On 26 October 1994, by notice of motion, Mr Eric Strauss sought leave on behalf of certain residents of Mason Street to be joined as a party to the proceedings. The Court made the following order on that day:

"Eric Strauss on behalf of the residents of Mason Street, Maroubra Junction be given leave to appear and be represented for the purpose of presenting evidence and making submissions without being joined as a party to the proceedings."

It is to be particularly noted that Mr Strauss was not joined as a party, but, instead, given a limited right to intervene, and that that right was given to him in his representative capacity. I shall refer to Mr Strauss and the residents of Mason Street whom he represents as "the resident objectors".

The applicant's development application was based upon a set of plans which were dated 20 June 1994 and were amended on 12 August 1994. I shall refer to this set of plans as "the earlier plans". However, on 14 or 15 September 1994, the applicant lodged with the council another set of plans, which I shall call "the later plans" and which were dated 14 September 1994.

By a letter dated 1 November 1994, which was prior to the hearing, the solicitors for the resident objectors enquired of the solicitors for the applicant if it could correctly be assumed, since the class 1 application involved the earlier plans, that the later plans were to be withdrawn. On 2 November 1994, the applicant's solicitors responded by stating that the applicant was relying upon the earlier plans in the class 1 application, although there was no intention to withdraw the later plans from the council. In addition, the council's solicitors made a similar inquiry on 15 September 1994 and 21 September 1994, and received a similar answer.

The hearing commenced on 3 November 1994 before the Senior Assessor, the appeal proceeding on the earlier plans. At the end of the second day, that is, 4 November 1994, the proceedings were adjourned part-heard until 9 December 1994.

It appears that, during the period between the adjournment and resumption of the hearing, negotiations had taken place between the applicant and the council, although there was no evidence as to the subject matter of those negotiations. Be that as it may, on 22 November 1994, the applicant's development application was on the agenda of the council meeting. A resolution in the following terms was passed:

"... that the recommendations of the Council's consultant town planner, as detailed hereunder, be adopted as the basis of the merit considerations and objections Council intends to raise in respect of the amended plans and that Council's Solicitors be instructed to notify the Land and Environment Court that Council agrees to consent to the substitution of the amended plans, provided that the applicant agrees to pay the Council's and residents costs on the Appeal to date ..."

There was then set out the town planner's recommendation that the council grant development consent subject to a number of conditions. The amended plans which were referred to in that resolution were the later plans.

The council had, however, made an error in that it had incorporated into its resolution the conditions it would wish to impose in respect of the earlier plans. Accordingly, at a short council meeting on 6 December 1994, the earlier resolution was rescinded, and a new resolution was passed, in identical terms to the earlier resolution, except that it incorporated a set of conditions referring to the later plans. I shall refer to this resolution as "the council resolution".

At the resumed hearing, Mr Thompson, for the council, opened by referring to short minutes of orders which he handed up. He said:

"Since we were last before you there has been a flurry of activity and commonsense has prevailed - triumphed, I think is the term used by one of our persons present, to this extent, Mr Senior Assessor. The applicant approached the council in November to be allowed to substitute Exhibit 9 which were the plans lodged - or dated the 14th of September 1994 in this appeal. After due consideration the council resolved on the 5th of December not to oppose that application on certain terms, namely that the applicant agreed to pay the respondents and resident objector costs for the hearing on the 3rd and 4th of November 1994 and any costs thrown away as a result of the amendment."

The short minutes of order contained three orders expressed to be sought by consent. The first allowed the appeal, the second granted development approval subject to conditions, and the third dealt with costs.

According to the transcript which was tendered in evidence, some discussion then ensued about the content of the later plans and the proposed conditions of consent, and then the Senior Assessor delivered a short judgment. He referred to the agreement between the parties, to some of the issues raised in the proceedings, and to the proposed conditions. He then gave orders in terms of the short minutes of order which had been handed up, adding, however, a fourth order which imposed a condition supplementary to those agreed by the parties. The costs order became order numbered 3, and it was in the following terms.

