Bluebank Properties Pty Ltd v Willoughby City Council

Bluebank Properties v Willoughby City Council [2008] NSWLEC 1182 CASES CITED: Denise Leha v MIMA [2000] AATA 105 Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333

APPLICANT Mr J Doyle (Solicitor) SOLICITORS LEGAL REPRESENTATIVES: Doyles Construction Lawyers RESPONDENT Ms H Irish SOLICITORS Mallesons Stephen Jaques

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

10707 of 2007 Bluebank Properties Pty Limited v Willoughby City Council

JUDGMENT 1 Her Honour: Commissioner Hoffman dismissed the s 96 modification application filed by the Applicant in Bluebank Properties v Willoughby City Council [2008] NSWLEC 1182. The Applicant has filed a Notice of Motion seeking an order that its costs be paid by the Council on an indemnity basis or alternatively a party/party basis.

2 The matter was heard on 20 December 2007 and 12 March 2008 and determined on 26 May 2008. The Commissioner determined that he could not lawfully approve the s 96 modification application as the original building approved would not remain substantially the same, as required under s 96(2)(a) of the Environmental Planning and Assessment Act 1979 (the EP&A Act ) at [72].

3 There was also an interlocutory motion filed by the Applicant seeking access to a document over which the Council claimed legal professional privilege which was part-heard for a day by Biscoe J. It was stood over pending the determination of the Commissioner and then not pressed by the Applicant.

4 The Applicant relied on affidavits of Ms Elliott, solicitor, dated 2 July 2008 and 1 August 2008. Reference was also made to parts of the transcript of the hearing before Hoffman C on 20 December 2007 and 12 March 2008. The Council relied on affidavits of Ms Astridge, solicitor, dated 20 September 2007, 15 August 2008 and 15 September 2008 and exhibits tendered in the original proceedings. Applicant's submissions 5 The Council has not acted properly and costs should be awarded under Pt 3 r 3.7(3)(c), (d) and (e) of the Land and Environment Court Rules 2007 (the Court Rules). The Council behaved unreasonably leading up to the commencement of proceedings, acted unreasonably in the proceedings and defended the proceedings for an improper purpose.

6 The model litigant code recognised by the Commonwealth government and numerous cases, particularly Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 which refers to the requirement for fair dealing (as part of a competitive tender process in that case), and Denise Leha v MIMA [2000] AATA 105 stating that the Commonwealth government should attempt to seek out all relevant information (in the context of assisting in finding a migration agent) should also be applied to the actions of the Council. If applied the Council failed to assist the Court in reaching its determination in a non-adversarial manner.

7 The Applicant submitted that the general history of the matter including the determination of the modification application by the Council in closed session was conduct not in conformity with the model litigant code of conduct. As I would not allow the decision-making process of the Council, which gave rise to the decision appealed against by the Applicant, to be considered, as it is not relevant to the determination of costs in these merit proceedings, the Applicant also submitted that the way the Council conducted its case was an abuse of process of the Court. The modification was simply for two basements to be constructed when there was already development consent for three townhouses. The Council ran its case in such a way that unnecessarily detailed information was sought given the nature of the application.

8 Specific issues were raised which were argued to cause the Applicant to incur unnecessary costs. Firstly, the Council's contention 1 that: The development as modified is not substantially the same as approved and as such does not satisfy the requirements of Section 96(2)(a) of the Environmental Planning and Assessment Act. in the statement of facts and contentions was unduly technical. The Council argued that was the precise basis on which the Commissioner determined to refuse the application. 9 Secondly, the Council filed three versions of the statement of facts and contentions because issues were raised and then not pressed causing the Applicant to incur costs. The correspondence between the solicitors as attached to their respective affidavits, particularly surrounding the Council's solicitor's letter dated 24 October 2008, was relied on to make that point. The Council submitted that it acted appropriately in seeking clarification of the issues which was necessary in large part because the Applicant failed to provide sufficient information to enable an assessment of the modification application to be undertaken. That view is confirmed by both the correspondence between the solicitors and the way the matter progressed at the hearing before the Commissioner. As the Applicant provided further information in response to the Council's solicitor's letters the Council was able to either not press a particular issue or deal with by way of condition.

