Charlie Lovett Pty Limited v Hurstville City Council

Land and Environment Court (NSW)|2014-11-20|Before: Sheahan J, Bignold J

Thomson v Mosman Council [1999] NSWLEC 86 Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; 179 ALR 664 Category: Costs Parties: Charlie Lovett Pty Limited (Appellant) Hurstville City Council (Respondent) Representation: Counsel:

Marque Lawyers (Appellant) HWL Ebsworth Lawyers (Respondent) File Number(s): 10657 of 2014, 10873 of 2013 Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 1 Citation: Charlie Lovett Pty Ltd v Hurstville City Council [2014] NSWLEC 1146 Date of Decision: 25 July 2014 Before: Commissioner Pearson File Number(s): 10873 of 2013

A: Introduction

This judgment concerns the costs of two separate, but related, proceedings in the Court.
Charlie Lovett Pty Ltd ("Lovett") was the applicant in Class 1 proceedings (matter no. 10873/2013 - "the primary proceedings") brought to obtain, from the Court, approval of a modification (MOD2013/0030) to a development consent ("DC" - no 11/DA268) it had obtained from Hurstville City Council ("Council") in 2011.
When those primary proceedings were dismissed by Pearson C, Lovett brought an appeal (matter no. 10657/2014), pursuant to s 56A of the Land and Environment Court Act 1979 ("the 56A proceedings").
Council was the respondent in both the primary and 56A proceedings.
While the 56A proceedings stood part-heard before me, they were discontinued by Lovett, with Council's consent, and the leave of the Court.

The costs applications

Both Lovett and Council now seek costs orders in their favour - Lovett seeks orders for its costs of both proceedings, as it did in prayer 7 of its s 56A summons, and Council seeks a costs order for only its costs in the 56A proceedings.
The Court must also decide upon what, if any, order ought to be made in respect of the costs of determining the competing applications for costs.

The proceedings in brief

In the primary proceedings, Commissioner Pearson refused, on 25 July 2014 ([2014] NSWLEC 1146), the modification application MOD2013/0030, lodged on 3 July 2013 ("the 2013 modification"), concerning DC 11/DA-268, granted on 16 November 2011 ("the 2011 consent").
The s 56A appeal was adjourned part-heard on 20 November 2014, during the respondent Council's oral submissions, but the resumption planned for 19 December 2014 could not go ahead, and was vacated by me on 18 December. The resumption was re-scheduled, on 23 December 2014, for 4 May 2015.
Before that resumption, the appeal was discontinued, in circumstances to be later described.
On 19 December 2014, Lovett lodged with the respondent Council a new s 96 modification application (MOD2014/0150), which Council approved on 18 March 2015 ("the 2015 modification"). The Notice of Determination was issued on 26 March 2015.
Lovett contends that the 2015 modification achieves what it had sought to achieve by both its 2011 development application ("DA"), and its 2013 modification application, and that Council should pay all its costs.
The s 56A appeal became otiose, as a consequence of that 2015 approval, but, before the formalities could be finalised, both parties changed solicitors.
On 1 April 2015, Newhouse & Arnold Solicitors filed a notice of their intention to file a Notice of Ceasing to Act for Lovett. Their Notice of Ceasing to Act was filed on 13 April 2015, and, on 14 April 2015, Nathan Mattock of Marque Lawyers signed and lodged his Notice of Change of Solicitor for Lovett.
On 2 April 2015, HWL Ebsworth filed a Notice of Change of Solicitor acting on behalf of the Council.
On 27 April 2015, Mattock filed in the s 56A proceedings a Notice of Motion ("NOM") seeking the following orders (emphasis added): 1. Leave to discontinue these proceedings, on the terms set out in Order 2 below. 2. The Respondent pay the Applicant's costs of these proceedings and the costs of Land and Environment Court Proceedings No. 10873 of 2013. 3. Such further orders as the Court sees fit.
On 1 May 2015, I granted Lovett leave to file forthwith its Notice of Discontinuance of the s 56A proceedings, "as to all claims for relief save as to costs".
I also vacated the hearing scheduled for 4 May 2015, and adjourned both the primary and the s 56A proceedings, and all questions of costs involved in them, to 15 May 2015, for hearing.
On 6 May 2015, the Notice of Discontinuance of the s 56A appeal was filed, along with a NOM from Lovett in the primary proceedings, seeking an order that the respondent pay Lovett's costs.
On 12 May 2015, Council filed a NOM in the 56A proceedings seeking orders that Lovett pay its costs of those proceedings, and its costs of its application for costs.

The evidence now before the Court

Lovett relies in both matters on (1) an affidavit and bundle of documents (Exhibit C6) from its owner/creator and director, Sam Nasser, (2) its five exhibits (Exhibits C1 - C5) from the part-heard s 56A hearing, and (3) the plans which Council approved in the 2015 modification decision (Exhibit C7).
Council relies on a detailed affidavit, with annexed documents, from its in-house corporate lawyer, Jennifer Ware, and the Court was invited to have regard also to the Transcript of the s 56A hearing on 20 November 2014.

The subject development

The subject site, at 2 Stanley St, Peakhurst, was formerly occupied and used by a Kennards Hire outlet.
The DA form (11/DA-268 - Exhibit C5, tab 3, fols 898ff) which led to the 2011 consent (a) identified the development as "use of land or building for warehousing, logistics, manufacturing & retail"; (b) described the work to be carried out as "new fit out construction to an existing building with various operations/use"; (c) and identified the "details of proposed commercial, industrial, or retail use" as "industrial/retail" (fol 901).
The premises were to be divided into a "Charlie Lovett" component - a "warehouse and logistics centre", involving coffee roasting, manufacturing, take-away, and outdoor dining - and an "Ocean 7" component - a partitioned-off, separate take-away food outlet.
In general terms, the Lovett warehouse space was to occupy approximately 66m², the Lovett roasting/manufacturing operation approximately 95.3m², and the "Ocean 7" component approximately 71.7m². The Statement of Environmental Effects ("SEE"), dated 26 August 2011 (Exhibit C5, fols 891ff), included (at fol 893) the following: Type of Goods Prepared 'Charlie Lovett' Roasting, Manufacturing and cafe: Roasting and manufacturing of coffee beans will take place for distribution, pre-packaged retail and for use in the corresponding cafe. The Charlie Lovett cafe will produce onsite; baked goods such as but not limited to bread, pastries and cakes, pre made sandwiches, salads and pastas (made off site and delivered to the premise) as well as coffee. 'Ocean 7' and cafe: The cafe will produce take away style fish burgers, oven baked fish fillets and chips with the sale of soft drinks, water and salads. The seafood is prepared offsite and stored frozen as well as thawed on site in appropriate freezers and refrigeration prior to cooking. No deep frying will take place on the premise.
At the time the DA was made, the Hurstville Local Environmental Plan 1994 ("the 1994 LEP") zoned the subject site "4 Light Industrial", but by the time the 2013 modification application was being considered, a new 2012 LEP had come into force, zoning the subject site "IN2 Light Industrial".
The 2012 LEP made other relevant changes to the 1994 LEP regime, notably defining various "refreshment room" type uses in more specific detail. I will return shortly to explore those definitional changes, and their ramifications for the characterisation issues in the proceedings (see [34] - [43] below).
"Hurstville Development Control Plan No 1 - Hurstville LGA Wide" ("the DCP") also applied to the site, most relevantly in respect of parking formulae for various types of use/development.
Under the 2011 consent, as issued (Exhibit C5, fols 850 - 878), approval was given to the "Alterations and change of use" for which the DA was made, and comprehensive conditions were imposed, including as to incorporation of documents in the DC (condition 2), storage (85), maximum staffing (99), parking (105), and lapsing (132). Of particular relevance were the following conditions (emphasis in original): 4. The Coffee Shop and Ocean 7 are restricted to a twelve (12) month trial period after issue of Occupation Certificate. ... 93. Cooking and food service - No deep frying is to take place on the premises, all food is to be served in takeaway containers. ... 98. The approved use being conducted only between the hours as follows; Charlie Lovett Manufacturing: 7.00am - 7.00pm (Monday to Sunday) Coffee Shop and Ocean 7: 7.00am - 9.00pm (Monday to Sunday)

The first modification

Under the 2013 modification application, the two retail tenancies were to be combined into one "Charlie Lovett" operation, trading 6am to Midnight, seven days per week.
That modification application was refused by Council; Council's decision was not upset in the Class 1 appeal before Pearson C; and the consequent appeal under s 56A has now been discontinued.

The second modification

Under the 2015 modification application, additional plans (Exhibit C7) were to be substituted in, or added to, condition 2; conditions 4, 93 and 99 were to be deleted; and, most relevantly on the trading hours issue, condition 98 was to be amended to read (Exhibit C6, fols 118 and 139): The approved use being conducted only between the hours of:- 6.00am to 10.00pm Monday to Thursday and Sunday; 6.00am to 12.00midnight Friday and Saturday.

The 1994 LEP

The 2011 consent was granted under the auspices of the 1994 LEP, which relevantly prohibited, in the "4 Light Industrial" zone (emphasis mine): business premises, office premises and shops (other than those ordinarily incidental or subsidiary to industry or which are primarily intended to serve persons occupied or employed in uses otherwise permitted in this zone, or which by virtue of their nature, the services provided, or the products produced, distributed or sold are, in the opinion of the Council, appropriately located in an industrial zone); ...
Clause 5 of the 1994 LEP included the following definitions: refreshment room means a restaurant, cafe, tea room, eating house or the like. shop means a building or place used for the purpose of selling (whether by retail or auction), or hiring (or displaying for the purpose of selling or hiring) items (whether goods or materials). warehouse or distribution centre means a building or place used for the principal purpose of storing, handling or displaying items (whether goods or materials) which have been produced or manufactured for sale, other than retail sale to the public from the building or place.
Clause 16(1) of the 1994 LEP provided that the Council could grant consent for development in that zone for the purpose of shops (other than bulky goods salesrooms or showrooms), or for commercial purposes, only where it was satisfied that: (a) where the proposed development may otherwise have been carried out within a business centre in the locality, suitable land for the development is not available in that business centre, and (b) the proposed development is of a type appropriate to an industrial zone, or to the general character of existing structures or uses within the industrial zone.
"Refreshment rooms" were permissible only with consent in two open space zones (6(a) and 6(b)), and were included also in the definition of "hospital": hospital means a building or place used for the purpose of providing professional health services (including preventative care, diagnosis, medical or surgical treatment or counselling) to people admitted as in-patients, whether or not out-patients are also cared for or treated, and includes: (a) ancillary facilities for the accommodation of nurses or other health care workers, ancillary shops or refreshment rooms and ancillary accommodation for persons receiving health care or for their visitors, ...