"3. The applicant to pay respondent and resident objector's costs of the hearing of 3 and 4 November 1994 and costs thrown away as a result of the applicant's reliance on the amended plans A01 to A12 dated the 14th of September 1994."

Before the Court was adjourned, however, the following exchange took place between Mr Robson of counsel who had appeared in the proceedings for the applicant and the Senior Assessor:

"MR ROBSON: Mr Senior Assessor, I just have one matter that is of some concern to Miss Puckridge, my instructing solicitor. She indicates to me that the third term of the conditions which are the consent conditions that bear her signature don't precisely reflect the agreement between the parties in relation to costs and she's just getting some instructions in relation to that.

SENIOR ASSESSOR: Well, I'd better pass this back and you'd better have an argy-bargy immediately and I will, if necessary, change the order which I have already given. Just give them to Mr Robson please? Keep that altogether please because I don't want to lose it.

MR ROBSON: It's the resolution of council which solicitors have the client's agreement was to reflect that the applicant agrees - the resolutions, as I understand, Mr Thompson ... the evidence, is that the applicant agrees - sorry, I am sorry -I withdraw my comments, it seems there has been an order to stay as made by the court.

SENIOR ASSESSOR: I have to say it did seem to reflect what Mr Thompson told me in his opening, so ---

SENIOR ASSESSOR: Would you pass those back then, please? Yes, all right, thank you."

Following the conclusion of the case, the Registrar, pursuant to pt 13 r 2 of the Land and Environment Court Rules 1980, signed and sealed a minute of the orders, but he omitted the costs order from that document.

In the light of that background, the competing claims may be shortly stated.

Both the council and Mr Strauss seek an order which would give force and effect to the costs order made by the Senior Assessor. By their respective notices of motion, they each ask that the Court make an order in terms of the costs order, or, in the alternative, that I grant concurrence under s 69(8) of the Land and Environment Court Act 1979 ("the Court Act") to the order made by the Senior Assessor.

Section 69 deals with costs. It provides generally that costs are in the discretion of the Court and the Court may order by whom, and to what extent, costs are to be paid. Sub-section (8) is as follows:

"(8) An assessor or assessors may not make an order under this section except with the concurrence of the Chief Judge."

The applicant seeks an order which would oblige it to pay the costs of the council, but would not impose upon it any obligation to pay the costs of the resident objectors. In its notice of motion, it seeks an order that the notice of motion filed by the resident objectors be dismissed, that the costs order, insofar as it seeks to impose an obligation upon the applicant to pay the costs of the resident objectors, be struck out, and that in lieu of the costs order, an order be made requiring the applicant to pay only the costs of the council.

Mr Tobin QC, for the applicant, based the applicant's case upon a jurisdictional point and a discretionary point. He submitted that the Senior Assessor had no jurisdiction to make an order for costs, and insofar as he purported to do so, that order ought to be struck out. If that were done, the issue would then be whether I should, in the exercise of my discretionary power to award costs, make an award of costs in favour of the resident objectors. Mr Tobin contended that there were certain factors which should lead me to decline to award costs in their favour. I will deal with those factors later -the first question which arises is whether the Senior Assessor had jurisdiction to make an order awarding costs, and I now turn to consider that question.

Mr Tobin put his submission that the Senior Assessor lacked jurisdiction to order costs on two separate bases, as I understood him. First, he argued that there is no statutory mandate within the Environmental Planning and Assessment Act 1979 ("the EP&A Act") for a council, or for an assessor exercising jurisdiction as a consent authority under the Court Act, to require the payment of costs as a condition of the grant of development approval or as a condition of agreement to the amendment of a development application.

