JUDGMENT
CORAM: HIS HONOUR
A. INTRODUCTION
1 By class 4 application filed on 17 February 2005, the Applicant seeks declarations that two development consents granted by the first Respondent (the Council) in respect of two development applications made by the second Respondent are null and void. One development consent was granted in respect of land situate at Lakemba for the demolition of the existing school buildings and the erection instead, of a residential flat building. The other development consent was granted in respect of land situate at Belmore for the demolition of existing buildings and the erection of a pre-school, kindergarten and primary school (effectively relocating the existing school from Lakemba to Belmore).
2 The class 4 application also claimed a consequential injunction restraining the second Respondent from carrying out development in reliance upon either of the two development consents.
3 Pursuant to directions given by the Court, Points of Claim and Points of Defence have been filed in the proceedings.
4 When the matter came before the List Judge on 3 May 2005, he directed that any Motion for security for costs be made returnable on 13 May 2003 for mention and not for hearing.
5 Each Respondent filed a Notice of Motion returnable on 13 May 2005 seeking orders that the Applicant provide security for costs - the Council's Motion claiming an amount of $40,000 and the second Respondent's Motion claiming an amount of $50,000.
6 When both these Motions came before me on the morning of 13 May 2005, I seriously queried the legitimacy of the Respondents' mutual expectation that there could be two separate costs orders for the full costs of both Respondents in the event of the class 4 proceedings failing in view of the fact, according to the Points of Defence that had been filed, the Respondents' separate defences merely duplicated one another and the Respondents appeared to be in the same interest in the litigation. Although the second Respondent was content to have its Motion adjourned to a future hearing date (which the Applicant had sought) the Council sought the immediate determination of its Motion submitting that this course would avoid the incurring of additional costs of a future hearing. Since the Applicant was not there and then ready to proceed I stood the Council's Motion down to later in the day to give the Applicant the opportunity to respond.
7 When the matter came before me later in the day, the second Respondent, without objection from the Applicant, withdrew its Motion seeking security with each party to pay its own costs on that Motion. By this stage the Applicant was in the position to present its case resisting the Council's Motion and the hearing of that Motion then took place.
B. THE RELEVANT FACTS
8 The Council's Motion invokes the power conferred upon the Court by the Land and Environment Court Act 1979, s 69(3) which provides as follows:
The Court may order a party instituting proceedings in the Court to give security for the payment of costs that may be awarded against that party.
9 The Applicant was incorporated on 13 January 2005 pursuant to the Associations Incorporation Act 1984. It has a membership of 55 persons (full financial members) and its balance sheet as at 12 May 2005 shows income totalling $18,215 and expenses totalling $16,742. The objects of the Applicant are to "represent all residents of Belmore and Lakemba covered by Canterbury City Council Local Environmental Plan 178 in action against unfair overdevelopment of Lakemba and Belmore".
10 The affidavit of the Applicant's Solicitor Joe Strati sworn 16 February 2005 annexes the written planning reports submitted to the Council's meeting held on 14 October 2004 at which meeting the Council resolved to grant the two development consents, the subject of the class 4 proceedings. Also annexed is a copy of the written objection pursuant to State Environmental Planning Policy No 1 - Development Standards (SEPP No 1) that was lodged with the Council in respect of the second Respondent's development application for the erection of the new school buildings on the Belmore site.
11 In paragraph 10 of that affidavit Mr Strati states that the class 4 proceedings are brought pursuant to the Environmental Planning and Assessment Act 1979, s 123 asserting various breaches of that Act by the Council in granting the two development consents. The class 4 proceedings allege jurisdictional error and "Wednesbury" unreasonableness in respect of the Council's decisions and in particular its decision to uphold the second Respondent's objection pursuant to SEPP No 1 in granting the development consent relating to the Belmore site, and a failure to comply with the public notification procedures of s 79A(2) of that Act in respect of the two development applications which received the two development consents granted by the Council.
12 These bases for the Applicant's allegations of invalidity of the two development consents are more comprehensively stated in the Points of Claim filed on 7 April 2005.
13 Each of the several bases for invalidity of the two development consents is denied by each of the Respondents in their separate Points of Defence filed on 2 May 2005.
