Fulton Hogan Pty Ltd v Blacktown City Council

The hearing

1. The costs hearing on 21 October 2020 was held, as a consequence of the COVID-19 pandemic, using Microsoft Teams software without the necessity for any physical attendance in the courtroom. The hearing was conducted in accordance with the Court's COVID-19 Pandemic Arrangements Policy.
2. Mr J Lazarus SC appeared for the Council on the costs application, whilst Mr M Wright SC represented the Company.

The evidence

1. Two affidavits (dated 17 September and 2 October 2020) were deposed by Mr J Fan, a solicitor employed by the Council's legal representative. Both were read on the motion. A bundle of documents exhibited to his first affidavit became Exhibit A. Exhibit B was the Company's Statement of Facts and Contentions in Reply filed on 20 March 2020 whilst Exhibit C was the Council's Amended Statement of Facts and Contentions filed on 12 August 2020.
2. An affidavit dated 2 October 2020, deposed by Ms B Warry, the solicitor for the Company, was read on the motion. A bundle of documents exhibited to that affidavit became Exhibit 1. An affidavit dated 6 October 2020, deposed by Mr B Dyer, a solicitor employed by the Company's legal representative, was read on the motion. A bundle of documents exhibited to that affidavit became Exhibit 2.
3. I later discuss those elements of Exhibit A necessary for my consideration of this motion, as I also do for the documents in Exhibits 1 and 2.
4. No oral evidence was required.

The orders sought

1. The Application Class 1 and its supporting documents were filed on 13 November 2019. These are in evidence in Exhibit 2 (the exhibit to Mr Dyer's affidavit). The Application Class 1 sought three orders. Those proposed orders were in the following terms: 1 The appeal is upheld. 2 That consent is granted to MOD-19-00309 to modify development consent DA-17-0023 to remove the requirement for s 7.11 contributions to be paid for the provision of stormwater drainage. 3 That the s 7.11 contributions paid for the provision of stormwater drainage under DA-17-0023 is refunded to the Applicant.

Introduction

1. A bundle of five documents was filed in support of the Class 1 appeal. Two of these documents warrant being noted.

The Council's letter of 21 October 2019

1. The first of the documents (Exhibit 2, folios 1 and 2) was a letter of 21 October 2019 from the Council's Coordinator Planning Assessment to the Company. It set out two reasons why the Council considered that the modification application could not be supported. One of those concerned engineering matters, whilst the other addressed the elements relating to financial contributions. For present purposes, it is appropriate to set out that which relates to engineering matters. This was in the following terms: Engineering The proposed modification is not supported. The applicant needs to do permanent on-site treatment which is allowed for in the Contribution Plan 18 (CP). The applicant would have to do temporary detention until the CP works are built. This is the same as any other situation where a developer wants to proceed ahead of the CP works. The applicant still needs to pay the contributions.

The Statement of Environmental Effects

1. The next relevant document was the Statement of Environmental Effects (the SEE) (Exhibit 2, folios 8 to 18), a document prepared by the Company's planning consultant. At folio 10, the SEE set out, in 1.2, the nature of the modification sought. This element of the SEE was in the following terms: The Applicant is seeking the modification of condition C4.1.1 of DA-17-00823 to remove the requirement for a contribution to be paid for the provision of stormwater drainage is the contribution applied is unreasonable based on the scope of stormwater infrastructure required to be provided for this development under the conditions of consent. The Applicant is also seeking the modification of ancillary conditions of consent to ensure that the permanent nature of the stormwater management infrastructure is recognised within the Consent. This application is being made to Blacktown City Council under Section 4.55 of the Environmental Planning and Assessment Act 1979 (the Act). These modifications are sought on the basis that the contribution rates imposed are considered unreasonable in the circumstances of the case. As the stormwater management is required to be provided on-site under the Consent the development will not generate demand for the offsite facility. There will be no expected impacts as a result of the proposed modification. No modification is being sought to the scale or layout of the development and as such the development will remain substantially the same development as originally approved.
2. The SEE also noted (folio 12), at 3.3 Standard of on-site facilities, the following: The on-site water cycle management facilities required as a condition of consent are of a sufficient standard to act as permanent facilities (please refer to the letter from Advissian [an engineering consultancy] at attachment 3 advising that the design of the detention basin that was constructed on the land was not intended to be temporary in nature and had been designed, as if it were to be permanent). They are not temporary in nature and should not be treated as such. There is no sunset clause within the consent requiring the decommissioning of these works. If/when the off-site facilities are provided, nor is there any method of compensation for the expense imposed through the initial investment in these works that that are due to the lack of reasonable timing within the plan.
3. The SEE set out (folio 13), at 5 Conclusion, a short summary of the overall practical effect of the modification application as going beyond merely the request for a refund of contributions levied by the Council. This conclusion was in the following terms: Having regard to the structure and content of the contribution plan and the scope of works required to be provided on-site as conditions of development consent, the standard of the on-site stormwater management is sufficient to be a permanent facility provided in lieu of the works required under the Plan.
4. The letter from Advissian (folios 17 and 18), dated 18 June 2018, said, relevantly: From a design perspective Advissian does not see any reason why the proposed detention basin could not be retained as a permanent structure for stormwater management; there is no difference in the design approach whether the basin is permanent or temporary.
5. The letter then set out seven technical reasons as supporting that conclusion.

The Notice of Determination

1. The Notice of Determination (Exhibit 2, folios 20 to 68) contained, on my comparatively cursory examination, at least three conditions of consent which refer to a "temporary detention basin" or "temporary OSD", being (it is to be inferred) the structure sought by the modification application to be acknowledged as being permanent rather than temporary. It is not necessary to identify or set out the precise terms of these conditions. However, it is also to be observed that, as noted later at [89], the Council's Amended Statement of Facts and Contentions set out 13 conditions that the Council understood were sought the be modified by the Company's modification application.

A relevant chronology

1. The written submissions of counsel each set out what was said to be a relevant chronology of events. The chronology on behalf of the Council was at paragraph 11 of Mr Lazarus's written submissions, whilst that for the Company was at paragraphs 14 to 35 of Mr Wright's written submissions.
2. Unsurprisingly, there are differences in descriptive emphasis placed in each of these chronologies as well as differences in the dates and events selected therein.
3. Despite the differences in the elements of the two chronologies set out in the competing sets of written submissions, it is unnecessary to seek to reconcile them in any comprehensive fashion by incorporating some consolidated (and potentially expanded) detailed chronology in this decision.
4. It is sufficient that I note that I have had regard to what I consider to be the relevant matters for present purposes.
5. However, it is to be noted Mr Lazarus proposed that, if the Council was unsuccessful in this costs application, an exclusionary order, with respect to the costs associated with the preparation of Ms Warry's affidavit, should be made. Although a limited exclusionary order concerning photocopying costs associated with this affidavit is appropriate (for reasons later explained), it is to be observed that, although compendious as to exchanges between the Company and the Council concerning the Company's modification application, generally, and the Class 1 proceedings in particular, I have needed to pay regard to the material contained in Exhibit 1 for the purposes of my necessary analysis of the differing chronology‑related submissions.

