Hawkesbury City Council v Saliba & Ors [2007] NSWLEC 381

Land and Environment Court of New South Wales

CITATION : Hawkesbury City Council v Saliba & Ors [2007] NSWLEC 381

APPLICANT Hawkesbury City Council

FIRST RESPONDENT Charlie Saliba PARTIES : SECOND RESPONDENT Pauline Saliba

THIRD RESPONDENT Domenico Demasi

FILE NUMBER(S) : 41188 of 2006

CORAM: Jagot J

KEY ISSUES: Costs :- consent orders - agreement alleged - no agreement - respondents ordered to pay applicant's costs

LEGISLATION CITED: Environmental Planning and Assessment Act 1979

CASES CITED: Wilkie v Blacktown City Council (2002) 121 LGERA 444

DATES OF HEARING: 12 June 2007

EX TEMPORE JUDGMENT DATE : 12 June 2007

APPLICANT Mr D Wilson SOLICITORS Adrian Walmsley & Co

FIRST & SECOND RESPONDENTS LEGAL REPRESENTATIVES: Dr S Berveling SOLICITORS Shaddick Baker & Paull

THIRD RESPONDENT Mr J Doyle SOLICITORS Holman Webb

JUDGMENT:

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

Jagot J

12 June 2007

41188 of 2006

HAWKESBURY CITY COUNCIL Applicant

CHARLIE SALIBA First Respondent

PAULINE SALIBA Second Respondent

DOMENICO DEMASI ThirdRespondent

JUDGMENT Jagot J:

1 This is a notice of motion in class 4 proceedings in which the applicant, Hawkesbury City Council, seeks an order that the first, second and third respondents pay its costs of the proceedings.

2 The proceedings were commenced on 11 December 2006, being proceedings in which the Council sought orders against the respondents with respect to the use of premises at 247 Wilberforce Road, Wilberforce.

3 The Council alleged in its class 4 application that the respondents should be restrained from using those premises for the purposes of a shop. The class 4 application was subsequently amended but the essence of the proceedings remain the same – namely, the premises were being used for the purposes of a shop, general store or roadside store and that such use, without development consent under the Environmental Planning and Assessment Act 1979 (the EPA Act), was unlawful and ought to be restrained.

4 The evidence before me shows that the first and second respondents owned the premises, whereas the third respondent was at the relevant time and up until on or about 16 April 2007, the lessee of the premises. The class 4 proceedings arose in circumstances where the Council served on the owners (that is, the first and second respondents) an order under s 121B of the EPA Act seeking that an alleged unlawful use of the premises cease. The first and second respondents had apparently commenced class 1 proceedings in this Court in response to the s 121B order. These class 1 proceedings were resolved by consent orders entered into by the Council as respondent and the first and second respondents as applicant. Pursuant to those consent orders, the Council's order under s 121B was modified so that the order required the respondents to cease the use of the premises for the purposes of a shop other than for the sale of fruit and vegetables grown on the subject property and in the Wilberforce and Freemans Reach localities, and associated orders relating to the removal of various advertising signs.

5 In the class 4 proceedings the Council alleged that the shop use was continuing, thereby necessitating the commencement of these proceedings against the owners as first and second respondents and the lessee as the third respondent. The class 4 proceedings were resolved by the first and second respondents entering into consent orders with the Council on 18 May 2007. Those consent orders provided that the first and second respondents be restrained from carrying or permitting the carrying out on the land development for the purposes of a shop other than, relevantly, a shop for the sale of fruit and vegetables grown on the subject property and in the Wilberforce and Freemans Reach localities and from placing or allowing the placement of advertising signs on the premises or land without first obtaining Council approval to do so. The terms of order 1 of the consent orders in the class 4 proceedings of 18 May 2007 largely reflect the terms of the consent orders in the class 1 proceedings. The class 4 consent orders provide in order 2 that costs are reserved. The orders require that any motion as to costs and affidavits in support are to be filed and served by 30 May, evidence in reply is to be filed and served by 4 June, and any motion as to costs is to be made returnable on 8 June. The proceedings were otherwise dismissed. The dismissal of the proceedings was without prejudice to the Council's rights to assert that it properly commenced and maintained the proceedings and its rights, if any, as to costs.