10 Thirdly, in relation to the calling of experts, costs were thrown away due to the Council's conduct of the case. The Council's engineering witness Dr Martens appeared on the first day of hearing (20 December 2007) without notice and gave evidence over the Applicant's objection. The Council said this was necessary because the Applicant only advised that it disputed the conditions of consent Dr Martens considered necessary being conditions 115-120 the night before the hearing. This resulted in a further hearing being necessary on 12 March 2008. The Council argued that the further hearing date was necessary because the Commissioner considered further amended plans were needed.

11 Costs were thrown away because of evidence from the town planning expert Ms Laidlaw about the construction certificate (CC) plans which spread confusion. As identified by the Council the transcript shows that the Commissioner requested the CC plans and asked Ms Laidlaw questions.

12 New evidence was produced on 12 March 2008 from Dr Martens without notice. The Council argued that was necessary because the Applicant filed without leave of the Court or notice to it an expert report of Mr Kozarovski just before the second day of hearing and it was necessary for Dr Martens to respond to this at the hearing. The Council objected to the tender of the report due to its lateness and lack of notice but it was admitted over objection. Both experts then gave concurrent evidence which was simply the most efficient way of dealing with the matter.

13 The Applicant's solicitor made several submissions that the way the Council ran its case caused confusion for the Commissioner and caused him to focus on irrelevant matters such as the CC plans and this lead to an incorrect decision.

Council's submissions 14 There is no basis demonstrated for the making of the costs orders sought by the Applicant. There is no evidence relied on to suggest that the proceedings were conducted in a way that was an abuse of process. I have set out above the Council's responses to the specific issues raised by the Applicant above. Finding 15 The usual costs order in Class 1 proceedings is that each party must pay its own costs. There has to be an element of unreasonable behaviour which justifies a departure from that approach so that it is fair and reasonable to award costs. Some of the circumstances in which costs may be awarded are identified in r 3.7 and subsections (c), (d) and (e) are relied on by the Applicant. Costs must be determined in light of the conduct of the litigation not the Council's decision-making process when it determined the modification application. It should also be noted that in a s 96 modification hearing the Court must determine both the threshold issue in s 96(2)(a) and, if that is satisfied, whether the application should be granted on its merits.

16 The general case contended for by the Applicant that the conduct of the Council in the proceedings gives rise to a finding that there was an abuse of process is unfounded particularly where the Applicant has been the unsuccessful party. Its application for the s 96 modification application was dismissed by the Commissioner on the threshold issue that s 96(2)(a) of the EP&A Act was not complied with. There is no suggestion in the Commissioner's judgment of matters being dealt with inappropriately by the Council. Indeed criticism made by the Commissioner is of the Applicant in relation to the difficulty of obtaining reasonable architectural drawings both before and at the hearing at [68].

17 There is simply no basis to find that the Council's conduct in the proceedings was an abuse of process. The chronology of events before the Court and the Council's behaviour during the hearing demonstrate that the usual approach to matters of this type was pursued appropriately by it. There was some change of the contentions relied on by the Council with some no longer pressed and some able to be dealt with by condition but that was largely motivated by the need to respond to the case presented (or not, as the case may be) by the Applicant. There are no circumstances giving rise to a finding that Pt 3 r 3.7(3)(e) (improper purpose) arises. Nor is there any evidence that the Council behaved unreasonably leading up to the litigation (r 3.7(3)(c)). The material the Applicant wished to rely on concerning events at the Council meeting is not relevant as it is not that decision that is under review. That leaves r 3.7(3)(d), that the Council acted unreasonably in the proceedings. I will consider the specific issues raised by the Applicant.

18 The argument that contention 1 was a technical argument that should not have been run is nonsensical given that this was the determinative issue in the case. The Commissioner decided to dismiss the application on the basis of contention 1, the threshold issue in relation to whether a s 96 application can be approved or not. Because the modification application failed at that point it was not necessary for the Commissioner to consider any merit issues.