Introduction

1. Although, in conventional civil litigation, there is a presumption that costs will follow the event - including in costs applications such as here being considered (Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 and r 42.1 of the Uniform Civil Procedure Rules 2005), this presumption does not apply in, relevantly, Class 1 merit appeals in this Court. This is because special provisions in the Land and Environment Court Rules 2007 (the Court Rules) apply to such appeals (and to other appeals not presently relevant) as a consequence of the application of the "no discouragement" principle.
2. In particular, for the purposes of my consideration of this costs application arising as a consequence of the Company's discontinuance of its Class 1 appeal without there having been any consideration of the merits of the appeal, it is to be noted that r 42.19 of the Uniform Civil Procedure Rules 2005 (the UCPR) does not apply. This rule would otherwise have created the presumption that the discontinuing party should pay the costs incurred by the other party to the litigation.

The Court Rules

1. The Court Rules make special provision, in r 3.7, to ensure that costs in, relevantly, Class 1 proceedings are only ordered to be paid by an unsuccessful party (here, the Company as the discontinuing party) when it is "fair and reasonable" to do so. The elements of this rule to be noted are in the following terms: 3.7 Costs in certain proceedings (1) … (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.
2. As can be seen, the terms of the examples given comprise an inclusionary list rather than being a closed set of circumstances where such an order might be appropriate. Other circumstances where it might be fair and reasonable to award costs in Class 1 proceedings are, obviously, not excluded from consideration.
3. It is also to be observed that there have been other examples where the question of whether or not costs should be ordered in such proceedings have been considered and determined (some successful for the costs applicant and others not so) on the facts and circumstances of the particular proceedings. It is not necessary to endeavour to set out a compendious list of such additional circumstances.
4. It is also to be noted that the "no discouragement" principle underlies and provides guidance in the application of r 3.7 of the Court Rules. Put simply, a person generally should not be discouraged from making or defending an application by the prospect of an adverse costs order (Arden Anglican School v Hornsby Shire Council (2008) 158 LGERA 224; [2008] NSWLEC 103 at [10]).

No merit consideration of the Company's appeal

1. No merit assessment within the Court was undertaken of the Company's modification application. Such merit consideration could have arisen on the basis of without prejudice discussions through the conciliation conference process (pursuant to s 34 of the Land and Environment Court Act 1979) or in a formal determination sense (had such conciliation failed or not taken place) had the Company's appeal proceeded to hearing.
2. In particular, this lack of formal merit consideration of the Company's modification application requires consideration in light of the decision of McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 in the way it has been applied (perhaps, more broadly than McHugh J intended - as discussed below).
3. In this decision, his Honour cautioned, as a general proposition, against undertaking some hypothetical merit assessment of proceedings which did not carry through to determination by the relevant tribunal.
4. However, a cautionary note is to be sounded because of what his Honour noted in the paragraph before those that are conventionally cited when the principles said to be derived from this decision are referenced. His Honour made it clear that what he was dealing with was: … the principles which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means.
5. The broad matters to which attention has been drawn by both Mr Lazarus and Mr Wright (to differing conclusions) are other more general remarks made by his Honour on 624 and 625 (examples omitted).
6. Accepting that, as counsel for both parties do by implication, his Honour's reasoning is appropriate to be applied in the present circumstances, circumstances where the Company has not achieved the relief sought in the Class 1 appeal either by settlement or by extra-curial means, it is appropriate to set out and apply the relevant elements of the remainder of his Honour's analysis to the present circumstances.
7. The paragraphs to which my attention has been drawn by both counsel are in the following terms (footnotes omitted): In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. … Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. … But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
8. It is necessary, later, to consider in a little detail the nature of the matters sought as outcomes by the Company in its Class 1 appeal and to obtain a proper understanding of how those outcomes are to be characterised in the first instance and, as a next step, what conclusion is appropriate to be drawn with respect to those matters in light of the above quoted passages.
9. As can be seen, there is no absolute prohibition on undertaking some hypothetical merit assessment, but significant caution is required before it might be appropriate to do so. Such a cautionary approach arises in these proceedings for several later explored reasons.

Introduction

1. The basis upon which the Council says that it is entitled to an order for its costs of the Class 1 proceedings upon the discontinuation by the Company were succinctly summarised in Mr Lazarus's written submissions at paragraph 2 in the following terms: (a) the proceedings were doomed to failure insofar as they related to a claim for a refund of development contributions already paid by the applicant, thus enlivening the principle in rule 3.7(3)(f) of the Land and Environment Court Rules 2007 (LEC Rules); (b) the proceedings involved as a central issue questions of law or of mixed fact and law that would have been determinative of the proceedings and were preliminary to an evaluation of the merits of the application, within the meaning of rule 3.7(3)(a) of the LEC Rules; (c) the applicant's unexplained decision to discontinue the proceedings provides the circumstances in which the making of a costs order in favour of the Council would be "fair and reasonable"; and (d) the applicant otherwise conducted the proceedings unreasonably so as to engage rule 3.7(3)(d) of the LEC Rules.
2. The Court Rules set out, in r 3.7(3), illustratively and not exhaustively, circumstances under which it might be concluded that it was fair and reasonable to make a costs order in proceedings such as these.
3. As can be seen above, three of the elements in this illustrative list are relied upon by the Council as bases upon which it submitted that the costs order sought should be made. Those provisions were r 3.7(3)(a), (d) and (f). It is convenient to deal with these provisions in the order in which they were addressed in Mr Lazarus's written submissions.

The position advanced concerning r 3.7(3)(f)

1. In amplification of why the conclusion should be drawn that these elements of the rule provided support for the Council's position on costs, Mr Lazarus set out, in his written submissions, at paragraphs 17 to 23, material advanced in support of the proposition that r 3.7(3)(f) provided a proper basis for making the costs order sought. These submissions were expanded upon by Mr Lazarus in his oral submissions.
2. The essence of these submissions, not needing to be traversed at any length, was that the Court had no jurisdictional power to make the orders sought by the Company to remove the obligation, retrospectively, to pay the development contributions of over $1.8 million or to order the Council to refund the amount already paid.
3. Mr Lazarus submitted, in paragraph 21 of his written submissions: If … the applicant were otherwise successful in the proceedings in persuading the Court that it was appropriate to modify the Consent, the Court could not as a matter of law have ordered a refund, given that at the time the contributions were paid, the condition imposing them was lawfully in effect, and the subsequent modification of the Consent to disallow those contributions could not have affected the lawfulness of their imposition in the first place.
4. Mr Lazarus amplified these matters in his oral submissions, but it is unnecessary to address them further. On this basis, Mr Lazarus submitted that the Company's modification application was "doomed to failure", thus making a costs order fair and reasonable.

The position advanced concerning r 3.7(3)(a)

1. The next topic addressed by Mr Lazarus was under the heading "The central issues in the proceedings were legal issues". His written submissions address this at paragraphs 24 to 26. As with the first topic, he expanded on his written submissions orally concerning these propositions. In this regard, he instanced contentions 1.1, 1.2, 1.3 and 1.5 of the Council's contentions as supporting the proposition that, in effect, the only issues in the proceedings were those of a legal or jurisdictional nature. This position was summarised in paragraph 26 of his written submissions in the following terms: 26. Consistent with the clear purpose of rule 3.7(3)(a), the legal issues in the case were of such a nature, extent and complexity so as to make it appropriate that costs should follow the event, notwithstanding the non-application of rule 42.1 of the Uniform Civil Procedure Rules 2005 (UCPR) to the determination of the issue of costs in these proceedings.
2. The position advanced for the Council was that both limbs of r 3.7(3)(a) were satisfied (as required), thus providing a sufficient basis for the making of the costs order sought.
3. It will be later necessary to consider, in some detail, precisely what was the complete scope of the pleaded matters of controversy between the parties (particularly the position adopted by the Council) in order to be able to address this submission.

