Aldi Foods Pty Limited v Holroyd City Council

APPLICANT Mr S B Austin QC with Mr P R Clay (Barrister) SOLICITORS Brophy Bridge & Mirow LEGAL REPRESENTATIVES:

RESPONDENT Miss J M Jagot (Barrister) SOLICITORS McKees

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

10012 of 2004 Aldi Foods Pty Limited v Holroyd City Council

JUDGMENT 1 Talbot J: Holroyd City Council ("the Council") has successfully defended an appeal by Aldi Foods Pty Limited ("the applicant") in respect of a development application for the building of a supermarket at Merrylands. The Council now makes an application for an order that the applicant pay its costs of the proceedings, or in the alternative, its costs from the time of a case management conference conducted by Commissioner Watts on 14 April 2004. 2 Judgments were delivered by the Court on 24 May 2004 and 30 July 2004. The Council claims that the circumstances of the case make it fair and reasonable that the applicant be ordered to pay the Council's costs for the following reasons:- (1) The Council had made it plain at the outset its willingness to reach a compromise position outside the context of adversarial proceedings, which enabled a supermarket development to proceed on the subject site provided that the matter which the Council perceived as of primary importance (a setback from Terminal Place consistent with the DCP masterplan) was incorporated within the development. (2) The Council remained open to that potential resolution throughout the proceedings. This motivated the Council's attendance, with Council officers capable of giving instructions on compromises present on 2 occasions, at 3 case management conferences before Commissioner Watts. (3) The setback from Terminal Place was plainly critical to the implementation of the masterplan for the reasons identified by the Council on 10 March 2004. (4) The applicant, prior to 24 May 2004, demonstrated its unwillingness to consider any compromise which gave weight to the DCP masterplan. This was demonstrated by a course of conduct comprising: a. The seeking of expedition of the merits hearing. b. The absence of any material change addressing the fundamental aspects of the DCP masterplan in the first amended plans served 17 March 2004. c. The refusal to amend the application to incorporate the capacity for future consistency with the DCP masterplan. d. The absence of any material change addressing the fundamental aspects of the DCP masterplan or the Court expert's evidence received 5 April 2004 in the second amended plans served 7 April 2004. e. The failure to take cognisance of the observations of Commissioner Watts at the case management conference on 14 April 2004 or to take advantage of the opportunity offered by the Council for some mutually acceptable compromise at any of the 3 case management conferences. f. The absence of any material change addressing the fundamental aspects of the DCP masterplan or the Court expert's evidence received 5 April 2004 in the third amended plans served 19 April 2004, after the bulk of the Council's evidence had been served. g. The filing and service of evidence of Nigel Dickson in 3 statements and of Mr Juradowitch in 2 statements highlights the applicant's refusal to engage with the DCP masterplan as if it were entitled to any material weight in the assessment of the urban design issues, as well as a statement in reply by Mr Dickson to that of the Court expert despite the ample opportunity already afforded to Mr Dickson to make all his thoughts known to the Court expert and the Council.

(5) Despite the evidence prepared by Mr Dickson and by Mr Juradowitch on behalf of the applicant, which was prepared following extensive opportunities to confer with the Court and Council's experts, both Mr Dickson and Mr Juradowitch agreed during the hearing that a number of further changes could or should be made to the development to make it acceptable even disregarding the DCP masterplan. A fourth amended plan was then filed in Court. (6) A fifth set of amended plans was served on 13 May 2004, which the applicant said addressed Exhibit O but which did not address the fundamental aspects of the DCP masterplan, which necessitated a further round of responses to those plans from the Council and the applicant. (7) Although having the benefit of the Court's interim judgment dated 24 May 2004, the applicant made no material change to the plans at any point prior to the next hearing on 23 July 2004 which addressed the fundamental aspects of the DCP masterplan. (8) The DCP masterplan had been well publicised and had been the subject of extensive consultation, including consultation with the applicant. (9) The DCP masterplan was agreed by all the experts to represent the application of sound planning principles in the public interest. (10) The proposed development, in addition to the being agreed by the experts to be unacceptable in the existing context, was obviously antipathetic to the implementation of the DCP masterplan. Expert evidence was not necessary to draw that basic conclusion.

