Crescent Newcastle Pty Ltd v Newcastle City Council and Friends of King Edward Park Inc

Land and Environment Court (NSW)|2021-07-19|Before: Robson J, Community Association DP

n) Newcastle City Council (No appearance on the Motion) Friends of King Edward Park Inc (Applicant on the Motion) Representation: Counsel: A M Pickles SC (Respondent on the Motion) No appearance (No appearance on the Motion) T F Robertson SC (Applicant on the Motion)

Solicitors: Allens (Respondent on the Motion) Newcastle City Council (No appearance on the Motion) Stringybark Legal (Applicant on the Motion) File Number(s): 2019/00291831 Publication restriction: Nil

Background

Before considering the evidence adduced and the submissions made by the parties, an understanding of the background to the proposed development and the history of the appeal proceedings provides context to consider the issues joined between the parties in relation to costs. The factual narrative in this section, but not the legal implications thereof, is mostly undisputed.

Proposed development

The proposed development the subject of the appeal proceedings consists of the demolition of existing structures, earthworks, the construction of residential accommodation comprising three residential flat buildings (161 units) and multi-dwelling housing (11 dwellings), associated car parking, landscaping and strata subdivision ('proposed development'), and is located on an approximately 12,000m² area of land being Lot 1 in DP 204077 and known as 11-17 Mosbri Crescent, The Hill ('site').
The site has road frontages to Mosbri Crescent and Kitchener Parade. Adjacent to the east of the site, and situated at a higher ground level, is a vegetated area called Arcadia Park. Further east, and again situated at a higher ground level and across Wolfe Street, is local landmark, The Obelisk.
Prior to the lodgement of the development application, the site was the subject of a planning proposal which rezoned the site from Zone R2 Low Density Residential to Zone R3 Medium Density Residential and amended the "Height of Buildings Map" and "Floor Space Ratio Map" within the Newcastle Local Environmental Plan 2012 ('NLEP') on 17 April 2018, to enable medium-density housing on the site. A master plan for the site containing locality-specific provisions and a preferred site layout plan also commenced within the Newcastle Development Control Plan 2012 on that same date.
The site is located in a "mine subsidence district" for the purposes of the Coal Mine Subsidence Compensation Act 2017 (NSW) ('Subsidence Act'). The site is undermined by old pillar and board mine workings, more particularly one mineshaft 50m below the surface and a further mineshaft 100m below the surface which are owned by Australian Agricultural Company Limited ('AA Co'). As a result, when undertaking the proposed development, it is proposed to stabilise the site by filling the mineshafts with a cement-type of material ('grouting work'). While the nature and extent of the grouting work is contested between the parties, it appears that the grouting work may extend beyond the site itself, and further, that some of the bore holes used to undertake the grouting work would be drilled into land surrounding the site owned by Council and the Crown.
The development application for the proposed development was lodged by Crescent with Council on 18 January 2019. Council undertook internal and external referrals of the development application, and it was publicly notified, with Council receiving 168 submissions objecting to the proposed development.

Procedural history

Consequent upon Council's deemed refusal of the development application, the appeal proceedings were commenced by Crescent on 18 September 2019. By notice of motion filed 11 May 2020, FOKEP sought to be joined as a party to the appeal proceedings pursuant to s 8.15 of the EPA Act and to delay the conciliation conference pursuant to s 34 of the Land and Environment Court Act 1979 (NSW) ('LEC Act') ('s 34 conference') that was scheduled to occur on 20 May 2020. On 19 May 2020, the Registrar of the Court dismissed FOKEP's application for joinder.
The s 34 conference was held between Crescent and Council before a Commissioner of the Court as scheduled on 20 May 2020. Crescent and Council agreed to the terms of a decision in the appeal proceedings that would be acceptable to the parties and dispose of the appeal proceedings ('s 34 agreement'), which then needed to be considered and given effect by the Commissioner in accordance with her functions under the LEC Act.
On 16 June 2020, FOKEP filed a notice of motion seeking an order that the Registrar's decision to dismiss FOKEP's application for joinder be set aside pursuant to r 49.19 of Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'), and that FOKEP be joined as a party to the appeal proceedings. On 1 July 2020, Moore J gave orders joining FOKEP to the appeal proceedings as the second respondent: Crescent Newcastle Pty Ltd v Newcastle City Council [2020] NSWLEC 88 ('Crescent Newcastle (Joinder Decision)'). In granting leave to FOKEP to become a party to the appeal proceedings, Moore J was satisfied that there was "at least potentially serious jurisdictional issues that require to be determined" and that these issues were sufficient to warrant the joinder of FOKEP as it was in the public interest to have them addressed: at [82]-[83].
Following this, a further s 34 conference occurred on 15 July 2020 between Crescent, FOKEP and Council, where it was agreed by the parties that the appeal proceedings were not able to be resolved by conciliation. Shortly after this, the Court listed the proceedings for hearing from 15 to 19 February 2021 and gave a timetable for the filing of amended statements of facts and contentions and the preparation of expert evidence.
On 24 August 2020, Crescent filed a notice of motion seeking leave to rely on amended plans and documents in the development application, which was granted by the Registrar of the Court on 28 August 2020. The development application as amended was publicly notified, with Council receiving 105 submissions objecting to the proposed development as amended.
In its amended statement of facts and contentions filed 7 October 2020, Council raised five contentions in relation to the proposed development, being: first, deficiencies in the stormwater management concept plan with respect to Arcadia Park; second, insufficient information being provided to enable detailed assessment of four discrete aspects of the proposed development (specifically, view analysis; overshadowing; retaining wall; and grouting plan); third, that a proposed public pedestrian pathway is not acceptable; fourth, concerns in relation to the receipt of general terms of approval under the Subsidence Act and the Rural Fires Act 1997 (NSW); and fifth, public interest concerns raised in submissions received in response to public notification regarding adverse and unreasonable impacts on neighbours and the local area.
In its amended statement of facts and contentions filed 30 September 2020 ('SOFAC'), FOKEP raised nine contentions in relation to the proposed development, being: first, the inadequacy of the development application with respect to the Environmental Planning and Assessment Regulation 2000 (NSW) ('EPA Regulations') regarding the precise extent of works (specifically grouting work) and impact on the surrounding environment ('first contention'); second, the impact of earthworks and tree removal within the adjacent Arcadia Park; third, concern regarding the cl 4.6 variation application to vary the height provisions applying to the site under the NLEP; fourth, breach of height provisions in the site-specific development control plan; fifth, heritage issues; sixth, site suitability and likely impacts on the environment and the public interest primarily relating to grouting work to be undertaken to avoid subsidence ('sixth contention'); seventh, the absence of owners consent from surrounding land owners (whose land will be bored or grouted) and mine owners ('seventh contention'); eighth, town planning issues relating to the bulk and scale of the proposed development; and ninth, compliance with the bushfire code.
The hearing of the appeal proceedings commenced before a Commissioner on 15 February 2021. The first day of the hearing was primarily occupied by opening submissions made by Mr Pickles on behalf of Crescent, followed by short evidence from a number of resident objectors. At this time, Council had no merit issues in contention that would support a refusal of the development application (such that the merit issues it raised could be the subject of conditions), and contended that the concerns raised by objectors had been sufficiently addressed. The second day of the hearing was occupied with a view of the site.
On the third day of the hearing, FOKEP's position was outlined in detail by Mr Robertson in opening submissions, with an emphasis on the following issues: the requirement for development consent for earthworks which are neither exempt development nor ancillary to another development pursuant to cl 6.2 of the NLEP (where FOKEP takes the position that the grouting work constitutes earthworks that would require development consent); that there was no information or assessment of the environmental impact of the grouting work as raised by the sixth contention in FOKEP's SOFAC (where FOKEP refers to cl 6.2(3) of the NLEP which sets out the matters that a consent authority must consider before granting development consent for earthworks pursuant to cl 6.2 of the NLEP, in addition to s 4.15 of the EPA Act); and that there was insufficient information to assess the impact of the grouting work on the surrounding environment as raised in the first contention in FOKEP's SOFAC.
As a consequence of FOKEP's position, debate ensued in relation to Crescent's ability to address these discrete concerns, which resulted in the Commissioner making an inquiry of Mr Pickles on the afternoon of the third day of the hearing as to whether Crescent was able to address, with evidence, the issues raised in FOKEP's opening submissions and the potential for a jurisdictional deficiency because of a failure to address cl 6.2(3) of the NLEP. The Commissioner also enquired as to the requirement for owners consent from those owners of the mineshafts and the surrounding land impacted by the proposed development, in circumstances where Crescent would have until the end of the appeal proceedings to provide any such consent.
In the circumstances, the Commissioner also specifically enquired as to whether Crescent wished, in circumstances where the appeal proceedings were an appeal from a deemed refusal of a development application, to continue with the hearing of the appeal proceedings or to discontinue them. The Commissioner expressed a view that she would be prepared to allow an adjournment for the balance of the afternoon for Crescent to obtain instructions, but otherwise it was her intention to "press on with the hearing" in circumstances where it was her understanding that the issues had been raised in FOKEP's SOFAC that was filed on 30 September 2020.
On the following morning, the fourth day of the hearing, Crescent sought and was granted leave of the Court to discontinue the appeal proceedings. FOKEP did not consent to the discontinuation of the appeal proceedings.
On 18 March 2021, FOKEP filed a notice of motion seeking costs in the appeal proceedings, being a lump sum of $48,515.77 pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) ('CP Act') or alternatively FOKEP's costs to be awarded on the ordinary basis. On 22 April 2021, FOKEP filed a further notice of motion seeking costs in the appeal proceedings (on the same basis as the notice of motion filed 18 March 2021) and also seeking leave to adduce expert evidence in relation to the quantum and reasonableness of its costs. At the hearing of the motions, it was agreed between the parties that the later motion effectively overtook the former motion, and so at the end of the hearing of the motion filed 22 April 2021, on 19 July 2021, I made an order that the notice of motion filed 18 March 2021, be withdrawn and dismissed with no order as to costs.

