Sader v Elgammal

1. [1]

   KIRK JA: I agree with Griffiths AJA.

2. [2]

   FREE JA: I agree with Griffiths AJA.

3. [3]

   GRIFFITHS AJA: The applicants (Mr and Mrs Sader) seek leave to appeal from orders made by the primary judge (Pritchard J). Her Honour declined to make an order for costs in relation to Class 4 proceedings in the Land and Environment Court (LEC), after the applicants’ judicial review proceeding had been dismissed by consent.

4. [4]

   Orders were made for a concurrent hearing of the application for leave to appeal and any subsequent appeal.

5. [5]

   For the following reasons, leave to appeal should be refused, with costs.

Background matters

1. [6]

   The applicants and the first respondent (Mr Elgammal) live in adjacent properties in Connells Point, NSW. Their properties overlook the Georges River. (The second respondent, who did not actively participate, is the certifier for the development. The third respondent, the State, filed a submitting appearance.)

2. [7]

   The development of Mr Elgammal’s land has given rise to a series of litigious disputes. First, there was a dispute as to whether development purportedly carried out by Mr Elgammal with reference to a Construction Certificate dated 17 November 2021 (CC1.0) was consistent with the underlying development consent. CC1.0 incorporated a 12-page landscape plan dated 21 October 2021 and prepared by Dapple Designs. I shall refer to this landscape plan as Landscape Plan Rev D.

3. [8]

   In August 2022, in proceedings brought by the Saders against Mr Elgammal, Duggan J held that CC1.0 was invalid because it was inconsistent with the development consent. Her Honour found that the excavation of natural rock was unauthorised, as were concrete slabs shown in Landscape Plan Rev D (see Sader v Elgammal [2022] NSWLEC 107 (2022 Sader v Elgammal proceedings)). On 30 September 2022, Duggan J ordered that the concrete slabs be demolished.

4. [9]

   On 3 November 2022, it appears that two further construction certificates were obtained by Mr Elgammal, both bearing that date. The first did not contain any reference to landscape plans. The second (CC2.0) referred to Landscaping Plans and Specifications prepared by Dapple Designs and dated 21 October 2022. I shall refer to this material as Landscape Plan Rev F. Landscape Plan Rev F was not stamped.

5. [10]

   The Saders considered that Landscape Plan Rev F showed concrete slabs overhanging the rock face which they said was inconsistent with the orders made by Duggan J. Accordingly, they brought fresh Class 4 judicial review proceedings against Mr Elgammal and others, commencing on 1 February 2023 (Class 4 proceedings).

6. [11]

   On 10 February 2023, Mr Elgammal modified CC2.0 (now CC2.1), which included Landscape Plan Rev F as well as an External Works Plan by A E Consulting Engineers Pty Ltd. The Saders complained that the External Works Plan depicted works which had, in fact, already been carried out.

7. [12]

   On 9 June 2023, the applicants filed and served in the Class 4 proceedings an amended summons and points of claim. Given its importance it is appropriate to set out the amended summons showing tracked changes from the original summons filed on 1 February 2023. It should be noted that prayer 1 of the relief claimed sought a declaratory order relating to the validity of the “Modified Construction Certificate” (which presumably was intended to mean the “Modification Construction Certificate” as defined, being CC2.1) because it was claimed that building work to which it related had already commenced. Mr Elgammal says that this became the primary claim and prayer 2, which relates to the landscape plans and External Works Plan, was relegated to an alternative claim.

8. [13]

   It is also important to note that restraining orders were sought in prayers 5, 6, 7(a) and 8. An order seeking demolition was also sought in prayer 7(b). These prayers for relief are all significant because, as will be elaborated upon, the applicants effectively abandoned these prayers for relief when they consented to the proceeding being dismissed.

9. [14]

   The amended summons is as follows:

10. [15]

    On 13 February 2024, Mr Elgammal made further modifications to CC2.1 by removing references to any landscape plans or to the External Works Plan (CC2.2).