3 References to the DCP and Master Plan are interchangeable. 4 Part 16, rule 4 of the Land and Environment Court Rules 1996 ("the Court Rules") deals with an application for costs in class 1 proceedings as follows:- (1) This rule applies to the following proceedings in classes 1, 2 and 3 of the Court's jurisdiction: (a) proceedings under Sections 95A, 96, 97, 98, 109K, 121ZK, 121ZM and 149F of the Environmental Planning and Assessment Act 1979 , (b) proceedings under sections 176, 177, 178, 182 and 611 of the Local Government Act 1993 ,

(c) proceedings under s 37 of the Valuation of Land Act 1916 , (d) proceedings under s 38A of the Land Tax Management Act 1956 , and (e) proceedings under s 96 of the Taxation Administration Act 1996 . (2) No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable.

5 The Rules make it plain that the approach to an application for an order for costs in class 1 proceedings is fundamentally unchanged from the historical position to the extent that the underlying principle is that there will generally be no order as to costs. Accordingly, unless it is in the circumstances of the particular case otherwise fair and reasonable, the Court will approach the exercise of its discretion on the basis that parties are to remain confident they may commence or defend proceedings without the onerous threat of incurring liability for costs other than their own, even if they are not the successful party. In other words costs will not be awarded in the proceedings referred to in Part 16, rule 4 unless it is fair and reasonable to depart from the underlying assumption in the circumstances of the particular case. Reasonableness is to be determined according to the ordinary sense of the word. The award of costs has to be fair as well as reasonable. Thus not only must it be reasonable for costs to be awarded but it must also be just and equitable.

6 There is no issue in this case that the applicant made an ambit claim or that the development, as proposed, was not permissible with consent. The claim was not in any sense irrational. The arguments centred on the merits of the proposal and the impact upon the prospect of the implementation of the DCP Master Plan. As pointed out in the judgment, delivered on 24 May 2004, during the hearing it became clear that there was only one important issue, namely whether the granting of consent to the proposed development would undermine the planned orderly and economic development of land in the proposed Neil Street Precinct within the Merrylands Town Centre. Effectively the other issues in the Statement of Issues were resolved by agreement between the experts or through amendments suggested by them. 7 There was an unresolved issue between the two sets of experts in relation to the extent of weight that should be given to the draft DCP and its Master Plan. The CAE, Mr Chesterman, supported the draft DCP and recognised that it was based on sound urban design principles and if implemented would bring substantial benefit to the Merrylands town centre. 8 There were differences of opinion as to whether the Master Plan could be readily implemented. It was common ground between the experts that the proposal would not achieve the strategic and land use objectives of the draft DCP to develop the subject site for high-density residential or mixed use. Nine points identifying changes to the proposal that could be implemented, even in the absence of any consideration of the impact upon the Master Plan, were agreed upon.

9 After the first hearing I decided, with the benefit of advice from Senior Commissioner Dr Roseth, that the state of evidence afforded an ideal opportunity for the Court to take advantage of the information already provided to it in an attempt to resolve the dispute in a way that was fair and just. The parties were given the opportunity to further explore the prospects of achieving a result compatible with the Council's vision provided that the proposal could remain essentially the same development as originally proposed in the development application. One of the considerations raised by the Court was whether it would be open for a time limited approval to be granted as a means of allowing the development to proceed during the initial period of the evolution and implementation of the Master Plan. 10 I rejected a submission made on behalf of the Council that it would be more appropriate to reject the application and allow the parties to negotiate independently. As a consequence I granted leave for the applicant to rely on further revised plans. After the revised plans had been considered a hearing took place on 23 July 2004.