The 2012 LEP

The 2012 LEP specifically permitted, in the now "IN2 Light Industrial" zone, with consent, "kiosks" and "take-away food and drink premises", but specifically prohibited "commercial premises", "community facilities", and "function centres".
"Commercial premises" were defined to mean any of the following: "(a) business premises, (b) office premises, (c) retail premises":
"Retail premises" were defined to mean "a building or place used for the purpose of selling items by retail ... whether the goods or materials (or whether also sold by wholesale), and includes ... (c) food and drink premises ...".
"Food and drink premises" were defined to mean "premises that are used for the preparation and retail sale of food or drink (or both) for immediate consumption on or off the premises, and includes any of the following (a) a restaurant or café, (b) take away food and drink premises, (c) a pub, (d) a small bar". The "note" to that definition says that "food and drink premises are a type of retail premises", as defined.
"Restaurant or café" were defined to mean "a building or place the principal purpose of which is the preparation and serving on a retail basis of food and drink to people for consumption on the premises, whether or not liquor, take away meals and drinks or entertainment are also provided". The "note" to that definition records that "restaurant or cafés are a type of food and drink premises", as defined.
"Take away food and drink premises" were defined as "premises that are predominately used for the preparation and retail sale of food or drink (or both) for immediate consumption away from the premises". The "note" to that definition says that "take away food and drink premises are a type of food and drink premises", as defined.
In her judgment in the primary proceedings, the learned Commissioner held (at [15]): While "take away food and drink premises" are included in "food and drink premises", and would thereby, as "retail premises", be "commercial premises" and thus prohibited in the IN2 zone, development for the purpose of a "take away food and drink premises" is a nominate form of development specified as permissible with development consent in the IN2 Light Industrial zone.

B: Costs Principles

Costs orders are compensatory, and not punitive, in character, and the costs discretion must be exercised judicially: Latoudis v Casey ("Latoudis") [1990] HCA 59; 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72.
While, as I have already noted, the primary proceedings in this present matter were concluded, so that an "outcome" is before the Court, the 56A proceedings have been discontinued, without any outcome.
Rule 42.19 of the Uniform Civil Procedure Rules 2005 ("UCPR") provides that, when proceedings are discontinued by the plaintiff, and unless the court orders otherwise or the Notice of Discontinuance otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the Notice of Discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.
However, it has been held that UCPR 42.19 does not apply to proceedings such as the present: see Mike George Planning Pty Ltd v Woollahra Municipal Council (No 4) [2014] NSWLEC 187, at [21], and the applicant's written submissions, par 6.
The statutory provisions and rules which are relevant to the present proceedings are as follows:
Section 56A of the LEC Act provides: Class 1, 2, 3 and 8 proceedings - appeals to the Court against decisions of Commissioners (1) A party to proceedings in Class 1, 2, 3 or 8 of the Court's jurisdiction may appeal to the Court against an order or a decision of the Court on a question of law, being an order or a decision made by a Commissioner or Commissioners. (2) On the hearing of an appeal under subsection (1), the Court shall: ... (b) make such other order in relation to the appeal as seems fit. ...
Section 98 of the Civil Procedure Act 2005 ("the CP Act") provides (emphasis added): Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. ... (6) In this section, costs include: ... (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and ...
Rule 3.7 of this Court's 2007 Rules provides (emphasis added): Costs in certain proceedings (1) This rule applies to the following proceedings: (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: ... (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.
The High Court made plain, in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin ("Lai Qin") [1997] HCA 6; 186 CLR 622, that the Court cannot hold a hypothetical trial of undetermined issues, such as the 56A grounds here, under the guise of a costs application. McHugh J said (at 624 - 625): In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs [Latoudis]. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order [Latoudis]. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties [Australian Securities Commission v Aust-Home Investments Ltd ("Aust-Home") (1993) 44 FCR 194]. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action [Aust-Home]. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [(1971) LGRA 237], the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... ... If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases ...
His Honour added (at 626): Having read the Tribunal's decision and the affidavit filed in support of the application for the grant of an order nisi, it seems to me that, although the prosecutrix had an arguable case, she did not have strong prospects of success. If I had to make a prediction about the outcome of her application, I would think that it would probably have failed. However, as I have said it is not the function of a court on a costs application - in most cases at all events - to make a prediction as to the outcome of a hypothetical case. It is enough that an applicant has acted reasonably.
Each case, including each costs decision, turns on its own facts and circumstances, and it is never possible to find a case completely comparable to the one at hand. It is, therefore, necessary to review closely several relevant authorities.
Each side raised a number of authorities relevant to various aspects of the exercise by this and other Courts of the costs discretion.
A leading authority on costs in this Court is Kiama Council v Grant ("Grant") [2006] NSWLEC 96; 143 LGERA 441, and another is Arden Anglican School v Hornsby Shire Council ("Arden") [2008] NSWLEC 103; 158 LGERA 224.
One important Court of Appeal decision concerning a costs decision of this Court is Ralph Lauren 57 Pty Ltd v Byron Shire Council ("Lauren") [2014] NSWCA 107; 199 LGERA 424.
In Grant, the Chief Judge discussed Lai Qin (at [46] - [48]), and recorded the discussion of that case by Burchett J in One.Tel Ltd v Deputy Commissioner of Taxation ("One.Tel") [2000] FCA 270; 101 FCR 548. Burchett J said in One.Tel (at [6] - [8]): 6 In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. ... in Australian Securities Commission v Berona Investments Pty Ltd [(1995) 18 ACSR 772], as Cooper J put it ... (at 777), "events had overtaken the proceedings". The relief originally sought was no longer required, and the proceedings were terminated without any decision on the merits. Neither side had won or lost ... 7 By contrast with the decisions I have been discussing, the present matter involves a clear winner. The applicants, by their proceeding, sought to challenge the validity of certain notices, and to have them set aside. The respondent, after initially defending those notices, encountered at least an evidentiary difficulty, and acknowledged that they were to be set aside. That means that the applicants have succeeded, ... the result one party sought was achieved without a hearing, but not by a "settlement" in the ordinary sense, or as McHugh J used the word, and certainly not by what his Honour called "extra-curial means". 8 In any event, if, as the respondent contends, I should determine the question of costs by assessing whether, to borrow the language of McHugh J in Ex parte Lai Qin at 625, "both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation [came to an end by the respondent's decision not to seek to uphold his notices]", I would arrive at the same result. ... On the Deputy Commissioner's own stance now, his stance earlier must have been unreasonable, at least once he had ascertained the true position. Yet that stance was maintained by opposition to the applicant's motion to amend, and by service of the notice to admit facts. It was only abandoned after the applicants defeated the attempt to obtain admissions.
Preston J adopted the distinction drawn by Burchett J - i.e., between cases of (a) effective surrender without a hearing and determination of merits, and those cases where (b) some supervening event or settlement removes or modifies the subject of the dispute leaving no issue to be resolved other than costs (e.g. Lai Qin) - and gave many examples of each type of case, before laying down (in [80]) the following guiding principle (albeit in the context of Class 4 proceedings): The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.
Arden was a Class 1 case. Biscoe J discussed (at [5] - [8]) the evolution of s 98 and Rule 3.7, and then said (at [9] and [10]): 9 In the context of the presumptive rule that there will be no order as to costs in planning appeals, the power to make a costs order is in the broadest of terms, that is, what is "fair and reasonable in the circumstances". 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. ... 10 One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes: ... In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, that persons generally should not be discouraged from exercising their rights of appeal via the prospect of an adverse costs order: ... This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation. ...
In Lauren, the Chief Judge of this Court delivered the leading judgment for the Court of Appeal, in an appeal brought from a decision of mine in a Class 4 case, where UCPR 42.19 was involved. I had ordered all parties to pay their own costs, and the appellants failed to satisfy the Court of Appeal of "sufficient error" to warrant intervention. Leave to appeal was refused. In His Honour's lengthy judgment (182 pars) the following statements of principle are made (at [24] - [34]): 24 In administrative law proceedings, for example, if the defendant acted unreasonably in exercising or refusing to exercise a statutory power and the plaintiff had no reasonable alternative but to commence litigation to compel the proper exercise of the power, but after commencement of the proceedings the defendant exercises the power in the manner sought by the plaintiff in the proceedings, the court may be able to conclude that the defendant acted so unreasonably that the plaintiff should obtain its costs of the proceedings: Lai Qin at 624-625 ... 25 In Lai Qin, ... McHugh J found that the Minister's conduct was not so unreasonable and did not justify making a costs order against the Minister (at 628). 26 Unreasonableness of conduct can also be found in a defendant continuing to defend litigation until it then surrenders to the plaintiff by consenting to the court making orders, or giving an undertaking to the court, in substantially the same terms and effect as sought by the plaintiff in the proceedings: see ... [Grant] at [56], [60]-[71], [80]; ... This is not a settlement of the litigation in the ordinary sense, but rather a surrender to the plaintiff. In this circumstance, although there has not been a trial on the merits, the court may feel confident that the discontinuing party would have almost certainly have succeeded if the matter had been fully tried: Lai Qin at 625. The defendant's unreasonableness in defending litigation that it would almost inevitably have lost up to the point of surrender, causing the plaintiff unnecessarily and unreasonably to have incurred costs to that point, may provide the justification for a costs order in favour of the discontinuing plaintiff. 27 This was the circumstance justifying the costs order in favour of the applicants in One.Tel. The applicants, by their proceeding, sought to challenge the validity of certain statutory notices directed to the applicants in order to have them set aside. The respondent, after initially defending the notices, encountered an evidentiary difficulty and consented to court orders setting aside the notices. Burchett J held that this meant that the applicant succeeded in the litigation. The result the applicant sought was achieved without a hearing and not by a settlement in the ordinary sense or by extra curial means. A costs order was made in the applicants' favour: at [7]. 28 Circumstances where there may be no unreasonable conduct of the parties include where the plaintiff discontinues because it has achieved the relief sought in the proceedings by means of settlement of the litigation with the mutual consent of the parties or by extra curial means, or because of the happening of a supervening event which so removes or modifies the subject of the dispute that no issue remains between the parties except that of costs: Lai Qin at 624; and One.Tel at [6]. 29 In the case of a settlement, the court ordinarily will not look behind the settlement to the reasons or motivation of the parties to settle, and hence will not evaluate the reasonableness of the parties in settling: ... 30 An extra curial or supervening event may or may not be related to any conduct or action of the defendant. If the extra curial or supervening event is unrelated to the defendant's conduct, no question regarding the reasonableness of the defendant's conduct can arise and the appropriate order may be that each party bear its own costs. The passage of legislation rendering the plaintiff's proceeding futile or wholly removing the plaintiff's cause of action is an example of a supervening event unrelated to any conduct of the defendant: ... 31 If, however, the defendant's action constituted or caused the supervening event, the reasonableness or unreasonableness of the defendant's actions may need to be assessed. It is not sufficient by itself that the defendant's action is or brought about the supervening event; there ordinarily needs to be something unreasonable in the defendant taking that action. In an administrative law proceeding, for example, a defendant public authority might re-exercise a statutory power, such as to grant a fresh approval to a fresh application, rendering futile the challenge in the proceedings to the validity of an earlier approval. Notwithstanding that the defendant's action caused the proceeding to become futile, unless there was some unreasonableness in the defendant so acting, the proper exercise of the costs discretion may still be to make no order as to the costs of the proceeding. Examples of this type of case are given in [Grant] at [72]-[77]. ... 32 A contrasting example is that given by McHugh JA in Lai Qin where a defendant acts unreasonably in exercising or refusing to exercise the statutory power, precipitating a plaintiff to bring the proceedings, and then the defendant exercises the power in the manner sought by the plaintiff. The unreasonableness of the defendant's conduct, which constitutes the extra curial or supervening event, justifies the making of a costs order against the defendant: Lai Qin at 624-625. 33 If there is no unreasonableness in the conduct of the defendant then, notwithstanding that the discontinuing plaintiff might have achieved some practical success by settlement or extra curial means, the proper exercise of the costs discretion will usually be to make no order as to costs. As McHugh J said in Lai Qin at 625: If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the costs of the proceedings. 34 One circumstance that will generally not be relevant in deciding whether an alternative costs order should be made is the reason for the plaintiff's discontinuance. ...
Preston J has consistently taken that Grant/Lauren approach, including quite recently in Council of the City of Sydney v Base Backpackers Pty Ltd ("Base") [2015] NSWLEC 63. His Honour said, in Base (at [83] - [84]): 83 ... The mere fact that an appeal falls within the circumstance in r 3.7(3)(a) is not determinative of how the discretion under r 3.7(2) to make an order for costs is to be exercised. 84 The determination under r 3.7(2) of whether the making of a costs order is fair and reasonable requires the Court to consider all of the circumstances, not just whether the proceedings fall within the circumstance in r 3.7(3)(a). There may be other circumstances that suggest that the making of a costs order would not be fair and reasonable in the circumstances. These could include unreasonable conduct by the party that has been held to be ultimately successful on the appeal, such as in the circumstances leading up to the commencement of the appeal or in the conduct of the appeal, including arguments made in the appeal. There may be other disentitling conduct of the party that has been ultimately held to be successful on the appeal. The Court needs to consider all of the circumstances before determining whether it is fair and reasonable to make a costs order.
Shortly after Base, in SDHA Pty Ltd v Waverley Council [2015] NSWLEC 65, Pepper J said (at [94] - [95]): 94 Each side raised matters that were fairly arguable and I am not aware of any disentitling circumstances either in the preparation, or conduct, of the appeal of the character described in r 3.7(3) of the LEC Rules (which are not, in any event, prescriptive criteria that the Court must apply in deciding whether a costs order should be made: Community Association DP270253 v Woollahra Municipal Council [2015] NSWCA 80 at [16]) that would cause me to exercise my discretion in a manner adverse to SDHA. As poorly drafted as the summons was, given the narrowing of the myriad of possible grounds of appeal in SDHA's written and oral submissions, this would not warrant the imposition of a costs order in the council's favour. 95 The council was required to establish some aspect of the conduct of SDHA, as a litigant in the Class 1 proceedings, that made it fair and reasonable that the Court would "cause the prima facie position prescribed by r 3.7(2) to be replaced by a situation in which" SDHA was required to pay the council's costs (Community Association at [55] per Barrett JA). On the material before me, the council has failed to do this and each party should bear their own costs of the appeal.
Many of the cases cited in matters like this were decided under earlier costs regimes, but principles of justice, equity, fairness and reasonableness have permeated all regimes over time. For example, in 1999, in a Class 4 matter known as Thomson v Mosman Council ("Thomson") [1999] NSWLEC 86, I had to adjudicate costs as between one side and the Council, after two neighbours had settled all aspects of their dispute by mediation.
The substantive issue between Thomson and the Council concerned notification/objection procedures. Thomson submitted (see [39]) that "he had a right to be heard even if his submission would have made no difference". He made a "prudent compromise" in the substantive proceedings, but sought costs, as he had "had no alternative but to come to court". I said (at [55] - [62]): 55. While I do not have to determine with certainty what the outcome of the litigation would have been, I am certainly satisfied that Thomson had a very serious case to be argued in respect of the miscarriage of the Council's procedures and policies, and that his case, and prospects of success, were probably strengthened by the amendment of the points of claim. 56. I have, therefore, come to the conclusion that it is probably more likely than not that Thomson would have succeeded in upsetting the consent, had the trial proceeded. 57. However, that is not the only matter that should be taken into account by the Court in exercising its judicial discretion as to costs. 58. The fundamental issue at the heart of the dispute between the two neighbours was resolved, somewhat late but still "in due course", by mediation, and I take account of the fact that, while Council was still considering his DA, O'Neil initiated some direct "settlement" discussions with Thomson. Shortly afterwards, Mrs Thomson also visited the O'Neil house to inspect some plans. 59. However, there seem to have been no personal or direct follow-up negotiations between the neighbours until the mediation, and it could be argued that Court proceedings were not Thomson's last resort, at least as against the neighbour. The situation between them is that an offer of settlement was made, but not responded to. A mediation was eventually organised for the day of the trial (some 9 months later), and resulted in a settlement which, like O'Neil's initial settlement proposal, involved his building some "privacy screen". 60. O'Neil had put to the Council a firm proposal to erect some screening, after he had put that suggestion to Thomson, without securing the latter's agreement. Council then resolved to require screening as a condition of its consent. That condition was not sufficient to satisfy Thomson, and, even though there is no evidence before me as to whether or not he endeavoured to have further negotiations with O'Neil, he was presumably advised that his best or only option, after Council declined to revisit its decision, was to challenge the consent on the basis that the Council's procedures had miscarried in the assessment of O'Neil's DA. 61. I am satisfied that these proceedings may well have succeeded, and, in the absence of any evidence to support an assertion, in terms of the test articulated by Bignold J in Jan Yee [Australia Pty Ltd v Woollahra Council, unreported, Bignold J, 26 March 1997 (40232/1995)], that they were not "justifiably commenced" and/or "justifiably continued", to the extent necessary to underpin an order for costs, I do not believe that the Council is entitled to an order for costs against Thomson. 62. I have also come to the view that it would not be an appropriate exercise of the judicial discretion to make no order at all as to costs. Thomson has satisfied the test laid down in Jan Yee, in so far as he brought proceedings against the Council, and the formal orders of the Court will, therefore, be that: Noting the agreement reached between the applicant and the first respondent, as embodied in Exhibit T1, the application is dismissed and the first respondent is ordered to pay such of the applicant's costs as were incurred by the applicant in respect of his claim against that respondent.
It could be said that Thomson had no option, other than court proceedings, whereas, in the present case, the court option may well have been the worst for Lovett.
In Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; 179 ALR 664, Goldberg J reviewed the Lai Qin line of authority, and then said (at [7]): Although it is open to me on the authorities to which I have referred to determine the costs issues by reference to the reasonableness of the conduct of the parties in relation to the amendment application, I consider, in the circumstances of this case, that I should determine the costs issue by reference to the outcome of the application in respect of which I have been able to form a concluded considered view. Although the High Court decision has made it unnecessary to determine the application to amend further the amended cross-claim, at the time the High Court decision was handed down I was well advanced in the preparation of my reasons for judgment. A hearing on the merits had occurred and all relevant matters were fully argued. I am therefore in a position to determine what orders I would have made had the two applications to amend further the amended cross-claim, and to dismiss the amended cross-claim, proceeded to judgment on the merits.
A discontinued Class 1 appeal was involved in Ross v Lane Cove Council [2013] NSWLEC 109. Biscoe J referred to (pars [9] and [10]) of his judgment in Arden (above at [61]), and to Grant, and to the pre 2007 costs regime. His Honour said (at [7] - [9]): 7 ... First, there was a costs rule which empowered the Court to order a discontinuing party to pay the costs of the other party in any civil proceedings. Secondly, there was a costs rule applicable to proceedings in classes 1, 2 and 3 of the Court's jurisdiction which was similar to r 3.7(2) of the 2007 rules except that it did not refer to "in the circumstances" but to "in the circumstances of the particular case". Thirdly, there was a Practice Direction that no costs order was to be made in planning and building appeals "unless the circumstances are exceptional". 8 It was in the context of this earlier costs regime that it was held in Manly Warringah [Rugby League Club Pty Ltd v Warringah Council [2006] NSWLEC 88] that "ordinarily" the filing of a notice of discontinuance without the consent of the other party will be a circumstance which makes it fair and reasonable that there be an order for costs because it usually represents abandonment of the claim but that the relevant consideration in every case is whether the discontinuance was reasonable conduct on the part of the discontinuing party in the circumstances of the case: at [13]. If this suggests a presumption in planning appeals that a discontinuing applicant should pay the respondent's costs which may be rebutted by the circumstances, I do not think it has survived the introduction of the new costs regime in 2007. 9 Under the current costs regime, in Classes 1, 2 and 3 of the court's jurisdiction there is no presumption that a discontinuing applicant should pay the respondent's costs. Such a presumption appears in r 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR), which provides that a plaintiff is to pay the defendant's costs in discontinued proceedings unless the court otherwise orders. While applicable to proceedings in classes 4 and 8 of the Court's jurisdiction, this rule does not apply to proceedings in classes 1, 2 and 3: Schedule 1 of the UCPR. On the contrary, r 3.7(2) of the LECR contains a presumptive rule that there should be no order for costs on discontinuance of class 1, 2 or 3 proceedings subject to one exception. Where costs are sought the question is simply whether the sole exception to the presumption applies, namely, that the Court considers the making of the costs order "is fair and reasonable in the circumstances".

