Blanc Black Pty Limited v Willoughby City Council

Land and Environment Court (NSW)|2022-07-27|Before: Robson J

Solicitors: BCP Lawyers and Consultants (Applicant) Maddocks Lawyers (Respondent) File Number(s): 2021/00169065 Publication restriction: Nil

Judgment

Before the Court is a notice of motion filed 29 June 2022 by the applicant, Blanc Black Projects Pty Limited ('Blanc Black'), seeking an order that Willoughby City Council ('Council') pay its costs relating to an adjournment on the second day of a hearing being conducted by a Commissioner of this Court in Class 1 development appeal proceedings.
The hearing of the notice of motion proceeded on 27 July 2022 with each of the parties providing evidence as well as written and oral submissions.
For the reasons that follow, I find that there should be no order for costs either as sought in the motion or for the conduct of the hearing of the motion.

Background

The salient background facts are mostly uncontroversial and may be shortly summarised. Further facts, some of which are controversial, will be noted in my consideration of the parties' submissions.
As a result of Council's deemed refusal of Blanc Black's development application lodged with Council on 9 April 2021, for the demolition of two existing buildings and the construction of a residential flat building comprising 12 apartments over basement parking at 58-60 Eastern Valley Way, Northbridge ('site'), Blanc Black filed Class 1 appeal proceedings in this Court on 11 June 2021.
Because the site is zoned R3 Medium Density Residential under the Willoughby Local Environmental Plan 2012 ('WLEP') and is in Area 3 of the Special Provisions Area Map in the WLEP, Council (and this Court in any appeal) was empowered pursuant to cl 6.8 of the WLEP to impose an "affordable housing condition" of any development consent requiring the provision of either affordable housing or a monetary contribution towards the provision of affordable housing.
Clause 6.8 of the WLEP relevantly provides: "… (3) The following are the affordable housing conditions - (a) a condition requiring the dedication in favour of the consent authority, free of cost, of land comprised of one or more complete dwellings with a gross floor area of the amount equivalent to 4% of the accountable total floor space, with each dwelling having a gross floor area of 50 square metres, (b) a condition requiring the payment of a monetary contribution to the consent authority by the applicant that is the value, calculated in accordance with subclause (4), of 4% of the accountable total floor space, … (4) The amount of the contribution to be paid under a condition imposed under subclause (2)(c) is the value of the gross floor area concerned calculated by reference to the market value of dwellings of a similar size to those proposed by the development application. … (7) In this clause - accountable total floor space means the following - (a) for development on land identified as "Area 3" on the Special Provisions Area Map - the gross floor area of the residential component of the development, excluding the residential floor space of the development that is used for affordable housing, …"
Blanc Black's statement of environmental effects dated March 2021 ('SEE') submitted to Council with the development application contained the following comments (along with a detailed report by M3 Property): "The proposal does not include any component of affordable housing due to the dwelling typology that does not lend itself to dedication of constructed floor space. The proposal will include a payment for the 4% of the [gross floor area ('GFA')]. An Affordable Assessment, prepared by M3 Property, dated 4 December 2020 is submitted with the [development application] package. The Affordable Housing Contribution Calculation is … [followed by a table recording that the contribution payable to Willoughby City Council was $451,980.]"
The "Affordable Assessment" prepared by M3 Property addressed the requirements of cl 6.8 of the WLEP and contained an assessment of the amount payable to Council (considering the proposed development's market value based on the market rate per square metre of similar sized two and three bedroom apartments in Northbridge, within the Willoughby Local Government Area, pursuant to the median sales documented in the Rent and Sales Report NSW, or equivalent), multiplied by the value of 4% of the accountable total floor space.
As noted above, these Class 1 appeal proceedings were commenced on 11 June 2021, and on 26 July 2021, Council filed its Statement of Facts and Contentions ('SOFAC') in which Council noted "Clause 6.8 - Affordable Housing" under the subheading "The Statutory Controls that are relevant to the DA…", but otherwise the SOFAC made no reference to any requirement for a condition requiring contribution towards the provision of affordable housing.
On 2 September 2021, after the termination of a conciliation conference (conducted under s 34 of the Land and Environment Court Act 1979 (NSW)), the Court made orders which set the matter down for hearing on 1 and 2 December 2021; directed the parties to approach the Court to seek directions for expert evidence; directed Blanc Black to file and serve any notice of motion to amend the development application; directed Council to file and serve a set of draft without prejudice conditions of consent ('draft conditions'); directed Blanc Black to thereafter file and serve draft conditions in response; and required any party which failed to comply with the directions to relist the matter with an explanation for any failure to comply.
On 12 October 2021, Blanc Black was, following the filing of a notice of motion on 1 October 2021, granted leave to amend its Class 1 application to rely upon amended plans (which, among other things, reduced the number of apartments from 12 to 11), and further expert reports ('amended application').
On 28 October 2021, Council filed an Amended Statement of Facts and Contentions ('ASOFAC') responsive to the amended application which made the same reference to cl 6.8 of the WLEP as the SOFAC (noted at [10] above).
On 15 November 2021, the Court gave directions providing that joint expert reports in the disciplines of town planning, traffic, urban design, civil engineering (flooding), and landscaping were to be filed and served by 24 November 2021 (being one week before the commencement of the hearing).
On 25 November 2021, a joint expert town planning report was completed by Stephen Gouge on behalf of Blanc Black and Mark Bolduan on behalf of Council. The report addressed the relevant (town planning) contentions in the ASOFAC and Blanc Black's replies thereto did not raise any matter related to affordable housing or contributions thereto.
On 1 December 2021, the hearing commenced before Acting Commissioner Bradbury. During opening submissions, as Council had not provided its draft conditions, Blanc Black's senior counsel stated: "I take it that there's no surprise coming for [Blanc Black] in the draft without prejudice conditions of consent that the [C]ouncil is seeking a contribution for affordable housing and I'd like that confirmed."
Although the orders made on 2 September 2021 required Council to serve its draft conditions 14 days before the hearing (on, effectively, 16 November 2021), Council served its draft conditions shortly after 1.00pm on the first day of the hearing (on 1 December 2021). Relevant to the present application, those draft conditions included the following condition: "27. Affordable Housing Monetary Contribution The applicant shall make a monetary contribution for the purpose of providing Affordable Housing that is calculated at 4% of the accountable total floor area of the development to Council. In calculating the monetary contribution reference is to be made to the market value of dwellings of a similar size and taken from the most recent median sales price of such dwellings for the Willoughby local government area as documented in the Rent and Sales Report NSW published by Housing NSW or, if another document has been approved for that purpose by the Director - General, that document. Prior to payment of the contribution evidence shall be submitted to Council's Director of Planning & Infrastructure demonstrating how the contribution has been calculated in accordance with the above requirement. The contribution is to be paid prior to release of the construction certificate. (Reason: Ensure compliance)" ('Condition 27')
On 2 December 2021 (the second day of the hearing), Blanc Black provided its draft conditions in response in which it struck through Condition 27. With the hearing of the evidence completed on the second day of the hearing, Blanc Black's senior counsel submitted that there was "no evidence" to support the imposition of Condition 27 and, therefore, the Court did not have "jurisdiction" to impose the condition. Although there is dispute as to what occurred, as a result of that position, Council's counsel indicated that an adjournment to allow Mr Bolduan to give evidence to support draft Condition 27 may be necessary and the Acting Commissioner allowed that adjournment which resulted in the proceedings becoming part-heard.
There is a factual dispute between the parties as to whether the adjournment was requested by Council or whether the Court offered Council the opportunity to adduce evidence in response to Blanc Black's submissions. Nonetheless, directions were made for the preparation of further evidence; conferral between the expert town planners limited to draft Condition 27; and whether it was lawful and reasonable to impose a condition requiring the proposed affordable housing contribution.
Further evidence was prepared by each of Messrs Bolduan and Gouge addressing Condition 27, affordable housing in Willoughby, and the further hearing proceeded and was completed on 22 February 2022. The further hearing included cross-examination of both experts and detailed oral submissions by the parties.
On 17 March 2022, the Acting Commissioner delivered his judgment upholding the appeal and granting approval to the proposed development subject to conditions. However, the Court did not impose Condition 27 as a condition of consent: Blanc Black Pty Limited v Willoughby City Council [2022] NSWLEC 1135.
The costs now sought by Blanc Black (in the sum of approximately $75,000) relate to the costs it incurred in the preparation for, and conduct of, the further day of hearing in relation to Condition 27.