Evidence

The parties marshalled significant evidence in relation to the motion for costs. FOKEP read an affidavit of its solicitor, James Ryan, affirmed 18 March 2021 and two further affidavits of Mr Ryan affirmed 22 April 2021. The affidavit of Mr Ryan affirmed 18 March 2021 detailed the background of FOKEP's engagement with the appeal proceedings (and its preparation for the hearing of the appeal proceedings) and included certificates of title and plans of surrounding land; documentation of the grant of the relevant coal seams to AA Co; and a summary of the costs incurred by FOKEP in the appeal proceedings.
The affidavit of Mr Ryan affirmed 22 April 2021 (of three paragraphs in length) annexed the expert report of Ross Nicholas of Costsplus dated 22 April 2021 in relation to the costs incurred by FOKEP in the appeal proceedings and an estimate of the costs of the motion for costs before me. The affidavit of Mr Ryan also affirmed 22 April 2021 (of 26 paragraphs in length) noted the purposes of FOKEP as an incorporated association, and identified excerpts of the transcript of the appeal proceedings before the Commissioner and Crescent Newcastle (Joinder Decision) relevant to the issue of costs. The affidavit exhibited the transcript of the hearing of the appeal proceedings before the Commissioner and the judgment of Moore J in Crescent Newcastle (Joinder Decision).
FOKEP also tendered the transcript of the hearing of the motion seeking joinder before the Registrar; the "Addendum Statement of Environment Effects" dated 24 August 2020 (being Tab 24 to Exhibit C before the Commissioner in the appeal proceedings) ('addendum SEE'); a bundle of 69 pages containing extracts from the "Statement of Environment Effects" dated January 2019 ('SEE') and addendum SEE; and a bundle of documents of 12 pages, being an extract from the "Mine Subsidence Investigation Report - Proposed Multi-Building Residential Development - 11-17 Mosbri Crescent" ('Summary Report') prepared by Coffey dated 14 January 2019, which included a summary of the ground model stratigraphy, downhole observations and engineering log of cored boreholes.
Crescent read the affidavit of its solicitor Rebecca Amy Pleming sworn 11 May 2021 which provided details of the background to the appeal proceedings, and exhibited a folder of documents from the appeal proceedings consisting of certain exhibits, correspondence and court documents. This folder included the "Mine Subsidence Grouting Remediation Strategy - Proposed Multi-Building Residential Development - 11-17 Mosbri Crescent, The Hill, Newcastle" ('Remediation Strategy') prepared by Coffey dated 24 August 2020.
Crescent also tendered an email from AA Co's In-house Lawyer and Risk Manager to Crescent's solicitors dated 7 October 2020, indicating that AA Co was, in principle, "happy to allow consent provided an appropriate indemnity is put in place".

Relevant legislation

Rule 3.7 of the Land and Environment Court Rules 2007 (NSW) ('LEC Rules') provides as follows: 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act) - (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 - (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question - (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents - (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (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.

Submissions

Without disrespect to the extensive written and oral submissions provided by each of FOKEP and Crescent in the course of the hearing of the motion, I now set out a summary of the parties' positions.

