Euro Sweets (NSW) Pty Ltd v Pittwater Council

EX TEMPORE Judgment 1HIS HONOUR : On 18 February 2011, the respondent Council gave to the present applicant an order pursuant to s 121B of the Environmental Planning and Assessment Act 1979 ( the Act ). In effect, the order required that the applicant cease the use of its premises known as Unit 55/6 Jubilee Avenue, Warriewood for the retail sale of food and beverages. 2On 25 February 2011 the applicant appealed to this Court pursuant to s 121ZK of the Act from the Council's order. That appeal was brought in Class 1 of the Court's jurisdiction. 3On 24 March 2011, the Council notified the applicant that it had revoked the order that was the subject of this appeal. That fact was known when, on the following day, 25 March, applicant's Class 1 application was first returnable before the Registrar of the Court. The Registrar was informed that the Order had been revoked. 4By a notice of motion filed on 4 April, the applicant seeks an order that the Council pay its costs of the proceedings. That order is opposed by the Council. To understand the submissions made by the parties, it is necessary to recite the background facts. 5On 18 April 2008, the Council granted development consent for the use of the applicant's premises as "a pastry cook workshop". The premises comprise an industrial unit in a complex of factory units used for warehousing and other uses consistent with the industrial zoning of the land under the applicable local environmental plan. 6As a result of a complaint received by the Council in September 2010, the premises were visited by Council staff. The complaint that had then been made suggested that the premises were being used for the retail sale of coffee and cakes. That complaint, so it seems, was made by a trade competitor. Representatives of the applicant were informed of the complaint at the time of the Council officer's visit. It was indicated to the applicant's representatives at the time that the development consent granted for use of the premises did not extend to allow the operation of a retail food outlet. 7Within days of that visit, the applicant, by its consultant planner, lodged with the Council an application to modify the 2008 development consent. That application was made pursuant to s 96(1A) of the Act. It sought to change the description of use of the premises by adding "to permit retail sale of product manufactured on the premises". In describing the intended use, the application contemplated the sale of cakes, pastries and sandwiches as well as coffee, focused upon sales to persons employed in the surrounding industrial estate. Nonetheless, the application contemplated that those sales would be by retail. 8The modification application was notified by the Council in accordance with its policy during October 2010. The application was also referred by the planning department to other departments within the Council. By letter dated 21 December 2010, further information concerning the application was sought from the applicant by the Council. That information was supplied by the applicant's consultant planner by letter dated 2 February 2011. 9Meantime, the applicant continued with the retail sale of take-away food and coffee. It may have been on a limited basis but nonetheless it continued. So much is apparent from inspections carried out by Council staff during January 2011. Indeed, on 16 February 2011, in a conversation between a Council officer and the secretary of the applicant company, it was admitted by the latter that the applicant was "still trading retail". 10This activity had been continued, notwithstanding the visit to the premises in September to which I have already referred. Indeed, in November 2010, the Council had advised the applicant by letter that the current development consent did not permit retail sale of food from the premises. 11On 2 February 2011, a notice of proposed order under s 121B requiring cessation of retail sales from the premises was given to the applicant in accordance with s 121H of the Act. It invited representations in relation to the draft order within "ten working days from that date". It is accepted by the applicant that the period given for representations to be made would have expired on 16 February. 12It seems that following receipt of the Council's notice of proposed order, the applicant instructed its consultant planner to make representations on its behalf. Those representations were made by letter dated 16 February but were not received by the Council until 18 February. 13On the morning of 18 February, a member of the Council's staff served upon the applicant the s 121B order that founded the present proceedings. The evidence does not reveal whether the order was prepared and served before or after the time at which the letter from the applicant's consultant planner was received by the Council, or at least came to the attention of any member of the Council's staff familiar with the matter. 14A report addressing the applicant's modification application was prepared by a member of the Council's planning staff for consideration at the Development Unit meeting of the Council to be held on 17 March. The report recommended that the application be refused. That recommendation was not accepted by the Development Unit. At that meeting, apparently attended by representatives of the applicant, the s 96 modification application was approved by the Council. As a consequence, the Council issued a modified consent to the applicant on 23 March and the following day notified the applicant by letter that the s 121B order issued on 18 February was revoked. The letter further indicated that no further action was required on the part of the applicant. 