The discontinuance was an effective surrender

1. The third proposition advanced by Mr Lazarus, was that the Company's discontinuance of the proceedings was an effective surrender. His written submissions on this point were at paragraphs 27 to 30 and, as with the other elements here dealt with, he expanded on this proposition during the course of his oral submissions.
2. The fundamental proposition advanced was that, absent any explanation being provided to the Court as to why the proceedings were discontinued, there is no proper basis that I could conclude anything other than the fact that the Company then accepted that the matters advanced by the Council in opposition to the Company's modification application were well-founded. This position is supported, Mr Lazarus submitted, because the Company had made a without prejudice settlement offer on 19 August 2020, an offer which was rejected by the Council on 24 August 2020. The Council's position was confirmed to the Company's legal representative by letter of 1 September 2020, with the Company's solicitors, the following day, giving notice to the Council's solicitors that the Company proposed to discontinue the proceedings.
3. In support of the proposition that these circumstances, gave rise to a presumption that the Council was entitled to the costs order it seeks, Mr Lazarus relied on comments by Craig J in H & W Pty Ltd v Lane Cove Council [2010] NSWLEC 87, at [21], these being: I can readily accept that the filing of a Notice of Discontinuance without the consent of the other party to proceedings will generally provide a circumstance in which the making of an order will be "fair and reasonable". This will be so because the discontinuance reflects an abandonment of the proceedings with the consequence that the costs incurred by the other party will necessarily be wasted.
4. A full reading of his Honour's decision makes it clear that these remarks were obiter dicta in the context of an outcome where his Honour declined to make a costs order against the discontinuing applicant in the circumstances of that case.
5. It is clear, however, that, as his Honour acknowledged, in [22], there may be circumstances where making such an order would not be reasonable. He gave the example of the instance of a supervening event (a circumstance with which his Honour was, in fact, dealing with where a decision by Pain J in Iris Diversified Property Pty Ltd v Randwick City Council (2010) 173 LGERA 240; [2010] NSWLEC 58 (Iris Diversified Property) had been given after the commencement of H & W Pty Ltd's Class 1 appeal had been filed), where the decision in Iris Diversified Property significantly changed what had been regard, prior to that, as the relevant applicable statutory framework against which H & W Pty Ltd's appeal was to be measured.
6. It will be necessary, in my consideration of this aspect of the Council's submissions, to return further to the reasoning of Craig J and, in particular, why he declined to make a costs order in the circumstances then before him.

The limited, alternative claim

1. Finally, in the alternative, Mr Lazarus submitted that r 3.7(3)(d) was an appropriate basis upon which a more limited costs order could be made against the Company if I was not otherwise satisfied that a general costs order sought should be made in the Council's favour. This was because, in two aspects, the Company's behaviour had been unreasonable in the conduct of the proceedings. In this regard, Mr Lazarus said, in his written submissions at paragraph 31: 31. In the alternative, the Council relies on rule 3.7(3)(d) of the LEC Rules to seek its costs relating to the time spent preparing for and attending the motion to vacate the s 34 conference, and the costs of conferring and liaising with the three Council witnesses who were drafting statements of evidence, respectively.
2. As can be seen, there are two elements advanced by Mr Lazarus in support of such an alternative, more limited costs order. The first element, relating to the costs associated with the Notice of Motion to vacate the conciliation conference, was said to make it appropriate for those costs to be ordered in the Council's favour as a consequence of the tardiness in the Company's agreement to the vacation of the conciliation conference, in circumstances where the Council had advised the Company, several months earlier, that the Council did not see any point in the conduct of such a conference.
3. Because the notification of the Company's consent to vacation of the conciliation conference was only conveyed to the Council's legal representatives the day before the Notice of Motion hearing, it was submitted that this constituted unreasonable conduct on behalf of the Company, thus warranting a costs order for the matters associated with preparation for, and pursuit of, the Notice of Motion.
4. The second aspect of this alternative, limited costs order arises, it was submitted, because the Council had needed to incur costs associated with the preparation of substantive evidence for the purposes of the hearing listed for 6 to 8 October 2020. The timetable for such preparation had been set by the pre-trial management process and the Council's evidence preparation steps were as described in paragraphs 23 and 24 of Mr Fan's affidavit of 17 September 2020 in the following terms: 23 On 2 September 2020, the applicant emailed the respondent and annexed a Notice of Discontinuance executed by its solicitor. A copy of this email and the proposed Notice of Discontinuance is exhibited at Tab 14. No explanation was provided by the applicant as to why it was discontinuing the proceedings. 24 At the time of receiving the email on 2 September 2020, the respondent had instructed three witnesses to provide Statements of Evidence in compliance with the directions of 28 July 2020. The proposed witnesses were: a. Jared Spies, Council's Senior Development Assessment Planner, giving expert evidence on town planning issues; b. George Eberl, Council's Design Engineer, giving expert evidence on engineering issues; and c. Dennis Bagnall, Council's Manager of Developer Contributions, giving evidence as to Council's adoption of policies on development contributions plans and the decision making process on infrastructure projects.
5. Together, the combination of these two sets of circumstances, Mr Lazarus submitted, warranted the making the alternative, limited costs order sought (if the Council was not successful in its otherwise general costs application).

Introduction

1. The Company's submissions in opposition to the Council's costs application address the matters raised on behalf of the Council in the same order as in my earlier setting out of the Council's position. Here, as there, it is convenient to adopt that approach in my consideration of these issues.
2. Before turning to do so, I should observe that Mr Wright had noted, in paragraph 41 of his written submissions, that only r 3.7(3)(f) had been raised by the Council in its email of 4 September, prior to the Company's filing of its Notice of Discontinuance. That email is in evidence (Exhibit 1, tab 46) and is clearly marked as being "Without prejudice save as to costs".
3. The fact that a single basis was relied upon in an email making a settlement offer, when that letter of offer is not relied upon by the offeror for any purposes in costs proceedings (as is here the case), cannot undermine in any way the overall substantive basis upon which the Council here seeks a general costs order in its favour.

The response concerning r 3.7(3)(f)

1. The basic position advanced on behalf of the Company, in Mr Wright's written submissions and those which he made orally, was that the Company's modification application was not doomed to fail.
2. The Company's position was that its modification application was not confined to raising purely matters of, and associated with, seeking a refund of the contributions which it had already paid. It was put that there were other merit aspects that would have arisen in the context of assessing the Company's application. Mr Wright also canvassed matters concerning contribution related issues which he submitted also evinced matters of merit.
3. Although he did not address, at any length, the question of the merit contentions specifically raised by the Council initially in its contentions and, subsequently, in its amendments to its contentions, he did submit that the modification application did have utility to the Company even if the contributions matters did not result in any refund of contributions already paid.
4. He also submitted that past decisions of this Court, as well as persuasive obiter dicta from the Court of Appeal (Spigelman CJ in Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249; (2008) 163 LGERA 83 at [50]) did not yield a consistent line of authority on these matters, citing at least the decision of Sheahan J in Karimbla Properties v Council of the City of Sydney [2017] NSWLEC 75; (2017) 222 LGERA 385 where his Honour held, in albeit in a council rates proceedings, that the Court did have power to order a refund. Although overturned on appeal, this point was not addressed (and thus not set aside) on appeal.

