Bungendore Residents Group Inc v Palerang Council and Anor

Environmental Planning and Assessment Act 1979 Land and Environment Court Act 1979 s 25B, s 69 LEGISLATION CITED: Land and Environment Court Rules 1996 Pt 6 r 1(1) Supreme Court Rules 1970 Pt 11 r 4(3), Pt 52 r 11(2) Yarrowlumla Local Environmental Plan 2002

Booksan Pty Ltd, Jaymay Constructions Pty Ltd v Wehbe, Elmir & Ors; GIO General Ltd and GIO Workers Compensation (NSW) Ltd v Wehbe, Elmir & Ors (No 2) [2006] NSWCA 103; Bungendore Residents Group Inc v Palerang Council and Anor (No 3) [2007] NSWLEC 251; Bungendore Residents Group Inc v Palerang Council and Anor (No 4) [2007] NSWLEC 536; Cutcliffe v Lithgow City Council (2006) 147 LGERA 330; CASES CITED: Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd, (FCA, Gummow, French and Hill JJ, 18 May, 2 June 1993, unreported); GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174; Residents Against Improper Development Incorporated v Chase Property Investments Pty Ltd (2006) 149 LGERA 361; Oshlack v Richmond River Council (1998) 193 CLR 72; Waters v PC Henderson (Aust) Pty Ltd (NSWCA, 6 July 1994, unreported)

21 August 2007 DATES OF HEARING: 22 August 2007 30 August 2007

APPLICANT Mr J Johnson SOLICITOR Environmental Defender's Office

FIRST RESPONDENT LEGAL REPRESENTATIVES: Ms H Irish SOLICITOR Minter Ellison

SECOND RESPONDENT Mr J E Robson SC SOLICITOR Harris & Company

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

40302 of 2005 Bungendore Residents Group Inc v Palerang Council and Navaroo Constructions Pty Ltd (No 5)

JUDGMENT ON COSTS 1 Her Honour: These are judicial review proceedings in which I determined to uphold a number of grounds of challenge argued by the Applicant in Bungendore Residents Group Inc v Palerang Council and Anor (No 3) [2007] NSWLEC 251 (Bungendore No 3). I determined I should exercise my discretion to make the declarations and orders sought by the Applicant in Bungendore Residents Group Inc v Palerang Council & Anor (No 4) [2007] NSWLEC 536 (Bungendore No 4). The final matter to determine is how costs should be awarded. The Council filed a submitting appearance save as to costs early in the proceedings. All parties have made submissions on how costs ought be awarded. 2 The Applicant did not succeed on all seven of its grounds of challenge. Grounds A and B were considered together and I upheld ground B that the Council failed to have regard to a detailed analysis which considered the location of proposed dwellings in relation to each other and in relation to irrigation fields in breach of cl 22(3) of the Yarrowlumla Local Environmental Plan 2002 (the YLEP). Grounds C and D did not arise as a result and essentially fell away. Ground E was upheld, concerning a clause of the YLEP, and ground F, concerning the DCP, was not. Ground G, the additional ground added later following the Court of Appeal decision in Residents Against Improper Development Incorporated v Chase Property Investments Pty Ltd (2006) 149 LGERA 361 (RAID) in November 2006, was also upheld. Applicant's submissions 3 As the successful party the Applicant argued that its costs should be paid. An apportionment of costs between the two Respondents is appropriate. Second Respondent's submissions 4 The Applicant was successful on only three of the seven grounds it pressed. It failed on the majority of grounds it pressed. It is not entitled to all its costs. To the extent that a partial award of costs is made the Council should be solely liable for costs, applying a variation of the principles identified in Cutcliffe v Lithgow City Council (2006) 147 LGERA 330. The Court has found errors in the Council's decision making process which are entirely of the Council's making. There is no "fault" by the Second Respondent in these circumstances and it should not therefore be liable for costs. Alternatively costs should be shared between the Respondents. 5 Cutcliffe provides an important recognition that a submitting appearance does not immunise a council from costs. The qualification to the principles of Cutcliffe identified by Biscoe J in GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 are not binding on me. The position of the Second Respondent where the Council files a submitting appearance having provided no indication about a defence is a difficult one. The Second Respondent had little alternative but to oppose the application seeking the declaration of invalidity of a development consent on which it wishes to rely.

