Community Association DP 270253 v Woollahra Municipal Council

Costs in Class 1 proceedings 3Rule 3.7 of the Land and Environment Court Rules 2007 applies to costs in Class 1 proceedings. 3.7 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. 4Evidence tendered were letter dated 4 November 2013, email dated 6 November 2013 and letter dated 14 November 2013 between the instructing solicitors for Community Association and the Council (exhibit A). A letter dated 31 July 2012 from the instructing solicitors for Community Association to the instructing solicitors for the Council concerning the notice of intention to issue an order was also tendered (exhibit 1).

Community Association's submissions 5While r 3.7 applies so that costs are only ordered if fair and reasonable, in Thaina Town (on Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; (2007) 71 NSWLR 230 Spigelman CJ (Mason P, Beazley, Giles and Ipp JJA agreeing) at [75] -[76] identifies that there is a difference between merits reviews such as an appeal in relation to a development application where a form of privilege is sought, and appeals against orders which impose requirements that action be taken directed to a person under threat of criminal sanction. The Community Association relied on r 3.7(3)(c), (d), (e) and (f)(ii). 6The Council should have been aware of the need to identify a nexus between the development and conditions of development consent in 2001 as was found lacking in Community Association (No 1) at [92]. In relation to subsections (c), (d) and (f)(ii) the conditions were found by the Court to be manifestly unreasonable in Community Association (No 1) at [102]-[106]. As identified in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1985-86) 162 CLR 24 by Mason J at 41, manifestly unreasonable means readily perceived, obvious, apparent and plain, observations which apply here. See also Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 at 229-230 that "if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it". There was clear evidence accepted by the Court that conditions 1, 29 and 30 were unreasonable in the Wednesbury sense. While the Council says that it was acting in the public interest, Thaina Town at [81] citing McHugh J in Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 (at 569-570) states that it is not a basis for depriving a successful appellant of its costs. There was no benefit to residents of the Babworth Estate as they already had access to the area as common property. 7The Council acted for an improper purpose (r 3.7(2)(e)) in seeking to gain access for the public to private foreshore land under the conditions of consent. The Council should have availed itself of the compulsory acquisition provisions in the Local Government Act 1993 and paid adequate compensation to the Community Association under the Land Acquisition (Just Terms Compensation) Act 1991. It sought to achieve a similar result with an improper method. Its defence was not maintainable because of the finding of Wednesbury unreasonableness (r 3.7(2)(f)). This should have been obvious to the Council and it should not have defended these proceedings or sought to rely on the s 101 of the EPA Act privative clause in these proceedings. 8While the Community Association failed on some issues these did not occupy much court time and this result should not deprive it of its costs. 9Indemnity costs are sought as there are special circumstances warranting a departure from the usual order of costs on a party/party basis. Relevant principles are identified in Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [54] "some positive ground or good reason", Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [44] per Gaudron and Gummow JJ "some relevant delinquency on the part of the unsuccessful party", Glaser v Poole (No 2) [2010] NSWLEC 232, Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 per Mason P "unreasonable conduct, albeit that it need not rise as high as vexation". The Council is a sophisticated local government body which must behave as a model litigant. In 2001 it imposed unreasonable conditions of consent, the modifications made unilaterally in 2005 by the Council to condition 29 and addition of condition 176 were a continuation of the same conduct through to defending the validity of the unreasonable conditions in these proceedings. Issuing the order to enforce the conditions requiring further stairs to be built obliged the Community Association to come to court to prevent the order being enforced. There was no obligation on the Community Association to act earlier to have the conditions removed from the consent. It was entitled to do nothing and ignore the Council's illegal conditions. The Council chose to take action by issuing the order requiring completion of the disputed conditions. 10Costs of the motion follow the event so that if party/party costs are awarded to the Community Association, costs of the motion should also be awarded to it (as the Council agreed). Further, costs of the motion should be awarded on an indemnity basis because an offer of compromise was made by the Community Association's solicitor to settle the proceedings on the basis that the Council agree to an award of party/party costs but this was not accepted. If costs are awarded on an indemnity basis to the Community Association then costs of the motion should also be awarded on an indemnity basis because the same actions giving rise to indemnity costs also applies to this costs motion. Further, the Community Association had to come to court and the offer of compromise was not accepted.