In support of this proposition, Mr Tobin drew attention to the powers of the Court on an appeal in class 1 of its jurisdiction. Under s 39(2) of the Court Act: "the Court shall, for the purposes of hearing and disposing of such an appeal, have all the functions and discretions which [the council] ... had in respect of the subject matter of the appeal". Those functions and discretions must be exercised within the framework of the EP&A Act. Thus the Court must take into consideration such of the matters specified in s 90(1) of the EP&A Act as are of relevance to the development the subject of the development application, and there are certain additional matters which must be taken into account under cl 65 of the Environmental Planning and Assessment Regulation 1994 ("the Regulation"). Having taken those matters into consideration, the Court must proceed to determine the development application, pursuant to s 91(1), by granting or refusing consent, and it may, in granting consent, impose conditions. Section 91(3) stipulates the purposes for which conditions may be imposed. There is no reference to costs in the matters which are set out in s 91(3). In the light of this statutory context, it was submitted, neither the council, nor the Court when standing in the shoes of a council on appeal, can require, as a condition of granting approval, that the applicant for approval pay the costs of any party, and in particular, of a third party.

It was submitted that, for similar reasons, neither the council, nor the Court on appeal, could require, as a condition of permitting an amendment to a development application, that the applicant for approval pay the costs of any party. Clause 48 of the Regulation permits a development application to be amended by the applicant with the agreement of the consent authority, but that clause makes no reference to the consent authority so agreeing conditionally upon the payment of costs.

The difficulty with this submission, however, is that, in my opinion, it relies upon a mistaken understanding of what it was that the council resolved to do in the council resolution. I think it is plain, from a fair reading of the council resolution, that the council was deciding the objections it wished to raise in respect of the later plans, and, more to the point for the purpose of these proceedings, it was deciding to agree to the applicant substituting the later plans for the earlier plans in the appeal before the Court, but on the condition that the costs thrown away by the council and the resident objectors were to be borne by the applicant. It is true that the resolution incorporated by reference the town planner's report which recommended the grant of development consent, but the council's reference to that report was clearly limited to specifying the conditions which the council would seek to impose if consent were to be granted. That interpretation of the council resolution follows, I think, from the reference to "objections Council intends to raise in respect of" the later plans, and the reference to the instructions to the council's solicitors to notify the Court of its agreement to the substitution of the later plans. At its highest, the council resolution implied that the council would not object to the grant of development consent by the Court based upon the later plans, if the conditions which its town planner recommended were imposed, and if the costs thrown away were awarded in favour of the council and Mr Strauss. It was not purporting either to grant development consent itself, or itself to agree to an amendment of the development application. It was doing what litigants frequently do. It was entering into a compromise in the interests of settling the litigation, but the discretion as to whether to substitute the later plans or whether or not to grant development consent remained squarely within the province of the Court on the appeal.

Compromises of that nature are made every day in litigation in this Court. Where parties agree that development consent should be granted, it still remains for the Court to exercise its discretion to grant consent. That is precisely and properly what the Senior Assessor did, as the transcript shows. He examined the later plans and their effect, and he considered the proposed conditions and submissions in respect of them. That is not to say that he ignored the agreement between the parties. That was a factor to take into account, and it is clear that he did take it into account.

Furthermore, it is clear from the transcript and the orders which the Senior Assessor made that he did not make the costs order as a condition precedent to permitting the substitution of the later plans, or as a condition of the development consent which he granted. Rather, he purported to make the costs order as a consequential order following the Court granting development consent and the completion of the litigation.

For these reasons, therefore, I reject Mr Tobin's submission that the order to pay costs was void as being imposed as a condition of the grant of development consent, or as a condition of agreeing to substitute the later plans for the earlier plans.

Mr Tobin made, however, a second submission as to jurisdiction which I think is correct. He contended that the power to award costs is a power which must be exercised judicially by a judge of the Court, and it is not a power which an assessor can exercise administratively. That is the foundation, so he asserted, for the requirement for concurrence of the Chief Judge in s 69(8) of the Court Act, and the foundation for cl 10 of the Practice Direction 1993, which is in the following terms:

The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional.