14 The Council's Motion for security for costs is supported by the two filed affidavits sworn by its Solicitor Ms Finn. In the earlier affidavit, Ms Finn annexes a copy of her letter to the Applicant's Solicitors advising that the Council "has formed the view that your client's application to the Land and Environment Court is unlikely to be successful and if costs are awarded in favour of our client, your client will have insufficient funds to pay our client's costs of the proceedings".
15 In the second Affidavit, Ms Finn estimates that the Council's costs would be in the order of $40,000 "upon the assumption that the matter would take two days hearing".
16 The parties' competing submissions have conveniently addressed the considerations held to be relevant to the exercise of the counterpart statutory discretion vested in the Federal Court of Australia by Beazley J in K B Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189.
17 These considerations which have generally been applied by this Court in exercising its statutory discretion were summarised by the Chief Judge of the Court in Hunter Ecologically Sustainable Employment Group Inc v Hez Pty Ltd and Ors (2003) 129 LGERA 344 in the following passage at 348:
However, the court is required to apply conventional principles to applications for security and, accordingly, in many cases this court has adopted the formulation by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197-198. The considerations said to be relevant by her Honour may be conveniently summarised as:
(1) whether the application for security has been brought promptly;
(2) the strength and bona fides of the case in which security is sought;
(3) whether the impecuniosity of the applicant results from the respondent's conduct the subject of the claim;
(4) whether the application for security is oppressive in the sense of denying an impecunious citizen or organisation a right to litigate;
(5) whether there are persons standing behind the plaintiff applicant who are likely to benefit and be willing to provide the security;
(6) whether persons standing behind the plaintiff applicant have offered any personal undertaking to be liable for the costs and if so the form of any such undertaking; and
(7) whether the applicant for security is in substance the plaintiff or the proceedings are defensive in nature.
18 According to the competing submissions, the dispute on the Council's Motion is limited to considerations (2) and (4), namely the strength and bona fides of the Applicant's case and whether the application for security is relevantly oppressive to the Applicant's statutory right to litigate its claims.
19 The Council's submissions on these two considerations are to the effect that the Applicant's case is weak and that far from the Council's Motion for security being oppressive to the Applicant it defeats the ruse of the Applicant's incorporation so as to avoid any liability for any costs order that may be made against the Applicant should its class 4 application fail.
20 The Applicant's competing submissions are to the effect that its case is a strongly arguable case and that its incorporation was for a genuine purpose of properly organising into an association with a separate legal identity capable of suing, the citizens of Canterbury City who had subscribed to a petition that had been submitted to the Council opposing the second Respondent's two development applications, during the Council's processing of those applications which culminated in the grant of the two development consents.
21 Although it was conceded on behalf of the Applicant that it would experience difficulty in satisfying any costs order that might be ordered against it because its funding depends upon donations, it was submitted that the following additional matters are relevant to the Court's adjudication on the Council's security Motion -
(i) the class 4 application was properly characterised as public interest litigation which characteristic was relevant to the question of whether a costs order should ultimately be made reflecting the result in the substantive proceedings; and
(ii) the motive of the Council in seeking security for costs in the proceedings may reasonably be held to be to stymie the proceedings rather than to guard against any loss involved in not being able to enforce any order for costs that might be the result of the proceedings (particularly in the light of the established practice of the Court generally not to award costs in development appeals brought against decisions of local councils).
22 In considering the question of the strength and bona fides of the Applicant's case I have in addition to the pleadings, the benefit of the documentary evidence annexed to Mr Strati's affidavit of the written planning reports that were submitted to and considered by the Council, at its meeting held on 14 October 2004 when it granted the two development consents.
23 Given the nature of the proceedings, namely a challenge to the validity of the two development consents based upon the grounds of (i) jurisdictional error; (ii) manifest unreasonableness; (iii) taking into account irrelevant considerations; (iv) failing to take into account relevant considerations; and (v) denial of procedural fairness, the documentary evidence annexed to Mr Strati's affidavit is likely to be the principal (if not exclusive) evidence adduced at the trial.