6 The Council submits that these proceedings were properly commenced against all respondents. The fact that the third respondent was not subject to the consent orders is neither here nor there because it had ceased its occupation before the consent orders were made. The Council had properly entered into the consent orders of 18 May. By those consent orders the Council had effectively achieved what it sought to achieve in the proceedings. The Council had not been guilty of any disentitling conduct. Therefore, in the ordinary course, the compensatory principle underlying orders for costs should be applied. Costs should follow the event.

7 The first and second respondents submit that there should be no order for costs against them in the proceedings. Their reasons are as follows: (1) The consent orders in the class 4 proceedings are precisely the same as the substantive orders in the class 1 proceedings. That is, the Council did not achieve anything against the first and second respondents that it had not already achieved in the class 1 proceedings. (2) The first and second respondents were not in breach of the EPA Act having regard to decisions such as Wilkie v Blacktown City Council (2002) 121 LGERA 444 in the Court of Appeal. The Council knew that a tenant occupied the premises before it commenced the class 4 proceedings. The Council knew that the person who was actually carrying out the activity was the third respondent as tenant rather than the first and second respondents as owners. Accordingly, the Council should not have commenced any proceedings against the first and second respondents.

(3) The third respondent knew of the s 121B order and knew of the dispute. 8 The other main plank in the defence of the first and second respondents to the Council's claim is their submission that an agreement came into existence between the first and second respondents and the Council on 4 May 2007. At that time the first and second respondents accepted an offer made by the Council for the proceedings to be settled on a particular basis, including that there be no orders as to costs against the first and second respondents. Accordingly, as I would understand it, the first and second respondents submit that the Council must be restrained from making this application for costs. The agreement between the Council and the first and second respondents should be specifically performed. Therefore, there should be and can be no order as to costs.

9 For its part the third respondent accepts it is appropriate that there be an order that the respondents pay the applicant's costs of the proceedings. If, however, the first and second respondents are successful in their defence then in the third respondent's submission it should not be responsible for the whole of the Council's costs, but only responsible for the costs relating to the third respondent (which might be expressed as a percentage of the overall costs). Further, it was relevant with respect to the latter possibility that the third respondent had indicated as early as 22 March 2007 that it was willing to enter a submitting appearance. Accordingly, if it were to be subject to a costs order by itself then that fact should be also be taken into account. Finally, the third respondent says, whatever the result of today, it should not be subject to the costs of the Council's notice of motion because it accepted from an early point that the order as sought by the Council should be made.

10 I propose to deal first with the question of the agreement alleged by the first and second respondents against the applicant. The evidence of the agreement is an email communication from counsel for the first and second respondents to his instructing solicitor noting that there had been a meeting with the Council's barrister, and continuing as follows "Leaving aside the merits of that argument, Council offers to settle the proceedings as against the Salibas on the following basis: (1)… [a substantive order follows in very similar terms to the final consent order made] . (2) No order as to costs between Salibas and Council.

11 About two weeks later the first and second respondents' solicitor sent a letter to the Council's solicitor, which said: We refer to our previous correspondence and to the recent discussions between our respective counsel. We are instructed by Mr and Mrs Saliba that they would be prepared to agree to settle this matter in accordance with the short minutes of order annexed hereto. We await your comments.

12 The short minutes of order annexed thereto contain order 1 in basically identical terms to the consent orders in fact made on 18 May. Order 2 no order as to costs as between the applicant and the first and second respondents. Order 3 proceedings against first and second respondent otherwise dismissed.

13 There then followed the making of the consent orders of 18 May 2007 to which I have already referred, but I should add that the consent orders take this particular form - order 2 and order 3 are the same as those referred to in the draft version sent between solicitors but have been struck through. There is a handwritten note beside them saying, "Agreed to by first and second respondents, not agreed by applicant" and the additional orders 2 through to 7 appear in handwriting on differently coloured pieces of paper.

14 Thereafter on 23 May 2007, after the orders were made in the proceedings, there is a letter from the first and second respondents' solicitor to the Council's solicitor referring to the conference, saying that the Council offered to settle the proceedings as against the Salibas on a particular basis, including that there be no order as to costs as between the Salibas and the Council. Further: It was directly as a result of that offer that I wrote to you on 26 April 2007, accepting the Offer and enclosing draft consent orders reflecting the Offer. Upon acceptance of the Offer, we had an agreement. This agreement is enforceable.

15 The letter then cites various cases. When I noted that the letter of 26 April 2007 was not in evidence, I was informed that this reference was in error and the correspondence was limited to that of 4 May 2007.