C: The Chronology of Events

For reasons which emerged outside the full hearing of the primary proceedings before Pearson C, and only after the one day of hearing in the s 56A hearing before me, it is necessary now for the Court to go through the chronology of events carefully, and in regrettable detail, taking care always to avoid any infringement of the Lai Qin principles regarding "hypothetical trials".
Lovett's original DA was lodged on 11 August 2011, followed shortly afterwards by its associated SEE (Exhibit C5, fols 891ff, and [24] - [26] above). Nasser describes the project (par 5) as involving two "refreshment room" tenancies. The LEP required that the use be appropriately "ancillary" to some permitted use in the industrial (c.f. commercial) zone.
Council's assessment report (Exhibit C5, fols 879 - 890, and Exhibit C6, fols 1 - 5) was placed before a meeting of the elected Council on 16 November 2011. The report noted (Exhibit C5, fol 889) that the proposal failed to comply in terms of car parking, safety, access, hours of operation and signage, and recommended refusal.
Council resolved, however (Exhibit C5, fol 890, and Exhibit C6, fol 11): THAT the application be given conditional approval, with the following conditions: o The industrial component operate from 7am-7pm o The coffee shop operate from 7am-9pm FURTHER THAT the coffee shop hours are given a 12 month trial.
That consent decision was notified on 1 December 2011 (Exhibit C5, fol 850ff and Exhibit C6, fol 12ff). It remains valid, even if ambiguous, until set aside, or declared invalid.
There were 145 conditions imposed by the Notice of Determination, and three of them subsequently gave rise to concern, as noted above (at [30]), namely 4, 93, and 98. In particular, the Court notes that Condition 4 in the Notice said: The Coffee Shop and Ocean 7 are restricted to a twelve (12) month trial period after issue of the Occupation Certificate.
Lovett now alleges that those conditions did not accurately reflect Council's decision to grant consent.
The twelve month "trial" period in Condition 4 began to run when an interim occupation certificate was granted on 29 March 2012, so it would have expired on 28 March 2013.