The response concerning r 3.7(3)(a)

1. The Company submitted that, properly characterised, the central issues in the proceedings were not legal ones - thus, contrary to the Council's case, not falling within r 3.7(3)(a).
2. The Company also put that it would have been necessary to have addressed merit issues with respect to the proposed modification to the contributions condition, condition 4.1.1, and the other conditions for which amendment was sought by the Company prior to determining jurisdictional and power issues. On this basis, the Company submitted that the two conjunctive limbs of this element of r 3.7(3)(a) could not be said to be determinative or preliminarily fatal to addressing the merits of the modification application. On this basis, Mr Wright submitted that there was no potentiality for this element of r 3.7(3) to be engaged. Mr Wright submitted that, for the purposes of this costs application, it would be necessary for me to undertake a hypothetical assessment of the jurisdictional and power issues, contrary to Lai Qin, to conclude that they would have inevitably been resolved in the fashion for which the Council contended.
3. However, it is also to be observed in this context that, as I later need to address in detail, not only did the Council itself press legal issues in its contentions as originally pleaded (and as subsequently amended), the Council also pleaded substantial merit impediments to the granting of the modification application. These matters also require to be considered later in the context of what was said in Lai Qin.

The discontinuance was an effective surrender

1. It was put for the Company that the modification application had utility to it in the sense that what was sought was to transmute the temporary nature of the drainage works constructed on the Company site into permanent ones.
2. This, the Company submitted, in the context of the Council's submission that the modification application was doomed to fail, would also necessitate me to undertake an examination of the comparative merits of the parties' positions in a fashion contrary to what was said by the High Court in Lai Qin. This was impermissible in the circumstances, Mr Wright said.
3. In response to the submission for the Council concerning Craig J's comment in H & W, Mr Wright submitted that those sentiments appeared to be inconsistent with the decision of Biscoe J in Ross v Lane Cove Council [2013] NSWLEC 109 at [9]. It will later be necessary to return to those comments (as well as to those of Craig J in H & W later in his Honour's judgement than those cited by Mr Lazarus as set out at [54]).
4. The overall tenor of Mr Wright's submissions on this point were concisely summarised in paragraphs 77 and 78 of his written submissions in the following terms: 77. Council's complaint that Fulton Hogan has not provided any "explanation" as to why it decided to discontinue the proceedings is not to the point. Fulton Hogan is entitled to rely on the presumptive rule that the Court will not make any order as to costs. If Council seeks to displace the presumptive rule, it is for Council to set out the reasons why it is entitled to a costs order in its favour. Council cannot cast this burden on Fulton Hogan. 78. In response to CS [30], in the absence of any evidence from Fulton Hogan as to its reasons for discontinuing the proceedings, there is no basis for the Court to draw the inference that Fulton Hogan ultimately "accepted" Council's position that the proceedings were "misconceived". There are many and varied reasons why an applicant may decide to discontinue proceedings. For example, a party may decide to discontinue proceedings because of the possibility that it may be ultimately unsuccessful in the proceedings, without believing that the proceedings are "misconceived" or "doomed to fail". The Court should not speculate as to a party's reasons for deciding to discontinue the proceedings, and in any event the matter is not relevant for the reasons detailed above.

The limited, alternative costs claim

1. Although it will later be necessary to address in some detail Mr Wright's submissions concerning the two elements put in support of the Council's limited, alternative costs claim, it is sufficient now to note, at a level of generality, the basis upon which the Company opposed the Council's propositions in support of the two elements here encompassed.
2. With respect to the claim for preparation for, and conduct of, the Notice of Motion hearing which vacated the conciliation conference, it is the Company's position that, first, it did not unreasonably withhold consent to vacation until the last minute and, second, that the Council needed the Notice of Motion and its determination by the Court because the Council was also seeking leave to rely on an Amended Statement of Facts and Contentions.
3. With respect to the claim for the preparation of Council evidence in anticipation of the scheduled contested hearing between 6 and 8 October, it was the Company's position that such evidence needed to be prepared in the ordinary expected course of events leading up to such a contested hearing. As a consequence, Mr Wright proposed that there was nothing exceptional in this which could warrant any costs order against the Company with respect to those costs.

Introduction

1. The Council's Statement of Facts and Contentions was filed on 5 March 2020. It provided the original framework, as is customary, of the matters to which the Company needed to respond. In circumstances where the Company has discontinued its proceedings, the contentions pressed by the Council in opposition to the Company's proposal provide in initial definition of the matters which would have been in contest in, but have not been the subject of, a hearing or adjudication.
2. These matters in contest may shift as a consequence of the Company's response to the contentions and, as is here the case, if the Council made an application to rely upon an Amended Statement of Facts and Contentions, one which, as later discussed, raised additional merit objections to the Company's proposal.
3. It is with respect to the totality of the matters in issue between the parties as defined by these three documents that it will be necessary to evaluate the competing submissions on this costs application.

The Council's original Statement of Facts and Contentions

1. The Council's Statement of Facts and Contentions was filed on 5 March. The terms of this document were in evidence as they were included in the bundle of documents exhibited to Mr Fan's first affidavit (Exhibit A).
2. The primary matters raised by this document related to legal issues concerning whether or not the Court could or should make changes to the conditions of consent relating to the drainage contributions and, depending on the outcome of that consideration, whether or not the Court had jurisdiction and power to order any refund to be paid to the Company.
3. However, in addition to those matters, the document also included particularisation that went to the merit of planning matters said to stand as impediments to approval of the proposed modification. The relevant element in this regard is addressed below.
4. The sixth contention was that the proposed modification should not be approved as it was not in the public interest. This contention had seven particulars pleaded in support of it. Of those particulars, (f) and (g) raised matters of merit relating (by necessary implication) to the aspect of the modification application seeking to remove the temporary designation of these stormwater facilities provided by the Company on the site. These particulars were in the following terms: (f) The proposed modification is contrary to the objects of State Environmental Planning Policy (Western Sydney Employment Area) 2009, as follows: • to provide for the coordinated planning and development of land in the Western Sydney Employment Area, • to improve certainty and regulatory efficiency by providing a consistent planning regime for future employment and infrastructure provision in the Western Sydney Employment Area, • to ensure that development occurs in a logical, environmentally sensitive and cost-effective manner and only after a development control plan (including specific development controls) has been prepared for the land concerned, (g) The proposed modification does not comply with part 5.6 of the Eastern Creek Precinct Plan Stage 3 in that it is not consistent with the Precinct stormwater management system.

The Company's Statement of Facts and Contentions in Reply

1. As earlier noted, the Company's Statement of Facts and Contentions in Reply was tendered, becoming Exhibit B on this costs' motion. It is unnecessary to set out, in any detail, the matters that are dealt with in this document. It is sufficient to observe that, in Part A - Facts, it is noted that the proposal seeks to remove the requirement that the Company pay development contributions for the provision of stormwater drainage and that those contributions already paid to the Council for that purpose be refunded.
2. The reply to the Council's contentions then addressed merit matters raised by the Council in its original Statement of Facts and Contentions. It did so only obliquely in 5.4, however, where the Company responded that the scope of works proposed by the contributions plan pursuant to which the Company had been levied would need to be revised to address the reduced demand for drainage works should those that had been provided by the Company on its own land be made permanent. To the extent that it responded to matters set out above from the Council's original Statement of Facts and Contentions, the Company proposed that a review of the contributions plan would need to address, inter alia, the level of provision of the proposed Council drainage works to "reflect current planning and engineering practice and likely population trends".