Evidence

The parties marshalled extensive documentary evidence. Blanc Black read the affidavit of Mark Driscoll affirmed 29 June 2022 and Council read the affidavit of Georgia Judith Louise Appleby affirmed 15 July 2022. Each deponent annexed extensive documentation including expert reports and background documentation.
Mr Driscoll, Blanc Black's solicitor, apart from deposing to uncontentious factual matters summarised above, deposes: 1. That the amended application granted 12 October 2021 related to a reduction in the number of apartments from 12 to 11 so that the floor space ratio ('FSR') of the proposed development complied with the FSR mapped for the site by the WLEP; 2. That no contention was raised by Council that Blanc Black should pay an amount towards the provision of affordable housing in the Willoughby Local Government Area in Council's ASOFAC; 3. That, on both 19 November 2021 (12 days prior to hearing) and 29 November 2021 (two days prior to hearing), he requested a copy of Council's draft conditions to which Council responded that the finalisation of the draft conditions was delayed as a result of the experts' delay finalising their reports; that he then advised Council that the delay had been caused by Council's traffic expert's unavailability; and that he made a further request for the draft conditions on 30 November 2021; 4. That a copy of Council's draft conditions (which included Condition 27) was not provided until 1.12pm on the first day of the hearing (1 December 2021), following a further request he had made via email at 11.53am that day; 5. That in final submissions on the second (and, at that time, final) day of the hearing, Blanc Black's senior counsel stated that Blanc Black did not agree to any affordable housing contribution sought by Council in the draft conditions; that Council's counsel sought an adjournment and leave to call further evidence from Mr Bolduan to support Condition 27; and it was this adjournment which caused Blanc Black to incur substantial additional costs amounting to $76,110.53 that "would not have been incurred if the draft conditions had been served on time"; and 6. That "the hearing would not have become part-heard" if the draft conditions had been served on time.
Ms Appleby, Council's solicitor, deposes that Blanc Black's amended application (for which leave was granted on 12 October 2021) did not "amend" the SEE (which had indicated that the proposed development "will include a payment for 4% of the GFA") nor did the amended application provide supporting evidence or make any reference to affordable housing and the applicant's contribution. Moreover, Ms Appleby deposes that the amended application did not reduce the GFA of the proposed development such that it would comply with the FSR control within the WLEP; refers to extensive correspondence between the parties' solicitors regarding directions for the preparation of expert evidence which resulted in short minutes of order made by the Court on 15 November 2021 for each of the joint expert reports to be filed and served by 24 November 2021; deposes that all the joint expert reports were filed late (over 25, 26 and 30 November 2021) contrary to the Court's orders of 15 November 2021; and deposes that proposed Condition 27 reflected the terms of the contribution proposed within Blanc Black's SEE.
Ms Appleby also deposes that Council's delay in the filing and service of the draft conditions was due to: 1. Blanc Black's motion for amendment of the development application being heard seven weeks prior to the primary hearing which thereafter compressed the time available to revise the SOFAC, to brief experts, and for the parties' experts to confer and prepare joint reports; 2. Blanc Black's six-day delay (11 to 17 November 2021) in identifying the names of its experts caused a consequential reduction in time for joint conferencing from two weeks to one week; and 3. Council (due to the abovementioned circumstances) being unable to finalise its proposed draft conditions until all joint experts' reports had been finalised on 30 November 2021 (in circumstances where Council informed Blanc Black that the draft conditions could not be issued until after receipt of the final joint (traffic) report because the draft conditions needed to respond to that report).
Ms Appleby also directed the Court's attention to the transcript of the hearing before the Acting Commissioner and the comments of Blanc Black's senior counsel in opening remarks, to the effect that "if there is going to be some condition proposing an affordable housing contribution, we're going to have a substantial dispute which is not anywhere mentioned in the contentions…". That it was only at 9.58am on the second day of the hearing that the applicant's solicitors provided Blanc Black's draft conditions in response which had struck out proposed Condition 27 (this being the first time such a condition was objected to); and that at about 3.00pm on the second day of the hearing, a submission objecting to the imposition of such a condition was made for the first time by Blanc Black's senior counsel.
Ms Appleby deposes that at the time of filing the SOFAC (and then the ASOFAC) "the payment of an affordable housing contribution by the Applicant was not an issue in dispute in the proceedings because the SEE… included an express offer by the applicant to pay a monetary contribution for the provision of affordable housing, which had been calculated [by Blanc Black] in accordance with cl 6.8 of the WLEP. That offer was never withdrawn by the applicant (or at least it was not withdrawn at any time prior to 2 December 2021)". Ms Appleby deposes that if the applicant had notified Council of this change of position at any time before the hearing commenced, the need for an adjournment would likely have been avoided.