Council's submissions 11The appropriate order is that each party pay its own costs of the appeal and the Council sought an order that the Community Association pay its costs of the motion for costs. Rule 3.7 applies so that costs should be awarded only if fair and reasonable to do so. The actions of a party must justify the making of such an order in all the circumstances. The rule applies in all types of Class 1 proceedings. Thaina Town was directed to an earlier costs regime whereby the general power in s 69 of the Land and Environment Court Act 1979 (Court Act) applied in an unfettered way. 12Subsection (c) does not apply. The site had a complicated planning and development history involving public consultation and amendment of planning instruments. The provision of public access to the foreshore has been at all relevant times a planning objective entrenched in amendments to the Woollahra Local Environmental Plan 1995 and the Babworth House Development Control Plan 1999. The public positive covenant was offered voluntarily by the developer in 2001 (Community Association (No 1) at [93]). The public interest nature of the conditions was reinforced by the s 88B instrument under the Conveyancing Act 1919 creating a public positive covenant over the foreshore land, the area of which was confirmed by the Court in Community Association (No 1) at [78]-[80]. 13No appeal to the Court was taken by the developer against conditions 1, 29 and 30 and the construction certificate plans giving effect to these. A notice was published under s 101 of the EPA Act limiting the time for appeal. No s 96 application to remove the conditions of development consent was made by the developer Kimberley Securities or the Community Association. The Council could not act unilaterally to remove the conditions of consent. 14In Anderson v Lake Macquarie City Council [2013] NSWLEC 96, a costs application following a successful challenge to an order on a single technical ground amongst a number of other unsuccessful grounds, the costs order made was that each party pay its own costs. It was held that the technical issue could have been raised as a preliminary point informs whether any other subsections of r 3.7(3) apply at [33]. A similar view should be taken here given no action was taken by Kimberley Securities or the Community Association to have conditions removed. 15In relation to subsection (d), the Council did not act unreasonably in the conduct of the proceedings. That the Council was not ultimately unsuccessful is not the circumstance enlivened by r 3.7(3)(d). 16If the Community Association submission that a finding of Wednesbury unreasonableness in relation to conditions of consent must result in a costs award under r 3.7 as provided in subsections (3)(c), (d) and (f) is accepted, councils will be reluctant to defend consent conditions in the Court. Because the three conditions fundamental to the s 121B order were found to be unreasonable does not mean that the Council's conduct was unreasonable or unfair for costs purposes. The circumstances before the Council in 2001 when the conditions were imposed which have been found to be Wednesbury unreasonable were not necessarily readily apparent to the Council at that time. 17There was no basis demonstrated by the Community Association for awarding any costs on an indemnity basis.

