Chris Lonergan & Associates v Byron Council, Pearlman J, 27 April 1998, unreported;

1. This is a notice of motion by the respondent for an order that the applicant pay its costs of the proceeding as a consequence of the filing by the applicant of a notice of discontinuance. The proceeding is in Class One of the Courts jurisdiction, to which cl 10 of the Practice Direction 1993 applies: The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional.

2. The present application for costs is made pursuant to the Land and Environment Court Rules 1996, Pt 11 r 5: A5. (1) If a party to any proceedings discontinues them in whole or in part, the Court may, on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought and who does not consent to the discontinuance.

(2) The costs payable to a party under any order made under this rule are to be the costs of the party occasioned by the discontinued claim and reasonably incurred before service on the party of notice of the discontinuance.

3. The following principles appear to have emerged from previous judgments of the Court: (1) In planning and building appeals it is first necessary to look for some exceptional circumstance so as to found an order for costs ( Chris Lonergan & Associates v Byron Council , Pearlman J, 27 April 1998, unreported). This is a direct consequence of cl 10 of the Practice Direction to which I have referred. (2) Ordinarily the filing of a notice of discontinuance without consent will satisfy the requirement for an exceptional circumstance or operate as an established exception to the practice direction ( Manly Wharf Pty Limited v Manly Council , Bignold J, 22 October 1997, unreported). This is because the discontinuance usually represents an abandonment of the applicants claim, thereby leading to the result that costs incurred by the other party are necessarily wasted or thrown away.
4. Whilst these principles generally govern the making of an order for costs in cases such as this, they are not hard and fast rules. If they were, then that would be contrary to the provisions of s 69(2) of the Land and Environment Court Act 1979, which give the Court an unfettered discretion as to costs. They are merely principles which the court has adopted as a guide to the exercise of the discretion which exists under that section. Moreover, the facts in each case are seldom the same. There may be special facts or circumstances which might justify a departure from these principles in any particular case.
5. Accordingly, it is necessary to examine the particular facts and circumstances which gave rise to the filing of the notice of discontinuance in this case. The position is best understood by reference to the following chronology of events: 1 April 1997 The applicant lodged a development application with the respondent for development consent to a proposed use of Aaged housing developmen.

21 August 1997 The applicant filed an application in Class 1 of the Courts jurisdiction, being an appeal under s 97 of the Environmental Planning and Assessment Act 1979 against the deemed refusal of the development application.

18 September 1997 The respondent served on the applicant notice of a preliminary question of law, namely whether or not the proposed development is permissible within a Residential 2(a1) zone under the Kogarah Planning Scheme Ordinance.

15 December 1997 The preliminary question of law was heard by Talbot J.

17 December 1997 Talbot J, in a reserved judgment, decided the question of law. His Honour held that the proposed development was not permissible in the Residential 2(a1) zone for the reason that, although units for aged persons are permissible within that zone, the proposed development did not satisfy the definition of Aunits for aged persons, which is defined to mean a residential flat building used to house aged persons as defined in the Aged or Disabled Persons Homes Act 1954, as amended, of the Parliament of the Commonwealth, being one erected or to be erected by an eligible organisation as defined in that Act Y. Although the title of the Aged and Disabled Persons Homes Act was amended to the Aged or Disabled Persons Care Act 1954, his Honour found that the applicant did not satisfy the description of an eligible person as defined in that Act.

24 December 1997 The applicants solicitors sent a letter to the respondents solicitors nominating Lakeside Hostel Pty Ltd as being an eligible organisation within the meaning of the Commonwealth Act and as being the proponent for the development.

9 January 1998 The respondent notified the applicant of a further preliminary question of law which it raised for determination, namely, whether Lakeside Hostel Pty Ltd is an eligible organisation within the meaning of the Commonwealth Act. (It would seem to me, however, that this question is one of fact rather than of law.)

9 January 1998 The Registrar listed the proceedings for hearing on the merits before an Assessor on 6 & 7 April 1998.

16 January 1998 The respondents solicitors sent a letter to the applicants solicitors raising a further preliminary question of law, namely, whether by reason of cl 26 of State Environmental Planning Policy No 5 (Gazetted 2 January 1998 and commencing on 14 February 1998) the provisions of the Kogarah Planning Scheme Ordinance still apply to the development application the subject of the appeal.