FOKEP's position

FOKEP contends that orders for costs are usually made against parties who discontinue proceedings during a hearing unless the discontinuance is a result of a compromise, was caused by the other party or is due to some external event, to compensate the other party for the cost and inconvenience of the proceedings: G E Dal Pont, Law of Costs (3rd ed, 2013); South East Forests Conservation Council Inc v National Parks and Wildlife Service and State Forests of New South Wales (1993) 81 LGERA 288 at 293-294.
While FOKEP acknowledges that the Court's discretion is fettered by the starting point in r 3.7 of the LEC Rules, it submits that it is "neither fair nor reasonable" that it should bear the expense of defending proceedings which Crescent has chosen not to progress. FOKEP refers to previous cases where the issue of whether awarding costs was fair and reasonable in the context of discontinuation was considered (Manly Warringah Rugby Leagues Club Pty Ltd v Warringah Council [2006] NSWLEC 88 ('Manly Warringah Rugby Leagues') at [12]-[14]; H & W Pty Ltd v Lane Cove Council [2010] NSWLEC 87 ('H & W Pty Ltd') at [21]-[22]; Fulton Hogan Pty Ltd v Blacktown City Council [2020] NSWLEC 169 at [111]-[113]), and concludes that while the essential question is whether it is fair and reasonable to award costs (Ross v Lane Cove Council [2013] NSWLEC 109 ('Ross') at [7]-[9]), the exercise is to be undertaken against the background of the compensation and wasted cost principles.
FOKEP takes the view that the discontinuance of the appeal proceedings has resulted in "wasted" expenditure by FOKEP. First, FOKEP has not obtained the benefit of a judgment that will "settle a controversy" between the parties as there was no outcome indicating whether the proposed development is permissible (whether or not that outcome was the outcome sought by FOKEP). In this respect, where the development application was deemed to be refused by Council with no grounds for refusal, it is possible that a future, materially similar, development application made by Crescent after the discontinuance could be approved by Council. Second, beyond settling a controversy between the parties, the outcome of the appeal proceedings could have been a development consent for the proposed development which creates and confers a right upon Crescent which is good against the whole world and thus is of broader interest. Third, the participatory benefits of proceedings in Class 1 of the Court's jurisdiction have been stymied, where FOKEP would not necessarily have a right to participate in the determination of a future development application.
FOKEP's primary position is that the appeal proceedings were discontinued because Crescent had a "non-approvable" development application, and as such, FOKEP should be compensated for its costs: AT v Commissioner of Police, NSW [2010] NSWCA 131 ('AT') at [20]; [32]. FOKEP submits that that the issues with the development application had been made clear since the beginning of its engagement with the appeal proceedings. FOKEP submits that it sought to be joined to the appeal proceedings in order to raise jurisdictional issues, and had made this clear in the submissions made and evidence marshalled both before the Registrar and later Moore J, in support of its applications for joinder. It was also detailed in FOKEP's SOFAC.
FOKEP characterises the issues in the appeal proceedings as being divided into jurisdictional and merit issues. There were three issues with the development application raised by FOKEP which it contends were jurisdictional ('jurisdictional issues'). The first jurisdictional issue related to the absence of owners consent for grouting work (where AA Co owned the mineshafts which would be filled with the grouting work, and grouting and associated bore holes would be undertaken both on the site and the surrounding land owned variously by Council and the Crown). This was raised in the seventh contention (of FOKEP's SOFAC), and at that time Crescent's position was that the grouting work did not require development consent.
The second jurisdictional issue related to the failure to comply with cl 6.2(3) of the NLEP and undertake an environmental assessment of the grouting work, in circumstances where the grouting work constitutes earthworks for which development consent is required pursuant to cl 6.2 of the NLEP. This was raised in the sixth contention (of FOKEP's SOFAC). FOKEP contends that Crescent conceded this to be the case in opening submissions, but then later tried to minimise the grouting work with the result that development consent would not be required under cl 6.2 of the NLEP.
The third jurisdictional issue, which overlapped with merit issues otherwise raised with the development application, related to the failure to describe the precise extent of grouting work and its impacts on the environment in the development application, citing Hoxton Park Residents Action Group Inc v Liverpool City Council (2011) 81 NSWLR 638; [2011] NSWCA 349 at [47]-[48]. FOKEP took the Court to bore hole logs showing where water was located; the descriptions of the proposed development in the SEE and the addendum SEE; extracts of the hearing before the Commissioner which engaged with the drilling and grouting work; and the Remediation Strategy with a description of the works required to facilitate the grouting work, to illustrate that the development application prosecuted by Crescent did not encompass drilling and grouting work under or on the site.
FOKEP submits that this issue was raised in the first contention in its SOFAC, and contrary to Crescent's submissions, it is FOKEP's position that particulars for this contention were provided in the sixth contention. It is also FOKEP's position that the failure to assess the impacts of drilling bore holes into and grouting of mineshafts was a breach of the EPA Regulations, for the following reasons: first, the EPA Regulations require evidence of owners consent and there was no owners consent provided by the date of discontinuance; second, the addendum SEE provided as part of Crescent's development application, as amended, excluded drilling of bore holes and grouting mineshafts and the use of temporary structures from the description and assessment of the proposed development the subject of the development application (including the volume of material to be extracted, impacts of noise, dust and run off, effects on surrounding development and waste management); third, the failure to show the location of the grouting work and temporary structures in relation to land boundaries and adjoining development, and the method of draining land, on a sketch; and fourth, no information in relation to parking and access arrangements for trucks: cl 50(1) and Sch 1 cll 1(1)(i), 1(1)(b), 2(1)(c), 2(1)(n), 2(3)(c1), 2(3)(g), 2(3)(e), 2(4) of the EPA Regulations. FOKEP submits that this contention is not one of inadequacy but rather of absence, such that further particularisation is not possible, and never ordered: Weinberger v Inglis [1918] 1 Ch 133; Chapple v Electrical Trades Union [1961] 1 WLR 1290.
FOKEP submits that the merit issues with the development application relate to planning (visual impacts and the s 4.6 variation request); heritage; ecology (impacts on Arcadia Park heritage item); groundwater; as well as the impact of grouting work on mine infrastructure underlying the site and surrounding area. FOKEP notes that it marshalled expert evidence on the merit issues, and that this included evidence relating to the grouting work which was also relevant to the jurisdictional issues.