Not fair and reasonable to award costs to the Community Association 18Rule 3.7(2) applies to the consideration of costs in this matter and contains a presumption that there will be no order as to costs (so that effectively each party will pay its own costs) unless it is fair and reasonable to make an order. Success alone in these Class 1 proceedings does not justify a costs order in the Community Association's favour. Circumstances where consideration can be given to whether a costs order ought be made are identified in subsection (3) and several are relied upon in this matter by the Community Association. Such factors are material to the Court's consideration but are not determinative of the exercise of the Court's discretion. As stated in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 the power to make a costs order only where fair and reasonable in the circumstances is in the broadest terms so that all considerations relevant to a determination of that question are open to a court, see [9]. Arden identifies at [10] the no discouragement principle which underpins the no costs rule in planning appeals, referring to the discussion of that in the Court of Appeal in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 at [22]-[23]. In Thaina Town (a decision of the Court of Appeal handed down the same day as Sansom) Spigelman CJ at [75]-[76] considered there was a difference between an order imposing liability on a person by requiring conduct to occur and expense incurred under the threat of criminal sanction, such as that issued under s 121B of the EPA Act, and a merits appeal in relation to a development application or consent pursued within the regulatory planning framework in the context of exercising the costs discretion under s 69 of the Court Act then in force. Rule 3.7 was not then in force. 19This appeal against the making of an order issued under s 121B of the EPA Act requiring compliance with development consent conditions was unusually complex. The principal issues in the case raised issues of mixed fact and law as to whether the conditions in question complied with the Newbury District Council v Secretary of State for the Environment [1981] AC 578 tests as a collateral attack upon the relevant conditions raised by the Community Association's grounds of appeal. I found that the second and third Newbury tests were not satisfied in Community Association (No 1) in relation to the three interrelated conditions challenged in the appeal. While the circumstances in Anderson where a single confined technical issue resulted in the appeal against an order being upheld are not identical, the reasoning in that matter underscores the circumstance here that the principal issues before the Court required consideration of the underlying legality of the development consent conditions sought to be enforced by the Council. Such issues would more usually be challenged in either a s 97 appeal under the EPA Act or possibly review proceedings in Class 4 of the Court's jurisdiction. I make no criticism of any party that this was not done but that informs my consideration of this matter for costs purposes. There was no merits assessment by me of the terms of the order per se, the more usual course in appeal proceedings of this kind. The distinction drawn in Thaina Town between appeals against orders and development appeals referred to in the previous paragraph is of course to be recognised, but each case must be considered on its own facts and that requires consideration of what was involved in this complex appeal. 20The Community Association's submissions equate my finding that the conditions under challenge were unreasonable in relation to the third Newbury test meaning Wednesbury unreasonable with that being unreasonable conduct on the Council's part warranting an award of costs in reliance on r 3.7(3)(c), (d), and (f)(ii), all of which rely on an aspect of unreasonable behaviour. I agree with the Council's submission that these are not overlapping matters. That the Court made a finding in 2013 that the imposition of three development consent conditions in 2001 was unreasonable in a Wednesbury sense does not mean that all of the Council's actions since imposing the conditions in 2001, including modifying the conditions in 2005 and issuing an order under s 121B are unreasonable for costs purposes. There is a lengthy planning and development history of the site in question reflected in part in the fact that the Council's s 121B order issued in 2012 was seeking to enforce conditions of consent imposed by it in 2001 in relation to a large and complex residential development. Some of the lengthy history is identified by the Council in its submissions in relation to the amendment of the relevant LEP and the creation of a DCP for the Babworth Estate site to provide for public access to the foreshore with such efforts dating from 1999 and earlier. That history includes the then developer Kimberley Securities offering to create a public purpose covenant over foreshore land. No attempt to challenge the conditions imposed was made by the applicant for development. The conditions were in place when the Community Association took over parts of the development including the common property after 5 February 2001. Although these contextual matters were not relevant to the legality of the conditions in the substantive proceedings, they are pertinent to assessing reasonableness in a costs sense. 21I agree with the Council's characterisation of matters before me that on its face condition 1 of the consent (which required stairs to be built on the foreshore land) remained breached in 2012, the conditions challenged were properly considered valid by the Council until set aside by findings of the Court and the conditions were directed to a public interest objective of greater amenity for the public through access to the foreshore. 22There was no failure to accede to the obvious by the Council in these proceedings in relation to the application of the Newbury tests. The matters before the Court were complicated and I do not consider the answers, including in relation to Wednesbury unreasonableness, were necessarily apparent to the Council in 2001 or subsequently. My finding of manifestly unreasonable conditions was based on material relating to impacts on a neighbouring lot with use of some existing stairs by the public during 2008-2010 as evidenced in affidavits sworn by the occupiers. I do not therefore consider that subsections (3)(c), (d) and (f)(ii) apply in this matter. 23Further, that the means of achieving the Council's public amenity planning objectives turned out to be incorrect in a legal sense does not give rise to a finding of improper purpose in a costs sense, and I accept the Council's submissions about its planning purpose set out above at par 12. I do not therefore consider that subsection (3)(e) applies in this matter. 24Exercising my costs discretion under r 3.7(2) I consider that the presumption that no costs order be made should apply. I do not consider that it is fair and reasonable that a costs order be made in favour of the Community Association in the circumstances outlined above in my findings in this unusual matter. 25There is no need to consider indemnity costs principles given my finding.

Costs on costs motion 26Costs of this costs motion should follow the event. The Community Association is ordered to pay the Council's costs.

Orders 27The Court makes the following orders: (1)Notice of Motion dated 14 November 2013 dismissed. (2)Community Association is to pay the Council's costs of the Notice of Motion dated 14 November 2013. (3)Exhibits to be 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: 11 February 2014