The Council's Amended Statement of Facts and Contentions

1. As also earlier noted, the Council's Amended Statement of Facts and Contentions filed 12 August 2020 became Exhibit C on this costs' application. In this document's Part 1 - Facts, the Council sets out in, 1.1, the fact that the Company was seeking to appeal the deemed refusal of its modification application lodged on 9 August 2019. It then continued as follows: 1.2 MOD-19-00309 proposes to modify development consent DA-17-00823 ('Consent") granted on 21 June 2018 by deleting the requirement under condition 4.1.1 for development contributions to be paid for the provision of stormwater drainage infrastructure, and also to modify the Consent, such that all references to that infrastructure being temporary are to be removed. 1.3 In its Statement of Environmental Effects dated 9 August 2019, the applicant stated that MOD-19-00309 also seeks "modification of ancillary conditions of consent to ensure that the permanent nature of the stormwater management infrastructure is recognised within the Consent". By correspondence on 31 July 2020, the applicant identified a number of conditions that would require consequential amendment. These are conditions, 6.7, 2.6.5, 2.6.6, 6.5.4 C, 6.5.4 D, 6.5.4 E, 6.4.5 F, 6.5.4 G, 6.5.4 H, 6.5.5, 13.8.2, 13.8.3 and 13.8.4.
2. The Council's contentions commenced at page 7 of Exhibit C. The first of them contends that "The jurisdictional prerequisites under s 4.15(1A) [sic - 4.55(1A)] are not satisfied. The contention is in the following terms: 1.1 The proposed modification cannot be approved as the Court cannot be satisfied that the modification: 1.1.1 is of minimal environmental impact, and 1.1.2 will result in a development that is substantially the same as the development that was approved under the consent.
3. The document then lists 17 particulars in support of this contention. One of those contentions is relevant in my determination of this motion. It is particular (c), this being in the following terms: The long-term retention of on-site stormwater drainage infrastructure approved as temporary may have an environmental impact that is beyond minimal in respect of at least the following: a. the long-term management of stormwater both on and off the site; b. any re-vegetation that can be undertaken on the land where the stormwater detention basin is located; c. any other permissible use of the land where the stormwater detention basin is located.
4. In this context, it is to be noted that particular (c) was not included in the Council's original Statement of Facts and Contentions filed on 5 March. 2020.
5. The second, third, fourth and fifth contentions relate to the imposition of contributions and the Company's seeking to have contributions already paid to the Council be refunded to the Company.
6. The merit elements of the Council's sixth contention were pleaded in the same terms as in the sixth contention in the Council's original Statement of Facts and Contentions set out at [86].

Jurisdictional matters

1. It is unnecessary, in light of the substantive merit matters pressed by the Council as impediments to the Company's modification application, to address, in any substantive fashion, the submissions put on behalf of the Company concerning jurisdictional matters said by the Council to preclude the Court's consideration of matters relating to the contributions conditions and/or whether or not the Court could order the repayment of contributions already made.
2. Although I have earlier set out the basis upon which the Company has submitted that the jurisdictional and power issues raised by the Council are not as settled as the Council invites me to conclude, it is unnecessary for me to address this point as I am satisfied that the fashion in which the Council pleaded its merit case in opposition to the Company's modification application precludes me from reaching the conclusion that the legal issues were so fundamentally central to the nature of the proceedings as to set aside the various merit matters pleaded by the Council as discussed below.
3. It is to be observed that the principal position advanced on behalf of the Council was that the issues in the primary proceedings were ones which fell within r 3.7(3)(a) as involving a question of law, a question of fact or a question of mixed fact and law which were potentially determinative of the proceedings.
4. The way the Council framed its original contentions raised substantive merit issues concerning various elements of the Company's proposed modifications. Indeed, in its amended contentions, as earlier noted, the Council expanded the merit matters which it advanced as impediments to approval of the Company's proposed modification. This is a sufficient basis to reject the Council's costs claim based on this element of the Court Rules.

Merit matters

1. With respect to the quite potentially significant merit issues raised by the Council in its contentions at 1.1(c) and 1.6 (f) and (g), even if I was tempted to undertake some evaluation of these matters (which I am not), I would have no proper evidentiary basis upon which to do so.
2. To the extent that the Council invites me to conclude that, in its entirety, the Company's modification application was entirely without merit and was doomed to fail, there is no basis upon which I could embark upon exploration of such a possibility (contrary, I am satisfied, to Lai Qin), as there is no available evidence that would enable me to do so.
3. Even if I was to conclude that the jurisdictional questions concerning the purely contribution/refund matters might have been appropriate for some notional examination (contrary to Lai Qin), the merit matters pressed by the Council could not conceivably have been the subject of such a course.

A proper understanding of the Company's modification application

1. It is not suggested on behalf of the Company that a significant element of its modification application did not relate to the contribution that it had been required to pay to the Council and the Company's desire to have money refunded to it.
2. However, it is clear from that which I have set out above, that not only did the Company raise matters that went beyond the purely financial but also that, in its pleadings in response, the Council raised potentially substantial merit matters in resisting the Company having the temporary designation of the constructed stormwater works removed and to effect acknowledgement of the permanence of those arrangements.
3. The Council's merit response makes it clear that the Council engaged with the Company's position on these matters with a degree of specificity demonstrating that there was a substantive contest between the parties on that aspect of the Company's modification application.
4. That position leads to the inevitable conclusion that the proposition that the Company's Class 1 appeal proceedings involved only questions of law is untenable. It is clear that this was not the position and that those drafting the Council's response knew that this was the position and responded appropriately in the Council's pleadings.
5. For me to reach a conclusion that it would be fair and reasonable under all the circumstances to make a costs order in the Council's favour would require me to undertake a notional determination of the merit aspects of the Company's case evaluated against the matters pleaded by the Council in reply. Doing so would be entirely contrary to the decision of the High Court in Lai Qin. There is also no merit evidence which would permit me to do so.
6. It therefore follows that no proper basis pursuant to r 3.7(3)(a) or (f) of the Court Rules has been established by the Council as to why it would be fair and reasonable for it to have a costs order in its favour.