11. [16]

    The solicitor for the applicants sent two letters dated 5 March 2024 to the solicitors for the first respondent. The first of those letters was sent on an “open basis” with the purpose of identifying the parts of the pleadings which the applicants contended were not resolved by CC2.2. In particular, the solicitor explained at some length why her clients considered that CC2.2 did not resolve prayer 1 of the amended summons. Those reasons included a claim that CC2.0 was of no effect because it was in breach of s 6.8(2) of the Environmental Planning and Assessment Act 1979 (NSW) and that the subsequent modification giving rise to CC2.2 was also necessarily invalid.

12. [17]

    The second letter dated 5 March 2024 contained an offer to resolve the proceedings on the basis that they be dismissed, with the first respondent paying the applicants’ costs in a fixed amount of $243,379.10.

13. [18]

    On 22 March 2024 (i.e. shortly after the mediation terminated) consent orders were made dismissing the proceedings, with the question of costs reserved. The consent orders included various notations, including a statement that the Court noted what was described as the “further modification of the construction certificate the subject of the proceedings”. It was also noted that the applicants withdrew a notice to produce issued to the first respondent, as well as two subpoenae. It was further noted that the first respondent did not press a notice of motion challenging the notice to produce and one of the subpoenae.

14. [19]

    For the purposes of the costs application in the LEC, the parties agreed a statement of agreed facts dated 24 May 2024 (SOAF).

15. [20]

    The Saders claimed that Mr Elgammal had capitulated by removing from CC2.1 Landscape Plan Rev F and the External Works Plan without replacement and that they were entitled to their costs.

16. [21]

    The primary judge rejected those claims and concluded that there should be no order as to costs (see PJ [78]-[91]). In brief, her Honour held that:

The primary judge’s reasons summarised

1. [22]

   Drawing on the SOAF and a bundle of documents (which included planning documentation and the parties’ correspondence), the primary judge described the background to the parties’ dispute, including Duggan J’s judgment and orders in the 2022 Sader v Elgammal proceedings. Her Honour also referred to separate proceedings commenced on 2 February 2023 by Georges River Council against Mr Elgammal, in which the Council sought similar relief to that sought by the Saders in their original summons, including challenging the validity of CC2.0 (Council proceedings).

2. [23]

   Her Honour noted that, shortly after the amended summons and points of claim were filed in the proceedings, the Court ordered on 7 July 2023 that both the Class 4 proceedings and the Council proceedings proceed to mediation. The mediation took place on 7 December 2023. Shortly beforehand (on 5 December 2023) the Council filed a notice of discontinuance in the Council proceedings. The notice of discontinuance stated that each party would bear their own costs.

3. [24]

   CC2.2 was issued on 13 February 2024, in which all references to landscape plans or the External Works Plan were removed. The mediation in the Sader proceedings terminated on 19 March 2024. As noted above, on 22 March 2024 orders were made by consent dismissing the Class 4 proceedings with costs reserved.

4. [25]

   Pritchard J identified the following two issues as requiring determination:

   1. (1)

      whether the removal of Landscape Plan Rev F from CC2.1 was a “capitulation” by Mr Elgammal; and

   2. (2)

      whether Mr Elgammal acted unreasonably in defending the proceedings.

5. [26]

   The primary judge summarised relevant legal principles from several authorities, including McHugh J’s judgment in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 and Nadilo v Eagleton [2021] NSWCA 232. Her Honour noted what appeared to be different approaches in Nadilo. Her Honour noted that Preston CJ of LEC said in that case at [93]-[94] that where there was “a clear winner” (based on a review of the substance of the relief sought in the originating process and whether, in substance, that relief had been obtained), the applicant also needed to demonstrate that the respondent’s conduct in defending the proceedings up until their termination was unreasonable, citing Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; 199 LGERA 424.