24 Although it may be accepted that the person challenging the development consent carries the onus of proof of invalidity (Parramatta City Council v Hale (1982) 47 LGRA 319 at 335) a perusal of the contents of the planning reports (both those prepared by the Council's planning staff and those prepared by the second Respondent's planning consultant (ie the SEPP No 1 objection and the Statement of Environmental Effects accompanying the development application for the Belmore development) reveals the following facts -
(i) the development consent granted in respect of the Lakemba site was for a residential flat development of 70 dwelling units involving a residential density exceeding by more than 100 percent the maximum density prescribed by a relevant development control plan;
(ii) in granting that development consent the Council had regard inter alia to a Social Impact Assessment prepared on behalf of the second Respondent which represented that the residential development " was required to fund the relocation of the second Respondent's existing school development to the Belmore site which would provide community benefit to the Belmore area " together with the comments on that Assessment provided by the Council's Director of Corporate and Community Services which included the following comment -
Sense of Place and Community Networks
Relocation of the school to Belmore adjacent to the All Saints Greek Orthodox Church is likely to serve to improve community cohesion and provide a new community identify for the Greek community by the integration of an institution of learning with local residential properties. Improved facilities in Belmore will also provide an opportunity for increased social interaction between residents and attendees of the school at the new site. This is likely to be the major social impact of the proposal, with significant benefits to the applicant community, and depending on management of the facilities could improve access to the facilities for local people.
From a local resident amenity point of view, there are some potentially negative effects on local neighbourhoods by centralising cultural services for a specific group. This would need to be further researched. Also in Lakemba, there are likely to be significant cumulative effects related to enabling further medium density housing development in an area that is already recognised for having an excess of this type of housing;
(iii) the development consent granted in respect of the Belmore site was for the development of new school facilities (relocated from the Lakemba site) having a floor space ratio exceeding by more than 100 per cent the maximum floor space ratio prescribed by cl 14 of the Canterbury Local Environmental Plan 178;
(iv) included in the report submitted to the Council in respect of the development application for the Belmore site is the following comment by the Council's Director of Environmental Services:
SEPP 1 - Development Standards allows the Council to vary a development standard, which in this case is the floor space ratio standard of 0.5:1 set out in LEP 178.
Council can vary the standard if it considers that strict compliance with the standard would be unreasonable, unnecessary and tend to hinder the attainment of the objectives of the EPA Act (clause 5(a)(i)(ii)). This clause of the Act includes proper development of the land for the purpose of promoting the social and economic welfare of the community and a better environment. If we accept this variation of the standard, it would have to be on these grounds.
The applicant argues that the variation in FSR is justified broadly on the grounds that in design terms, spatially, if the road is included it would comply and also it would promote the social and economic welfare of the community. The latter point is discussed in more detail later in this report;
(v) the SEPP No 1 objection supporting the second Respondent's development application for the Belmore site was prepared by a town planning consultant and was in a form that accords with an approach to considering an objection under SEPP No 1 that was adopted by Lloyd J in Winten Property Group Ltd v North Sydney Council (2001) 130 LGERA 79 at 89; and
(vi) it is apparent that the reports submitted to the Council appreciated the obvious interrelationships between the two development applications. This is demonstrated by the following extract from the report of the Council's Director of Environmental Services on the development application for the residential flat development on the Lakemba site:
Another issue relates to allowing a higher density on the basis of community benefits gained by relocating the school which is subject to the separate development application. This could be done by issuing a Deferred commencement approval on the basis that the development could take place once the school was commenced, say up to the first level slab being completed. This would remove the concerns that residential development could proceed and the school not be built (notwithstanding the best endeavours by the applicant) and therefore, the outcome which was one of the bases for allowing the increased density would not be achieved.
25 It is in the light of the documentary evidence upon which I have briefly touched that I have concluded that the grounds of invalidity asserted in the Applicant's Points of Claim present more than a merely arguable case.