Council's submissions 6 The primary position of the Council is that its costs liability should be limited to half of the costs of grounds B and E, on which the Applicant succeeded, to the date of Council's submitting appearance. The Applicant should not have its costs in relation to issues on which it did not succeed: see James v Surf Road Nominees Pty Limited [No 2] [2005] NSWCA 296 per Beazley, Tobias and McColl JJA at [32] - [36]. Further, ground G, on which the Applicant also succeeded, had not arisen as at the date of the Council's submitting appearance. The Second Respondent should be responsible for the other half of the costs of grounds B and E on which the Applicant succeeded to the date of Council's submitting appearance, plus any other costs awarded to the Applicant.

7 In Cutcliffe Biscoe J identified at [50] guidelines to consider when deciding whether a council which files a submitting appearance ought be liable for costs. The circumstances of this case fall squarely within the "qualification" referred to in [50(c)] of Biscoe J's four general guidelines. In this case, the Council entered an early submitting appearance prior to the first callover and the Second Respondent, the beneficiary of the development consent, took an active role in defending the proceedings. The Second Respondent should therefore be liable for the Applicant's costs to the extent that they exceed the costs that the Applicant would have incurred if both Respondents had filed submitting appearances. In this case that would result in the Second Respondent being wholly liable for the Applicant's costs incurred after the date of the Council's submitting appearance in relation to the defences raised by the Second Respondent but not by the Council. 8 Biscoe J has revisited his guidelines in Cutcliffe in GPT in circumstances identical to those in the present case. In that case his Honour distinguished his earlier decision in Cutcliffe because the respondent council had actively defended the proceedings until shortly before the trial when the other respondent, the beneficiary of the development consent, had surrendered on the issue on which the applicant succeeded. In GPT the council had entered an early submitting appearance before filing a defence and his Honour formulated an exception to his Honour's earlier guidelines at [29] as follows: Where a council enters an early submitting appearance without raising any defence but the beneficiary defends the proceedings, it is generally fair to limit the council's costs liability to half of the costs of the issue on which the applicant succeeds to the date of the council's submitting appearance. 9 Alternatively as the errors found by the Court are those of the Council, the Council says: (a) In relation to ground B, the Second Respondent deliberately failed to show building envelopes for the lots "as the development applications did not include the erection of dwellings" see Bungendore No 3 at [11]. (b) The Council notes that GPT concerned a case where, as the Second Respondent repeatedly contends in these proceedings, the error identified was one of the consent authority. Therefore, for the purposes of applying GPT, nothing turned on whether the errors identified by the Court were errors of the consent authority or otherwise. (c) The Court has no evidence as to whether or not environmental harm was likely to be caused by the erroneously issued development consents if they were proceeded with (see [37] of Bungendore No 4). At the highest, the Court acknowledged that the prohibition now contained in cl 21A of the YLEP suggested a different approach to water and sewage disposal management in the future ([37] of Bungendore No 4). (d) The Second Respondent was directly responsible in the proceedings for the costs referred to in par 10(i), (ii) and (iii) below, and the Applicant was directly responsible for its costs incurred in connection with its late, sixth ground of challenge (at par 10(iv)). 10 The Council also submitted that there were unnecessary costs incurred during the proceedings for which it should not be liable as follows:

(i) Unnecessary costs - Motion for security for costs By Notice of Motion heard 11 May 2005 the Second Respondent successfully sought an order that the Applicant provide for security for the costs of the Second Respondent. The Council submitted that it should not have to bear the Applicant's costs in connection with this motion. The Council did not seek such orders and was a submitting party only at the time security for costs was sought. If any order is made in relation to costs connected with this motion, it should be wholly against the Second Respondent.