Blanc Black's position

Blanc Black relies upon the fact that the hearing was always set down (by agreement) for two days. To the extent that Council intended to seek a condition of consent that approximately $500,000 be paid pursuant to cl 6.8(2) of the WLEP, Blanc Black submits that the Court would, in any event, first need to be satisfied of the matters in cl 6.8(2) of the WLEP (particularly subcl (c), "whether one of the affordable housing conditions should be imposed… for the purpose of providing affordable housing in accordance with the Willoughby Affordable Housing Principles") and s 7.32(3)(c) of the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act') (which provides that a condition requiring contributions for affordable housing may only be imposed if it requires a reasonable dedication or contribution having regard to the extent of the need in the area for affordable housing, the scale of the proposed development, and any other dedication or contribution required).
Blanc Black submits that on 2 September 2021, the Court made, by consent, the usual directions for hearing pursuant to Sch 3 of the Land and Environment Court Practice Note - Class 1 Development Appeals ('Practice Note'), requiring Council to serve draft conditions 14 days before hearing; and that the service of these draft conditions was an essential prerequisite to Blanc Black's preparation of evidence for the hearing.
Blanc Black maintains that it was Council who made the application for an adjournment at the conclusion of the second day of the hearing and that it was Council's request that led to the proceedings becoming part-heard (and further significant costs being incurred).
Blanc Black draws the Court's attention to pars (18) and (20) of Sch E of the Practice Note which provide: "18. The respondent consent authority is to file and serve draft conditions of consent (in both hard copy and electronic form) 14 days before the hearing. … 20. If any party fails to comply with a direction of the Court that some action be taken by a specified time, and the defaulting party is not able to take that action within two days of the specified time, the defaulting party is to: (a) relist the matter before the Court within three days of the specified time; and (b) provide to the Court on the relisting an affidavit explaining the non-compliance, the reason for the non-compliance and what action the party proposes to take and when the party proposes to take action to comply with the direction. Note: The Court will usually order that the defaulting party pay the costs of the other party of and occasioned by the non-compliance and the relisting unless it appears to the Court that some other order should be made as to the whole or any part of the costs." and submits that Council's failure to comply with the Court's orders made (by consent) on 2 September 2021 caused significant delay (noting that the draft conditions were not provided until the middle of the first day of the hearing); and submits that if the draft conditions (in particular, Condition 27) had been served on time, the experts would have addressed the matters in their joint report, there would have been no need for an adjournment, and the evidence "would have likely concluded on day two".
In response to Council's submission (noted below) that the orders now sought by Blanc Black are time-barred (relying upon r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'), par (106) of the Practice Note, and r 7.6 of the Land and Environment Court Rules 2007 (NSW) ('LEC Rules')), Blanc Black submits that s 98(3) of the Civil Procedure Act 2005 (NSW) ('CP Act') provides that an application for costs can be made at any stage during or after proceedings; that the present application had to be made after the conclusion of the proceedings because commissioners simply do not have power to award costs; that, consistent with Grace v Grace (No 9) [2014] NSWSC 1239 referred to in Yarraford Pastoral Co Pty Ltd v Lewington [2017] NSWSC 316 ('Yarraford Pastoral'), r 36.16 does not apply because Council is not seeking to vary any (final) order made by the Acting Commissioner on 17 March 2022, because the Acting Commissioner did not have jurisdiction to decide the question of costs; and that par (106) of the Practice Note (made under s 15 of the CP Act) does not deprive the Court of jurisdiction to make a costs order: Graphite Energy Pty Ltd v Lloyd Energy Systems Pty Ltd [2014] NSWSC 1326 ('Graphite Energy'). In any event, Blanc Black submits that Council has not demonstrated any prejudice suffered by reason of Blanc Black's delay in bringing the application.
In summary, Blanc Black submits that it is fair and reasonable that the Court order Council to pay its costs associated with (being "thrown away" as a result of) the further hearing because of Council's failures being: first, to make clear in the ASOFAC that it intended to seek Condition 27; second, to address in any evidence before the hearing or within its filed Bundle of Documents, the facts and matters required by cl 6.8 of the WLEP and s 7.32 of the EPA Act (in relation to Condition 27); third, to ensure that Mr Bolduan addressed facts and matters required by cl 6.8 and s 7.32; and fourth; to serve the draft conditions (including Condition 27) before 1.15pm on the first day of the hearing.
Finally, Blanc Black submits that reference to the affordable housing contribution (or the alleged "offer" to make such a contribution, as characterised by Council) in the SEE does not relieve Council of the obligation to serve the draft conditions, nor relieve Council of its obligation to provide evidence of matters referred to in s 7.32 and cl 6.8(2) as a jurisdictional step and maintains that it was Council's counsel who requested the "opportunity to put on any further evidence…" on the second day of the hearing in circumstances where Council had that "opportunity" at all times up until the hearing.