The Council's "effective surrender" argument

1. The final matter to which it is appropriate to turn, in the context of the Council's claim for payment of its total costs, is the Council's proposition that the Company's discontinuance effectively constituted a complete surrender.
2. In this regard, the Council relied on what had been said by Craig J in H & W at [21] earlier set out. In response, Mr Wright had relied on the decision of Biscoe J in Ross v Lane Cove at [9].
3. Although the obiter dicta comment by Craig J was a sweeping one of apparently general application, it is appropriate to consider the two judgements together to test whether, in each instance, on the facts and circumstances of the particular case, they are able to be reconciled.
4. It is appropriate to set out, first, an element of what was said by Craig J in H & W dealing with what might be an appropriate course to take for an applicant if there were two distinct but interlinked elements to an appeal where there is the possibility that the party might succeed on the one but not on the other. His Honour addressed this in [26] of his judgement in the following terms: 26 … It is sufficient to notice that the applicant had lodged a single development application with a number of different elements. On the hearing of the Class 1 appeal, it was open to the Court to grant development consent for some of those elements, for example conversion of the existing heritage building and erection of the new dwelling house, but to reject the subdivision element: s 80(4) EPA Act. It is difficult to see that had the hearing proceeded to conclusion and the result been that the land use components of the application were approved but subdivision was not, the Council would successfully have sustained an argument for partial payment of its costs.
5. In his decision in Ross v Lane Cove, Biscoe J said, at [9] and [10]: 9Under the current costs regime, in Classes 1, 2 and 3 of the court's jurisdiction there is no presumption that a discontinuing applicant should pay the respondent's costs. Such a presumption appears in r 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR), which provides that a plaintiff is to pay the defendant's costs in discontinued proceedings unless the court otherwise orders. While applicable to proceedings in classes 4 and 8 of the Court's jurisdiction, this rule does not apply to proceedings in classes 1, 2 and 3: Schedule 1 of the UCPR. On the contrary, r 3.7(2) of the LECR contains a presumptive rule that there should be no order for costs on discontinuance of class 1, 2 or 3 proceedings subject to one exception. Where costs are sought the question is simply whether the sole exception to the presumption applies, namely, that the Court considers the making of the costs order "is fair and reasonable in the circumstances". 10For 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.
6. As can be seen in a comparison of Craig J's comments in [26] and Biscoe J's comments in [10], there is no fundamental inconsistency with the approaches that they took in the circumstances which were then before each of them.
7. In the present case, clearly there is no explanation for the discontinuance given by the Company. It is not appropriate that I speculate on what might be the reasons for the Company reaching the conclusion that discontinuance was the appropriate course of action for it to adopt. However, it falls on the Council to persuade me that there was no proper basis upon which the Company could discontinue in circumstances where substantive legal and merit issues were pressed as impediments by the Council.
8. That places a requirement on the Council to dispel the possibility that the broadly consistent approaches of Craig and Biscoe JJ as discussed above, did not provide a rational basis upon which the Company might conclude that it was appropriate not to take the risk of further expense in preparing for, and the running of, a three day hearing in circumstances where the Company might not achieve the totality of the result for which it contended when it commenced its Class 1 appeal.
9. The Council has failed to do so with this providing a sufficient basis to reject this aspect of the Council's costs application.

The Council's limited, alternative cost application

Introduction

1. I have earlier noted that the Council sought, in the alternative, a limited costs order. The relevant paragraph from Mr Lazarus's written submissions setting out the nature of the order sought was there repeated. As can be seen, there are two elements to this alternative order. The first of those sought the Council's costs of preparation for and attendance at the Notice of Motion hearing on 16 July at which conciliation conference set down for 20 July was vacated. Mr Lazarus succinctly summarised the Council's position on this point in his written submissions at (32). This paragraph was in the following terms: 32. The Council's costs of preparing the notice of motion and affidavit in support seeking to vacate the conciliation conference were wasted, in circumstances where the Council had sought to vacate the conference as far back as April 2020, against the applicant's opposition. The applicant only changed its position to one of support for the Council's application the evening before the motion was due to be heard on 16 July 2020. No explanation has been provided for the applicant's eleventh hour change of position. It was unreasonable for the applicant to have opposed the vacation of the conciliation conference, having regard to its obvious lack of utility and then only to consent to the course proposed by the Council the evening prior to the hearing of the Council's notice of motion.
2. The second element of this more limited costs order concerned the commencement of preparation of affidavit evidence for the Council for the three-day merit hearing which had been set down for 6 to 8 October. Mr Lazarus summarised this aspect of the alternative, limited costs application in his written submissions, at paragraph (33): 33. The applicant should also pay for the Council's costs of preparing its evidence prior to the notification (without warning) that the applicant would be discontinuing the proceedings. The mere fact that the discontinuance followed upon the rejection by the Council of the applicant's without prejudice offer does not justify the applicant's delayed action in seeking to discontinue the proceedings.
3. On 11 December 2019, orders were made for a number of steps to be taken to progress the Company's appeal. In this context, two of them are to be noted. First, the parties were to meet and have a without prejudice discussion prior to the end of March and, second, a date was set for a conciliation conference in the event that the without prejudice bilateral discussion was unsuccessful. That conciliation conference was set for 20 July.

Vacation of the conciliation conference

1. On 8 July 2020, a little less than a fortnight prior to the date of the conciliation conference, a Notice of Motion was filed for the Council seeking to vacate the conciliation conference. The Notice of Motion also sought that the Council be granted leave to rely on an Amended Statement of Facts and Contentions.
2. An affidavit of Mr Fan of 8 July was read on the Motion when it was dealt with on 16 July. Mr Fan dealt with the proposed amendments to the Council's Statement of Facts and Contentions at paragraphs 17 and 18 of his affidavit. These paragraphs were in the following terms: The respondent wishes to raise additional matters contained in the amended SOFAC, being the tracked changes version from the document filed on 5 March 2020 ("Amendments"). A copy of this proposed amended SOFAC is a next to my affidavit and marked with the letter "K". By raising the Amendments, the parties have defined the issues that will cause the just, quick and cheap resolution of the proceedings.
3. On 15 July, the Company's legal representatives advised those of the Council that the Company consented to the vacation of the conciliation conference.
4. The following day, the Council's Notice of Motion was dealt with. There were two substantive outcomes from this attendance. First, the agreed order to vacate the conciliation conference was made. Second, the Council was granted the leave sought to rely on its proposed Amended Statement of Facts and Contentions. It is clearly the position that the hearing was necessary for both purposes and not merely to achieve the cancellation of the conciliation conference.
5. In the context of the Amended Statement of Facts and Contentions, it is to be noted that, in addition to a number of matters of what might be regarded as a legal drafting tidying effects, the Council pleaded, for the first time, those matters set out in particular (c) to its first contention. This amendment had the effect of pleading three additional substantive merit impediments that the Council said stood as barriers to the proposed modification. This additional particularisation has earlier been set out.

Preparation of the Council's merit evidence

1. The Council also seeks costs associated with the preparation of evidence from three Council employees. It is submitted that these costs were wasted as a consequence of the Company's unilateral decision to discontinue the proceedings.
2. On 23 July, after the vacation of the conciliation conference, the matter was listed for hearing from 6 to 8 October. On 28 July, orders were made for pre-trial preparation. These orders included a timetable for the filing and serving of evidence, including expert town planning and engineering evidence. The orders provided that individual expert reports by each side were to be filed and served by 7 September with joint expert reports to be filed and served a week later.
3. I have earlier set out Mr Fan's evidence as to who those witnesses were and what was to be the scope of their evidence.
4. The preparation of the evidence, within the time period between the setting of the pre-trial timetable on 28 July and the Council being informed by the Company that it proposed to discontinue the proceedings spanned a substantial proportion of the period of the timetable during which allowance had been made for the preparation of evidence. It had been therefore been necessary for the Council to commence this evidentiary preparation in order to comply with the timetable. As a consequence, the Council should be compensated for the costs associated with doing so.
5. The directions made on 28 July for preparation for the hearing between 6 and 8 October required that individual expert reports be filed and served by 7 September with joint expert reports to be filed and served one week later. Specific directions were made for expert evidence in the disciplines of town planning and engineering. The parties were also given leave to make application if they wished to rely on any other areas of expertise.
6. During the period between the making of these directions and the filing of the Company's Notice of Discontinuance, Council commenced the preparation of statements of evidence from the three Council employees. It was submitted that the Council that costs associated with the work for these purposes was unnecessary and wasted as a consequence of the Company's determination to discontinue the proceedings.