6. [27]

   In contrast, Brereton JA (with whom Meagher JA agreed) said in Nadilo at [12] that where one party effectively capitulates, rendering further litigation unnecessary, without any element of compromise, it is not necessary to demonstrate “unreasonableness” to obtain an “order otherwise” pursuant to r 42.20(1) of the Uniform Civil Procedure Rules 2005 (NSW).

(a) Was the removal of Landscape Plan Rev F from CC2.1 “a capitulation”?

1. [28]

   After summarising the parties’ respective submissions on this first issue, the primary judge said that she was not persuaded that Mr Elgammal had effectively surrendered. After noting that this was a case where there had been no hearing on the merits and the moving party no longer wished to pursue the proceeding, her Honour observed that the Court had to assess matters “on the basis of known and undisputed facts to avoid trying a hypothetical action”. Moreover, her Honour acknowledged at PJ [78]:

2. [29]

   After referring to the test in Lai Qin, the primary judge said that she was not satisfied that the Saders were “almost certain to have succeeded if the matter had been fully tried” (PJ [79]).

3. [30]

   The primary judge explained why she considered Nadilo to be distinguishable:

4. [31]

   Her Honour said that the amended summons changed the relief sought “in a not insignificant way” (PJ [81]). This is because the claim in prayers 1 and 4 of the amended summons alleged that Mr Elgammal had commenced work depicted in CC2.2 so as to render the construction certificate invalid, whereas the claim in prayer 2 of the amended summons which related to Landscape Plan Rev F was now expressed to be in the alternative to the primary claim in prayer 1.

5. [32]

   Her Honour added that, while it was inappropriate to conduct a hypothetical trial with a view to assessing the prospects of success for the relief sought in prayer 2 of the amended summons, she was not satisfied that Landscape Plan Rev F was “almost identical” to Landscape Plan Rev D, as claimed by the Saders. The primary judge reproduced part of each of those landscape plans (at PJ [84]) which, for convenience, are again now reproduced:

6. [34]

   The primary judge then turned to the second issue, relating to the reasonableness of Mr Elgammal’s conduct. Her Honour did so on an assumption that, contrary to the majority view in Nadilo, this was a relevant matter. Her Honour then explained why she was not satisfied that Mr Elgammal had acted unreasonably in continuing to defend the proceedings. Her Honour noted in particular at PJ [88] that no points of defence or evidence had been filed and that all orders and directions had been made by consent.

7. [35]

   Finally, her Honour noted at PJ [91] that the fact that the Council proceedings had been commenced against Mr Elgammal the day after the Class 4 proceedings were commenced was not a relevant consideration. Her Honour ultimately concluded that there should be no order as to costs of the Class 4 proceedings nor any order for costs in relation to the Saders’ costs application itself.

Consideration and determination

1. [36]

   It is common ground that leave to appeal is required in circumstances where the primary judge’s orders were made in the LEC’s Class 4 jurisdiction and concern costs (see s 58(3)(c) of the Land and Environment Court Act 1979 (NSW)).

2. [37]

   The applicants properly acknowledged that to obtain leave to appeal they need ordinarily to demonstrate that there is an issue of principle, a matter of general importance or a clear injustice which is more than merely arguable (see Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 and Mohareb v Local Court of New South Wales [2024] NSWCA 235 at [25]).

3. [38]

   The applicants also properly acknowledged that the primary judge’s decision on costs involved the exercise of discretion, which required them to demonstrate an error of the kind described in House v The King (1936) 55 CLR 499; [1936] HCA 40.