Council's position

Council takes three primary positions. First, Council submits that the costs application is out of time pursuant to s 36.16 of the UCPR and therefore must be dismissed; second, and alternatively, Blanc Black's application is out of time pursuant to par (106) of the Practice Note and should be dismissed; and third, there is otherwise no basis for the Court to find that it is just and reasonable to make any adverse costs order pursuant to s 3.7 of the LEC Rules.
In relation to r 36.16 of the UCPR, Council submits that r 1.5 and Sch 1 of the UCPR provide that the UCPR applies to proceedings in Class 1 of the Court's jurisdiction; there is no period prescribed within r 3.7 of the LEC Rules which otherwise governs in what circumstances the Court may make an order as to costs; r 36.11 of the UCPR provides that a judgment or order is required to be entered and that unless the Court orders otherwise, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system; and, rr 36.16(1) and 36.16(3A) of the UCPR provide that a party may apply to set aside or vary a judgment or order only if a notice of motion seeking such an order is filed, within 14 days after the judgment or order is entered (noting that r 36.16(3C) provides that the Court may not extend this time limit).
Council submits that as the judgment (in the Class 1 appeal) was delivered by the Acting Commissioner on 17 March 2022 and final orders entered in the Court's computerised court record system the same day, the Court's orders are "final" because commissioners of the Court do not have power to make costs orders (LEC Rules, rr 3.10(1)(a)(iv) and 3.10(b)(v)) and, as such, Blanc Black's motion (filed 29 June 2022) seeking an order for costs is effectively an application to vary final orders is incompetent and must be dismissed because it is out of time under r 36.16 of the UCPR.
Council points to Golden v V'landys (No 2) [2016] NSWCA 350 at [23]-[27] and Rodi v Gelonesi [2016] NSWCA 348, which both accepted that r 36.16 of the UCPR applies to applications to vary costs orders. Council submits that the Court should follow McColl JA's reasoning in Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227 ('Zepinic') at [85], that an application to add an order not made in the Court's original orders in an application to vary a judgment (despite Davies J not following that reasoning in Yarraford Pastoral), because Zepinic demonstrates that r 36.16 sets a limited time after the conclusion of proceedings during which an application for a costs order pursuant to s 98(3) of the CP Act can be made, and is consistent with the purpose of finality underlying r 36.16; and because Preston CJ of LEC adopted an approach not inconsistent with Zepinic in J.K. Williams Staff Pty Limited v Sydney Water Corporation (No 3) [2022] NSWLEC 17 ('J.K. Williams').
Council submits that the 14-day period prescribed within r 36.16 of the UCPR prevails to the extent that it is inconsistent with the 28-day period prescribed by par (106) of the Practice Note; however, even if the Court finds that r 36.16 did not apply, Council submits that par (106), albeit not a statutory rule, provides guidance (Graphite Energy at [14]; Regional Architects Pty Ltd v Coffs Harbour City Council [2021] NSWLEC 29 at [83]; Statewide Planning Pty Ltd v Penrith City Council (No 3) [2018] NSWLEC 109 at [5]-[9]), which should be complied with as a matter of good practice, such that also pursuant to par (106) the application is out of time.
Council further submits that an extension of time is not appropriate in the circumstances where, applying the principles considered in Tomko v Palastry (No. 2) [2007] NSWCA 369 ('Tomko') at [55], Blanc Black's length of delay is significant (being three months after the 28-day period elapsed); no proper explanation for the delay has been given; the application for costs is not fairly arguable considering Blanc Black's conduct throughout the matter; and where the onus is on Blanc Black to demonstrate that Council would not be prejudiced by the circumstances of the delay in bringing the costs application.
Apart from the above, even if the Court found this costs application was competent and that the delay does not disentitle Blanc Black from making the application, Council submits that the Court would refuse to make an order pursuant to r 3.7 of the LEC Rules because it is not "fair and reasonable in the circumstances". Taking into account the list of circumstances in r 3.7(3), Council raises three matters which it submits militate against the Court making a costs order against Council.
First, the only reason that further evidence (and hearing) was required was because of Blanc Black's "late change of position" regarding a condition relating to affordable housing, and not because of late service of Council's draft conditions. This is made clear by, first, the SEE stating that Blanc Black proposed to pay a monetary contribution for the provision of affordable housing; second, Council's identification of cl 6.8 of the WLEP as a statutory control applicable to the development application in its SOFAC in July 2021 (and again in October 2021 in its ASOFAC, and Blanc Black's response noting that "Clause 6.8 - Affordable Housing" was a relevant "Statutory Control" on both occasions); third, Council's assessment report (of September 2021) which recorded that if development consent was to be granted it would be recommended to be subject to an affordable housing condition; fourth, Council served, albeit on 1 December 2021, the draft conditions proposing Condition 27; fifth, on the following day, Blanc Black notified Council that it no longer agreed to the imposition of an affordable housing condition; and sixth, as a result of Blanc Black's change in position, the Acting Commissioner chose to give both parties the opportunity to adduce further evidence.
Secondly, accepting that Council did not file the draft conditions in accordance with the Court's earlier directed timetable, it did not act unreasonably in failing to do so because, first, the delay was primarily caused by the late service of the joint expert reports - in part because Blanc Black did not brief some of its experts until mid-November (as Ms Appleby deposes to), and because the experts themselves were late in finalising their reports (relevantly, the town planners and, particularly, the traffic engineers); second, Council promptly finalised, and served, Council's draft conditions on Blanc Black when Council had received the final joint reports; and third, Blanc Black could not have been taken by surprise by the inclusion of proposed Condition 27 because Blanc Black had itself proposed that such a condition be imposed as a condition of consent.
Thirdly, contrary to Blanc Black's submission, the adjournment on 2 December 2021 did not cause Blanc Black to incur any costs that it would not have otherwise incurred. This is because, first, Blanc Black's development application stated its intention to pay an affordable housing condition; second, Blanc Black did not raise any objection to the imposition of an affordable housing condition in its reply SOFAC; third, even if Blanc Black had objected to the imposition of an affordable housing condition at any time prior to the hearing, that would have resulted in Council (and likely Blanc Black) seeking directions to adduce evidence in respect of that matter, and the experts who had already been retained could have addressed that matter in their joint reports; and fourth, given the complexity of the issues raised by Blanc Black's objection to the imposition of Condition 27, the Class 1 appeal could not have been heard and completed in the two days allocated and would have required three days of hearing where the parties' town planners had (for the further hearing on 22 February 2022) prepared three further "voluminous" expert reports in relation to the issue, the parties' counsel had prepared lengthy written submissions, and the town planners were extensively cross-examined during the additional day of hearing.
In light of the above, if Blanc Black had indicated its objection to the imposition of a condition pursuant to cl 6.8 of the WLEP, the parties would have incurred exactly the same costs and expenses as they incurred when Blanc Black belatedly raised the issue during the hearing and, as such, Blanc Black has not incurred any additional costs and expenses by reason of the fact that the hearing was adjourned to allow the parties to adduce evidence and prepare submissions in relation to Condition 27.
Overall, Council submits that if further additional costs have been incurred by Blanc Black, it was a result of Blanc Black's own conduct, in particular the fact that Blanc Black resiled from the express terms of the SEE, and therefore if there was unreasonable conduct it was on the part of Blanc Black.