First modification

On 3 July 2013, Lovett lodged its first s 96 modification application (Exhibit C2, tab 6.2, fols 205ff, and Exhibit C6, fols 37ff).
Lovett noted on the coverpage of the application - somewhat anomalously under the heading "Description of development on original consent": "Extension of existing retail tenancy. Plans attached. Vary trading hours"
Then, under the heading "Type of Modification", at the foot of that cover page, Lovett said: "Existing DA is for 2 Retail Tenancies. Sect 96 for this to become one retail tenancy. Vary existing trading hours"
Nasser notes (par 12(c)) that the modification application sought deletion of Condition 4, as imposed. In his written submissions in the 56A proceedings (par 1), Lovett's counsel stated that the objective of the modification application was to allow Nasser: to rationalise use of the single level building from which his café operates, to utilise vacant and under-utilised space within the same building, by removing an internal partition and thereby allowing use of space already approved for use by another café (Ocean 7), with the addition of some additional bench space and seating.
Lovett annexed to its application a "Plan of Management" (Exhibit C6, fols 51 - 54) which referred to the premises/use as a "café", which in "15 months" of operating had generated no complaints, and indicated an intention to obtain a liquor licence.
Lovett also annexed a new SEE (Exhibit C6, fols 56 - 61), which used the word "restaurant" to describe the then current use of the premises.

The Class 1 appeal

While that 2013 modification application remained undetermined, Nasser, on behalf of Lovett, filed, on 12 November 2013, its Class 1 appeal against its deemed refusal (Exhibit C2, tab 6.2, fols 202 - 204).
On 21 November 2013, Ware wrote to Nasser (Exhibit C2, tab 4): Dear Sir Hurstville City Council ats Charlie Lovett Peakhurst Land & Environment Court Proceedings No. 13/10873 Premises: 2 Stanley Street, Peakhurst (Premises) I am the lawyer for Hurstville City Council in these proceedings. Council acknowledges receipt of service of the class 1 appeal on 13 November 2013. A notice of appearance will be served shortly. The appeal purports to seek an order, "To re-instate our original DA and have our Section 96 assessed on its merits" and is an appeal against a deemed refusal of a section 96 modification application no. MOD2013/0030 relating to development consent no. 11/DA-268 endorsed on 30 November 2011. Condition 4 of that consent provided: "The Coffee Shop and Ocean 7 are restricted to a twelve (12) month trial period after issue of Occupation Certificate". Council's records indicate that an interim occupation certificate was issued on 29 March 2012. There is no further record of any application to extend the trial period and/or to delete condition 4 until the modification application was received by Council on 10 July 2013. At this time, the use permitted under the development consent had lapsed by reason of condition 4. Accordingly, there is no existing valid development consent in place for use of the Premises. This in turn means that the Council and the Court on appeal, has no jurisdiction to approve the modification application as to relates to a development consent that has lapsed. In view of this, it is requested that you immediately withdraw the class 1 appeal from the Court and the modification application from Council. Council will consider an application for a refund of the fees paid with respect to the modification application. If the appeal is not withdrawn by midday Tuesday 24 November 2013, I am instructed to file a motion with the Court seeking orders that the Court has no jurisdiction to determine the appeal and for costs. Please advise whether you intend to withdraw the appeal within the time stipulated. Furthermore, I am instructed by Council that building works appear to have been carried out at the Premises without consent of Council, being works that required development consent. The works appear to be in accordance with plans submitted with the modification application. As Council cannot approve the modification application because the underlying development consent has lapsed, the only alternative available is for you to lodge an application for a building certificate with respect to the unauthorised building works. If this application is not made within 14 days of the date of this letter, Council will have no alternative but to commence legal proceedings in relation to the unauthorised works. In view of the matters raised above, please provide an urgent response by close of business Monday 24 November 2013. Should you wish to discuss this matter, please contact me. Yours faithfully Jenny Ware Corporate Lawyer
Nasser deposes (par 13) that, on 5 December 2013, he discussed Condition 4 with the General Manager of Council, Victor Lampe, and that, during the alleged exchange between himself and Lampe, the following was said: Me: "... You asked me to add Condition 4 to our s96 and we did." Mr Lampe: "You have had some issues from when you were on Council with Vince and Con and the officers are just doing what we are told." Me: "Victor, you are not allowed to do what you are told. You are only allowed to do what is right and assess applications on their merit."
The original Statement of Facts and Contentions ("SFC"), as filed by Council in the primary proceedings, on 6 December 2013 (Exhibit C5, tab 6, fol 928ff), included (as Contention B1.1, at fol 930) a claim that "the consent for the use has lapsed beyond the jurisdiction of s 96 ...".
The SFC was amended on 13 February 2014 (Exhibit C5, tab 7), again on 18 February 2014 (tab 8), and finally on 28 April 2014 (tab 9), but none of those amended versions carried forward the original contention B1.1 (see fols 937, 944, and 951), and none claimed that the Notice of Determination of the DC did not reflect Council's actual decision.
On 10 March 2014, Council issued a Notice of Determination, dated 5 March, refusing the 2013 s 96 application (Exhibit C5, tab 3, fols 821 - 824, and Exhibit C6, fols 63 - 66).
Associated with the copy of that Notice (in Exhibit C5) is the Council's assessment report (fols 825 - 836 plus appendices). Council's "interpretation of use" as stated in that report (at fol 825) was "restaurant or café", and the report noted that the then current proposal was considered (fol 825, par 5) to be "an intensification of the existing use and is not considered to be substantially the same as originally approved". Thirty-six parties were notified of the application and Council received no submissions (fol 825, par 6). Refusal was recommended, and so was referral for appropriate enforcement action (fols 825 - 826).
The Class 1 appeal was heard by Pearson C on 28, 29 April, and 26 June, 2014, she delivered her judgment on 25 July 2014 (Exhibit C1, tab 1). In summary, the learned Commissioner reasoned, in her careful and considered judgment (at [86]): The development to which the consent as modified relates is not substantially the same as the development for which development consent 11/DA-268 was originally granted, and s 96(1A)(b) of the Act is not satisfied. Regardless of whether on a consideration of the relevant matters in accordance with s 96(3) the application could properly be approved on its merits, the application to modify development consent 11/DA-268 must be refused.
The critical issues were changing use, and substantial difference.
The consequences of the Commissioner's decision were that the DC stood unmodified, and the trial period had expired.

Enforcement action

Meanwhile, on 26 June 2014, Council issued to Lovett a Penalty Infringement Notice ("PIN") for what Nasser says (par 15) was "trading between the hours of 9am to 5pm".
However, by the time Nasser appeared at Sutherland Local Court on 16 July 2014, to oppose the PIN, it had been withdrawn by Council (Nasser, pars 15 and 16).
Council's concerns were, in fact, broader than "trading ... 9am to 5pm". On 12 August 2014, Ware wrote to Lovett's then solicitor, David Newhouse, saying, inter alia (Ware, fols 7 - 8): 1. ... as the consent has not been modified ... your client has been, and continues to, act in breach of condition 4 ... whilstever the business is operating and the condition remains in place. ... 4. ... the Penalty Notices ... c. ... have been issued, inter alia for: i. Carrying out development not in accordance with a development consent, in particular, in breach of condition 4 which is the trial period; and ii. Carrying out development not in accordance with development consent, in particular, the unauthorised works associated with the building being built not in accordance with the approved plans (drawing AA003 Rev C 20 September 2011). d. Your assertion that condition 4 has no continued operation as the condition refers to "Coffee Shop and Ocean 7" in circumstances where Ocean 7 is not trading is not accepted. The development consent applies to the whole of the premises. Condition 4 applies to the whole of the premises, regardless of whether part of the premises is not in use. e. Council has issued the Notices for 2 different offences - breaches of condition 4 and unauthorised works, being the works carried out not in accordance with the approved plans. They are 2 separate charges and are neither duplicitous or uncertain. These matters were documented and the subject of evidence in the Land & Environment Court proceedings. Your client cannot assert that it is not aware of the charges against it. ...

The Section 56A appeal

On 22 August 2014, Lovett filed a summons commencing its s 56A appeal against the Pearson decision. That summons also failed to raise the "unreflective" nature of Condition 4 in the Notice of Determination, but the appeal, as constituted, was listed to be heard on 20 November 2014.
That appeal did not preclude Lovett from seeking to address his problem with the Notice of Determination, which his appeal could not resolve.
On Saturday 15 November 2014, Nasser emailed the Mayor and Councillors, apparently following up on an "emotional letter to you all" two days earlier, which does not appear to be among the evidence, and following up also on a meeting on the Friday, at which Lovett was "given the opportunity to address Council" on the following Wednesday (19 November). He said (Ware, fol 24): We would like to walk you through the site and show you the gyprock wall we would like to remove. We have a chance next Wednesday to right a wrong that has gone on for 2 and a half years. The Council meeting will only give us a short time to talk so please email or call me so I have the chance to show you what you actually voted to refuse. We clearly showed both the Mayor and the General Manager the anomalies in the report that were 100% factually incorrect and it's because of this they have allowed us to reappear before you. We also explained that our appeal of your decision is on Thursday 20 November and with this information our Lawyers asked us to speak to Council to see if we could convince you to re look at this and save not only rate payers but our customers substantial legal cost. We simply wish our elected officials to know the truth and make a decision on what they think is best for the Peakhurst community and we would love to show you before Wednesday's meeting. If you are able to attend, please call me on 0419 770 434 or email me. I am happy to make time to explain and Charlie will be in your hands.
On 18 November 2014, Nasser emailed the elected Councillors and some officers of the respondent, and the ICAC, forwarding the Council resolution of 2011, which he said "is at the heart of the matter". The email continued (Ware, at fols 26 - 27 - bolding added): The simple fact is, the council resolved that in their meeting on November 16 2011 the the HOURS are to be on trial. Clearly stated in attachement 'A'. The Council officers didnt like the Council resolution so they created their own version and issued a development consent (attachment 'b') that is entirely at odds with the Council resolution stating in that consent that the actual BUSINESSES were on trial. That is incorrect, and we have spent 18 months going through the courts to rectify a problem that didnt exist. One of your staff has deliberately and fraudulently misconstrued the resolution of council to make it seem like the BUSINESS had a 12 month period, which is completely at odds with the minutes. Hurstville Council has been long renowned for their inconsistent decisions, and it is time someone takes account for it. I plead with you Mr Mayor that this wrong be made right on Wednesday night and that a consent be issued in accordance with the resolution of council on Wednesday night and that as per the resolution, council may consider the HOURS ONLY in a review. We have 7000 customers at Charlies, all of whom love the concept and we have never had a compliant. As i say this is the most serious of breaches of the local government act a resolution of a council meeting is a legal instrument and is not to be tampered with or manipulated by anyone.
At 4.37pm on the same date (18 November 2014), Nasser emailed the Mayor, Councillor Con Hindi, in these terms (Ware, fols 31 - 32): Mr Mayor Opportunity for Council to do the right thing We are simply asking for our democratic rights to be respected. If Council can agree to the bellow (sic) wording, the matter can come to an end. We suggest that Council do the following: 1. Amend the Notice of Determination of the original DA so it accords to the original resolution by the Councillors at the Council Meeting of November 16 2011, in particular the removal of any trail (sic) period and confirming both Ocean 7 and Charlie Lovett were approved as a refreshment room; 2. Confirmation from Council that the combined operation depicted in the plans annexed to the Joint Report does not require further consent (ie. exempt development or covered by the above consent without further s.96 modification); 3. Council agrees that the s.56A appeal may be discontinued by Charlie Lovett and on the basis that Council will not seek its costs. Please advise as a matter of urgency so we can have time to discontinue our s.56 appeal?
Councillor Hindi sought urgent advice from General Manager Lampe, who responded to him at 6.20pm (fol 31): Con, In response to the email I advise:- 1. Council has no power to re-open or reconsider the application; 2. Council is not able to act above the decision in the Land & Environment Court where this matter was refused; and 3. Only the applicant may withdraw the appeal and this is not an issue for Council.
No response appears to have been sent to Nasser, but Mr Ireland submits (Tp84, LL5 - 28) that Council "flatly rejected" Lovett's "overture", by "failing to engage with the substance of [it]". Mr Ireland said (Tp84, LL45 - 46): In other words a further overture to settle the proceedings that apparently falls on deaf ears.
The next day, 19 November 2014, Council met, and discussed "the first s 96 Application" (Nasser, par 20). Nasser was in attendance, and queried "the difference between the Council Resolutions and the Notice of Determination Conditions", but received no response (pars 21 - 22) from Councillors. Ware has provided (at her fol 33) a copy of a report (or information document), which was prepared by Council officers, for that meeting, in respect of Nasser's "representations". Various Council documents were annexed to that report (Ware, fols 35 to 49). Council resolved only to "receive and note this information" (fol 50).
On 20 November 2014, I commenced hearing the s 56A appeal. It was then hoped that the hearing would resume and conclude before the December-January Court vacation, and the resumption was subsequently fixed for 9am on Friday 19 December (the last day of the 2014 Law Term).