26 Moreover, the grounds asserted by the Applicant certainly raise matters of public interest in respect of the Council's statutory duty as a consent authority under the Environmental Planning and Assessment Act, ss 79C and 80 to determine development applications. As was pointed out by Chief Justice Spigelman in giving the judgment of the Court of Appeal in Zhang v Canterbury City Council (2001) 115 LGERA 373 at 383:
The statutory power in s 80 of the Environmental Planning and Assessment Act to "determine a development application" by granting or refusing consent does not confer an unfettered discretion. It is subject to the obligation to "take into consideration" the matters identified in s 79C(1). This obligation is of a similar character to that which has been found to be imposed by a statutory obligation to "have regard to" identified matters.
In one such statutory context Mason J said:
When subs (7) directs the Permanent Head to `have regard to' the costs, it requires him to take those costs into account and to give weight to them as a fundamental element in making his determination." (Emphasis added.)
(R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329.)
In the case of a statute which empowered the court to make such order as to it seems just and equitable having regard to: (a) ... and (b) ... , Gleeson CJ and McLelland CJ in Equity said:
... par (a) and par (b) prescribe the focal points by reference to which the discretionary judgment as to what seems just and equitable must be made. They are not merely two matters, or groups of matters, which take their place amongst any other relevant considerations. (Emphasis added.)
(Evans v Marmont (1997) 42 NSWLR 70 at 79-80.)
A development control plan is not an environmental planning instrument : see definition in s 4. Accordingly, the requirement in s 80(2) that a consent authority must refuse an application that would "result in a contravention of" such an instrument does not apply to a development control plan. Furthermore, the proscription, by s 76B, of any development prohibited by an environmental planning instrument, does not extend to a prohibition in a development control plan. Nor can such a plan contain a non-discretionary development standard which, if complied with, would take away a consent authority's discretion under s 79C(2).
The consent authority has a wide ranging discretion -- one of the matters required to be taken into account is the public interest -- but the discretion is not at large and is not unfettered. DCP No 23 had to be considered as a fundamental element in or a focal point of the decision-making process. A provision so directly pertinent to the application for consent before the council as was cl 4.0 of DCP No 23 was entitled to significant weight in the decision-making process but was not, of course, determinative.
27 That Chief Justice's reasoning would appear to be directly relevant to the Council's decision to grant the development consent to the residential flat development on the Lakemba site having a density exceeding by more than 100 percent the maximum density prescribed by the relevant Development Control Plan.
28 Another aspect of that decision challenged by the Applicant's Points of Claim concerns the attribution of the social and economic benefits of the proposed residential development providing the necessary funding for the second Respondent to relocate the existing school facilities to the Belmore site.
29 This aspect of the Council's decision appears to raise matters of considerable public importance to the proper discharge of the duty imposed by the Environmental Planning and Assessment Act, ss 79C and 80. Moreover, the Applicant's case raises matters of obvious public interest in terms both of the application of the normative planning controls provided by environmental planning instruments and development control plans and of the opportunities for the principled departure from those controls by the exercise of relevant planning discretion in a given case.
30 It follows from the foregoing discussion of the pleadings and evidence (as it stands) that my evaluation of the strength and bona fides of the Applicant's challenge to the validity of the development consent for the residential development on the Lakemba site is that its case is quite a strong one. Moreover, aside from that evaluation, I am also of the clear opinion that the Applicant's case raises issues of considerable public interest to the administration of the EP&A Act and in particular to the statutory duty of the Council, as consent authority, to properly determine development applications.
31 The Applicant's case asserting invalidity of the development consent granted for the relocation of the existing school to a new development on the Belmore site focuses attention on the second Respondent's SEPP No 1 objection and more particularly upon the Council's consideration of it. In this respect, the Applicant's case as pleaded is one of jurisdictional error, taking into account irrelevant considerations, failing to take into account relevant considerations and manifest unreasonableness.