Whether the application for costs is out of time

Before considering whether it is fair and reasonable to make a costs order, it is necessary to determine whether Blanc Black's application is out of time as Council contends.
The parties accept that r 36.11 of the UCPR provides that a judgment of the Court is taken to be entered when it is recorded in the Court's computerised court record system, which occurred on 17 March 2022; that any application under r 36.16(3A) by way of notice of motion must be made 14 days after the entry of judgment; and that, in any event, par (106) of the Practice Note requires that costs applications be brought within 28 days.
I do not consider that Blanc Black's application is time-barred pursuant to cl 36.16 of the UCPR (and r 7.6 of the LEC Rules). I accept Blanc Black's submission (noted at [33] above) that s 36.16 does not apply because the motion presently before the Court is not seeking the "setting aside or variation" of a judgment in circumstances where it is clear that the Acting Commissioner did not have the power to make orders as to costs.
In Zepinic, McColl JA at [82] considered that, consistent with the principle of finality, r 36.16 requires a costs order to be sought at the time of judgment or within the period prescribed by r 36.16; and, at [85], that an application for an order not made until after a Court's original orders is an application to vary a judgment or orders of the Court, even if it would add an order rather than amend an existing order. However, noting (but not altogether determinative in my consideration) that her Honour was not sitting as a member of the Court of Appeal in the framework of the appellate structure for an appeal from lower courts, I prefer the differing comments of Davies J in Yarraford Pastoral at [36]-[44], that the finality principle is not offended where s 98 of the CP Act permits applications after proceedings are concluded, and where the question of costs simply has not been dealt with, explicitly or implicitly, by the Court (in the matter before me because the Acting Commissioner had no jurisdiction to deal with costs). I do not consider Preston J's reasoning in J.K. Williams to be applicable where in that case his Honour was (similar to Zepinic) dealing with an application to vary orders where the original court which had jurisdiction to make an order as to costs and had exercised that jurisdiction within its original orders. I therefore consider it appropriate not to follow Zepinic, and find that, in the present circumstances, I am able to entertain Black Blanc's costs application.
In relation to par (106) of the Practice Note, s 15 of the CP Act provides that the Chief Judge may issue practice notes in relation to civil proceedings in respect to which the CP Act applies. As noted above, par (106) provides that where a commissioner has made and determined a development appeal, any party seeking an order for costs of proceedings must apply for costs by notice of motion filed 28 days from the making of final orders in the proceedings.
As appears to be accepted by the parties, the Practice Note guides but does not govern, and must yield to the requirements of an individual case, although it has been said that it would be a rare case that a court would depart from such guidance: Graphite Energy at [14].
While I accept that the Practice Note is not a statutory time bar, it provides a requirement which, for obvious reasons, should be complied with. I also accept that in considering applications seeking extensions of time, four matters provide some guidance being: the length of the delay; the reasons for the length of the delay; if relevant, whether an applicant has a fairly arguable case; and the extent of any prejudice suffered by a respondent to such an application: Tomko at [55] Basten JA, where his Honour adopted commentary from the High Court in Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 at [4].
In the circumstances, having found that the present application is not out of time in accordance with r 36.16 of the UCPR for the reasons noted above, I consider that the non-compliance with par (106) of the Practice Note is not, on its own, a matter that would be determinative in the present application, given my findings to follow, particularly in circumstances where, although I consider the delay of approximately 76 days not insignificant, Council has not raised material prejudice. Despite this, I am of the view that the Practice Note should not be dismissed merely as a 'guide' in circumstances where practice notes provide for the effective management of this Court's procedures. Suffice it to say, if Council had pointed to any significant prejudice, I would have been inclined to disallow the application because of the non-compliance with the Practice Note, as I consider this is an essential matter in relation to the principle of finality of litigation. For these reasons I do not consider that the application is out of time as submitted by Council.