Further Extra-curial events and dealings

Also on 20 November 2014, Nasser (pars 23 - 24) had personal conversations with two Councillors (Badalati and Kastanias), who advised him that Councillors did not respond to him at the meeting on 19 November 2014 because the General Manager had warned them they "would be in contempt of court".
On 24 November 2014, Nasser wrote to the Mayor (and copied to other Councillors) in these terms (Ware, fol 52): We lodged a DA for 2 Stanley St Peakhurst in 2011 and received two (2) conflicting approvals. 1 from Councillors and a different one from the officers. We have a right to one answer to our Development Application instead of two. Very few on Council are interested in hearing our concerns and Councillors have been gagged from speaking to us. Is this normal or are we being singled out for special treatment by those who don't like us? Are we being denied our democratic rights? We are really frustrated with Councils position and would rather speak to our elected Councillors in person rather than through the Courts. We at Charlies feel that this is only fair and proper. We would like to have a meeting with yourself and interested Councillors and Officers to get some clarity on Councils position on the following questions; 1) We are in Court fighting to prevent Council from Closing us down. Councils position in Court is very determined on this point yet We have been promised by Councillors that Council is not trying to close Charlie's down. Then why are we in court? 2) Have Councillors been briefed on the current matter before the Land and Environment Court, Charlie Lovett v Hurstville Council and have Councillors spoken to Councils lawyers in person or is the advice Councillors are getting hearsay advice? 3) We were asked by Councillors Mining and Stevens at the recent meeting to lodge a section 96 application for our trading hours and to confirm Council is not trying to close Charlies. We lodged a section 96 in 2013 to ask council for that very thing and council refused our application unanimously? Are we being asked to lodge the same section 96 again? 4) Councillors were told that they would be in contempt of court if the (sic) made any decision on our DA. Will this apply to any new application we lodge? 5) We offered to withdraw our appeal in the Land and Environment Court if Council would hear our case 3 days before the Court date and Council meeting. The General Manager of Council refused our offer flatly. Was this offer discussed with Councillors? Has Council introduce a new policy of not settling matters before court? Please Mr Mayor, we are looking to you and the Councillors for guidance as to how to proceed. Please advise us of a meeting date at your earliest convenience.
On 2 December 2014, he wrote to the "Mayor and Councillors" in these terms (Ware, fols 54 - 55): The vindictive, venomous and spiteful behavior of Council has gone over the top! The day after the Council meeting a Council officer came down and harassed our staff about not having our trading hours on display (email from staff member attached). This behavior from Council staff has continued everyday and yesterday at 12:15 had to refuse access to 2 Council officers (Tina Christie and another gentleman) because they wanted to inspect and take pictures of our staff, customers and operations during our busy lunch hour. This is appalling! Bullying in the school playground is completely unacceptable. Bullying by grownups is an offence. What is it when your own Council is the perpetrator of bullying? I have attached a Stat-Dec of a conversation I had with Mr Lampe which when combined with the behavior of Council Officers, the falsified reports going to Council meetings, bogus legal advice about contempt of court for dealing with our application, unprecedented and unconscionable conditions being imposed on our original D.A by Officers, the whole thing smells very rotten! Maybe the officers are being influence by some Councillors for personal retribution or maybe the Officers are hunting us down of their own volition (the fine to close us down is also attached!) either way it is unacceptable to us. We at Charlie's refuse to believe that all of our elected Councillors are part of this abuse of process, bullying and shocking behavior by our Local Government so we call on those Councillors to help us in our hour of need! We were told to lodge a section 96 18 months ago and we did and look at where we are now. Councillors are now asking us to go down memory lane and lodge a section 96 again. It doesn't seem to matter what we do, it will be doomed to fail because our council is hell bent on driving us into the ground whether all the Councillors are in on the act or not. Doesn't Council have anything better to do than pick on a local cafe?? For God's sake leave us alone!

The second modification application

Lovett's second modification application, dated 17 December 2014 (Exhibit C6, fols 70ff), but apparently (Nasser, par 25) submitted on 19 December 2014, was lodged with Council. It described its substance (at fol 73) in these terms: Delete conditions 4, 93, 98, 99 of existing consent (11/DA-268) and confirm that both Ocean 7 and Charlie Lovett were approved as Refreshment rooms on 16 November 2011 under the then current 1994 LEP. Approve existing layout. Delete an internal Gyprock wall. Approve the proposed car park configuration from the attached McLaren Report. Amend the counter layout Amend the wash-up area. Add a fixed permanent shade structure over the outdoor seating area. Increase our Café Trading Hours from current approved 7am to 9am (sic) Monday to Sunday to 6am to 10pm Mon, Tue, Wed, Thur and Sun and 6am to 12am Friday and Saturday Night.
Nasser deposes (par 26): The First s96 Application and the Second s96 Application are substantially identical save for that the Second s96 Application seeks in addition: (a) to delete the Notice of Determination Conditions (apart from Condition 4 the deletion of which was sought already in the First s96 Application); and (b) confirm that Charlie Lovett and Ocean 7 were approved by the Respondent as refreshment rooms (as defined by Hurstville Local Environment Plan 1994) on 16 November 2011.
It was said (Tp102, LL1 - 10) that this modification application showed a "more sophisticated" approach, but it still did not raise the problem with the conditions (c.f. the Council's decision on the DA).