A direction made by the Chief Judge that proceedings be heard by one or more Assessors shall be interpreted as being a direction to hear the whole of the matter other than any question of costs.

Any application for costs in matters heard by an Assessor or Assessors should be made by notice of motion within 14 days of publication of the judgment."

There is no doubt that the current practice of this Court is that costs are not awarded by an assessor or assessors, and that parties who consider that exceptional circumstances exist invariably make application for costs by notice of motion which is heard by a judge of the Court. The practice of concurrence by the Chief Judge under s 69(8), if it ever was the practice, has now fallen completely into disuse and no applications for concurrence are made. That may arise at least in part from the fact that, generally speaking, costs are not awarded in planning and building appeals because of the requirement that exceptional circumstances exist.

However, whatever be the rationale for s 69(8) or cl 10 of the Practice Direction, the fact is that the Senior Assessor purported to make an order for costs, but no concurrence was furnished by me, and the Senior Assessor did not have the power alone to make that order. In those circumstances, the costs order cannot be sustained; there was no jurisdiction to make it, and no doubt that was why the Registrar omitted it from the minute of the orders which were subsequently taken out.

I agree with Mr Tobin's further submission that the parties could not, by agreement, confer upon the Senior Assessor a jurisdiction which he did not have. In support of this proposition, Mr Tobin relied upon the observation of Dawson J in Harris v Caladine [1991] HCA 9; (1990-1991) 172 CLR 84 at 123 to the effect that the Family Court could not make an order which otherwise fell outside its jurisdiction merely because the parties consented to it. That was a case which concerned the powers of the Registrar of the Family Court, but the same principle in relation to this Court is to be found in Combwood Pty Ltd v Baulkham Hills Shire Council (Court of Appeal, 28 March 1995, unreported).

I add, for completeness, that Mr Thompson, for the council, submitted that consent orders are often made in planning and building appeals, and by some concurrence of the Chief Judge, are made by the assessor or assessors hearing the appeal. That practice is contrary to cl 9 of the Practice Direction, which provides that consent orders are to be made by the duty judge, but in any event, cl 9 does not operate to confer upon an assessor or assessors the jurisdiction to make costs orders, which is expressly removed from their power by cl 10 of the Practice Direction.

What I have said on the jurisdictional aspect of this matter disposes of the argument raised by Mr Thompson, and by Mr Robertson, for the resident objectors, that the omission of the costs order from the minute of orders signed and sealed by the Registrar was accidental, and could be corrected by the "slip" rule, that is, pt 10 r 7 of the Land and Environment Court Rules 1980, which permits accidental slips or omissions in a judgment or order to be corrected by the Court upon application by any party or without application.

The conclusion that I have reached as to the lack of jurisdiction leads then to the issue as to whether costs ought now to be awarded in favour of both the council and the resident objectors in the exercise of my discretionary power. The respondents submitted that I should now exercise the power to grant concurrence under s 69(8), so as to enshrine the agreement which the parties reached. Even if I were to do so, it seems to me that I would have to do so acting judicially and I would be required to take into account all factors relevant to an exercise of a discretion as to whether to award costs.

To do that would be no different, so far as concerns the proper exercise of discretion, from exercising the same power under s 69(2) of the Court Act, upon the notices of motion which have been filed in accordance with cl 10 of the Practice Direction. It seems to me more in accordance with this Court's current practice that I proceed to determine the question of costs afresh, as it were, under s 69(2) and in conformity with cl 10 of the Practice Direction. I turn then to that issue.