FOKEP notes that as the applicant for the development application and the appeal proceedings, it is Crescent's responsibility to satisfy the requirements for development consent irrespective of whether the matter has been raised as an issue by the parties or the decision-maker: 278 Palmer St Pty Ltd v The Council of the City of Sydney [2020] NSWLEC 165 ('278 Palmer') at [61]. This includes the satisfaction of jurisdictional prerequisites in relation to the earthworks: Denoci Pty Ltd v Liverpool City Council [2020] NSWLEC 102 ('Denoci') at [124]-[125]. FOKEP submits that because Crescent's development application was not approvable, the Class 1 appeal proceedings were "doomed from inception" and should not have been brought. FOKEP submits that its costs have been "entirely or substantially wasted" in circumstances where the Class 1 appeal proceedings were withdrawn and there was no judgment on the jurisdictional or merit issues.
FOKEP rejects Crescent's position that the discontinuance was a result of FOKEP's SOFAC not containing "sufficient particularity" about the third jurisdictional issue (both before the Commissioner and now before this Court in this motion) as a "red herring". FOKEP takes the position that particulars were provided in the SOFAC and Crescent was clearly aware of the jurisdictional issues without any further particulars being provided, as the expert report dated 13 November 2020 of Steve O'Connor, Crescent's town planner, responded to the sixth contention in FOKEP's SOFAC by including an assessment of the grouting work under cl 6.2(3) of the NLEP. In any event, even if the jurisdictional issues were raised without sufficient notice, and notwithstanding the commentary of the Commissioner regarding adjournment, this is not a reason to discontinue the appeal proceedings.
Instead, FOKEP contends that the appeal proceedings were discontinued because the Commissioner had expressed concerns in relation to Crescent's position both in relation to grouting work constituting earthworks and the potential for jurisdictional issues resulting from the failure to address cl 6.2(3) of the NLEP and to obtain owners consent. In this respect, while Crescent had sought to characterise the grouting work as not requiring consent and excluded them from the scope of the environmental assessment they were undertaking, it became clear over the course of the hearing that consent would be required.
After referring to the "well-trodden" principles regarding the Court's consideration of r 3.7 of the LEC Rules, FOKEP makes the following submissions as to why the making of an order for costs would be "fair and reasonable in the circumstances". First, the "no discouragement principle" which underpins the presumptive costs rule in r 3.7 is "exhausted" by the presumption, such that it is not necessarily relevant to the question of whether the making of a costs order is fair and reasonable: Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 ('Sansom') at [76]; [92]. In any event, there are issues with the application of the no discouragement principle in the context of a discontinuance, where the appeal proceedings have been "terminated before their time".
Second, the focus on the circumstances of each particular case in the exception means that previous cases are unlikely to be helpful. Third, the concept of unreasonableness relates to the unreasonableness of the conduct of the parties in the proceedings. In this respect, while acknowledging that a later conclusion that a decision being challenged was made unreasonably does not necessarily mean a failure to accept this at the start of the proceedings constitutes unreasonable conduct (Community Association DP 270253 v Woollahra Municipal Council [2015] NSWCA 80; (2015) 207 LGERA 268 at [53]), FOKEP contends that, in the circumstances of the appeal proceedings, the fact the Crescent commenced the appeal proceedings without an approvable proposed development was unreasonable conduct.
Fourth, the fairness criterion has been held, in relation to a comparable provision regarding costs, to not be "qualitatively different" from exercising unfettered discretion, and further, that is a relatively low hurdle to be met: AT at [26]; [33]. In AT at [33], the Court of Appeal also noted that fairness would take into account the compensatory purpose of awarding costs. FOKEP submits that as a result, the central question is whether it is appropriate that it be compensated for costs, in what it contends was a manifestly incompetent appeal because of the failure to satisfy jurisdictional tests.
In contending that this question should be answered in the affirmative, FOKEP submits: 1. The appeal proceedings were obviously "commercial" for Crescent; 2. Crescent was well-advised and suffered no forensic disadvantage due to its representation or the availability of witnesses; 3. Crescent was on notice that the jurisdictional issues would be pursued by FOKEP; 4. In those circumstances it must have been obvious to Crescent that there were jurisdictional issues with the development application; 5. While FOKEP sought to join the appeal proceedings, it represents the community and does not have a commercial interest in the outcome. FOKEP's participation in the appeal proceedings was "essential" to enable justice to be done and facilitate proceedings under ss 56-58 of the CP Act, given Council did not actively participate in the appeal proceedings. Given this, FOKEP's choice to join the proceedings resulted from Crescent's inadequate development application; 6. Where Council does not seek its costs, fairness issues associated with Crescent paying two sets of costs will not arise. Further, Council's position on its costs is not relevant to the issue of whether FOKEP should get its costs, in circumstances where Council did not actively participate in the appeal proceedings; 7. Crescent should have detected the deficiencies in the development application "at the outset" and either these deficiencies should have been addressed or the appeal proceedings discontinued. Where Crescent took the position that it would not address the issues and did not amend its development application in any relevant way, the appeal proceedings were "doomed to fail" such that it is fair and reasonable for FOKEP to be compensated for its continuing defence of the appeal proceedings.
FOKEP rejects the suggestion from Crescent that the fact it voluntarily sought to be joined to the appeal proceedings (in contrast to Council as a compulsory party) means it assumed some risk, and contends that, once joined FOKEP should not be treated differently from any other party, and in any event, it took on the risk of an adverse outcome, not the proceedings being discontinued during the hearing. It also raises the possibility that, if the appeal proceedings had continued and FOKEP had been successful, while costs are not normally awarded, they could have been awarded, citing Huajun Investments Pty Ltd v City of Canada Bay Council [2020] NSWLEC 108 ('Huajun Investments').
In summary, FOKEP contends that it is fair and reasonable that FOKEP be compensated for incurring costs (both in relation to jurisdictional and merit issues) to defend "an entirely unnecessary suit". This is particularly true where it was not a case of insufficiency of evidence to satisfy jurisdictional issues, but rather no evidence to satisfy those issues.