19 In relation to the contentions that were not pressed, I agree with the Council's submissions that the course of events in the proceedings was entirely reasonable in seeking to identify and resolve issues. At the outset of the case a key issue for the Council was the failure of the Applicant to provide adequate information on numerous matters, hence Council's solicitor's letter of 24 October 2007 which was criticized as excessive by the Applicant's solicitor. Much of the Applicant's solicitor's submissions on this aspect of the case was stating from the bar table that it was obvious that these issues were irrelevant and unnecessary. It is not obvious at all that that is the case. Essentially the Council sought clarification of issues relevant to the modification as raised in case management before Hussey C on 10 September 2007. When more detailed responses were received and the issues clarified, issues that were no longer problematic or became of less significance were not pressed. That is not unreasonable behaviour on the Council's part. Even if there had been unreasonable behaviour the amount of costs thrown away appears minimal, consisting largely of correspondence between solicitors. 20 In relation to the issues raised concerning costs thrown away because of the expert evidence of Dr Martens on 20 December 2007 and 12 March 2008, the Council has explained why Dr Martens had to attend unexpectedly on the first day of the hearing. This was to respond to very late notice from the Applicant on the eve of the hearing that the conditions of consent he proposed were disputed. The Commissioner clearly found his evidence of assistance. Similarly his additional evidence on 12 March 2008 arose because of the late service of Mr Kozarovski's report only a few days before the hearing. Once again Dr Marten's evidence was clearly material to the Commissioner's consideration. Ms Laidlaw gave evidence as an independent expert witness at the request of the Commissioner. There can be no suggestion that the Council has acted in a way that caused unreasonable costs to be incurred by the Applicant in these circumstances.

21 The Applicant's case in some respects was an attempt to raise issues more suited to a s 56A appeal given statements that the Commissioner's decision was incorrect and took into account irrelevant matters. In this costs matter I must accept the Commissioner's determination as final and correct in the absence of any appeal. What is really complained of is how the Commissioner ran the proceedings and focused on matters he considered relevant. The fact that the Applicant's solicitor considered the CC was not relevant to the proceedings and should not have been introduced is irrelevant when the Commissioner clearly did believe it was.

22 In relation to the model litigant code of conduct, the Applicant submitted that I should make a finding that there is a common law obligation such as that referred to in Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333 at 342 in relation to the activities of the Crown (in that case the Commonwealth) which applies to local councils operating in this Court. It was not necessary, according to the Applicant, that there be a specific code to which I must refer but a finding broadly that the principles referred to in the numerous cases identified in the Applicant's submissions should be followed by the Council. The Applicant submitted that I should make a finding that the Council failed to behave as a model litigant. It is unnecessary for the determination of this costs issues that I determine the contention of the Applicant that there is a common law duty on a council to act as a model litigant. The Council said, correctly, that it had acted as a model litigant and had brought relevant matters to the Court's attention.

23 The Applicant argued there was an important point of principle raised by this case because the Court should determine whether the detail dealt with in a CC is necessary to the consideration of the modification of a development application. It is not appropriate that I provide such general guidance as such matters must depend on the circumstances of a particular case. Despite the Applicant's solicitor's submission on more than one occasion that there were matters of detail more appropriately dealt with by the CC and therefore unnecessarily introduced into the Class 1 hearing, given that detail is what was sought by the Commissioner suggests to the contrary. Matters were raised in relation to subsurface drainage, for example, which it was not appropriate to leave to be dealt with in the CC in the opinion of the Commissioner. The Applicant is bound by that conduct of the Commissioner in identifying and determining what he considers are the important matters in the proceedings and cannot seek to overcome that perceived disadvantage now in this costs application. 24 I consider the Applicant's Notice of Motion for costs should be dismissed. None of the grounds relied on in r 3.7(3) are made out. Costs of the motion 25 The Applicant has been unsuccessful on its motion. Its solicitor argued that as it has raised important issues concerning the application of model litigant rules in this jurisdiction and the need for guidance to be provided on the relevance of CC plans in appeals of this kind, costs should not be awarded against the Applicant. I do not agree that these were important issues that had to be determined in these proceedings and have declined to do so. As costs generally follow the event for Notices of Motion in relation to costs and the Council has been successful in opposing the order sought costs should be awarded in its favour.

26 The Council also sought indemnity costs on the ground that such an award is warranted because the costs motion lacked any prospect of success and was therefore doomed to fail. The Applicant's solicitor was put on notice that the issues raised in Ms Elliot's first affidavit (which was not ultimately read in the costs motion but I gather was in similar terms to her affidavit dated 1 August 2008) lacked merit in a lengthy letter dated 9 July 2008 from the Council's solicitor to the Applicant's solicitor considering that first affidavit. I consider the costs arguments raised by the Applicant's solicitor had poor prospects of success but I do not consider that warrants an award of indemnity costs in the absence of unreasonableness or misconduct on the Applicant's part.

Orders 27 The Court makes the following orders: 1. The Notice of Motion dated 2 July 2008 is dismissed. 2. The Applicant is to pay the Council's costs of the costs motion and hearing as agreed or assessed. 3. Exhibits to be returned except Exhibits 5, 13, 15, 16, F, H and L.

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