A preliminary matter which arises is whether it is open to the Court to award costs in favour of a non-party. The resident objectors, through Mr Strauss, were not formally joined as a party in the proceedings. Mr Strauss was, instead, given leave to appear on their behalf and be represented for the purpose of presenting evidence in the proceedings. Mr Robertson put the proposition that there is no limitation on the power of the Court, in the exercise of its discretion, to award costs in favour of a person who is not a party to the proceedings. His authority for this proposition was the decision of the High Court in Knight & Anor v F.P. Special Assets Ltd and Ors [1992] HCA 28; (1992) 174 CLR 178. It was there held that the jurisdiction and discretion to award costs under the relevant rule of the Queensland Supreme Court Rules (which does not differ in any significant respect from s 69(2) of the Court Act) was not confined to the parties to the proceedings. The issue in the appeal was whether the Supreme Court of Queensland had jurisdiction to make an order for costs against receivers of two companies which were unsuccessful parties in certain proceedings, the receivers themselves not being parties to those proceedings. Mason CJ, Deane, Dawson and Guadron JJ, McHugh J dissenting, after an historical review of principle and authority, held that the relevant rule conferred the jurisdiction in question. The basis of the decision is illustrated from the following passage from the joint judgment of Mason CJ and Deane J at 185:

"According to their natural and ordinary meaning, the words of the rule are sufficiently expansive to enable the Court to make an order for costs against a person, whether that person is formally a party to the proceedings or not. The jurisdiction and the discretion thereby conferred are not limited. Because they are not limited it is easy to postulate a variety of circumstances where an exercise of the jurisdiction against a non-party would be extravagant and unjust. However, the existence of that possibility provides no justification for the imposition by the courts, by way of implication, of an arbitrary limitation upon the general jurisdiction conferred by the rule. To do so would, as will appear, deny the power to the Court to order costs against a non-party in cases in which, in the interests of justice, such orders should be made. The inevitable answer to arguments directed to limiting curial jurisdiction based on the supposition that the jurisdiction might lend itself to abuse is that the court will and should develop principles governing the exercise of the discretion which will ensure that the jurisdiction is not exercised in such a way as to give rise to abuse."

It was Mr Robertson's submission that the case is authority for the general proposition that the Court's jurisdiction and discretion to award costs is not limited, and may extend to awarding costs in favour of a non-party as well as against a non-party, as was the case in FP Special Assets. Whether or not such an order should be made remains within the discretion of the Court and such discretion must be exercised judicially.

Mr Tobin did not take serious issue with Mr Robertson's proposition, although he did not concede that the principle there enunciated was of general application. I am content to adopt the proposition that my discretion under s 69(2) of the Court Act is wide and unfettered by a limitation as to non-parties. There is precedent for such an approach in this Court; see, for example, Golden v Coffs Harbour City Council [No 2] (1991) 72 LGRA 406.

Mr Tobin did, however, submit that as a matter of policy costs ought not to be awarded in favour of a non-party because the corollary would follow, that is, that costs could be awarded against a non-party. That, he submitted, would be contrary to the policy of the EP&A Act to encourage public participation. The answer to that proposition is that the very purpose of cl 10 of the Practice Direction is to encourage public participation by eliminating the costs risks in planning and building appeals except in exceptional circumstances, so that persons involved in those appeals are thereby not discouraged to challenge the decisions of councils and others who may be better funded than they are.

Mr Tobin raised two factors which, he submitted, would lead to the Court to decline to award costs in favour of the resident objectors.

The first of those factors involved an allegation that the applicant agreed to the imposition of the costs order under duress, in the sense that he was forced to agree by the threat of the legal proceedings, and that his agreement was not voluntary. This rather special meaning of duress is derived from Mason & Anor v The State of New South Wales [1959] HCA 5; (1958-1959) 102 CLR 108. That case concerned a claim by the plaintiffs who were interstate road carriers to recover amounts paid by them by way of permits for interstate transport as money had and received. The plaintiffs paid the amounts under protest, believing that their vehicle was liable to seized if the payments were not made. Subsequent to the payments being made, the statute under which they had been purportedly levied was found to be invalid. The principle appears in a passage from the judgment of Dixon CJ at 117:

"We are dealing with the assumed possession by the officers of government of what turned out to be a void authority. The moneys were paid over by the plaintiffs to avoid the apprehended consequence of a refusal to submit to authority. It is enough if there be just and reasonable grounds for apprehending that unless payment be made an unlawful and injurious course will be taken by the defendant in violation of the plaintiffs' actual rights. The plaintiffs were not bound to wait until the illegality was committed in the exercise of the void authority."