(ii) Unnecessary costs - expert evidence As noted at [87] and [88] of Bungendore No 3 : Expert evidence can have only a limited role to play in judicial review proceedings which are concerned with the decision making process of the Council, not with the merits of particular decisions. … I therefore find the evidence of Mr Hynes and Dr Martens and also Ms Ketelby of limited assistance. Similar observations are made at [124] and I concluded that: This evidence is inconclusive at best.

The Council submitted that it should not be liable for the costs of the Applicant's forensic decision to respond to evidence adduced by the Second Respondent, or the Applicant's costs of examining, cross-examining or re-examining witnesses in relation to such evidence in circumstances where the Council (being a submitting party) had no control over such evidence, written or oral. If any order is made in relation to costs connected with this evidence, it should be wholly against the Second Respondent.

(iii) Unnecessary costs - discretionary hearing The Council remained a submitting party for the purposes of evidence and the hearing on 21 and 22 August 2007 as to whether the Court should exercise its discretion to make the orders sought. This included a late application by the Second Respondent to re-enliven reliance upon and argue s 25B of the Land and Environment Court Act 1979 (the Court Act). The Council submitted it should not have to bear costs connected with the Second Respondent seeking to persuade the Court not to grant the relief sought. If any order is made in relation to costs connected with the exercise of the Court's discretion and s 25B, it should be wholly against the Second Respondent.

(iv) Unnecessary costs - late, sixth ground of challenge The Court of Appeal delivered the Applicant the choice whether to add a late, sixth ground of challenge, namely that the development applications were for designated development and no mandatory environmental impact statement was provided as part of the development applications. The Applicant incurred additional expenses by its election to assert in these proceedings that the Council's determination of the development consents on 6 January 2006 wrongly applied this Court's long-standing approach to the law (when the Council should have applied a then unknown approach later found by the Court of Appeal).

Finding 11 Under s 69 of the Court Act the award of costs is made exercising the Court's discretion. In Class 4 proceedings such as these the usual order is that the successful party will have its costs paid in the absence of disentitling conduct.

Should the Applicant have all its costs? 12 The Applicant has successfully argued that there were substantial breaches of the EP&A Act. Because the Applicant was not successful on all the grounds of challenge both Respondents argued that it should not have all its costs. The cases referred to in James consider costs in multiple issue cases. In Waters v PC Henderson (Aust) Pty Ltd (NSWCA, 6 July 1994, unreported), Mahoney JA (Kirby P and Priestley JA concurring) quoted approvingly the notes to Pt 52 r 11.2 of the Supreme Court Rules 1970 (the Supreme Court Rules) (as then in force) which stated: Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. This was also quoted with approval in James per Beazley, Tobias and McColl JJA at [32]. The Court of Appeal went on to state at [34]: Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter.

13 I note that Part 52 r 11.2 of the Supreme Court Rules is not the same as s 69 of the Court Act as it states : If the Court makes any orders as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs. The rule reflects the usual practice of the Court in Class 4 proceedings.

14 The approach identified by the note to Pt 52 r 11.2 Supreme Court Rules and James as ordinarily appropriate applies in this case. I do not consider it is correct to characterise the Applicant as successful in three out of seven issues so that costs should be apportioned according to the outcome of particular issues. Four grounds (A, B, C, D) were interrelated and the Applicant was successful on one of these (B). Consequently grounds C and D no longer arose and these occupied little time at the hearing. Of the remaining three substantive grounds (F, E, G) the Applicant was successful on two (E, G). I consider it is fair to characterise the Applicant as largely successful in the proceedings. Apportionment of costs on the basis of whether the Applicant was successful or unsuccessful on a particular issue in the proceedings is not appropriate.

15 Should the Applicant have all its costs given the Council's submissions at par 10 that there were costs incurred unnecessarily, according to the Council, by the Applicant and the Second Respondent? These costs related to the motion for security for costs, adducing of expert evidence, the late ground added after the Court of Appeal decision in RAID and the costs of the discretion hearing. The order made at the time the security for costs order was made was that costs be in the cause, suggesting the Applicant should have those costs as it is the successful party. The Applicant has not acted unreasonably in incurring the costs otherwise referred to by the Council as unnecessary and should have these paid. It relied on expert evidence by way of reply to the Second Respondent's tendering of expert evidence and its actions in doing so were not unnecessary or disentitle it to those costs. The hearing on the exercise of the Court's discretion while not relevant to the Council was relevant to the Second Respondent and the Applicant was entitled to respond to the arguments presented. Finally, the late ground added into the proceedings by the Applicant was not "unnecessary" as the Council argued given that this matter had not yet been determined finally at the time that the RAID decision was handed down after the substantive hearing. 16 The Council's submissions on costs it deemed unnecessary are relevant to the next issue of whether there should be apportionment of costs as between the Respondents.

