Indemnity costs in the ERD Court for Contempt
The Environment, Resources and Development Court (Court) has recently exercised its discretion to award costs to a council on an indemnity basis in relation to an action for contempt of court.
That decision is available here: City of Charles Sturt v Leorob Pty Ltd, Leopardi [2023] SAERDC 9.
This is one of only very few instances where a council has been successful in the full award of indemnity costs in relation to ongoing enforcement proceedings.[1] As such, the case sets a useful precedent for understanding the factors the Court will consider in exercising its discretion to award costs in matters concerning the enforcement of judgments.
Background
The City of Charles Sturt (Council) undertook civil enforcement action against the two Respondents – Leorob Pty Ltd and its director Mr Leopardi – in relation to unlawful development pursuant to section 214 of the Planning, Development and Infrastructure Act 2016 (PDI Act). The matter concerned unlawful alterations or additions to a State Heritage Place in the form of advertising signs, timber work, electrical conduits, and a panelled screen, which required approval under the PDI Act.
The Council was successful in these proceedings and the Respondents were ordered to remove the unlawful development within thirty days of the date of the judgment (which was handed down on 17 May 2022).
More than 6-months after the date of that judgment, the Respondents still had not complied with the orders of the ERD Court, despite multiple attempts by the Council to procure their compliance. The Council then initiated proceedings for contempt of court.
Contempt proceedings
The Council was successful in establishing the grounds for contempt and a charge was issued against the Respondents in February 2023.
The Court subsequently granted an extension of time with respect to the original orders to give the Respondents a final opportunity to comply and thereby avoid a finding of guilt in relation to the contempt. The Respondents had materially complied with the orders by 28 April 2023 and the charges were rescinded by the Court.
The parties were then invited to make submissions on costs.
Indemnity costs
It is typical in proceedings for contempt in other jurisdictions that the party bringing contempt, if successful, has its costs awarded on an indemnity basis.[2] Such costs are of a higher order than party-party costs (which are the standard award in ERD Court proceedings[3]).
The award of costs on this higher scale effectively indemnifies the party bringing the contempt proceedings for all legal costs incurred. The onus then lies on the other party, should they challenge the costs sought, to prove that such costs were unreasonable. This effectively reverses which party bears the onus of proof in seeking costs.
The award of indemnity costs in this case was contingent upon the Court being satisfied of the following preconditions:
- where there had not been a trial on the merits, that the party bringing the contempt was destined to succeed; and
- unreasonable conduct or misconduct on the part of the alleged contemnors; and
- whether it is appropriate for the party bringing the action to be relieved entirely of the expense.
In this case, the Court was satisfied that all preconditions were made out, particularly on the basis that:
- the Respondents knowingly disobeyed the orders, which were clear and direct, and did not take any steps to purge their contempt until directed to by the Court on 13 April 2023;
- the Respondents’ conduct throughout the proceedings – which included multiple failures to attend, obstructive conduct with Council staff, and disrespect of the Court process – demonstrated both unreasonable conduct and misconduct; and
- the Council was required to bring the proceedings to enforce the orders of the Court, without which compliance would not have been achieved.
The Court therefore considered that costs on an indemnity basis were appropriate.
Take home message
Proceedings for contempt are serious and involve a high burden of proof and often lengthy pre-trial procedures. The costs associated with bring contempt proceedings can therefore be significant. As such, it is helpful to have a clear precedent illustrating the factors involved in the award of costs on an indemnity basis so that councils are not left out of pocket.
Councils should also be aware that step-in rights present an alternative option in the enforcement of judgments for actions brought under section 214 of the PDI Act, and additional cost-recovery measures exist pursuant to section 214(12) with respect to those step-in rights.[4]
We encourage councils to consider their enforcement options and seek legal advice in relation to outstanding matters of non-compliance.
For more specific information on any of the material contained in this article please contact Nicholas Munday on +61 8 8217 1381 or nmunday@normans.com.au.
[1] Note, for example, the partial award of indemnity costs in Lockleys Holdings (SA) PL v City of Port Adelaide Enfield [2011] SAERDC 3.
[2] See Degmam Pty Ltd (in liquidation) v Wright (No 2) [1983] 2 NSWLR 348; Australian Competition and Consumer Commission v Hughes [2001] FCA 38.
[3] See Pejafs Pty Ltd v Bitmead (No 2) [2012] SAERDC 23 per Costello J (paragraphs [9]-[18]).
[4] Note that a Council, if successful in taking civil enforcement proceedings under section 214, has these powers available to it as of right, and these are separate and discrete from a power to initiate proceedings for contempt. It has been held by the Court in Registrar of the Environment, Resources and Development Court v Cranwell [2021] SAERDC 26 that a Council need not exercise its section 214(12) powers prior to seeking a charge of contempt.