Mr Tobin's submission was that the same principle applies in this case. The applicant was compelled to agree, so this submission went, to the short minutes of order because he apprehended that unless he so agreed the council would, in violation of the applicant's right, take an unlawful and injurious course which would prevent the applicant's development application being properly considered within the terms of the EP&A Act. The council was purporting to exercise a power which was void, that is, it unlawfully required the payment of costs either as a condition of the grant of development consent or as a condition of agreeing to an amendment of the development application. Mr Tobin completed this submission by pointing to the fact that the applicant agreed to the costs order under protest, as evidenced by a letter dated 8 December 1994 sent by his solicitors to the council's solicitors, in which it was stated that the applicant "... feels that it has been forced to agree to this condition and that it has no option but to pay the costs ...".

In my opinion, however, the principle in Mason's case has no application to the facts of this case. The relevant facts here are these. First, the applicant is a person of extensive experience in real estate and property development; he deposed to the fact that he had operated in this field since 1972. Secondly, he deposed in his affidavit to the fact that, whilst he believed that the council was insisting upon payment of the resident objectors' costs as a condition of it consenting to amendment of the development application, he took advice from his current solicitor before instructing his then solicitor to require that only party and party costs be paid. Third, the evidence of Mr Strauss, which was unchallenged, was that the applicant was in the courtroom for the whole of the hearing of the proceedings on 9 December 1994. Fourth, the exchange between the applicant's counsel and the Senior Assessor at the end of the hearing which I have set out shows that the costs order was expressly adverted to and specific instructions sought from, I infer, the applicant who was there at the time. Fifthly, there could have been no apprehension that the applicant's rights would be violated. Absent the agreement between the parties, the applicant could have applied to the Senior Assessor at the resumed hearing to substitute the later plans and, if the later plans disclosed a more acceptable development, it was likely that the Senior Assessor would have granted that application. The applicant may still have faced a costs application in those circumstances, but it is unlikely that his right to consideration of the later plans would have been jeopardised in any way. The only reasonable inference to draw from these facts is that the applicant was fully informed and well understood the effect of the consent order relating to costs, and that he was under no duress in the relevant sense.

In addition to these matters, however, it cannot be said, for the reasons which I have already set out, that the council was purporting to grant development consent or agree to the amendment of the development application conditionally upon the payment of costs. As I have earlier said, the council's resolution amounted to an agreement to settle the litigation; it was a compromise reached in the course of that litigation. It was not unlawful, and the payment of costs pursuant to it was not tainted with invalidity so as to import an application of the principle in Mason's case.

Mr Robertson sought to answer the applicant's assertion of duress by putting the proposition that, even if it could be said that the council was threatening to continue with the class 1 application which had been instituted, that was not wrongful unless there was some element of impropriety. He relied upon James v The Commonwealth (1938) 62 CLR 373 and Northern Territory of Australia & Ors v Mengel & Ors (High Court, 19 April 1995, unreported). Due to the findings I have made, I do not find these authorities to be of assistance in the circumstances of this case.

The second factor which Mr Tobin submitted I should take into account in order to decline to award costs in favour of the resident objectors was based on an allegation that the circumstances reveal corrupt conduct (in the special sense in which that term is used in the Independent Commission Against Corruption Act 1988 ("the ICAC Act")) on the part of the council, and that I should not enshrine that conduct by making an order which would support it.