15It is in the context of these facts that the applicant seeks an order for payment of its costs. It acknowledges that in light of the Land and Environment Court Rules 2007 ( LECR ) r 3.7(2) there is a presumption that no order for costs should be made in a Class 1 appeal of the present kind. However, it contends that in all the circumstances it is fair and reasonable that an order in its favour should be made. 16In support of its costs application, the applicant prays in aid the provisions of LECR 3.7(3)(a) and (c). Those paragraphs of the rules relevantly identify circumstances that might demonstrate the making of a costs order to be fair and reasonable. They include: "(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, ... (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, ... " 17I do not believe that LECR 3.7(3)(a) is relevant to the present circumstances. That paragraph of the rule, so it seems to me, is appropriate to a circumstance where determination of some question preliminary to a consideration of the merits has been undertaken and that determination, for all practical purposes, brings or had the potential to bring the proceedings to an end ( Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15]). The circumstances attending the Council's revocation of the s 121B order are not of that kind. 18However, it is acknowledged that the circumstances identified in LECR 3.7(3) are not exhaustive of the circumstances in which the costs discretion may be exercised by determining that it is fair and reasonable to award costs. I certainly do not so regard them. 19The provisions of LECR 3.7(3)(c) have more substance as a basis upon which to found the applicant's submission. Indeed, it is by reference to the circumstances leading to the commencement of these proceedings upon which the applicant lays heavy emphasis in order to found its submissions. In support of the exercise of discretion in its favour, the applicant points to the distinction to be drawn between an appeal from refusal of a development application (or any exercise of a statutory discretion) and an appeal to resist the imposition of a penalty or obligation of the kind imposed by a s121B order (see the decision of Court of Appeal in Thaina Town (On Goulburn) Pty Ltd v Sydney City Council [2007] NSWCA 300; (2007) 71 NSWLR 230. 20I accept that distinction as being relevant. However, unlike the position that pertained in Thaina Town , the regulatory regime established by LECR 3.7(2) now imposes a presumption that no order will be made when determining an appeal from a statutory notice, the disobedience to which may impose a liability or expose the recipient to a penalty. The costs consequences for the successful prosecution of an appeal from such a notice will therefore not necessarily be the same as those considered appropriate under the former regulatory regime. The decision of Jagot J in Moussa v Owners Corporation of Strata Plan 65404 (No 2) [2008] NSWLEC 121 does not, to my mind, draw any different conclusion. Certainly the cases demonstrate that the considerations reflected in the earlier jurisprudence on the topic are relevant to be considered, but are not determinative of the outcome (see Moussa at [10]). 21The applicant submits that the conduct of the Council was unreasonable for a number of reasons. First, it says that there was a "capitulation" by the Council, with the result that it ought properly be ordered to pay costs. Expressed in the language of the rule, by reason of that capitulation, the applicant submits that it was fair and reasonable that an order for costs should be made in its favour. 22The second ground upon which the applicant presses its entitlement to an order is that the period of time that elapsed between the complaint first made to the Council and the decision to issue the order in February 2011 was unreasonable. Third, the applicant says that when there was an outstanding s 96 application before the Council, lodged in response to the complaint made about its activity, it was unreasonable to issue the order as the Council did on 18 February. Fourth, the imposition in the order of a period of one day for compliance was itself unreasonable. Finally, it claims that the Council ignored representations made by the applicant in response to the notice of intention to issue the order. 23Whether or not there has been a capitulation, in the sense intended by the applicant, is very much a question of fact. Those facts to which the "capitulation" description were applied in the decision of this Court in Statewide Developments Pty Ltd v Minister for Infrastructure and Planning [2005] NSWLEC 353; (2005) 142 LGERA 154 are significantly different from those facts which pertain in the present case. In Statewide , the order issued by the Minister had been fully satisfied. Notwithstanding acknowledgement that this was so, the Minister persisted in maintaining the order in an endeavour to achieve an undertaking, thereby necessitating an appeal. The period of time during which the Minister sought to maintain the order, notwithstanding expressed satisfaction that its requirements had been met, and then revoking it only after the appeal had been on foot for some time, was the circumstance upon which the Court found that there had been a "capitulation". Lloyd J concluded that the Minister's conduct was unreasonable and therefore an order for costs should be made. 24Here the circumstances are quite different. It cannot be ignored in the present case that while a s 96 application had been lodged, the applicant continued to carry out retail sales, apparently without any development consent so to do. In that circumstance, the Council was not required to stand by and ignore the breach while the s 96 application was being processed and considered (cp. s 124(3) of the Act). 