Introduction

1. Mr Wright submitted that neither element of the limited, alternative costs claim on behalf of the Council had any validity.

The Notice of Motion hearing

1. First, with respect to the vacation of the conciliation conference, Mr Wright submitted that a proper consideration of the procedural history of the Company's appeal demonstrated that the Company had never indicated opposition to this course of action. The first time that the Council's legal representatives had notified that vacation of the conciliation conference was proposed was after the failure of the without prejudice discussion on 24 June. The Company's solicitors sought instructions from the Company when the Council indicated that it wished to seek to vacate the conciliation conference, but the Council's legal representatives filed the Notice of Motion prior to such instructions being received. As Mr Wright noted that "Fulton Hogan ultimately consented to the vacation of the s 34 conciliation conference".
2. Mr Wright also noted that the Council had sought leave to rely on an Amended Statement of Facts and Contentions, a matter which had nothing to do with the Company's conduct of the proceedings and which, itself, necessitated a Notice of Motion.
3. He also submitted that, had the Council agreed to a without prejudice discussion within the time ordered in December 2019, "it is reasonable to conclude that many of the costs which Council incurred in preparing for the proceedings, such as the costs of its Notice of Motion and the costs of preparing its evidence, may have been avoided" (written submissions at paragraph 86).
4. The final element of Mr Wright's submissions on this point was that, as the Council had not sought costs of the Notice of Motion in the terms of the motion itself, it was not now appropriate for that to occur. Had the Council proposed to seek its costs of the motion, it should have done so at that time.

The evidence preparation costs

1. Mr Wright's submissions on the question of whether or not the Company should be ordered to pay the costs associated with the preparation of Council evidence in conformity with the prehearing timetable were that those costs were ones which would have been expected to be incurred in the ordinary course of compliance with the timetable. As such he submitted, adopting a remark I had made in a costs application dealt with earlier this year, this appeal was an "ordinary, plain vanilla and unexceptional Class 1 appeal" (Xia v Hornsby Shire Council [2020] NSWLEC 73). On this basis, he submitted that this costs element sought by the Council did not warrant making any limited costs order against the Company.
2. He also relied on his written submissions at paragraph 86 on this point.

The Notice of Motion hearing

1. Although it was submitted for the Council that the Company had been advised as early as April that the Council did not consider that there was any point in the holding of a conciliation conference, that advice must be viewed in the context of the Company having sought dates for the without prejudice discussion required by the December 2019 directions without success during the period which would have encompassed such notification by the Council to the Company.
2. As earlier noted, a without prejudice discussion between the parties did not take place until 24 June. It is reasonable to conclude that, although that meeting was without prejudice, the position would have been made clear to the Company on that occasion that the Council did not propose to compromise with respect to the matters pressed by the Company in its modification application.
3. I am satisfied that it is only on that occasion (24 June) that it is appropriate to assume that the Company could be taken to have become aware of the inutility of the proposed conciliation conference scheduled for 20 July.
4. Viewed in that timeline context, it is not appropriate to conclude that there was an unreasonable delay on behalf of the Company in consenting to vacation of the conciliation conference (particularly in circumstances where, immediately prior to the filing of the Council's Notice of Motion, the Company's legal representatives had advised that they were still seeking instructions on that point).
5. The Notice of Motion was filed unilaterally on 8 July, a clear working week prior to the scheduled date of the conciliation conference. I can discern no reason why this period of time was necessary in circumstances where the Company's legal representatives were still seeking instructions on the point. the
6. In addition, it is to be observed that the Council was not merely seeking vacation of the conciliation conference by the Notice of Motion hearing. It was also seeking to be given leave to file and rely upon an amended statement of facts and contentions, a document which contained substantive amendments as elsewhere discussed.
7. The combination of these two circumstances makes it entirely inappropriate to contemplate awarding any costs associated with this Notice of Motion and its hearing to be made in the Council's favour.

The evidence preparation costs

1. I now turn to the question of whether or not the Company should be ordered to reimburse the costs of the Council for the evidentiary preparation steps that had been undertaken between the timetabling hearing on 28 July and the Company's first informing the Council of its intention to discontinue the proceedings. I have earlier set out what could reasonably be inferred to be the nature of the areas of evidence proposed to be given by the three Council employees we evidentiary preparation had commenced.
2. This evidence, quite conventionally, was addressed to supporting the various financial timing and merit impediments said by the Council to stand as barriers to approval of the Company's modification application (including the additional merit element included in particular (c) to the Council's first contention. This can be discerned from the earlier relevant extract from Mr Fan's affidavit.
3. Such evidentiary preparation was necessary, amongst other reasons, as a consequence of the merit matters pleaded in the Council's amended contentions - amended merits contentions of apparent significance. It is to be noted that these merit contentions said to be fundamental impediments to approval of the Company's modification application do not sit comfortably with the submissions in these costs proceedings that the dominant nature of the substantive proceedings were ones of a primarily jurisdictional and power legal nature.
4. As earlier discussed, the "no discouragement" principle applies in merit proceedings and the Company was entitled to reconsider its position following the Council being granted leave to rely on the amended contentions, including the pleading of the additional merit contention noted.
5. As submitted by Mr Wright (although occurring in a differing fashion to that discussed by me in Xia v Hornsby), these were nonetheless Class 1 merit proceedings. I am not satisfied that it would be fair and reasonable, in light of all these circumstances, to award the Council costs associated with the commencement of the preparation of the evidence of the three Council officers.

Conclusion on a limited costs order in the Council's favour

1. For the reasons explained above, there is no justification to make either of the elements sought by the Council in its proposal for a alternative, limited costs order in its favour.

The general position

1. As earlier noted, in Class 1 costs' application proceedings, costs ordinarily follow the event. However, in these proceedings the Council proposes that, if it was to be unsuccessful in all aspects of its costs application and costs were to be ordered against it, there should be exclusions made to the scope of such an order.

Introduction

1. In the event that the Council was not successful, Mr Lazarus submitted that any costs order against the Council should be limited as a consequence of what the Council proposed was unnecessary costs incurred on behalf of the Company in its response to this costs application.

The Council's position

1. The position advanced for the Council can be understood sufficiently from the terms of Mr Lazarus's written submissions. He said, at paragraph 4: 4 The applicant has served affidavits of Breellen Warry affirmed on 2 October 2020, and Blake Dyer sworn on 6 October 2020. The exhibit to Ms Warry's affidavit comprises an extraordinary 344 pages. The exhibit to Mr Dyer's affidavit replicates documents that are already otherwise in evidence. A special costs order should be made in respect of those affidavits, irrespective of the outcome of the Council's notice of motion.
2. He expanded on this proposition at paragraphs 34 to 36: 34 Irrespective of the outcome of the present application, there should be an order for costs arising out of the Warry affidavit, the exhibit to which contains no less than 51 tabs, comprising 344 pages, the bulk of which is either irrelevant or a duplication of material already otherwise in evidence, or both, and the exhibit to Mr Dyer's affidavit, which replicates documents that are already otherwise in evidence. 35 In the context of a costs application, the quantum of which rises no higher than $62,000, it was contrary to the dictates of s 56 of the Civil Procedure Act 2005 (NSW) for the applicant to have made a conscious decision to put into evidence virtually every piece of correspondence between the parties, involving copious amounts of unnecessary photocopying, in circumstances where the vast majority of that material is unlikely to be referred to during the course of the hearing of the Council's costs application. 36 Consistent with the approach in Kelly v Randwick City Council [2019] NSWLEC 43 at [15]-[19], the Court should make a special costs order, referable not only to the unnecessary photocopying but also to the Council's costs of reviewing the exhibits.