4. [39]

   In determining the application for leave to appeal it is also relevant to bear in mind that costs involve matters of practice and procedure. Intermediate appellate courts are generally cautious in granting leave to appeal in such matters. Thus, in Gorczynski v Annandale Services Pty Ltd [2004] NSWCA 71 at [16] Santow JA (with whom Meagher and Ipp JJA agreeing) said:

5. [40]

   Some intermediate appellate courts have gone so far as to say that courts are “loath” to overturn costs orders (Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; 265 ALR 112 at [113] per Jacobson, Siopis and Foster JJ) and will avoid encouraging appeals on questions of costs (Ouwens Casserly Real Estate Pty Ltd v Harcourts South Australia Pty Ltd [2017] SASCFC 69 at [7] per Kourakis CJ, Peek and Stanley JJ). Having said that, however, there are exceptions. The applicants emphasised that this Court granted leave to appeal and upheld the appeal in relation to costs orders in the LEC in Nadilo.

6. [41]

   For the following reasons, I do not consider that the applicants have identified any issue of principle, matter of general importance or clear injustice to warrant a grant of leave to appeal. Nor have they identified any error of fact or law which is more than merely arguable.

7. [42]

   I consider that the primary judge was correct to place the emphasis which she did on the significance of the changes made in the amended summons. When the summons was originally filed it was clear that the relief sought was primarily directed to Landscape Plan Rev F. But that changed in the amended summons on 9 June 2023. Prayer 1 then became the primary claim which, when read together with related prayer 4, claimed that Mr Elgammal had physically commenced work depicted in CC2.1 which rendered CC2.1 invalid. Significantly, the claims relating to Landscape Plan Rev F were expressed to be in the alternative to the primary claim.

8. [43]

   It was well open to the primary judge to take the view that the proceedings were terminated as a result of a compromise between the parties, rather than a capitulation. The orders made on 22 March 2024 noted the further modification of CC2.1 (which was the subject of prayer 1), dismissed the proceedings and reserved costs. These consent orders were made shortly after the termination of the mediation. The compromise involved Mr Elgammal no longer defending CC2.1 and applying for a new construction certificate which excluded Landscape Plan Rev F and the External Works Plan. The Saders compromised what had become their primary claim in prayer 1, by agreeing to the proceedings being dismissed without that issue being determined.

9. [44]

   Significantly, by agreeing to the proceeding being dismissed in that manner, the applicants abandoned the other relief sought by them in the amended summons, including the relief in prayer 1, the orders seeking to restrain the first respondent from carrying out further building work (prayers 5, 6, 7(a) and 8), as well as the order seeking demolition (prayer 7(b)). The applicants’ willingness to give up those various claims for relief strongly supports the primary judge’s finding that the proceedings terminated by way of compromise and not a capitulation on the part of the first respondent. Even though it appears that no reference was made to this matter in submissions below or by the primary judge in her reasons for judgment, it is a powerful consideration against granting leave to appeal.

10. [45]

    The primary judge’s approach on the issue of compromise does not raise any question of principle or public importance and the applicants have failed to demonstrate any clear injustice or error which is more than merely arguable in respect of her Honour’s reasoning.

11. [46]

    In their summary of argument, the applicants contended that the primary judge misunderstood an uncontested fact, being the removal of the External Works Plan. They emphasised that [13] of the SOAF recorded the parties’ agreement that Landscape Plan Rev F and the External Works Plan had been removed from CC2.1. The primary judge was well aware of that matter, as is evident from her Honour’s express reference to it in PJ [53] and [62].

12. [47]

    The applicants contended that the primary judge’s error was revealed at PJ [83] which, they claimed, suggested there were “disputed facts relation [sic] to [Landscape Plan Rev F]”. The applicants added that because Mr Elgammal had abandoned that document, “her Honour likewise erred insofar as she held that there remained any factual or legal issues to resolve”.

13. [48]

    There are two fundamental difficulties with the applicants’ position. First, those contentions are inconsistent with the claim made in their solicitor’s first letter dated 5 March 2024, in which it was repeatedly asserted that CC2.2 did not resolve the litigation, with particular reference to prayer 1 in the amended summons.