Hearing deferred

During that week (15 - 19 December 2014), it became - and was agreed on all sides, including mine, to be - impossible for the s 56A hearing to resume until the new year (see my email, sent to both counsel at 3.08pm on 17 December, at Ware, fol 62).
On 17 December 2014, at 6.03pm, Newhouse emailed Sam and Nasrine Nasser in these terms (Ware, fols 18 - 19): As discussed over the phone, the court invited the parties an opportunity to adjourn the matter on Friday, due to the events that have unfolded in Martin Place and the fact that the Judge is the duty judge, if both parties were agreeable to the adjournment. The Council agreed to adjourn Friday provided you were agreeable to cease all campaigning against Council. We conveyed your position that you would be agreeable not to take any further steps, except that you needed the right to talk to Councilors (sic) and council staff (eg for s.96 application). The offer by Council was then withdrawn. The matter will now proceed at 9am on Friday as indicated.
I respectfully observe that Newhouse's comments to the Nassers in that email are neither entirely accurate, nor appropriate. The cancellation of the 19 December listing had nothing whatever to do with the "events" in Martin Place (presumably the Lindt Café siege) - it was a simple listing difficulty for both Mr Ireland and the Court, which Council was content to accommodate (see again Ware, fol 62).
However, on the basis of clearly inadequate information, Nasser emailed the Councillors again, on 18 December 2014 (at 10.02am - Ware, fols 17 - 18): Please read the email correspondence below from our Lawyers which clearly shows that Council is trying to prevent us from lodging our s96 and is determined for the court proceedings to continue. We no longer know who is lying and who is telling the truth at Hurstville Council. This 2 versions of everything has been happening for 3 years. Does anyone up there know whats going on? Councillors Stevens and Clr Mining promised us in a public meeting that they were not trying to close us down and told us to lodge a s96 and based on their promise we stopped our campaign. Yet the below correspondence proves that someone is lying?? We are in court trying to stop Council from closing us down. We have been trying to defer the legal proceeding for one and a half months now and your General Manager won't allow it. On behalf of whom?? Where to from here? are we going to continue to burn public money or are Council Officers finally going to admit it made a mistake....
On 19 December 2014, Ware wrote to Newhouse at length (Ware, fols 14 - 16), and, in fairness, that letter should be set out in full in this judgment. Ware said (italics and underlining hers, but some other emphasis mine): The purpose of my letter is to raise with you concerns Council has over email correspondence being sent direct to Councillors from your client in circumstances where the parties are involved in (part heard) litigation. In particular, your client's correspondence appears to indicate that he does not understand the nature of the current proceedings. Further, your email to your client contains incorrect representations which I now seek to correct. Your email to Mr & Mrs Nasser You write, "As discussed over the phone, the court invited the parties an (sic) opportunity to adjourn the matter on Friday, due to the events that have unfolded in Martin Place and the fact that the Judge is the duty judge, if both parties were agreeable to the adjournment." Response: The request to a change in the hearing time was made by your counsel. The Judge refused Mr Ireland's request for a later start and instead stated that he would agree to an adjournment if by consent. See emails attached ... There is no mention of Martin Place events and the Judge was responding only to your barrister's request for a later starting time. You write, "The Council agreed to adjourn Friday provided you were agreeable to cease all campaigning against Council. We conveyed your position that you would be agreeable not to take any further steps, except that you needed the right to talk to Councilors (sic) and council staff (eg for s.96 application)." Response: There was no "agreement" as stated. There was a counsel to counsel discussion on the afternoon of 17 December 2014 before instructions had been obtained by either participant in respect of any adjournment of the proceedings to another date. Mr Ireland was well aware that Mr Seymour had no instructions at that stage. Further, as this was a discussion clearly held on a "without prejudice" basis and at a stage where Mr Seymour needed to obtain instructions, it was assumed that any report of it to your client would be handled appropriately. You write, "The offer by Council was then withdrawn." Response: There was no offer made by Mr Seymour or me to you or to your client, and accordingly, no withdrawal of any offer. Rather, I expressed the position of Council in not opposing the adjournment was conditional only upon a further hearing date being set on a day convenient to the Council's legal team. This was in writing to you yesterday morning. At no time did you and I have a discussion about any "campaign". Mr Nasser's email to Councillors Mr Nasser writes, "Please read the email correspondence below from our Lawyers which clearly shows that Council is trying to prevent us from lodging our s96 and is determined for the court proceedings to continue." Response: There has been no attempt by the applicant to lodge a further s96, Council is not preventing a s96 application being lodged. The Council is a respondent to Court proceedings commenced and maintained by your client. Council didn't oppose the recent application for an adjournment because, the application having been refused, there was and is no prejudice to the Council in having the appeal stood over to next year. Mr Nasser writes, "We no longer know who is lying and who is telling the truth at Hurstville Council. This (sic) 2 versions of everything has been happening for 3 years. Does anyone up there know whats going on?" Response: We don't understand this allegation. Any accusation that any Council officer, Councillor, or the Council's legal representatives, are lying is strenuously denied. We remind your client that causes of action are available to individuals in such circumstances. Mr Nasser writes, "Councillors Stevens and Clr Mining promised us in a public meeting that they were not trying to close us down and told us to lodge a s96 and based on their promise we stopped our campaign. Yet the below correspondence proves that someone is lying??" Response: There are no proceedings on foot by Council to close down the business. Council has not commenced enforcement proceedings to close down the business. There has been no s96 lodged since the application which is now the subject of the current Court proceedings. The only enforcement action taken by Council was the issue of PINs several months ago which were subsequently withdrawn. Nobody, from our side at least, has ever lied to Mr Nasser about the Court proceedings and/or a s96 application. Mark Seymour's dealings were (appropriately and ethically) directly with Clifford Ireland. My dealings have been with you, almost always in writing. I am instructed that Mr Nasser has not spoken to any Council staff in the development assessment team about a new s96. Mr Nasser writes, "We are in court trying to stop Council from closing us down. We have been trying to defer the legal proceeding for one and a half months now and your General Manager won't allow it. On behalf of whom??" The current Court proceedings have been commenced by your client. They are an appeal on a point of law against the Commissioner's earlier decision to refuse the s96 modification application. The proceedings do not, and have never, involved closing down the business or any enforcement action. Your client's statement about "one and a half months" is not understood. The only request to defer the legal proceedings was made by Mr Ireland on Wednesday 17 December. This followed the Judge's refusal to allow the parties to start the hearing at a later time, to suit the convenience of Mr Ireland. The General Manager provided instructions that the adjournment to the new year was not opposed. This was conveyed immediately to Mr Ireland. Mr Nasser writes, "Where to from here? are we going to continue to burn public money or are Council Officers finally going to admit it made a mistake...." Mr Nasser's appeal has been adjourned, at essentially, your barrister's request, to a date to be fixed by the Court. After the final submissions, his Honour Justice Sheahan will presumably reserve his decision and eventually hand down a written judgment. In relation to public money and costs, Council is the respondent in both Court proceedings. It has simply responded to and prepared for litigation commenced by Charlie Lovett Pty Limited. The allegation that Council officers made a mistake is denied. Council staff recommended the modification application for refusal. That recommendation was adopted unanimously by the Council and led to the refusal of the application. The Court also found that the modification application was not appropriate for similar reasons put forward by Council staff in the report to Council. Overall, Mr Nasser's complaints are hard to understand. They reiterate the strange claim that Council is somehow doing "something" to him when all that has happened is that his modification application has been, rightly, refused by the Council and then the Court. I respectfully remind you that both parties to these proceedings are legally represented. It is strongly recommended that all future communications relating to the proceedings be through the parties' legal representatives. In saying that, the current proceedings do not preclude your client from lodging applications (s96 or otherwise) in accordance with the law. In such circumstances, the usual Council processes would be observed and any application would be considered on its individual merits and having regard to the relevant legislative framework. I say this as there seems to be some indication that your client believes he is somehow now prevented or hindered from lodging a s96 modification application.
Also on 19 December 2014, General Manager Lampe emailed all Councillors in these terms (Ware, fol 57): Dear Councillors I refer to the email sent by Charlie Lovett to all Councillors yesterday at 10:02am. I have made enquiries with our legal team and set out below the chain of events relating to the recent adjournment of the proceedings. 1. The appellant's appeal was part heard on 20 November and had been listed for further hearing at 9:00am on 19 December 2014 by his Honour Justice Sheahan. 2. On 17 December 2014, Charlie Lovett's barrister wrote to the Court requesting a later start at 11:00am, to suit his own convenience ... 3. The Council had consented to this request, on the basis that the matter would conclude on that day. 4. The Judge rejected Mr Ireland's request ... Instead, his Honour suggested that the matter could be adjourned if both parties agreed. 5. The Council didn't oppose this request ... 6. The hearing was subsequently vacated by the Court and will be relisted sometime next year, in May 2015. 7. I have made enquiries with the Development Assessment staff and no attempt has been made to lodge a further s96 application. Councillors, this matter is before the Court and is part heard. Both Council and Charlie Lovett Pty Limited are legally represented. The rules of litigation apply to these proceedings. All correspondence and communications relating to the proceedings must be sent through the parties' legal representatives, not directly between the parties. Otherwise, the Court process is undermined. As demonstrated above, it is clear that Charlie Lovett's email contains gross misrepresentations as to the truth. Accordingly, I do not propose to respond to the other issues raised.
On 23 December 2014, Council's Michael Watt wrote to Nasser, saying, inter alia (Ware fols 64 - 65): We are writing in connection with the use being carried out at the premises in breach of Development Consent No. 11/DA-268 dated 30 November 2011 (Consent). In particular, condition 4 of the Consent provides: "The Coffee Shop and Ocean 7 are restricted to a twelve (12) month trial period after issue of Occupation Certificate". Council's records indicate that the Occupation Certificate was issued on 5 March 2012. Therefore, the stated trial period has expired. Notwithstanding this, the use of the "Coffee Shop" component of the Consent has continued in breach of condition 4. This breach of the Consent gives rise to a breach of the Environmental Planning & Assessment Act, 1979. On 17 December 2014, the Council resolved in respect of the premises: "To authorise the General Manager to take appropriate action in respect of the unauthorised use". Council is in receipt of your s96 modification application no. 2014/0150 received on 19 December 2014. The modification application includes, amongst others, a request to delete condition 4. It is recommended, in order to attempt to remedy the breach of Consent to prevent legal proceedings being taken, the current s96 modification application be amended to make reference to the request to delete condition 4 only. This is consistent with previous advice provided to you at the meeting with the Mayor, General Manager, Council's Ombudsman and myself on 14 November, 2014. We also recommend you then consider lodging a further s96 modification application that deals with the other matters and Consent changes you propose. Both applications will need to be accompanied by appropriate justification to support the outcomes requested. This would mean that there would be 2 separate s96 modification applications before Council. Both applications would be assessed on their individual merits and in accordance with the law. In this regard any decision to be made by Council can only be on the totality of the application and not in respect to individual modifications to conditions or plans. Please note that this letter is a recommendation only - it is not in any way intended to pre-determine the modification application(s) and any response you make is entirely up to you. We do recommend that you adopt this course and advise us before 4:00pm on 12 January 2015. In the meantime, Council will proceed to assess the current s96 modification application as lodged.
In his submissions at the costs hearing (Tp86, LL6 - 10), Mr Ireland described the Council's proposal of 23 December 2014 as "artificial", "Kafka-esque", and "continuing obfuscation" of Lovett.
As already noted above ([9]), the relisting of the 56A proceedings for 4 May also occurred on 23 December 2014.