How should costs be apportioned between the Respondents? 17 The issue now arises on what basis I should award costs as between the Respondents. One issue to consider is the effect of the Council filing a submitting appearance as provided for under Pt 11 r 4(3) of the Supreme Court Rules (adopted in this Court under Pt 6 r 1(1) of the Land and Environment Court Rules 1996). In Cutcliffe Biscoe J considered numerous authorities and concluded that it was appropriate in some circumstances for a council which has filed a submitting appearance to be liable for costs incurred after the date the submitting appearance was filed. He identified guidelines in Cutcliffe at [50]. 18 In Cutcliffe Biscoe J states at [50]: The following general guidelines may be formulated, based on the cases and principles reviewed in this judgment, for the exercise of the Court's discretion to order costs where

· an applicant successfully brings proceedings that are necessary to have declared invalid or set aside a development consent or decision of a consent authority; · the consent authority and the beneficiary of the development consent or decision are necessary or proper parties; and · the cause of the invalidity is an error of or attributable to the consent authority and not to the beneficiary: (a) the applicant will ordinarily be entitled to be compensated by an award in its favour of the costs of the proceedings unless it has engaged in disentitling conduct. (b) where the beneficiary does not defend the proceedings, the applicant's costs will ordinarily be awarded against the consent authority, whether or not the latter enters a submitting appearance. This is because the cause of the litigation is the error of the consent authority and not of the applicant or the beneficiary. The consent authority cannot immunise itself from costs consequences of its own error by entering a submitting appearance because then a successful applicant cannot be properly compensated in costs. It is not sufficient that a consent authority should bear the applicant's costs only up to the time of the consent authority's submitting appearance because the applicant must continue to incur costs thereafter in order to establish, by evidence and argument at a hearing, that it is entitled to declaratory and injunctive relief.

(c) where the beneficiary does defend the proceedings, albeit unsuccessfully, the applicant's costs will ordinarily be awarded against both the beneficiary and the consent authority, whether or not the latter enters a submitting appearance. The award of costs against the consent authority is because its error is the cause of the litigation. It cannot immunise itself from costs by entering a submitting appearance for the reason given in (b) above. The award of costs against the beneficiary is because it chose to defend the proceedings. A qualification is that the beneficiary alone may be required to bear the applicant's costs to the extent that they exceed the costs that the applicant would have incurred if both respondents had submitted, being costs attributable to defences that the beneficiary has unsuccessfully raised and the consent authority has not raised. An example may be a defence by the beneficiary that, notwithstanding an invalidating error by the consent authority, the court, for discretionary reasons, ought not to grant any relief. 19 Applying the guidelines in Cutcliffe, particularly [50(c)], I consider the Council should be liable for some costs of the Applicant. 20 In GPT Biscoe J correctly stated at [29] that guidelines are not binding, are general and must be flexible. He distinguished the facts in Cutcliffe on the basis that the council had actively defended the proceedings until just before trial when the other respondent, the beneficiary of the development consent, surrendered on the issue on which the applicant succeeded. In GPT, no defence was filed by the council, which entered a submitting appearance early in the proceedings, before the first return date. Biscoe J limited the costs of the submitting council so that it was liable for only part of the costs up to the date of its early submitting appearance. He considered it was generally fair to limit the council's costs liability to half the costs of the issue on which the applicant succeeded to the date of the submitting appearance. In GPT the applicant was successful on only one of several grounds raised concerning the validity of a council delegation of power. Biscoe J accepted that relatively little evidence would have been necessary if the proceedings were limited to that issue.