Whether it is fair and reasonable to make an order for costs

Having found that the present application (made 3 months and 12 days after the Acting Commissioner's judgment) is not out of time, the Court's power to order costs is derived from s 98(1) of the CP Act and subject to the LEC Rules.
Proceedings such as these conducted in Class 1 of the Court's jurisdiction are subject to the presumptive rule set out in s 3.7 of the LEC Rules, wherein an order for costs should not be made unless the Court considers in "fair reasonable in the circumstances".
Rule 3.7 of the LEC Rules provides as follows: 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act) - (a) all proceedings in Class 1 of the Court's jurisdiction, ... (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following - (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question - (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents - (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where - (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.
While the principles applicable to the Court's exercise of the power under r 3.7 of the LEC Rules are well-known and not repeated (Liverpool City Council v Moorebank Recyclers Pty Limited; Benedict Industries Pty Ltd v Minister for Planning (No 4) [2017] NSWLEC 116 at [10]-[14]; Dunford v Gosford City Council (No 3) [2015] NSWLEC 96 at [23]-[37]; and earlier, Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15]), I note the words of Spigelman CJ in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 at [48]: "The starting point must be the presumptive rule that there will be no order as to costs. It is in that context that the power to make an order for costs is conferred in the broadest of terms i.e. what is "fair and reasonable … in the particular circumstances". There is no restriction, other than rationality, on the scope of the considerations relevant to the formulation of that judgment. However, those considerations must be, in the opinion of the first instance judge, of sufficient weight to overcome the presumptive rule."
Although r 3.7(3) of the LEC Rules provides a list of circumstances in which an order for costs may be fair and reasonable, and those indicia "demonstrate considerations that could be broadly described as relating to matters out of the usual course of a merit proceeding" (Brett Hodgson v The Hills Shire Council (No 2) [2021] NSWLEC 133 at [7]), and may provide some assistance when evaluating whether an order for costs is fair and reasonable, the power exercised by the Court is not confined to those matters and is instead in the broadest of terms. I adopt the following comments of Biscoe J in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 at [9]: "… All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight. …"
Applying the principles summarised above, and noting that Blanc Black bears the onus of demonstrating why a costs order should be made, I have formed the view, not without some reluctance, that it would not be fair and reasonable to grant the relief sought in the present application for the following reasons.
I note, as Preston J found in HP Subsidiary Pty Ltd v City of Parramatta Council [2020] NSWLEC 135 at [16], that the Court in Class 1 proceedings must itself be satisfied that each of any jurisdictional preconditions to the Court exercising the power and functions of the consent authority have been met.
I therefore accept, as submitted by Blanc Black, that in a jurisdictional sense, in an appeal such as was before the Acting Commissioner, the Court must be satisfied that it is appropriate to impose an affordable housing condition and that at the completion of the primary hearing (at least by the second day), Council had not marshalled evidence to justify the imposition of such a condition. While the fact that the Court did not ultimately impose a condition is not relevant to the present application, I consider the essential question is whether the conduct of Council, in all the circumstances of the case, warrants the making of an order as sought by Blanc Black in the sense that such an order is fair and reasonable.
While I accept that, at the time of the initial hearing before the Acting Commissioner, Council did not attend to that which it should have attended to (the marshalling of appropriate evidence to justify the imposition of Condition 27), Council's conduct is, to a limited extent, explained (but not excused) in the circumstances by reference to the material comprising the development application and amended application.
Council's conduct in failing to provide the draft without prejudice conditions in accordance with the (usual) directions made on 2 September 2021 is a further matter that weighs in favour of the relief now sought by Blanc Black and, in my view, would have been determinative but for the fact that the time that would usually be available for the preparation of draft conditions was shortened, albeit not to a large extent, by Blanc Black's decision to seek amendments to the application which apparently responded to matters either raised at a conciliation conference (on 26 August 2021) and/or, more simply, was an attempt to address matters of concern raised in the SOFAC.
Council's solicitor has given evidence that the reason for the delay in the provision of the draft conditions related to first, Blanc Black's amendment motion in October 2021 (albeit some seven weeks before the hearing) which required a revision of each of the SOFACs and required the briefing of experts (and for such experts to confer and prepare joint reports); second, a "six day delay" by Blanc Black in identifying the names of its experts which resulted in the period for joint conferencing being reduced from approximately two weeks to one week; and third, a view (which is contested and which I do not fully accept) that Council was unable to finalise the draft conditions until "all" joint expert reports had been finalised (on 30 November 2021).
Although Council has not properly explained why it did not strictly comply with the (14-day) requirement to provide draft conditions, I consider that the above circumstances provide some explanation for the delay. Further, as I consider at [72]-[73] below, I am not satisfied that, even if the draft conditions (including Condition 27) had been provided, the further costs that were ultimately incurred would not have, in any event, been incurred.