Crescent's position

Crescent submits that both the context of discontinuance and the suggested jurisdictional issues raised (involving questions of owners consent and the assessment of impacts of grouting) are contrary to the fundamental no discouragement principle which underpins r 3.7 of the LEC Rules, and do not demonstrate a fair and reasonable basis for costs to be awarded to FOKEP. Crescent seeks to confine the commentary in Sansom to the context of that case, being the determination of a separate question of law, and instead submits that the no discouragement principle remains highly relevant.
Turning first to discontinuance, Crescent submits that FOKEP seeks to "dress up" its application for costs as being concerned with jurisdictional issues not being satisfied, when in fact the discontinuance of the appeal proceedings is the underlying issue in the application. The actions of FOKEP when Crescent sought to discontinue the appeal proceedings - where FOKEP refused to consent to the discontinuance and indicated that costs were an issue - demonstrates that discontinuance is the basis for the costs application.
Crescent submits that discontinuance of the appeal proceedings is not intended to give rise to an order for costs in proceedings in Class 1 of the Court's jurisdiction, by comparing the identified illustrative matters in r 3.7 of the LEC Rules with rr 42.19 and 12.4 of the UCPR. Something more than discontinuance is necessary to establish a fair and reasonable basis for costs to be awarded, and Crescent contends this is not present in the appeal proceedings. Rather, Crescent submits that it was entitled to take the position that, in light of the conduct of the hearing thus far, it did not want to run the risk of proceeding with the litigation (especially where the appeal proceedings related to a deemed refusal and there were other avenues it could pursue), citing Ross at [10].
Crescent submits that the need for "something more" is especially pertinent where FOKEP had specifically sought to be joined in the appeal. In this respect, the ordinary rule is based on the defendant or respondent not being an instigator of the litigation, such that where proceedings are discontinued due to the capitulation of the instigator, the non-instigating party would be compensated for its costs. In the appeal proceedings FOKEP was not an unwilling respondent but rather a "voluntary and desirous participant". Crescent submits that where FOKEP has actively chosen to participate in the appeal proceedings because it wishes to take on the functions of a contradictor and to prevent the development application being granted, it did so at its own risk, and it would be an "anathema" to the concept of non-discouragement to award costs to the joined party due to proceedings being discontinued: Walfertan Processors Pty Ltd v Upper Hunter Shire Council (No 5) [2010] NSWLEC 109 at [43].
In relation to the "jurisdictional" issues raised by FOKEP, Crescent does not accept FOKEP's primary position that the development application was "non-approvable" as a result of jurisdictional issues not being satisfied. Crescent submits that in the absence of a decision, it cannot be established that FOKEP's claimed jurisdictional issues would have been made out: cf. Huajun Investments. Crescent warns the Court against "embark[ing]" on an enquiry about jurisdictional issues where this would involve a hypothetical trial of the whole case: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 ('Lai Qin') at 626. In these circumstances it is not reasonable to contend, as FOKEP contends, that the discontinuance of the appeal proceedings should be treated as if FOKEP had enjoyed success on the jurisdictional issues it raised.
Further, Crescent notes that the matters characterised as "jurisdictional" by FOKEP are inherently tied to the merits of the development application (while accepting that FOKEP's contention regarding owners consent raises a mixed question of fact and law). Crescent submits that most appeals relating to development applications have jurisdictional preconditions to their determination, and in this context jurisdictional issues should not be elevated or equated with questions of law referred to in r 3.7(3)(a) of the LEC Rules, when in fact both jurisdictional and merit issues are essential to a determination of the development application. As a result, the fact that jurisdictional issues were raised by FOKEP does not support an award of costs.
Crescent makes discrete submissions in relation to FOKEP's contention regarding owners consent. While this contention was clearly jurisdictional, Crescent contends that it was not determinative when the appeal proceedings were discontinued as it is clear that owners consent can be provided at any time up to the determination of the development application: Botany Bay City Council v Remath Investments No 6 Pty Ltd (2000) 50 NSWLR 312; [2000] NSWCA 364 at [5] and cases cited therein. In this respect, whether owners consent for the grouting work was required was disputed between the parties, and Crescent's position was that it was not required because the grouting work does not trigger the requirement for development consent to be obtained, pursuant to cl 6.2(2)(b) of the NLEP. In any event, Crescent had indicated in the course of the hearing before the Commissioner that the obtaining of such consent (if required) from AA Co was not an impediment. In addition, consent had, as a matter of fact, been provided by Council (and, if it had not been, could be provided by the Court pursuant to s 39(2) of the LEC Act). In these circumstances, Crescent emphasises that it was capable of addressing the issue of owners consent on these three alternative bases, and submits that its conduct cannot be characterised as unreasonable, and FOKEP has failed to explain why granting it costs is fair and reasonable.
Crescent submits that FOKEP's second and third jurisdictional issues (relating to cl 6.2 of the NLEP and the impacts of grouting work) are effectively contentions, that Crescent's appeal proceedings had no prospect of success, or that Crescent had failed to provide necessary information to allow for a proper understanding of, and consideration of, the development application: rr 3.7(3)(f)(i) and (b)(ii) of the LEC Rules. It submits that these contentions are unsupported in circumstances where no findings were made on the merits of the appeal application. In particular, Crescent seeks to distinguish the circumstances of the appeal proceedings from 278 Palmer, wherein 278 Palmer, a decision-maker had concluded that information claimed to be relevant was, as a matter of fact, relevant.
Crescent submits that FOKEP "confounds" the issues in its sixth contention and the issues in its first contention, in circumstances where it was the first contention that was the basis for the discontinuance (as is clear from the transcript). Crescent takes the position that FOKEP's sixth contention, that there was no environmental assessment of the grouting work to be unsupported by the evidence, and points to (in evidence in this motion for costs) a substantial number of exhibits in the appeal proceedings to demonstrate that the particulars in the sixth contention were addressed. Where this information was present, and without a determination of the merit issues in the appeal proceedings, it cannot be said that Crescent's prospects were hopeless or that there was an absence of necessary information, and further, this was not the basis for the discontinuance. Crescent also resists significant weight being placed on the addendum SEE in circumstances where this was prepared before FOKEP's SOFAC was filed.
Crescent submits that the "real basis" for the discontinuance of the appeal proceedings was the lack of information to address new "merit" matters which were related to (but not particularised in) the first contention and raised for the first time in FOKEP's opening submissions on the third day of the hearing. These new merit matters included, as recorded in par 45 of Crescent's written submissions in the motion for costs before me: "(a) Where the stockpiles of earth and rock extracted from the earth would be located; (b) Where the testing is done to ensure [the soil] is not laced with arsenic and heavy metals. (c) Evidence of testing to ensure that there are no environmental consequences for stockpiling on site and removing it off site. (d) The length of time for boring; (e) How many trucks will be necessary to deliver cement to the site; (f) When the seams are opened up, where does the methane go and how much methane will be released? (g) What measurements have been taken of the methane in the coal seams?" (Citations omitted.) (hereinafter referred to as the 'new merit matters').
Crescent submits that the new merit matters had not been previously particularised (where particulars were sought by Crescent on 14 October 2020 but were not provided by FOKEP prior to the hearing of the appeal proceedings). They were also not addressed by the expert joint reports, which meant that Crescent was not on notice of the matters prior to the third day of the hearing, which is when Crescent realised they did not necessarily have evidence to respond to those matters. Crescent submits that the conduct of FOKEP in failing to provide particulars on request and raising the new merit matters militate against an order for costs.
Crescent rejects FOKEP's position that FOKEP had raised the reason that the development was not approvable in its applications for joinder, and alternatively that Crescent was on notice of the jurisdictional issues raised by the first contention since the SOFAC was filed. Rather, Crescent seeks to characterise the first contention as only raising merit issues (rather than raising jurisdictional and merit issues as contended by FOKEP) where it cannot be asserted the information sought by FOKEP was necessary for the determination of the appeal proceedings in the absence of such a determination. Further, Council, as the relevant consent authority, had never sought the evidence that was needed to respond to the issues raised by FOKEP.
While Crescent accepts that as the applicant for the proposed development it has an obligation to provide the information required by the EPA Regulations to enable assessment of a development application, it submits that it is not required to second guess the meaning of a contention that has been inadequately particularised, or to address matters specified by counsel for a party during opening address, which are not otherwise required to be provided.
In the circumstances, Crescent "quite properly" took the position that it may be at risk if it pursued the litigation without evidence to respond to the new merit matters. Crescent further submits that in circumstances where the Commissioner had "more than once" made it abundantly clear that she would not be prepared to grant an adjournment to obtain the evidence to meet the issues raised by FOKEP, it is clear that the first contention was the real reason for the discontinuance.
In these circumstances, Crescent submits that the discontinuance in fact saved "significant additional costs" that would otherwise have been incurred had the appeal proceedings continued, noting that if the appeal proceedings had been dismissed on merit issues, FOKEP would have been "most unlikely" to have been able to claim costs and that an applicant should not be discouraged from discontinuing merit proceedings where that act reduces costs to all parties.
Crescent also rejects the proposition that in discontinuing the appeal proceedings, FOKEP has been denied its expectation or right to obtain an outcome. Instead, Crescent contends that as the applicant, it was the only party with rights that were impacted by the decision to discontinue the appeal proceedings, in that it no longer had the opportunity to obtain a development consent for the proposed development from the Court. By discontinuing, Crescent acted in a sensible manner to avoid further costs and time being spent on the appeal proceedings that it now judged to be risky and it should not be discouraged from this course of conduct. As with any discontinuance, this resulted in costs being wasted by both FOKEP and Crescent, but that in itself, is not a reason that would be fair and reasonable to award costs to FOKEP.
Crescent also rejects FOKEP's reliance on previous cases such as Manly Warringah Rugby Leagues on the basis that these cases were decided prior to the current costs presumption in r 3.7 of the LEC Rules, and as a result of the then current rules, approach the essential question from a different position. It submits that there is no precedent for respondents to be awarded costs in the context of discontinuance since r 3.7 of the LEC Rules has been applicable.
Finally, Crescent responds to FOKEP's submissions regarding the Court's discretion to award a costs order in the following manner: first, the Court would not accept that Crescent's status as a commercial developer is relevant to the question of costs; second, Crescent being "well-advised" and suffering no forensic disadvantage would not have any bearing on a costs order (in the absence of any need to negative a submission seeking favourable exercise of the discretion for the opposite reason); third, the fact that FOKEP is a community group does not support an order in its favour (although may be relevant in declining to make an order against it); fourth, the position of Council regarding costs is not relevant to whether FOKEP should be awarded its costs; and fifth, that Crescent acted as a reasonable applicant in discontinuing the appeal proceedings when the gap in the evidence became obvious.
In the circumstances, Crescent submits that it acted in a reasonable manner in discontinuing the appeal proceedings because it saved costs and time, in circumstances where it judged there to be a risk that they would lose due to insufficiency of information.