32 Although the existing case law has recognised the broad scope of the dispensing power conferred by SEPP No 1, it also recognises the necessity for the exercise of that power in a given case to be by reference to proper planning considerations: see Legal and General Life of Australia Ltd v North Sydney Municipal Council (1990) 69 LGRA 201. Although the facts of that case (where the exercise of the dispensing power was sustained both in this Court and in the Court of Appeal) involved a massive exceedance of the prescribed maximum floor space ratio and the prescribed maximum building height control, the principal judgment delivered by Priestley JA recognised the possibility of the success of a submission that a very large exceedance of the prescribed maximum development standards "necessarily involved an abuse of power" in the sense of "Wednesbury" unreasonableness when he said at 209/210:
The effect of SEPP No 1 is to cast a heavy responsibility on consent authorities and the director to avoid any possibility of misuse or abuse of its provisions. The legislation and the instruments under it give that responsibility to them. The Land and Environment Court can set aside a decision made under the statutory and statute-derived powers in a case of the present kind if it is shown that there has been an abuse of those powers in the sense explained by Lord Greene MR in the well-known final paragraph of his reasons in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 233-234 and adopted here: see, amongst many cases, Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39 per Mason J and following. The Land and Environment Court can not otherwise set aside such a decision.
It now seems to me that it was to abuse of the Wednesbury kind that L & G's fifth ground of appeal was directed. If I am right in thinking this, then the substance of the argument was to the effect that to grant a consent permitting such a very large increase over the development standards for floor space ratio and height, necessarily involved an abuse of power.
I would not exclude the possibility that such a submission could succeed in some circumstances. If, for example, in the present case, the Minteyville land stood in a zoning area which had a two storey height limitation with which every building within a mile's radius conformed, and the consent were granted and no plausible reason could be imagined for such consent, then the submission might succeed. No doubt other examples can be constructed.
However, the facts of the present case are almost the reverse of the example I have given. Development in the vicinity of the Minteyville land had been such that it is difficult to see that the two development standards relied on by L & G were, when Minteyville made its application, anything other than unreasonable or unnecessary. It is not merely that the L & G building, and the Comrealty building when completed, the immediate neighbours of the Minteyville land, will be taller than the proposed Minteyville building, but that many other buildings in the immediate vicinity combine with the first two mentioned to make maintenance of the two development standards, at least in the case of the Minteyville land, quite pointless. There was ample evidence of this before Cripps J, and the evidence before him showed that the Council was fully aware of the situation, as was to be expected. I do not see that the Council's consent decision could be said to be an abuse or excess of the Council's power on any available ground of attack.
33 Again my evaluation of the Applicant's case in respect of the Belmore development site is that it is a very arguable case of relative strength and raises issues of considerable public importance to the proper administration of the EP&A Act.
34 In view of the foregoing evaluations, it is not necessary for me to consider in any depth the independent ground of invalidity based upon an alleged denial of procedural fairness by dint of the failure to provide a copy of the development plans in the public notification process that was undertaken by the Council in respect of the second Respondent's two development applications. It is perhaps sufficient to say that this particular ground appears to me to be a somewhat technical procedural default in view of the "advisory note" appearing in Section 3.3 of the Council's Notification Policy which states:
For some larger development proposals, it may not be practical to send notification plans. In this instance, only notification letters will be sent.
35 Accordingly, on the disputed issue concerning the strength and bona fides of the Applicant's case, I would clearly prefer the Applicant's submissions to the competing submissions advanced on behalf of the Council.
36 This leads to my consideration of the other disputed consideration, namely the likely effect of the making of an order for security on the Applicant's future continuation of the proceedings. In this respect, I accept that the Applicant's financial position is such that it probably would not be able to satisfy any costs order that might be made against it in the event of the failure of its class 4 application. I also accept the likelihood of an order for security effectively terminating the proceedings.
37 However, in view of my evaluation of the public interest issues raised by the Applicant's case, it cannot be assumed at this stage of the proceedings that the general rule of costs in class 4 proceedings following the event would be applied in the event of the Applicant's class 4 application failing: see Oshlack v Richmond River Council (1998) 193 CLR 72.