21 In Cutcliffe, the qualification to the making of a costs order against a submitting council is identified in [50(c)] as being where the beneficiary of a consent unsuccessfully raises defences not raised by the consent authority. If there is an early submitting appearance by a consent authority without filing a defence, its view of whether a challenge to its decision-making process giving rise to a development consent is defensible will be unknown to the other parties. The person wishing to rely on the consent has to decide if it wishes to "defend" a decision that it did not make. If the defences the beneficiary relies on in seeking to have the development consent upheld are unsuccessful, it is impossible to know if these would have been defences a council would have relied on had it chosen to file a defence. This suggests that each case needs to be considered to determine what defences were raised in relation to what grounds of challenge where a council files an early submitting appearance before it files a defence. The approach taken in GPT was that the council's costs were limited to a portion of the costs up to the time the submitting appearance was filed. In GPT the applicant was successful on only one discrete issue concerning the delegation power of a council and was unsuccessful in the several other issues raised. 22 The outcome on costs for each case depends on its facts. GPT is one example of a costs order in circumstances where the Council has filed a submitting appearance before filing a defence. In this case I have upheld some of the Applicant's substantial challenges to the Council's decision-making under its LEP and the EP&A Act. I consider that where the failure of the council's decision-making process is fundamental to the applicant's challenge that, in the absence of a defence being filed by a council, it can be liable for costs beyond the date of its submitting appearance where the challenge is successful based on grounds concerning the council's failure of decision-making. Whether such a costs order is appropriate and its extent depends on the issues and conduct of the parties in a particular case. I am also mindful that where councils are acting on the joint statement of Gummow and Gaudron JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 77-78, 90 concerning the desirability of councils not participating actively in litigation challenging their consents, they should not be discouraged from doing so by the possibility that they will face a substantial costs order against them despite filing a submitting appearance early in the proceedings. 23 Given that the Council did not participate in the substantive hearing, the security for costs application, or the hearing on how the Court should exercise its discretion, it did not contribute by its conduct to the length and complexity of the proceedings. It is therefore unreasonable for it to be held liable for half the Applicant's costs. 24 The Council identified in its submissions four issues in relation to which it argued that unnecessary costs were incurred for which it should not be liable; security for costs, expert evidence, the discretionary hearing and the late ground of appeal based on the Court of Appeal decision in RAID on 23 November 2006. In relation to the application for security for costs, which required a separate hearing, I agree that the Council should not be liable for the costs of those parts of the proceedings concerning that application. In relation to the conduct of the substantive hearing, I accept the Council's submissions that it had no control over the extent to which expert costs were incurred, relying on my finding that these had limited utility (at [88]). The expert evidence occupied a substantial part of the hearing time. There was also a separate hearing including preparation of further evidence in relation to what orders the Court should make in the exercise of its discretion. As it played no part in that separate process, which was an issue of concern to the Second Respondent and Applicant only, the Council should not be liable for the Applicant's costs in relation to that part of the proceedings. 25 The Court can apportion costs as it sees fit and numerous cases have identified that a mathematical approach is not required or appropriate, see for example, Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd, (FCA, Gummow, French and Hill JJ, 18 May, 2 June 1993, unreported), Booksan Pty Ltd, Jaymay Constructions Pty Ltd v Wehbe, Elmir & Ors; GIO General Ltd and GIO Workers Compensation (NSW) Ltd v Wehbe, Elmir & Ors (No 2) [2006] NSWCA 103 referred to in GPT at [25]. In order to avoid a complicated exercise of apportioning costs relating to each of these separate issues it is preferable that I make a costs order which I consider is generally reflective of the circumstances in this case. The First Respondent should be liable for 25 per cent of the Applicant's costs and the Second Respondent should be liable for 75 per cent of the Applicant's costs and I will so order. Orders 26 The Court makes the following orders: 1. The First Respondent is to pay 25 per cent of the Applicant's costs of the proceedings as agreed or assessed. 2. The Second Respondent is to pay 75 per cent of the Applicant's costs of the proceedings as agreed or assessed. 3. The exhibits may be returned.

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