Legal principles

As identified by the parties, the starting position for the award of costs in Class 1 proceedings such as the appeal proceedings is set out in r 3.7 of the LEC Rules, wherein an order for costs should not be made unless the Court considers it to be "fair and reasonable in the circumstances". While r 3.7(3) of the LEC Rules provides a list of example circumstances where the Court may find it fair and reasonable to award costs, this list is not exclusive and there may be other circumstances in which it is fair and reasonable to award costs. The scope of the example circumstances has been recently described by the Court as "relating to matters out of the usual course of a merit proceeding": Brett Hodgson v The Hills Shire Council (No 2) [2021] NSWLEC 133 at [7].
It is apt to note that FOKEP did not frame its submissions that it is fair and reasonable in the circumstances for a costs order to be made by reference to the example circumstances in r 3.7(3) of the LEC Rules, but rather drew attention to the discrete circumstances in the appeal proceedings. In contrast, Crescent sought to characterise FOKEP's contentions as encompassing two of the example circumstances, being first, not having reasonable prospects of success; and second, failure to provide information or documents necessary to gain a proper understanding of, and give proper consideration to, the development application: rr 3.7(3)(f)(i) and (b)(ii) of the LEC Rules. As FOKEP is the applicant on the motion before me, and has the onus of convincing the Court that in the circumstances of the appeal proceedings it is fair and reasonable for costs to be awarded, I do not limit my consideration to the two example circumstances identified by Crescent, but rather adopt the approach of FOKEP.
The parties agree that the reason for the presumption that no costs order will be made such that each party pays its costs in r 3.7 of the LEC Rules is the no discouragement principle - being that persons should not be discouraged from exercising their rights of appeal by reason of an adverse costs order: Sansom at [23]. However, I accept that in Sansom, the Court of Appeal noted that it is not permissible to proceed to determine whether it is fair and reasonable to award costs on the basis of the application of the no discouragement principle, as giving that principle presumptive effect beyond the basic rule would impermissibly detract from the Court's discretion implicit in the fair and reasonable test: at [76] and [97].
Given this, the essential question for my consideration is whether the circumstances of the appeal proceedings support a conclusion that it is fair and reasonable that FOKEP is awarded its costs. As noted by Spiegelman CJ in Sansom at [48], "[t]here is no restriction, other than rationality, on the scope of the considerations relevant to the formulation of that judgment [whether awarding costs is fair and reasonable in the circumstances]". However, for costs to be awarded, those considerations must overcome the basal presumption in r 3.7 of the LEC Rules that costs will not be ordered.
I am mindful of the High Court's reminder of the need to focus on the statutory language rather than previous cases dealing with earlier and differently expressed statutory regimes in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [47], and so approach previous cases, such as Manly Warringah Rugby Leagues (which were decided when differing statutory regimes were in force), with caution. In particular, I am cognisant that there is currently no equivalent to the previous Pt 11 r 5 of the Land and Environment Court Rules 1996 (NSW) or the current r 42.19 of the UCPR, which provide for the award of costs in the context of discontinuance. Given this, while I accept that costs are generally ordered against parties who discontinue proceedings to compensate the other party for wasted costs where r 42.19 of the UCPR is applicable, this is not presumptive nor determinative (to borrow the language of Spiegelman CJ in Sansom) in the motion for costs before me, as I am bound by the language of r 3.7 of the LEC Rules.
In this respect, it is clear that, as submitted by Crescent, something more than the circumstance of discontinuance is necessary to establish that it is fair and reasonable for costs to be awarded: Ross at [9]. This position was recently reiterated by Pain J in Regional Architects Pty Ltd v Coffs Harbour City Council [2021] NSWLEC 29 at [87], where her Honour noted "[t]he act of discontinuance alone does not give rise to any presumption about costs" and further, that "[t]he act of discontinuance needs to be considered in the overall context of the proceedings" when assessing whether it is fair and reasonable to award costs: cf. H & W Pty Ltd at [21]-[22].
I consider Biscoe J's commentary in Ross at [9]-[10] to be apposite in circumstances where it also dealt with the award of costs in the context of a discontinuance of an appeal in Class 1 of the Court's jurisdiction: "[9] …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". [10] For example, if there was no reasonable basis for a planning appeal, that would be a strong circumstance supporting a costs order against the discontinuing applicant. But if, for example, an applicant, in the light of evidence that has emerged during the proceedings or an "amber light" by the presiding Commissioner, decides that the resultant increased risks of litigation are such that a planning appeal should be discontinued, with resultant savings in time and costs of the other party and saving of the Court's time, that may be a circumstance weighing against ordering the discontinuing party to pay the costs of the other party. In such a situation in a planning appeal, it may be sensible to discontinue, and not sensible to discourage the applicant from discontinuing by raising a presumption that it should pay the respondent's costs and to encourage it to continue and lose by a r 3.7(2) presumption that there will be no costs order."
At a high level, FOKEP has raised issues relating to the approvability of the development application due to jurisdictional issues, and the unreasonableness of Crescent in pursuing the appeal proceedings when it had been on notice of these jurisdictional issues since FOKEP sought to be joined to the appeal proceedings, or at least since FOKEP filed its SOFAC. Against this, Crescent contends that it took a reasonable position that there were no jurisdictional issues with the development application, and further, that its decision to discontinue with the appeal proceedings when new merit matters were raised by FOKEP during the hearing was reasonable. The divergence between the parties relates to the reason for the discontinuance, and whether this reason makes it fair and reasonable to award costs.
Before delving further into these positions, it is convenient to record that while previous cases regarding costs and some of the submissions made by the parties centre on the "reasonableness" of the conduct of Crescent as the discontinuing party, a finding that Crescent's conduct was variously unreasonable or reasonable is certainly relevant, and may be persuasive, but is not necessarily determinative, of the question of whether it is fair and reasonable in the circumstances to make an order for costs. As noted by Preston CJ of LEC in Council of the City of Sydney v Base Backpackers Pty Ltd [2015] NSWLEC 63; (2015) 208 LGERA 342 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."
While Preston J was considering a finding that proceedings fell within one of the specific example circumstances in r 3.7(3) of the LEC Rules, his Honour's commentary is also relevant to a finding that the conduct of the discontinuing party was unreasonable.
Further, I note that due to the discontinuance there is no final determination of the jurisdictional preconditions and merits of the development application to inform my consideration and determination of the award of costs. It is not the role of this Court in a motion for costs to assess and determine the jurisdictional preconditions and merits of a matter in a hypothetical action: Lai Qin at 624 (where I consider this principle to be apposite in a broader discontinuation context than that originally referred to by McHugh J). Given this, my consideration of the submissions regarding jurisdictional preconditions and merits made by the parties in this motion for costs are limited to the extent they are relevant to my determination of the award of costs.