14 February 1998 State Environmental Planning Policy No 5 commenced (replacing the previous State Environmental Planning Policy No 5). Under the policy units for aged persons are permissible in this zone and there is no requirement for such units to be built by or for an eligible organisation. However, cl 26 of the policy provides:

A 26. Development applications made before commencement of policy

A provision of this policy does not apply to or in respect of the determination of a development application made, but not determined, before the commencement of the provision.

2 March 1998 The applicants solicitor telephoned the respondents solicitor and advised that a Notice of Discontinuance will be filed.

5 March 1998 The applicant filed the Notice of Discontinuance

8 March 1998 A new development application was lodged by the applicant for the construction of health care aged housing units, similar to that previously the subject of the discontinued proceedings, and to which the new State policy applies.

10 March 1998 The present Notice of Motion by the respondent for its costs was filed.

6. Mr D P Wilson, who appears for the respondent (the applicant for costs), submits that the proceeding was discontinued by the unilateral act of the party which brought it, so that the respondent thereby incurred costs in defending the proceeding and which costs are now necessarily wasted or thrown away. He submits that the making of the new State policy on 14 February 1998 did not render the appeal a futility. It merely afforded the applicant an alternative approach in propounding its proposed development. The applicant could have continued the proceeding by nominating an eligible organisation as defined by the Aged or Disabled Persons Care Act 1954 (Cth) or by arguing for the applicability of the State policy, notwithstanding cl 26 thereof.
7. Mr W R Davison SC, who appears for the applicant in response to the notice of motion for costs, submits that there has not been a total abandonment of the applicant=s proposal. The discontinuance of the proceeding and the lodgment of a further development application is a direct response by the applicant to the change in the law brought about by the new State policy. The applicant was thus acting reasonably and the principle behind cl 10 of the Practice Direction should apply.
8. It is convenient to consider firstly the circumstances which give rise to an applicant discontinuing a proceeding. In Manly Wharf Pty Limited v Manly Council , Bignold J said that whilst an order for costs against the discontinuing party will ordinarily flow from the discontinuance of the proceeding, it may be established that the discontinuance does not reflect a total abandonment of the applicants claims, in which circumstances it may be just that there be no order as to costs following upon the discontinuance of the proceeding. It is also, I think, necessary to consider whether the discontinuing party acted reasonably or unreasonably in discontinuing. In Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, McHugh J said (in a case where a prosecutrix had not proceeded with her action) 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 cost of the proceedings. This approach has been adopted in a large number of cases (See, eg Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; Seventh Mingcourt Pty Ltd v Lawrence (unreported, Federal Court of Australia, 1 August 1996), per Branson J; Coleman v City of Melville (unreported, Supreme Court of Western Australia, 22 September 1994), per Scott J; Compadres Australia Pty Ltd v Waterfront Place No 2 Pty Ltd (unreported, Supreme Court of Queensland, 15 August 1995), per MacKenzie J; Inprint Ltd v K & D Media Pty Ltd (unreported, Federal Court of Australia, 22 December 1995), per Einfeld J; Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772).

9. Mr Wilsonss submissions in this case amount, in effect, to a submission that the applicant should have pursued its appeal notwithstanding the change in the law effected by the commencement of the new State policy on 14 February 1998. In view of the provisions of cl 26 of the State policy, it was in my view not unreasonable for the applicant to have taken the course which it did. It would have been unreasonable to hold the applicant to a determination of its appeal based upon the law as it existed at the time when the development application was made. It would have been unreasonable for the applicant to face the uncertainties presented by the need to establish that the body it nominated was an eligible organisation as defined by the Commonwealth legislation and to overcome the provisions of cl 26 of the new State policy. It was reasonable for the applicant to be afforded the opportunity to take full advantage of the provisions of the new State policy by lodging a further development application to which that instrument would clearly apply, an opportunity which the respondents submissions would seem to deny.
10. In short, in the particular circumstances of this case it was reasonable for the applicant to discontinue the proceedings and start again by lodging a further development application to which the new State policy would apply. That does not amount to an abandonment of the applicants claim. What is now proposed by the applicant is substantially the same development as that which was the subject of the application which has been discontinued. It is by no means certain, therefore, that the costs and disbursements incurred by the respondent have necessarily been wasted.
11. Since the act of the applicant in discontinuing is reasonable in the circumstances of this case, then there is no exceptional circumstance within the meaning of cl 10 of the Practice Direction which would displace the usual practice of the court in making no order for costs in planning and building appeals. That is to say, there should be no order for the costs of the discontinued proceedings.
12. Accordingly, the order of the court is that the respondents notice of motion dated 10 March 1998 is dismissed with costs.

I certify that this and the 6 preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd.

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