11 Further argument on 23 July 2004, based on the amended plans, identified a number of issues that could not be resolved sufficiently to allow the development to proceed in a way that was compatible with the objectives of the Master Plan. Notwithstanding the arguments put forward by the applicant to the contrary, I accepted Council's submission that the final proposal was antipathetic to the Master Plan because it would severely prejudice the implementation of the Plan, even if there was a time limited consent which would require the demolition of the development at the expiration of the specified time. The development would be an incompatible activity, highly visible and could deter potential investors from proceeding with development consistent with the implementation of the Master Plan. A number of other obstacles could not be overcome. On balance, the Court found that as the proposal was antipathetic to the Master Plan and DCP the application must fail on its merits. Ultimately in a judgment delivered on 30 July 2004 the development application was determined by the refusal of consent. 12 There is an element of internal inconsistency in the Council's argument which says on the one hand it incurred unnecessary expense when it was required to meet the proliferation of evidence prepared in support of the applicant's case, yet if it had known the applicant would not contemplate a setback consistent with the objectives of the DCP it is doubtful it would have incurred the cost of seeking a compromise and preparing evidence in reply. While the Council had always maintained that it wanted an increased setback from Terminal Place, it was not until shortly before the second hearing that it indicated that it would accept a development inconsistent with the Master Plan as long as it was setback a sufficient distance. Thereafter it became clear that the applicant was not able or not willing to provide a setback acceptable to the Council. An unsuccessful attempt was made to compromise by the provision of deep planting within the setback of Terminal Place 13 An argument that the applicant should have heeded an observation attributed to Commissioner Watts during a management conference that the evidence of the CAE Mr Chesterman was significant and in his opinion would be given greater weight than evidence filed on behalf of the parties is fundamentally flawed. The observation, if indeed it was made in those terms, is so manifestly incorrect that no part of the Council's case can be made out by relying on it to suggest the applicant's evidence should have thereafter been responsive to it. 14 The generation of a succession of amended plans as a consequence of an evolutionary process involving management techniques recently adopted by the Court and the appointment of a Court Appointed Expert (CAE) is not necessarily of itself a matter for adverse comment in respect of reasonableness in the context of a costs application. 15 There is no principle that requires an applicant to directly respond to the demands or even wishes of a council in order to avoid the consequences of an adverse costs order. To carry such a principle to extreme would remove any relevance to the appeal process. Experts can differ in respect of subjective as well as objective views of the impact of development and it is appropriate for those views to be fully articulated, tested and reconciled in the appeal process. 16 Submissions made on behalf of the Council to the effect that the applicant, as a sophisticated developer with access to expert and legal advice, ought to have known that its development was inconsistent with Council objectives for the locality, that were based on sound planning principles, are not to the point as the legitimate arguments raised by the applicant in support of its case showed.

17 In this case the applicant consistently maintained an argument that the Master Plan should not be determinative and ultimately that the development could proceed without detrimental impact upon its implementation. The issues in the case went no further than that. They were legitimate issues based on merit. In the circumstances it would not be fair and reasonable for the applicant to bear the burden of the Council's costs or any part thereof.

18 The applicant has been successful in resisting the Council's Notice of Motion seeking an order for costs. The applicant seeks an order for costs in its favour in respect of the costs application. In my view the position previously adopted under the former Practice Direction 1993 paragraph 10A prevails, namely that the cost of the hearing of the costs motion are separate costs incurred in relation to the power conferred by s 69 of the Land and Environment Court Act 1979. 19 Miss Jagot submits that I should not make a costs order against the Council in the circumstances because Part 16 rule 4 applies to the planning appeal litigation and that if every unsuccessful costs application attracted an order for costs, Part 16, rule 4 would lose its effect. Furthermore she says the Council's case was well founded and that the Court should recognise that the greater flexibility of the Court's approach to achieve an acceptable outcome in planning appeals has the effect of generating the risk of additional costs. 20 There is some merit in what Miss Jagot says but the principle remains that the former Practice Direction and Part 16, rule 4 were made to encourage dissatisfied applicants to seek a review of planning and building decisions by consent authorities without the risk of costs if unsuccessful. The Council's application extends beyond that review and caused the applicant to incur further costs as a consequence of the separate hearing in relation to costs. I propose to exercise the Court's discretion pursuant to s 69 of the Land and Environment Court Act in respect of the costs of the motion by awarding the successful party its costs. Orders 21 I make the following orders:-

1. The application by the Council for an order for costs against the applicant in respect of the proceedings is dismissed.

2. The Council pay the applicant's costs in relation to the application for costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.