FOKEP's jurisdictional issues

I find that it is clear from the evidence that FOKEP raised what it contends (and taking FOKEP's position at its highest, I assume, without deciding) were jurisdictional issues in its initial application for joinder before the Registrar, during the review of the Registrar's decision before Moore J, and in its SOFAC filed 30 September 2020. It is clear that Crescent was on notice that FOKEP intended to argue that the development application the subject of the appeal proceedings could not be approved for jurisdictional reasons for a significant amount of time prior to the hearing of the appeal proceedings before the Commissioner.
More specifically, the transcript from the hearing before the Registrar indicates that senior counsel for FOKEP raised suggested "jurisdictional" issues including the need for grouting work on adjoining land to be described in the development application (Tcpt, 19 May 2020, p9(12-17)); the absence of owners consent for the grouting work (Tcpt, 19 May 2020, p9(1-9)); the failure to address cl 6.2 of the NLEP as a jurisdictional prerequisite (Tcpt, 19 May 2020, p9(23-27)); and the failure to assess the impacts of the proposed development on Arcadia Park (Tcpt, 19 May 2020, p9(43-50), p10(1-7)). Jurisdictional issues were also raised before Moore J, as evidenced in his Honour's comment that "[i]t is fair to say that much of the time was devoted to jurisdictional issues, particularly concerning the nature and location of grouting of the historical mine shafts in two seams that are in the vicinity": Crescent Newcastle (Joinder Decision) at [58].
Finally, in relation to FOKEP's SOFAC, it is clear that the seventh contention raises owners consent in relation to the surrounding land and from the owner of the mineshafts as a jurisdictional issue (at pars (a), (d) and (e)). The sixth contention raises the issue of compliance with cl 6.2 of the NLEP, indicating that "the grouting must be considered via the following framework in Cl 6.2 of the NLEP" and identifying potential environmental impacts of the grouting work (at par (k)), although the absence of an environmental assessment pursuant to cl 6.2(3) of the NLEP was not explicitly raised in the SOFAC.
The failure to describe the extent of grouting work and its impacts on the environment in the development application is succinctly, but somewhat shortly, set out in the first contention of the SOFAC. Taking into account FOKEP's submission regarding particularisation, I consider that the sixth contention identifies that FOKEP sought to raise issues of grouting work both on the site (at par (f)) and on the surrounding land (at par (c)) as direct impacts of the proposed development requiring assessment as part of the development application (at pars (e), (f) and (i)).
The fact Crescent's town planner, Mr O'Connor, included an assessment of the grouting work under cl 6.2(3) of the NLEP in his expert report dated 13 November 2020 in response to FOKEP's SOFAC, is evidence that Crescent was aware of the suggested jurisdictional issues that FOKEP sought to raise in the appeal proceedings. However, while Crescent engaged with and considered the suggested jurisdictional issues raised by FOKEP, it took different positions on them with the consequence that it did not consider them to preclude the grant of development consent for the proposed development.
In summary, Crescent's view was that there was no need for development consent for the grouting work on the surrounding land on the basis that the work was either ancillary to a development the subject of a consent or constitutes environmental protection works; that owners consent could be obtained prior to any determination and that owners consent had either been obtained prior to the hearing, or it was likely that it would be obtained prior to the determination of the appeal proceedings; and, finally, that the development application appropriately assessed the proposed development. On this basis, Crescent progressed the appeal proceedings.
In my view, the jurisdictional issues raised by FOKEP involve both legal and factual matters of nicety relating to the grouting work and the scope of the works included in the development application. It is not clear to me, without the benefit of full argument on the issues raised, whether the issues characterised as jurisdictional were in fact jurisdictional, and further, that one party's position on the jurisdictional issues raised would have necessarily succeeded. This is a function of the discontinuance of the appeal proceedings during the hearing, and differentiates the appeal proceedings from previous cases such as Huajun Investments, where the Court heard and delivered a decision determining the issues raised in the Class 1 appeal proceedings such that it was clear which party was successful. In this respect, I accept Crescent's submission that the discontinuance of the appeal proceedings should not be treated as if FOKEP enjoyed (or would have enjoyed) success on the jurisdictional issues it raised, when considering the application for an order as to costs.
Therefore, without engaging further with the issue of whether the issues were in fact jurisdictional and whose position on the jurisdictional issues was correct, where this is beyond the scope of my role in determining this motion for costs, I find that it was reasonable for Crescent to take a different view to FOKEP of those jurisdictional issues and progress the appeal proceedings accordingly. In this respect, I do not consider Crescent to have acted unreasonably in proceeding with the ongoing conduct of the appeal proceedings after the applications for joinder by FOKEP, despite being on notice of the jurisdictional issues that FOKEP intended to argue at the hearing.
FOKEP invited me to find that Crescent discontinued the appeal proceedings because it realised that the jurisdictional issues would preclude the approval of the development application. Crescent rejects this contention, and puts forward a different reason for the discontinuance of the appeal proceedings. I note that even if the reason for Crescent's discontinuance of the appeal proceedings on the fourth day of the hearing was that the jurisdictional issues would preclude development consent for the proposed development being obtained, the evidence before me indicates that that would have been a relatively recent position taken by Crescent. Prior to the discontinuance, Crescent had consistently taken the position before the Registrar and Moore J that any jurisdictional issues required to be resolved for the grant of development consent could be satisfied. I do not consider Crescent's conduct in taking this position, even if subject to a later change, to have been unreasonable.
Therefore, I do not consider Crescent's conduct in relation to the jurisdictional issues raised by FOKEP to be unreasonable, such that I would make a finding that it is fair and reasonable in the circumstances that costs are awarded to FOKEP.

Crescent's new merit matters

Crescent submits that new merit matters were raised by FOKEP during the hearing, and this was the reason for the discontinuance. The new merit matters as characterised by Crescent are recorded at [58] above. After reviewing the transcript of the hearing of the appeal proceedings, I am satisfied that these issues were raised by FOKEP before the Commissioner (Tcpt, 17 February 2021, p152(35)-153(2)).
The question arises as to whether this was the first time that the new merit matters were raised, as contended by Crescent. Having reviewed FOKEP's SOFAC, it appears as though the merit matters broadly fall into the issues raised by the first contention, in that they constitute potential impacts of the grouting work on the surrounding environment, but were articulated by senior counsel for FOKEP with more granularity in the hearing before the Commissioner. I accept that the sixth contention provides some further details of the potential impacts of the grouting work raised by FOKEP - nominating a longer construction and operating time for the construction of the proposed development and amenity impacts of adjoining property (at pars (i) and (k)). I find these impacts to be similar to some of the construction matters raised in the new merit matters including the length of time for boring and the impact of truck movements at the site. It follows that I do not accept Crescent's submission that the sixth contention does not describe environmental impacts, as I consider this position to constitute an overly strict delineation between the contentions.
However, further testing and environmental matters raised in the new merit matters are not reflected in the sixth contention. In this respect, I find that some of the new merit matters raised by FOKEP were raised for the first time at the hearing of the appeal proceedings, in the sense that senior counsel for FOKEP described specific issues regarding the potential impacts of the grouting work on the surrounding environment. Notwithstanding this, I consider that these new merit matters had been more generally raised in the first contention of FOKEP's SOFAC, and thus Crescent was on notice that FOKEP would be raising these kinds of issues, and could have prepared evidence to address these kinds of issues.
Senior counsel for Crescent made careful submissions in the motion before me regarding Crescent's position in relation to the new merit matters, in the context of the hearing before the Commissioner. This included that the first contention and the new merit matters were not addressed by the experts when preparing evidence of the appeal proceedings. Further, at the hearing of the appeal proceedings, the parties engaged in a "debate about evidence and a debate about whether there was sufficient evidence to address a contention" where Crescent "did not have an immediate answer" for the new merit matters: Tcpt, 15 July 2021, p43(42)-44(2). As such, there was a tactical decision taken that there was a real risk on the question of first, whether the Commissioner would consider that she needed evidence addressing the environmental impacts of the grouting work as reflected in the new merit matters in order to meaningfully assess the development application; and second, whether or not Crescent had the ability to address the Commissioner in relation to the new merit matters, in the context of an indication from the Commissioner that she was unlikely to grant an adjournment to obtain such evidence: Tcpt, 15 July 2021, p51(29-32), 59(19-43).
In contrast, senior counsel for Crescent took the Court to the various places in the evidence (including expert reports) where the sixth contention was addressed, and submitted that "as all the material marshalled shows, there was ample [evidence] directing itself to contention 6 and the matters raised in contention 6K [sic]": Tcpt, 15 July 2021, p49(49-50). On this basis, Crescent submits that the discontinuance was not related to evidence required to address the sixth contention.
I have reviewed that part of the transcript of the hearing of the appeal proceedings before the Commissioner concerned with the "debate" regarding whether there was sufficient evidence to address FOKEP's contentions closely. While I have had regard to the alternative reasons for the discontinuance proffered by FOKEP, I consider that the transcript of the hearing indicates that the decision was made in response to the new merit matters raised by FOKEP. This is most clearly articulated by senior counsel for Crescent, when on the afternoon of the third day he said to the Commissioner "[m]y problem was, was that - and maybe it's a problem for the way in which Mr Robertson has chosen to open, but the way the opening is put, it's put that there's a whole load of other things is [sic] necessary": Tcpt, 17 February 2021, p160(46-48). Following this, on the fourth day when, in seeking leave to discontinue, senior counsel for Crescent noted that it took the view that "we would, in order to persuade you that the relevant matters have been taken into account, nevertheless need to supplement this application with that material" where "that material" was earlier identified as "that which was the subject matter of what is said in ground 1 [the first contention] to be an insufficiency of information to assess the environmental impact of the mine grouting works": Tcpt, 18 February 2021, p164(8-26).
I have found that Crescent was on notice of the kinds of issues raised by FOKEP in the new merit matters because they had been more generally raised in the first contention of FOKEP's SOFAC, but that Crescent took a strategic decision during the hearing to discontinue the proceedings on the basis that it did not have evidence to address the first contention and convince the Commissioner to grant development consent for the proposed development. However, I do not consider this conduct to support a contention that it is fair and reasonable in the circumstances to award costs to FOKEP, for the following reasons: 1. While Crescent was on notice of the kinds of issues raised by FOKEP in the new merit matters, it was not on notice of the specific issues regarding further testing and environmental matters raised by senior counsel for FOKEP in opening; 2. Crescent had prepared a significant body of evidence designed to convince the Commissioner to grant development consent for the proposed development (where Crescent had the responsibility to adduce such evidence and make such submissions as it thought best advanced its case: Denoci at [124]). In this respect, until the third day of the hearing of the appeal proceedings, Crescent's position was that it had the evidence required to convince the Commissioner to grant development consent for the proposed development; 3. It is reasonable for a party to be responsive to the perceived position of the Commissioner hearing the appeal proceedings in relation to the submissions of the other party and the evidence that would be required to convince the Commissioner to grant development consent for the proposed development; and 4. Having come to the conclusion that it did not have the evidence it thought the Commissioner may require to grant development consent for the proposed development, it was open to Crescent to take a tactical decision regarding the prospects of the appeal proceedings.