16 In my view it is clear there is not an enforceable agreement between the Council and the first and second respondents that there be no order as to costs in these proceedings. First, I do not accept the analysis that there was an offer on 23 April, accepted on 4 May and, accordingly, that by the letter of 4 May, a binding agreement came into existence between the parties. The reason for this is although there may have been an offer as set out in the email of 23 April, the terms of the letter of 4 May are not consistent with an intention that there be a binding agreement coming into force by reason of that letter functioning as an acceptance. It seems to me this is clear from the terms of the letter.

17 As counsel for the Council identified, the operative second paragraph is worded in the future tense, "We are instructed by Mr and Mrs Saliba that they would be prepared to agree to settle this matter". It seems to me to be very clear from the words "would be prepared to agree to settle" that what is being contemplated is the existence in the future of a binding agreement. In other words, the act of the making of the consent orders would constitute the binding agreement. I think this conclusion is even clearer from the last paragraph of this letter which says "We await your comments". I can only understand that as an invitation to consider and respond to the draft consent orders. The letter itself in my view is fundamentally inconsistent with the notion that, on the sending of the letter, there came into existence a binding agreement between the Council and the first and second respondents.

18 Secondly, the terms of the consent orders of 18 May 2007 are also fundamentally inconsistent with any such agreement either having come into existence or having remained in existence as at that date. The proposed order that there be no order as to costs was deleted by agreement between the parties. Although there is a note that the first and second respondents agreed to that order, there is also a note that the applicant did not agree. Moreover, the Court expressly reserved the question of costs in order 2 and then made a further order that absent any agreement in relation to costs, certain steps should follow the filing and service of a notice of motion. Finally, the Court expressly noted that the dismissal of the proceedings was without prejudice to the Council's rights, if any, as to costs.

19 Those consent orders, in my view, are utterly irreconcilable with the notion that there was, at least as at 18 May 2007, some form of binding contract between the Council and the first and second respondents with respect to costs. Accordingly, I do not accept an agreement came into existence as at 4 May. In any event, if it did, that agreement was plainly varied by a further agreement between the parties as of 18 May (although I consider the only relevant agreement to be the agreement of 18 May which leaves the question of costs at large and put into place procedural steps to allow that issue to be resolved).

20 I come then to the other arguments by the first and second respondents. I do not think that it is open to the first and second respondents to submit that no order for costs should be made against them because they were not in breach of the EPA Act based on the authority of Wilkie v Blacktown City Council and authorities to similar effect (that is, that an order under s 124 of the EPA Act can only be made against a person who is themselves in breach of that Act). The difficulty with that submission is, while it may well have been available as a substantive defence to the proceedings, the consent orders have been made against the first and second respondents, restraining them from carrying out a certain use of land. When one looks at those consent orders, it is apparent that the Council largely obtained the relief that it sought in the class 4 proceedings. In these circumstances I think that it would be inappropriate to accede to any submission that there should not be a costs order to compensate the Council because the first and second respondents were somehow not appropriate respondents to the proceedings. That submission cannot properly stand with the terms of the consent orders that the Court in fact made in the proceedings.

21 Similarly, the fact the Council knew that there was a tenant involved does not speak against the conclusions that the Council: - (i) properly commenced these proceedings against three respondents, (ii) was able to obtain substantive relief against the two respondents who had a continuing association with the property, (iii) did not obtain relief against the third respondent because by that time, such relief was unnecessary, (iv) but otherwise achieved its objective with respect the use of this property.

22 In my view this is simply a case where the Council properly commenced proceedings, was successful in obtaining largely the relief it sought, and has not engaged in any disentitling conduct. Therefore, in the ordinary course the appropriate exercise of discretion would be an order that the respondents pay the Council's costs of the proceedings.

23 This makes it strictly unnecessary for me to consider the variations on that order put forward by the third respondent (who indicated it accepted that such an order should be made). However, it does seem to me that it would be unreasonable to impose the costs of the Council's notice of motion on the third respondent. In my view, the first and second respondents should be solely responsible for those costs.

24 Hence, the order in the proceedings with respect to costs will be: (1) The first, second and third respondents are to pay the applicant's costs of the proceedings as agreed or assessed, save and except that, the first and second respondents shall be solely responsible for the applicant's costs relating to the notice of motion dated 28 May 2007. (2) The exhibits may be returned. ****************************

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