38 Another consideration which further undermines any expectation that the Council would receive an order for costs in the event the Applicant's substantive case fails, derives from the fact (already noted) of the active participation of the second Respondent in these proceedings. The second Respondent has an obvious stake in the Applicant's challenge to the validity of the development consents. In these circumstances where the Respondents are essentially in the same interest and their defences are essentially the same, the probable incidence of any costs order that might ultimately be made against the one successful Applicant would be an order for the payment of only one set of costs between both actively participating respondents. If as occurred in 1998 in Hamill v Byron Shire Council (1998) 98 LGERA 400 (decided shortly after the High Court's judgment in Oshlack) I exercised the costs discretion by awarding one set of costs between two active respondents giving two thirds to the developer and only one third to the Council, the current position in this Court has significantly changed to one that accords far greater recognition to the following dictum in the joint judgment of Gaudron and Gummow JJ in Oshlack at 90:
One submission by the Council may be discounted immediately. The Council urged that the imposition upon it and other councils of the costs "of successfully defending litigation brought against them in the [Court] might impose a very substantial financial burden" and result in expenditure or loss of public moneys, inevitably to be passed on to ratepayers through an increase in rates or by a reduction in services provided to ratepayers. We have referred earlier in these reasons to the constitution of the action tried by Stein J. In a significant number of such litigious disputes, it will, in accordance with the reasoning in R v Australian Broadcasting Tribunal; Ex parte Hardiman [(1980) 144 CLR 13 at 35-36. See also Australian Conservation Foundation v Forestry Commission (1988) 76 LGRA 381 at 386; Kerr v Verran (1989) 28 IR 179 at 206; Vidler v Secretary, Department of Social Security (1995) 61 FCR 370 at 382-383.] , be entirely appropriate for, if not incumbent upon, the local government body not to assume the position of a protagonist and to avoid incurring substantial costs. The position of protagonist will be filled by the party against which injunctive relief is sought and which is the real contradictor in respect of the application for declaratory relief.
39 In considering these matters concerning the possible incidence and content of any costs order that might ultimately be made in these proceedings in the event that the Applicant's class 4 application fails, I am not telescoping that end result into my present consideration of the Council's Motion for security for costs. Rather, I am drawing attention to matters that seriously undermine any presupposition that in the event of failure of the Applicant's class 4 application the Council, as an active respondent, has a legitimate expectation to receive an order for its costs in the proceedings. It is that expectation that necessarily prompts and supports the present Motion seeking security for costs.
40 Finally, I would firmly reject the Council's submission that the Applicant's incorporation under the Associations Incorporation Act involves some kind of reincarnation of the penniless persons who hired themselves out as litigants in early nineteenth century England, as was referred to in the concluding remarks of Young CJ in Eq in Melville v Craig Nowlan and Associates (2002) 54 NSWLR 82 at 120.
41 Significantly, it is to be noted that the Melville case involved an impecunious natural person and nothing there said was directed to the position of an impecunious body corporate against which an order for security was sought and which, according to the leading judgment of Heydon JA, if made would fall for decision in accordance with Part 53 r 2(1)(e) of the Supreme Court Rules: see at 97.
42 In that respect, it is noteworthy that the NSW Corporations Law excludes from the definition of "corporation" a number of entities including "bodies incorporated under the Associations Incorporation Act 1984": see the commentary at pars 53.5.4 of Ritchie's Supreme Court Practice. This also reflects the fact that from its enactment, the Associations Incorporation Act 1984 s 6 has expressly provided (originally) that the NSW Companies Code and (currently) that the Corporations Law does not apply to an incorporated association except as otherwise expressly provided.
43 In these circumstances, the Council's submission that an incorporated association such as the Applicant instituting legal proceedings such as the present proceedings is somehow to be regarded reproachfully and as deserving of being put in its right place by being subjected to an order that it provide security, is in my opinion an anachronistic and untenable proposition which is to be firmly rejected. This is not to deny the operation of the Associations Incorporation Act, including its protection provided by s 16(1) of members from liability to contribute towards the debts and liabilities of the incorporated association.
44 For all of the foregoing reasons, I would exercise the discretion conferred by the Land and Environment Court Act, s 69(3) by declining to make any order for security in favour of the Council in these proceedings. In so concluding, I have found the present case to be significantly different from another case seeking security for costs which I decided last week: see Bungendore Residents Group Incorporated v Palerang Council [2005] NSWLEC 235.
C. ORDER
45 The Council's Notice of Motion seeking an order for security of costs is dismissed with costs. Exhibits may be returned.