14. [49]

    Secondly, the applicants have misread PJ [83]. For convenience it is now reproduced:

15. [50]

    That paragraph refers to PJ [51] and [61] respectively, which are now reproduced for convenience:

16. [51]

    Fairly read, PJ [83] does not suggest any sufficiently arguable error to warrant leave to appeal. Her Honour was merely responding to the applicants’ claims, as summarised at PJ [51], by accepting the first respondent’s submissions which were summarised at PJ [61]. Those submissions included claims that the applicants had misread the construction certificate and the annotated Landscape Plan Rev F, matters which were left unresolved by the termination of the proceedings.

17. [52]

    Nor has any error which is more than merely arguable been demonstrated in respect of the primary judge’s rejection of the applicants’ claim that Landscape Plan Rev F was “almost identical” to Landscape Plan Rev D. It was the applicants themselves who raised that issue in the proceeding below, and the applicants who used the words “almost identical” to describe the two versions of the landscape plans. In advancing that submission, the applicants invited the very kind of comparison undertaken by the primary judge. For example, the applicants’ outline of written submissions dated 28 May 2024 contain the following contentions:

18. [53]

    The primary judge cannot be criticised for engaging with that submission and rejecting it on the basis that a simple comparison did not in fact show that the landscape plans were “almost identical”, as shown by the extracts from the colourised plans at PJ [84], and allowing them to speak for themselves (see at [32] above). I would not infer, as the applicants asked the Court to infer, that the primary judge failed to ask the question raised by the applicants about the effect of Landscape Plan Rev F. It may well be that her Honour also took into account differences in the annotations on the two landscape plans but it is unnecessary to go that far.

19. [54]

    The relatively straightforward nature of the simple task of comparing the two landscape plans is not avoided by describing her Honour’s approach as “asking the wrong question”, as asserted by the applicants. The applicants themselves must accept responsibility for the primary judge focusing on the question whether the plans were “almost identical”. For completeness, it might also be added that, in any event, it is difficult to see how any question of principle or public importance can be divined from visually comparing different landscape plans.

20. [55]

    Assuming (without deciding) the issue of the reasonableness of the conduct of Mr Elgammal’s defence is relevant (which is the assumption made by the primary judge), no sufficiently arguable error been demonstrated in respect of the primary judge’s reasoning and conclusion. Her Honour correctly viewed the assessment of Mr Elgammal’s conduct as not requiring a review of large volumes of evidence or tentatively resolving disputed questions of fact. As the primary judge noted at PJ [88], no points of defence or any evidence had been filed and all orders and directions in the proceedings were made by consent. In addition, her Honour reiterated that the removal of Landscape Plan Rev F from CC2.1 was not a capitulation which would otherwise have supported a finding of unreasonableness. Nor was it erroneous for the primary judge, by essentially accepting the submissions of the first respondent at PJ [71], to have regard to the fact that, even as late as March 2024, the earlier removal of Landscape Plan Rev F on 13 February 2024 did not resolve the litigation. Indeed, as noted above, that was the applicants’ own stated position as expressed in the first letter dated 5 March 2024.

21. [56]

    Finally, no arguable error is demonstrated in respect of the primary judge’s finding at PJ [91] that the Council proceedings were not relevant to the issue of costs.

Conclusion

1. [57]

   In light of the applicants’ persistence in pursuing the issue of costs (as is their legal right) it is worth re-emphasising that, while there will be rare and exceptional cases, intermediate courts of appeal will generally adopt a restrained approach in determining whether or not to grant leave to appeal from a costs order. Such restraint is desirable not only in the interests of finality in litigation but also in recognition of the fact that the determination of costs is a matter for the primary judge’s discretion, which must be exercised judicially, and is not subject to the usual scope of appellate review. Furthermore, litigants can expect that an appellate court will exercise particular caution and restraint when asked to review a costs order because such an order is properly characterised as involving a matter of practice or procedure.

2. [58]

   For all these reasons, I would refuse leave to appeal, with costs.