Other issues

FOKEP raised a number of other discrete reasons in support of its contentions that the award of costs would be fair and reasonable, which I deal with shortly here.
I do not consider that the failure to obtain an outcome or judgment in the appeal proceedings to be a reason for an order for costs to be made in favour of FOKEP. The discontinuance of proceedings is not a novel outcome for the appeal proceedings, and as such the parties to the appeal proceedings should have been aware of both the risk of an adverse outcome, and the appeal proceedings being discontinued. Both of these circumstances bear the risk that FOKEP's expenditure on the appeal proceedings would be "wasted" in the sense that FOKEP did not obtain its desired outcome in the appeal proceedings.
While accepting that the discontinuance of the appeal proceedings ended FOKEP's participation in the appeal proceedings without an outcome or judgment, I note that FOKEP can avail itself of those opportunities for public participation (as provided for in the EPA Act) during the consideration of any future development application for the proposed development or a similar development. In a similar manner, in the event of any further court proceedings in relation to any future development application for the proposed development or a similar development, and depending on the characteristics of those court proceedings, it would be open to FOKEP to seek to participate in much the same manner as it did in the appeal proceedings.
I accept that while costs are not normally awarded at the conclusion of Class 1 appeal proceedings, they can be: Huajun Investments. However, I do not consider that anything further is gained from an assessment of this issue, in circumstances where the appeal proceedings were not fully argued, for the reasons set out above at [78].
While the matters to be traversed in my consideration of whether it is fair and reasonable in the circumstances to make an order for costs are broad, I do not consider that Crescent's allegedly "commercial" engagement with the appeal proceedings to be persuasive when considering whether it is fair and reasonable in the circumstances to award costs. In a similar manner, while I accept that FOKEP is a not for profit incorporated association and take this into account in my consideration, apart from my consideration of the costs of this motion, I do not consider this to be material.
Further, while the main dispute at the hearing of the appeal proceedings was between FOKEP and Crescent, I do not accept FOKEP's characterisation that Council did not actively participate in the appeal proceedings. Council engaged with the appeal proceedings in the manner it saw fit prior to the joinder of FOKEP (including through participation in the s 34 conference). Council was entitled to take the position it took at the hearing, being that there were no merit issues in contention that would support a refusal of the development application. Thus while accepting that FOKEP was joined to the appeal proceedings on the basis that it would raise "potential jurisdictional issues" that would not have been raised without FOKEP, once joined, FOKEP was joined as a party for all purposes: Crescent Newcastle (Joinder Decision) at [83]). I do not consider that this supports a conclusion that it is fair and reasonable that FOKEP's costs are paid.
I reach a similar conclusion in relation to Crescent's contention that as an applicant for joinder, FOKEP voluntarily assumed risk in relation to the appeal proceedings (unlike Council who was a necessary party), being that once joined, FOKEP was joined as a party for all purposes.
Finally, I accept that there were resultant savings in time and costs of the other party and saving of the Court's time due to Crescent's discontinuance, in that the hearing was terminated and no judgment was required to be produced by the Commissioner, and I take this into account in my consideration of all the circumstances.

Conclusion

Considering the evidence before the Court, and the submissions made by the parties on the motion for costs, I do not find that it is fair and reasonable in the circumstances to make an order that Crescent pay the costs of FOKEP. As such, I dismiss the motion and make no order for costs in relation to the appeal proceedings.

Costs of the motion

Crescent submits that it is "well established" that the costs for a costs application usually follow the event, such that Crescent should have its costs of the motion before me if it was successful in resisting the motion. Given my decision regarding the motion for costs, Crescent has enjoyed success.
However, FOKEP submits that as it is a public interest group, it raised questions of public interest in the appeal proceedings, and did not make an improper claim for costs in the motion (in that a reasonable amount of costs were sought), and as such, in the event that it was unsuccessful in the motion, the costs of the motion should not be awarded against FOKEP.
In the circumstances, I do not consider it to be appropriate that the costs of the motion be awarded against FOKEP. The relevant legal principles regarding orders for costs in Class 1 proceedings have already been extensively traversed in the course of this motion, and apply in an analogous manner to the costs of the motion.
I accept that FOKEP is a public interest group that was established and incorporated in 2011 as a not for profit association for the purposes of promoting and protecting the historic values and public recreational purposes of King Edward Park and the King Edward Headland Reserve as a place of special significance in the Hunter, both in Aboriginal and European history. I also accept FOKEP's submission that FOKEP's conduct in bringing the motion seeking a capped amount in costs was not an improper claim.
In these circumstances, I do not find it to be fair and reasonable in the circumstances of the motion for an order to be made against FOKEP for the costs of the motion. I therefore make no order for costs in respect of the costs incurred in the motion.

Orders

The Court orders: 1. The notice of motion filed on 22 April 2021 by Friends of King Edward Park Inc is dismissed. 2. No order is made in respect of the costs incurred in the primary Class 1 appeal proceedings filed on 18 September 2019 by Crescent Newcastle Pty Ltd and discontinued on 18 February 2021. 3. No order is made in respect of the costs incurred in the notice of motion filed on 22 April 2021 by Friends of King Edward Park Inc.

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: 01 December 2021

Environmental Planning and Assessment Regulation 2000(NSW)

Land and Environment Court Rules 1996(NSW)

(2015) 207 LGERA 268

(2015) 208 LGERA 342

(2007) 156 LGERA 125

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