The other (not unrelated) matter of concern in relation to Council's conduct was the failure to articulate with appropriate specificity (or, on one view, at all), the ongoing requirement for an affordable housing condition in circumstances where ordinarily, I would not accept that the mere reference to "Clause 6.8 - Affordable Housing" in the relevant section, "The Statutory Controls that are relevant to the DA…" within the SOFAC (and the ASOFAC) was, on its own, sufficient. Simply stated, if that was the only reference to the prospect of an affordable housing condition (and the nature and extent thereof) being imposed, I would have found against Council's position.
However, as noted above, the SEE included a specific announcement that, having considered and articulated the requirements of cl 6.8 of the WLEP, because the site is located within Area 3 on the Special Provisions Area Map but did not include any component of affordable housing due to the dwelling typology "that does not lend itself to dedication of constructed floor space", the proposal "would include a payment for the 4% of the GFA"; and thereafter provided a tabular calculation, as well as attaching a detailed report from an expert, providing an "assessment" of the affordable housing contribution in a monetary form (obviously determined in accordance with cl 6.8(3)(b) of the WLEP) accompanied by "supporting market evidence which calculated based upon the 4% of permissible GFA" a contribution in the sum of $451,980. From the evidence, it is clear that there was no further reference by Blanc Black in any of its material provided to Council (or to the Court) prior to the first day of the hearing that there may be any concern in relation to the imposition of such a condition.
Although Blanc Black in the SEE acknowledged, at least, the likelihood of its acceptance of an affordable housing contribution condition (and provided detailed material of an expert nature supporting a contribution of approximately $500,000), I do not consider that that conduct relieves Council of the obligation to marshal evidence to satisfy the Court that it is appropriate in the circumstances to impose the condition. However, I accept that Council's oversight (its assumption that the imposition of a condition was not in issue) had its genesis in the conduct of (and material provided within the SEE by) Blanc Black, such that Council's failure to address the jurisdictional precondition does not on its own amount to conduct that in all the circumstances of the present matter make it fair and reasonable to make the order now sought by Blanc Black.
I accept that some element of "surprise" was equally experienced by both of the parties - the Council assuming wrongly that Blanc Black would accept (having proffered) an affordable housing condition, and Blanc Black not expecting such a condition where Council had not otherwise indicated that such a condition would be sought and where Council had not adduced the material required to justify such a condition.
Even if Council was aware that there would be a lively dispute in relation to the imposition of Condition 27, a matter I accept it would have been aware of if it had provided draft conditions in accordance with the direction - being 14 days before the hearing (that is, on or before 16 November), I am not satisfied, given the nature and extent of evidence that was subsequently marshalled by each of the parties for the further hearing, that the two days that had been allocated (on 2 September 2021) would have been sufficient for the conduct and completion of the hearing. That is, the further costs (or part thereof) would have likely been incurred.
It could be said that Council's failure to marshal evidence at the primary hearing, albeit to some extent explainable by Blanc Black's position, clearly meant that further time (and costs) was incurred. Nonetheless, with the knowledge of what happened on the third day of the hearing and to the extent that Blanc Black did not (on one view understandably) marshal evidence earlier that it would not be reasonable and appropriate for the Court to impose Condition 27, I am not satisfied that the matter would have finished within the allocated two days. Although there is weight in Blanc Black's submission that Council made a forensic decision (not to call evidence to support the condition) that was wrong and should bear the consequence, I consider that insufficient to grant relief to Blanc Black.
I make two further observations. First, I do not accept Council's argument that the conduct of Blanc Black (in relation to the content of the SEE) amounted to an "offer" which in a quasi-contractual sense could not be withdrawn or "resiled from" in circumstances where Council should have been aware that it was required to provide some evidence (at least in relation to the impact the development would have on the existing mix and likely future mix of residential housing stock within Willoughby Local Government Area). Council also should have been aware that, under s 7.32 of the EPA Act, Condition 27 could only be imposed to the extent that the Court was satisfied that the relevant preconditions had been met - matters about which the Acting Commissioner was ultimately not satisfied.
Second, in relation to the issue between the parties as to whether Council requested the adjournment (or whether it was at the instigation of the Acting Commissioner), it is clear from perusal of the transcript that it was Council's application for the adjournment to marshal further material - an application which the Acting Commissioner properly, in all the circumstances, accepted.
Although not determinative, I consider the conduct of both parties is, as I noted during the hearing of the motion, "substandard". It is incumbent upon all parties, and, their legal representatives, to articulate with precision all matters (especially jurisdictional matters) about which the Court will need to be satisfied in a timely manner - even in circumstances where a matter may not be, technically, "in contention". I am of the view that the difficulty, if it can be described as such, in the present matter has been contributed to by both parties. Further, while I accept that on occasions some delay in the provision of draft conditions may be explainable (and reasonable) on the basis that the precise nature of the expert evidence is not finalised, and that there may be inutility in filing lengthy draft conditions which may require significant reconsideration, any conduct thwarting orders of the Court should not be encouraged.
In summary, while I accept Blanc Black's dual propositions that it was in the situation it was because of Council's conduct in, first, failing to articulate the affordable housing condition in the SOFAC (or ASOFAC); second, failing to provide draft conditions that contained a relevant condition in a timely manner as required; and third, failing (although a collateral failure) not to have evidence which was otherwise required, I do not consider that conduct determinative in all the circumstances of this matter.