Second modification application determined

On 4 March 2015, Council considered a report on the second s 96 application, that report being described as an "Independant (sic) Assessment, Consultant Planner" (Ware, fols 66 - 91). In its Executive Summary (fols 66 - 67) the following paragraphs appear: 7. The approved use for the non-manufacturing areas is as two (2) takeaway food and drink premises. 8. The current application is generally considered not to be substantially the same as the development for which consent was originally granted and is therefore not capable of being approved in its entirety. 9. It is open to a consent authority to approve part but not all of the Section 96 modification request, and to impose conditions which relate to the same planning matter. 10. The deletion of Condition 4 which imposes a trial period, is recommended for approval as the development to which the consent as modified relates will remain substantially the same development as the development for which the consent was originally granted. However the deletion of the Condition 4 does not authorise a change of use from the approved takeaway food and drink premises on the site. 11. The proposed development is considered to be of minimal environmental impact. 12. The proposed development is inconsistent with the majority of the objectives in the relevant IN2 Light Industrial zone under the Hurstville Local Environmental Plan 2012. It generally complies with the Development Control Plan No 1 - LGA wide, save as to the setback of the shade structure from the side boundary. 13. A Section 96(1A) modification is not the appropriate vehicle to dispute the findings of the Land and Environment Court as to the approved use. 14. The unauthorised use of the central area as a café is recommended for referral to the enforcement section of Council.
The external assessor recommended (fol 67): THAT the application be determined as detailed in the report by deleting Condition 4 and including Condition 4A which confirms the approved use of the non-manufacturing parts of the site as takeaway food and drink premises, and refusing the remainder of the modification application. FURTHER THAT the matter be referred to the appropriate enforcement person at Council to take appropriate action under Part 6 of the Environmental Planning and Assessment Act 1979 in accordance with Council's adopted Enforcement Policy.
He reported (at fol 69) on a meeting with the Nassers on 11 February 2015, in these terms: ... the author of this report visited the site and discussed the proposal and inspected the site for approximately two (2) hours over the lunch period from 12.30pm to 2.30pm. Sam and Nasrine Nasser (the proprietors of Charlie Lovett) explained the history of the consent, including that the Ocean 7 tenancy never commenced operation (partly because of Condition 93 of the consent). They drew attention to the environmentally appropriate use of furniture and crockery at the premises. Access was given to all parts of the site to assist the inspection and consent was given for photographs to be taken. The appearance is of an extremely pleasant, relaxed and thriving use with a wide selection of sandwiches, salads, pizza, burgers and pasta, coffee and drinks, with provision for indoor and outdoor seating. Mr Nasser advised that some coffee demonstrations also occur at times. The roasting was occurring during the visit in the western sector of the site. Mr Nasser advised that they roast about 2.5 tonne of coffer (sic) per month, of which about 350kg (14%) is used in the café, 30-40kg is sold retail at the café, and the rest is sold wholesale to cafes and restaurants. Some loading was observed from the manufacturing area whilst on site. The car park was well utilised but not full at all times when observations were made of the car park. They are currently using the Ocean 7 area for storage associated with the Charlie Lovett business as there is no other use for this area and they have been unable to sublease it.
He then gave a detailed summary of the primary proceedings (at Ware, fols 72 - 73), and also mentioned some events which had followed them. Whereas Nasser has asserted that the two modification applications were "substantially identical" ([110] above), the assessor observed (Ware, fols 73 - 74): The principal differences between the 2013 modification and the current modification are: • The current modification appears to essentially seek a declaration that the approved use of Charlie Lovett and Ocean 7 in 2012 was as a refreshment room, counter to the findings made by Commissioner Pearson. The request does not appear to be seeking a change of use, rather to seek to establish existing use rights. • The current application seeks approval for the current layout. That layout is set out in drawing No. AA002A Landscaping Plan Issue F dated 29 March 2012. Presumably the request also includes approval for the "outside seating" which is not currently approved, and is only peripherally mentioned in the Statement of Environmental Effects in the context of being underneath the proposed shade structure. • Small internal changes to the counter and rear wash-up area behind the warehouse are also sought. • The current modification additionally seeks to delete Condition 93 about no deep frying and all food in takeaway containers and Condition 99 restricting the site to twenty (20) full time employees. • The current application also seeks to add a fixed shade structure over the outdoor seating. • The 2013 application sought hours 6am to midnight seven (7) days per week. This application seeks 6am to 10pm Sunday to Thursday and 6am to midnight Friday and Saturday. • No plans have been lodged in this application as to how the Ocean 7 tenancy is proposed to be fitted out or how many seats are proposed. Although it may be generally as set out on page 20 of the Acoustic Report which was lodged on 11 February 2015, there are structural differences between that plan and plan AA002 dated 19 December 2104 (sic) originally lodged with the 2014 modification. Matters which are jointly covered by the 2013 modification (which the Court has determined would not render the consent for takeaways as substantially the same), and the current modification are: • Removal of the trial period in Condition 4; • Increase in trading hours to 6am in the morning and between one (1) and three (3) hours in the evening in Condition 98; • Change the car park layout; and • Delete the internal wall between Charlie Lovett and Ocean 7 to create one (1) tenancy.
The report noted (at Ware, fol 75): The building is not laid out in the manner of the plans approved under the 2011 consent plans, although the Applicant advises that the variations to the built form have been certified by an interim occupancy certificate. This assessment report does not discuss whether or not those amendments have been lawfully carried out. That is a matter for Council's compliance section. The café is generally laid out in the manner set out in the plan marked AA002A Landscaping Plan Issue F dated 29 March 2012 lodged with the modification application. The principal differences between the approved plans and the current layout are: [The report then detailed 10 particular non-compliance matters]
On the question of Lovett's request for "confirmation" of the use approved by the 2011 consent, the Assessor commented (Ware, fols 86 - 87 - emphasis mine): The description of the development in the application seeks to "confirm that both Ocean 7 and Charlie Lovett were approved as Refreshment rooms on 16 November 2011 under the then current 1994 LEP". Presumably this application is made because they are aware that an application for change of use from a takeaway to a café use is not permissible in the zone and they are seeking to establish existing use rights. By this modification application, the Applicant has essentially sought to appeal or overturn the finding of Commissioner Pearson in the Land and Environment Court that the approved use of the Charlie Lovett central area and Ocean 7 was for a takeaway food and drink premises. There is no argument formulated in the lodged documents that establishes the basis on which tis (sic) is made, but presumably this is based on the Hurstville Local Environmental Plan 1994 wording which referred to refreshment rooms, the use of those words in the Council Officer's assessment and wording in the original application. However this assessment has found that the approved use for the non-manufacturing part of the sites is for two (2) takeaways. ... The Applicants stated on inspection (but did not include in the modification application) that the Council resolution had been incorrectly translated from the Council resolution which gave approval for: • The industrial component operate from 7am-7pm • The coffee shop operate from 7am-9pm Further that the coffee shop hours are given a 12 month trial However the Notice of Determination Condition 4 goes further than the resolution by stating: The Coffee Shop and Ocean 7 are restricted to a twelve (12) month trial period after issue of Occupation Certificate. It is not apparent from the Agenda of the meeting on 16 November 2011 that there were any conditions attached to the report considered in the meeting of 16 November 2011. There would therefore have been many factors in the conditions which were not canvassed in the report or at the Council meeting. The Applicant has not sought to alter Condition 4 to that stated in the minutes and resolution, nor have they (sic) alleged that there has been any error of law, they simply seek the deletion of the condition. This modification application is not the appropriate forum in which to argue that the Notice of Determination was invalidly drafted, and it is noted that no such statement is included in the modification application. If the Applicant indeed felt that there had been an error in the drafting of the Notice of Determination in 2011, they (sic) could have sought a Review of Determination under Section 82A of the Act, or appealed the determination under Section 97 of the Act, however the time for making such applications has passed. The requested "confirmation" cannot therefore be made by this application.
In the "conclusion" to the assessment (fols 90 - 91), the following comments appeared: The approved use of the site is for one part to be warehouse, storage and logistics, some manufacturing and for two (2) takeaways. The proposed Section 96(1A) modification is considered to effectively alter the use of the two (2) takeaway premises to a single café and to reduce the warehouse, storage, logistics and manufacturing areas of the site. It is not considered to be substantially the same development as was originally considered and approved by the Council. This means that the application cannot be approved as it was lodged. ... The modification application as a whole cannot be recommended for approval as it fails to meet the requirement to be substantially the same development as the development for which the consent was originally granted and it is against the public interest to consent to an application which fails to achieve the requirements needed for a valid modification application. However the deletion of the Condition 4 trial period could be approved as it would retain the approved use as substantially the same as that which was originally approved. Irrespective of the expired trial period in Condition 4, the current use of the Charlie Lovett central area is as a café and is not in accordance with the approved use as a takeaway. The area used for warehouse, storage and logistics has been reduced by the construction of a wall to incorporate part of that area into the kitchen. The area approved for roasting and roasting storage area is being used for café seating. If the use of these areas remain unchanged even if the recommended deletion of Condition 4 occurs, these will remain as unauthorised uses of the site. It is recommended the unauthorised use be referred to the appropriate section of Council for appropriate action. The Applicant has sought to either to establish use rights as a café or refreshment room, or to effect a change of use. Neither can be done pursuant to this modification application because this assessment finds that the approved consent for the non-manufacturing part of the site is as two (2) takeaway food and drink premises (which is a permissible use in the zone), and that to change the use to a café would not be the substantially the same development as the development for which the consent was originally granted.
A detailed recommendation went to Council at that meeting, i.e. on 4 March 2015.
It recommended only that the 2011 consent be amended by (A) deletion of Condition 4, and (B) insertion of a new Condition 2A (NOT "4A" - c.f. [122] above), regarding internal alterations. The balance of the modification application was recommended for refusal.
However, Council resolved to defer the application (fol 93).
A revised report was put to Council on 18 March 2015 (Ware, fols 91 - 120).
Much of the factual material was unchanged from the assessor's 4 March report, including the finding about layout ([125] above - and see now Ware, fol 103).
The conclusion (at fols 118ff) mirrors that reached on 4 March ([127] above), but the recommended determination (at fol 119) is different.
Instead of proposing a new Condition 2A (at [129] above), the 18 March report proposed a new Condition 4A in these terms (fol 119): The approved use of the part of the site not used for manufacturing, storage, warehousing and roasting is for two takeaway food and drink premises. The development as modified by the deletion of Condition 4 of the original consent does not authorise a change of use of those areas to any other use other than as takeaway food and drink premises.
It then recommended (1) refusal, on the same grounds as on 4 March, and (2) referral for enforcement action.
Nasser deposes (pars 27 to 30) to statements made by him, and by Councillors Badalati and Kastanias, at the 18 March Council meeting.
The Minutes of that meeting (extracted in Exhibit C6, at fols 113 - 118) include, as "CCL553-15" (fols 117 - 118), the item concerning the Lovett application, described as: "2 Stanley St Peakhurst - Section 96 modification to delete some conditions of consent - make changes to car park and internals - add shade structure and change trading hours (MOD2014/0150)"
Council did not simply adopt the revised assessment report, so I now set out the relevant Minute of Council's decision, in full (fol 118 - with some emphasis added): Prior to the matter being considered, the following Speakers addressed Council: • Mr Sam Nasser (in favour of the application's approval) - plus an additional extension • Mrs Nasrine Nasser (in favour of the application's approval) - deferred to Mr Nasser Minute No. 145 RESOLVED THAT the original council resolution of 16 November 2011 previously approved by Council, namely 11/DA-268 be confirmed FURTHER THAT the development be approved as submitted in the modification application with the following amendments to conditions:- Condition 2 - be amended to include the plans submitted with this modification application namely:- • Approve existing layout • Delete and internal gyprock wall • Approve the proposed car park configuration from the McLaren Report. • Amend the counter layout • Amend the wash-up area Condition 4 - deleted; Condition 93 - deleted; Condition 98 - be amended to read:- The approved use being conducted only between the hours of:- 6.00am to 10.00pm Monday to Thursday and Sunday; 6.00am to 12.00midnight Friday and Saturday. Condition 99 - deleted. (Moved Councillor R Kastanias / Councillor V Badalati) For: His Worship the Mayor, Councillor C Hindi, Councillor P Sansom, Councillor C Wu, Councillor V Badalati, Councillor C Drane, Councillor R Kastanias, Councillor N Liu, Councillor J Mining Against: It was noted that the motion was carried unanimously.
Nasser deposes (par 31): The minutes of the meeting of the March 2015 Council Meeting record that the Respondent made the following resolutions in respect of the Second s96 Application: (a) the Development Application approved by the Respondent on 16 November 2011 be confirmed; (b) the Second s96 Application be approved subject to certain amendments to Conditions 2 and 98 of the Notice of Determination; and (c) the Notice of Determination Conditions be deleted save for Condition 98 which was amended as referred to above A copy of the minutes is at pages 113 to 118of the Exhibit.
It is to be noted, however, that the minutes are very specific (c.f. (a) in Nasser, par 31), and that what was confirmed, in fact, was Council's resolution of 16 November 2011 (see Tp103, LL21 - 35).
The modification approved "involves structural elements but approves no change of use" (Tp104, LL26 - 27).
Mr Seymour submits (1) that the two modification decisions are neither wrong, nor right, such as to justify some order for costs for Lovett, and (2) that there is no reason to read them as inconsistent (Tp104, LL20 - 28).
A Notice of Determination was issued on 26 March 2015 (Nasser par 32, and see the Notice in Exhibit C6, at fols 119 - 144).