The Company's position

1. It is unnecessary to set out in any detail the basis upon which Mr Wright submitted that there should be no exclusionary costs order made with respect to the extent of, and material contained in, the two affidavits and their exhibits comprising the Company's evidence. In essence, the response for the Company is that the material contained in, or annexed to, the two affidavits relied upon by the Council provided an incomplete picture of the matters appropriate to be put before the Court and that the companies evidence merely rectified this position.

Consideration Introduction

1. As a consequence of my broad conclusion that the Council's costs application fails, it is necessary to consider and determine the subsidiary application on behalf of the Council proposing that I should include an exclusionary element in the conventional costs orders that would follow from the Council's failure.
2. I therefore turn to address the question of whether I should make some exclusionary provision in the costs orders otherwise appropriate to be made. Consideration of Exhibit 1
3. As can be seen from my much earlier comment concerning the necessary use I made of Ms Warry's affidavit, I am satisfied that (with the limited exception of the particular matters concerning specific elements of the exhibit to Ms Warry's affidavit) there is no basis for any exclusionary costs order being made against the Company.
4. It is to be noted, in the context of this proposal, that Exhibit 1 (the bundle exhibited to Ms Warry's affidavit) was not paginated. I have undertaken a sufficient examination of the totality of the documents contained in it. I observe, as it is relevant to the issue of the exclusionary costs order sought on behalf of the Council (in the event that the Council was, as it is, unsuccessful on this costs application) that, on my examination of it, I noted that at least pages 8 and 10 to 20 behind tab 31 of this exhibit were blank.
5. As a consequence, I have had my tipstaff undertake a count of total pages in Exhibit 1 and, of those pages, how many were blank. His examination revealed that there were only a little over 200 pages with material reproduced on them and fourteen blank pages (being two blank pages additional to those I had noticed - these in the material behind tabs 1 and 46).
6. Although the material in Exhibit 1 (with the exception of the blank pages I have noted) comprises virtually (but not entirely) a compendious set of the correspondence between the parties over the period between 14 October 2019 and 2 October 2020, it is to be noted that the affidavit to which this material was exhibited was dated 2 October 2020 and was filed that day. This filing self-evidently predated Mr Lazarus's written submissions on behalf of the Council containing paragraph 4 earlier set out.
7. Although I have not, as earlier noted, undertaken a folio by folio detailed examination of this material, the index to Exhibit 1 makes it clear the nature of the chronological sequence of the documents contained in it. My examination of the material makes it clear that this index accurately reflects the nature of the material contained in the exhibit.
8. Although, during the course of counsels' submissions, I was taken to only limited material in Exhibit 1, there is no basis upon which I could conclude that much of this material were so self-evidently irrelevant as to be impossible to be brought into play for any purpose in these costs proceedings.
9. On the other hand, some documents in Exhibit 1 are copied in an unnecessarily repetitious fashion. For example, the Council's Amended Statement of Facts and Contentions (comprising 12 pages) has been reproduced behind tab 30 and then as annexure K behind tab 31. Some other lengthy email chains appear to have been reproduced in their entirety with early elements in that chain also being reproduced. In addition, on a number of occasions, the final photocopied page of a sequence comprised source acknowledgement or disclaimer information unnecessary for an understanding of the substantive elements of the correspondence in the preceding folio(s). None of this material was necessary and the costs of copying it should not be allowed in the Company's favour.
10. However, I have concluded that it would be a significant misallocation of my time or my tipstaff's time to undertake a detailed analysis of what percentage of the material in Exhibit 1 should be disallowed on these bases. On my impressionistic examination of the document, I am satisfied that about 25% of the material contained in the exhibit is either unnecessary, irrelevant, duplicated or blank pages. On this basis, only three quarters of the cost of this copying should be ordered to be paid for by the Council.
11. Quite apart from the mathematical imprecision of the assertion in Mr Lazarus's submissions that this exhibit comprised 344 pages (when, even counting the 51 grey plastic dividers as if they were pages, Exhibit 1 comprises only 290 elements - including its 2 page index) rather than the 344 pages asserted), there is absolutely nothing that could be regarded as being extraordinary in the scope and volume of this material. Consideration of Exhibit 2
12. It is also difficult to understand the submission with respect to Exhibit 2. This exhibit, of 77 pages, comprised the Class 1 appeal papers as they appear on the Court's file. Absent them being tendered via the medium of the folder exhibited to Mr Dyer's affidavit and, by being tendered, becoming Exhibit 2, that Class 1 appeal material would not automatically have been in evidence before me on this costs application.
13. The comment made by Mr Lazarus concerning the documents in Exhibit 2 is not to be accepted. The terms of the Class 1 modification appeal papers, although they formed part of the formal records of the Court, do not comprise evidence for present purposes unless and until they are tendered, here, relevantly, by a party to this costs application. Such a tender was not effected by anything in the Council's case. It was, however, effected by the tender of Exhibit 2 by Mr Wright. The documents contained in Exhibit 2, as discussion elsewhere in this decision demonstrates, were necessary to be in evidence for the purposes of demonstrating the complete scope of the Company's modification application. The absence of availability of the terms of the SEE as evidence in these costs proceedings would have had a considerable weakening effect on the Company's resistance to the Council's costs application.
14. As a consequence, not only is it appropriate to acknowledge that Exhibit 2 was not otherwise in evidence, contrary to Mr Lazarus's submission, but that the contents of Exhibit 2 were relevant, and significantly so, in the Company's case.
15. There is no possible basis upon which Exhibit 2 could be the subject of any exclusionary costs order.

Conclusion on exclusionary costs order

1. For the reasons explained immediately above, there is no basis for making any broadly applicable exclusionary order in the Council's favour with respect to the material tendered on behalf of the Company. The only relevant limitation to be imposed is one which ensures that an allowance the blank pages and other unnecessarily copied material earlier noted is not to be the subject of any copying cost element in the calculation of the costs to be ordered in favour the Company. For that reason (and that reason alone), a limited exclusion to reflect this is contained in the costs element of the orders made below.

Conclusion on costs of the costs application

1. With the exception of the limited exclusionary element discussed immediately above, there is no reason why, for these costs' proceedings, costs should not follow the event. The event here is, self-evidently, the Company's success in resisting any costs order being made as a consequence of its discontinuance of the Class 1 appeal proceedings (see Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [39]).
2. The appropriate costs order arising from my rejection of the Council's costs' application is that, with only a limited exclusion, the Council should pay the Company's costs of this costs' application.

Orders

1. The orders of the Court, therefore, are: 1. The Respondent's application that the Applicant in pay the Respondent's costs of the Class 1 proceedings is dismissed; 2. The Respondent is to pay the Applicant's costs of these costs' proceedings (except that, for this purpose, only 75% of the copying costs of the exhibit to the affidavit of Breellen Warry dated 2 October 2020 are allowed for the purposes of this costs order); and 3. The exhibits are returned.

Amendments 08 December 2020 - removed Associate's Certification notation 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: 08 December 2020