Conclusion

In summary, I do not consider it fair and reasonable to make the orders sought in the application, having taken into account: the lateness of the application (which I do not consider determinative); Council's apparent reliance upon the earlier position of Blanc Black (as clearly stated in the material accompanying the development application); the parties' agreement to a two day hearing when the amended application was anticipated (and eventuated); the parties' agreement that the expert evidence would be in the form of joint reports which would be provided in a relatively short timeframe before the hearing; the lateness of the provision of the joint expert reports; Council's lateness in the preparation and provision of the draft conditions; Council's failure to marshal evidence that would otherwise be required, in circumstances where Council considered the imposition of a condition requiring contribution not to be an 'issue'; and the circumstances relating to the conduct of the hearing (and the further hearing) before the Acting Commissioner.

Costs of the application

Although Council has enjoyed success in this motion, the motion also falls within Class 1 of the Court's jurisdiction and, therefore, r 3.7(2) of the LEC Rules applies: Zhang v Davidson (No 2) [2020] NSWLEC 89 at [70]; Simo Popovac v Dominic Kennedy [2022] NSWLEC 9 at [81].
For the reasons above, and having regard to all the circumstances, and the fact that each party must accept some responsibility for the conduct of the hearing before the Acting Commissioner (including the circumstances that contributed to the adjournment), I consider that there is no evidence before me that would justify a departure from the presumptive rule in r 3.7(2) of the LEC Rules and, as such, each party should bear its own costs of the motion.

Orders

The Court orders: 1. The notice of motion filed 29 June 2022 is dismissed. 2. Each party is to bear its own costs of the hearing of the notice of motion filed 29 June 2022.

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. Decision last updated: 18 August 2022

(2008) 158 LGERA 224

(2007) 156 LGERA 125

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