Nasser's complaints have continued

Nasser has continued to pursue some complaints about Council's handling of his project (see his email of 15 April 2015, to the mayor, copied to all Councillors, at Exhibit C6, fols 146 - 147).
On 16 April 2015, Councillor Kastanias emailed the Mayor and General Manager in these terms (Exhibit C6, fol 145): The Applicant has expressed frustration over why council is still pursuing this matter in a court as I believe there is a court hearing on Friday which council will be expending additional ratepayers monies after the conditions have now been corrected. Thus seeing the conditions have been restored or corrected therefore I believe all court action should cease and thus bearing no additional day costs to council and ultimately the ratepayers of Hurstville City Council. I re-iterate councillors had nothing to do with the conditions imposed on Charlie Lovett and our names cleared of any responsibility for the conditions being imposed in the past on Charlie Lovett. Therefore, the correction of the conditions as per council meeting should eradicate further court action. Can you please advise position on this matter as to cease spending additional ratepayers monies ???
Ware includes in her material (at fol 121) a response which Lampe sent on 16 April 2015 in reply to Kastanias's email of earlier that day: Rita, Charlie Lovett has taken Council to court and as such we are the respondent. Charlie Lovett needs to take action to cease court action as they initiated the proceedings.
Nasser emailed Lampe later on 16 April 2015 (fol 121): Hi Victor You are correct, we are the appellant. The court proceedings are now simply a matter of costs. If council agrees to pay our legal costs(which would be the right thing to do after what we have been through, then we would immediately withdraw our appeal for tomorrow's proceedings?
On 23 April 2015, Nasser complained (fol 149) to Councillor Kastanias that his email of 15 April had drawn no response. She responded to him (fol 148): ... [I] have referred your emails and serious allegations to instruct the internal Ombudsmen Mr. Warren Park to refer your serious allegations to ICAC, Police and further seek legal advice on this matter. I must reinterate (sic) that councillors played no part or had any influence on the conditions imposed on Charlie Lovett as that would be illegal and foremost I was not present on council when those conditions were imposed on Charlie Lovett. And we have had no knowledge council is still pursuing court action against Charlie Lovett after original resolution was restored. Thus, in response I hope that answers your question in the below said email you sent with regards to these serious allegations made against councillors.
In respect of these post-March 2015 matters, Nasser deposes (pars 34 to 36): 34. On or around 16 April 2015, l had a conversation with Cr Kastanias in words to the following effect: Me: "Why are we still proceeding with Court? Given what we have been through, why hasn't the Council agreed to pay our legal costs and chosen to continue to fight this matter?" Cr Kastanias: "The Councillors did not know that the proceedings were continuing. No information relating to the Court action has been presented to Council." 35. On 16 April 2015, Cr Kastanias sent an email to the Mayor of Penshurst, Cr Con Hindi, and Mr Lampe, in relation to these proceedings. A copy of the email is at pages 145 to 147 of the Exhibit. 36. On 23 April 2014 (sic), I received an email from Cr Kastanias which indicated that: (a) the Councillors were not involved in the Notice of Determination Conditions imposed on the Plaintiff; (b) the Councillors had no knowledge that Council was still pursuing court action against the Plaintiff; and (c) Ombudsman Mr Warren Park had been instructed to refer the matter to ICAC and the police. A copy of the email from Cr Kastanias is at pages 148 to 149 of the Exhibit.

Applicant

In support of its claims for costs, Lovett relies (1) on its eventual success in achieving what it says it had set out to achieve by its original DA, and (2) on the "unreasonable" conduct of Council in rejecting it, and resisting all attempts by Lovett to "right the wrong".
Lovett relies on Council's belated acceptance of its allegation that it issued a Notice of Determination inconsistent with the resolution of the elected Council to so determine Lovett's DA. Council has now completely reversed its stand on the project, and in the litigation (e.g. sub 17), and now accepts (1) no longer segmenting the Lovett premises, (2) having no trial period, (3) imposing no limit on patron numbers (see the new plans - 21 above), and (4) replacing two takeaways with one eat-in restaurant.
Lovett says that it was unreasonable of Council to reverse its stand so comprehensively.
Lovett also asserts a "very high probability or near certainty" of its success in the 56A proceedings - the first leg of Lai Qin - and, during his costs submissions, Mr Ireland rehearsed the notes of his undelivered final submissions on the s 56A appeal.
He says that Pearson C dismissed a relevant consideration, namely, the additional environmental impacts of the changes to the DC (Tp69, LL1 - 9).
Council's conduct was variously described as "inconsistent, capricious and irrational" (Tp71, L2), and "incompetent, inconsistent, contrarian, capricious" (Tp89, LL19 - 20). It was aggressive in the proceedings, and provocative with the PINs (Tp74, LL11 - 22).

Respondent

Council relies on the fact that the allegation that the Notice of Determination improperly or invalidly reversed what Council had decided was not raised in the "pleadings" for either proceedings, and came up only in a late letter from Lovett (e.g. subs 6) - Nasser's email of 18 November 2014 "is about the first time that this has been brought to [Council's] attention".
Lovett must wear the forensic decisions behind the arguments it put to the Court. It had "new material" in the second modification - Council didn't reverse its position.
In respect of the 56A proceedings, Council says that if it were simply a case of a supervening event removing the subject matter of those proceedings, each side should pay its own costs.
However, in this case, the applicant "was invited on several occasions to take into account what he was really after ... but he chose to appeal", a course which would not achieve what he wanted (Tp90, LL2 - 6). Nasser chose to communicate with Council mainly through the Court proceedings, and became more aggressive after the resumption of the 56A hearing was deferred to the New Year. Council advised him to separate the hours and structure issues. That was bold, rational, and well-intentioned advice, because Ware could not guarantee a Council outcome (Tp94), but the advice wasn't followed.
Council's position on costs changed from each party paying its own to seeking its costs from Lovett, because, Council says, s 56A was an unreasonable choice of option - it was a "very narrow" approach (Tp95), i.e. for Lovett to go looking for Commissioner error. A modification application in respect of Condition 4 was clearly required, and Nasser was specifically invited to make one. Council, therefore, submits that it should get its costs on the 56A.

E: Consideration

In its criticism of the "reasonableness" of Council's conduct generally, Lovett relies upon the "charter" legislated for Councils pursuant to s 8(1) of the Local Government Act 1993, which includes, inter alia, obligations: to exercise its functions in a manner that is consistent with and promotes social justice principles of equity, access, participation and rights and to ensure that, in the exercise of its regulatory functions, it acts consistently and without bias, particularly where an activity of the council is affected.
Section 8(2) provides: A council, in the exercise of its functions, must pursue its charter but nothing in the charter or this section gives rise to, or can be taken into account in, any civil cause of action.
Pain J, in Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109, expressed doubt (at [96] - [97]) about reliance on the charter "as containing a set of legal requirements" (my emphasis).
Mr Ireland countered Council's reliance on Pain J's decision, by referring to the Court of Appeal's decision in Patsalis v State of New South Wales [2012] NSWCA 307; 81 NSWLR 742, especially the leading judgment of Basten JA, at [42] to [55], which leaves the way open to limited reliance on the charter in some "civil" matters. (Leave to appeal to the High Court was refused: [2013] HCASL 24.)
Nasser had apparently had some problems with Council officers in the past ([86] above), but those issues are not a proper concern for these costs proceedings, which are compensatory and not punitive in character.
I can find no infringement of the charter by the Council in the present matter, so I turn now to the more specific complaints made by Mr Ireland on Lovett's behalf.
Central to those complaints is the alleged divergence between what Council resolved regarding Lovett's original DA, and how its approval of the project, which was contrary to the Council officers' recommendation, was detailed in the official Notice of Determination.
That issue must have been apparent to Lovett as soon as the two documents were compared. It could and should have been taken up with Council expeditiously, but it was not pursued with Council at all, it seems, until 18 November 2014 ([100] above). It was not Council's problem, and, contrary to Lovett's assertion (Tp70, L45), its problem and its circumstances are not "unique".
Instead, Lovett sought from Council a modification of consent, which included extension of trading hours, and then appealed to the Court, firstly against Council's delayed assessment of its modification application, and ultimately against its refusal.
When that Class 1 appeal did not succeed, a s 56A appeal was brought, asserting legal error on the Commissioner's part.
At no stage during the Court hearings up to 20 November 2014 was the alleged error in the Notice of Determination raised - it would have been a collateral challenge, but it should have been raised elsewhere in that time.
All proceedings were brought by Lovett, and controlled by Nasser and his legal team, and, despite Mr Ireland's valiant efforts in the costs argument to convince me of the necessary legal error in the Commissioner's decision, I am far from satisfied that success was "practically certain" in the 56A proceedings (c.f. Thomson, ([66] above).
Here, the outcome of the 56A could not yet be predicted, despite both counsel seeking to run their submissions (Ireland par 27, c.f. Seymour pars 20 - 31). The appellant had not yet identified a question of law asked and wrongly answered by the learned Commissioner. Attacks on her fact-finding are not sufficient: Site Plus Pty Ltd v Wollongong City Council [2014] NSWLEC 125.
I find that Council was entitled to (1) overrule its officers' recommendations on the DA and the first modification application; (2) defend the Class 1 proceedings; (3) enforce its conditions of consent; (4) resist the 56A proceedings; and (5) revisit its whole approach to the project, and the proceedings, when Lovett's real argument was presented to it, in the context of the second modification attempt. (As to (5), see Segal v Waverley Council [2005] NSWCA 310; 64 NSWLR 177.)
I find no "unreasonableness" in Council's conduct at any stage.
Indeed, the final outcome for Lovett was better than it had sought (Tp81, L24).
It is perhaps unfortunate that some of Council's actions were explained only internally, and not to Lovett/Nasser ([102]f above), but Ware, in particular, was commendably open and constructive in her "warnings" to Nasser of the difficulties he faced in the options he chose ([85] and [116] above). The Court is free to look at extra-curial conduct, in so far as it bears upon conduct in the proceedings: Lauren, at [31] (see [62] above).
On the other hand, Lovett is bound by the forensic decisions it has taken during the dispute, even if Nasser misconceived what was being done in his (or its) name (see [100] above). It is simple to judge them as poor, with the benefit of hindsight, but that is not the Court's function.
My function is to decide, firstly, if there is any conduct on Council's part which entitles Lovett to compensation for costs it has incurred fighting it, and, then, if so, if there is any "disentitling" conduct on Lovett's part, which could lead to the costs discretion not being exercised in its favour.
I do not find any conduct of the first type. This case is of the type identified by Lai Qin, as applied in Grant, and in Lauren (at [33] - above at [62]).
Lovett and Nasser must look elsewhere for redress, and I express no views on the questions still troubling them about the case.
The "disentitling" issue obviously does not arise for decision, but, rightly or wrongly, Lovett was free not to accept Council's advice. The s 56A appeal was not its best option, but it was not unreasonable, such that it would entitle Council to claim its costs of it.
Accordingly, in all the circumstances I have described, I consider that both parties should pay their own costs of both the primary proceedings and the 56A proceedings.
I also consider that, in all the complex circumstances of this matter, each side had an arguable case to put to the Court on costs, and, as both their cases failed, that each party should pay its own costs of the costs hearing.

F: Orders

The orders of the Court will, therefore, be: 1. All Notices of Motion for costs are dismissed. 2. Each party is ordered to pay its own costs of: 1. The Class 1 appeal proceedings 10873/2013; 2. The s 56A appeal proceedings 10657/2014; and 3. The Notices of Motion and hearing on costs. 1. All exhibits, including those retained on file 10873/2013, pursuant to the orders of Pearson C, are returned.

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: 05 June 2015

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