25Having proceeded to determine the applicant's s 96 application by granting consent, the Council promptly notified the applicant of its decision and revoked the order. This is a fundamental difference from the facts that existed in Statewide . In these circumstances, rather than there being a capitulation in the sense in which the applicant sought to maintain that position, there was, as the Council submitted, a relevant changed circumstance, namely the grant of consent to the s 96 application which addressed the Council's allegation that the applicant had to that point in time acted in breach of the Act. The Council's conduct by promptly revoking the order, having determined the s 96 application favourably to the applicant, and then indicating that no further action was required upon it, was in the circumstances, entirely reasonable. 26The other circumstances that I have identified upon which the applicant relies in order to sustain its application for costs can be dealt with succinctly. The period of time that had elapsed between complaint and the issue of a notice seems to me to bear little upon the matter at hand. If time was of the essence so far as the applicant was concerned, faced with the knowledge that the Council considered retail sales to be in breach of the Act, the remedy lay in the applicant's own hands. Having lodged the s 96 application in September and being aware of the complaint that was made as to its conduct, it had the opportunity as early as November to bring an appeal to the Court on the basis of the Council's deemed refusal of its modification application: s 96(6) EPA Act. 27The next matter upon which the applicant relies, namely the imposition of an onerous time period for compliance with the order, while on its face attractive, does not, on reflection, withstand close scrutiny. What was required of the applicant was simply the cessation of an activity which, in its own submission, was incidental to or ancillary to the conduct of its principal activity, being the manufacture or production of pastry products. The evidence before me demonstrates that the only equipment involved in carrying out its retail activity was a coffee making machine together with a small refrigerated counter from which product could be sold or served to customers. Why it would require any more than a day in which to cease using those particular pieces of equipment and otherwise declining service to would-be customers was not made clear. 28The final matter upon which reliance is placed is the failure to consider representations made on behalf of the applicant in response to the notice of the proposed order. Although it was submitted that allowing ten working days in which to make submissions was an unreasonable period, quite why that period was unreasonable was not articulated. Importantly, there is no evidence to suggest one way or the other as to whether or not the representations made on behalf of the applicant were received before or after the time at which the order was served on 18 February. 29Given the limited nature of the applicant's retail activity, it seems to me that ten working days in which to make some representations as to why an order requiring cessation of that activity which, on its face, appeared to be in breach of the Act, was a reasonable period of time. That period of time having expired by 16 February, it could not seriously be complained that two days later the Council then sought to, and did in fact, issue the s 121B order. 30As I have already said, whether the order was in fact prepared and served before or after receipt by the Council of the consultant planner's representations is not apparent from the evidence. So far as I am concerned that position does not assist the application for costs, the applicant bearing an onus in circumstances such as these to establish that it is fair and reasonable to make the order that it seeks. If this ground was to be pressed, it was incumbent upon the applicant to demonstrate, as a fact, that there was a failure to consider representations as a basis upon which to sustain the order that it seeks. 31None of the circumstances relied upon by the applicant to my mind bespeak a proper application of the exception to the general rule that no costs order should be made in proceedings of this kind. In many respects, the applicant was the author of its own misfortune in having to bear costs of instituting its appeal. Had it simply ceased serving coffee, sandwiches and cakes, pending determination of the s 96 application, it would not have had to address the Council's s 121B order. Moreover, as I have already indicated, if time was a problem for it, an appeal pursuant to s 96(6) of the Act was a course of action open to it and was available as early as November 2010. 32For these reasons, the applicant's notice of motion will be dismissed. 33Accordingly, I make the following orders: 1.The applicant's notice of motion dated 4 April 2011 is dismissed. 2.The applicant is to pay the respondent's costs of the notice of motion, such costs to be as agreed or assessed. 3.Grant leave to the applicant to discontinue proceedings by filing a notice of discontinuance in the Registry by 4.00pm on Monday 16 May 2011. 4.Exhibits may be returned.