The basis for this submission is the claim that the conduct of the council falls within the definition of "corrupt conduct" in s 8(1)(b) of the ICAC Act, which is in the following terms:

(b) any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions;"

There is no claim that the conduct of the council was dishonest. What is alleged is that the council, in requiring as a condition of its agreement, that the costs of the resident objectors be paid, was acting in a "partial" manner, that is, that it was preferring a particular lobby group by requiring money to be paid to it. The applicant alleged that Mr Strauss represents a particular political group, being part of a lobby group known as "R.A.I.D" (which appears to stand for "Residents against Inappropriate Development"). The affidavits of Mr Sanchez and Mr D M Harbour sought to establish that the activities of the particular lobby group include intervention in court proceedings, and include a particular personal attack upon the applicant as a local developer. In those circumstances, it was submitted that the requirement to pay costs to the resident objectors amounted to a subvention of a politically active group within Randwick.

It represents an entirely misconceived notion of the purpose of an award of costs. The rationale of a costs order is that it just and reasonable that a party who has caused another party to incur costs of litigation should reimburse that other party for the liability incurred. Costs are compensatory (see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 567). If the circumstances dictate that costs should be awarded, then the payment of costs is to compensate or reimburse the payee for the liability incurred in the litigation. It cannot be regarded as a payment by way of funding of a political group, even if the intervention of the payee in the proceedings is alleged to have been for a political purpose. The motivation of the payee is irrelevant; the relevant matter is the liability incurred by the payee by reason of its participation in the litigation. In this case, the applicant instituted proceedings against the council's refusal of development consent. The Court permitted Mr Strauss on behalf of the resident objectors to appear for the purpose of presenting evidence and giving submissions. That evidence, of course, went to the planning matters the subject of the appeal; it could not go to political matters such as intervention in court proceedings to prevent development. It is clear from the transcript of the proceedings on 9 December 1994 that the solicitor for the resident objectors made submissions about planning matters;

An inquiry as to whether conduct is corrupt within the ICAC Act is not a relevant inquiry for the purposes of a costs application in this Court. It is a specific inquiry, which involves a consideration of the elements of s 9 as well as s 8 of the ICAC Act; furthermore, a finding of corrupt conduct within the terms of that Act does not create or affect legal rights and obligations (Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125). The proper approach in a costs application in this Court is for the Court to conduct a more general inquiry to determine whether the conduct of any party would disentitle that party to an award of costs. That more general inquiry has nothing to do with corrupt conduct under the ICAC Act, although, in a particular case, a finding of conduct disentitling a party to costs might be conduct which could call for scrutiny under the ICAC Act in other proceedings and in another forum

For the reasons which I have set out, I would be loath to examine the political activities of local groups in order to try to discern improper conduct, but in any event I can discern no such conduct on the part of the council. There was no evidence of a partial or preferential exercise of powers by the council. Mr Sanchez and Mr Harbour gave evidence of political lobbying and activity in the Randwick local government area, but that does not establish that the council resolution was based upon an intention to prefer some political lobbying group for an improper purpose involving the payment of costs to that group. There is nothing in the minutes of the meetings of council on 22 November 1994 and 6 December 1994 which would indicate anything other than the council was resolving upon a motion in the ordinary course of the council's business. The suggestion that the council might have been partially favouring the resident objectors is also belied by the letter dated 5 December 1994 which Mr Strauss wrote to the council and in which he complained that, although he had been granted leave to be represented on behalf of the Mason Street residents, he had not been consulted about the council's proposed conditions of consent. He had received a copy only one hour before the council's meeting on 22 November 1994, he was not consulted about the rescission motion, and he had not been advised of the negotiations between the applicant and the council.

The proper approach of the Court, in my opinion, is to examine the proceedings and their surrounding circumstances to ascertain if exceptional circumstances exist as required by cl 10 of the Practice Direction, and then to consider whether, in exercise of discretion, costs ought to be awarded and to whom. That is an uncontroversial and straightforward approach and is the one which I propose to adopt.

The relevant circumstances were these. The applicant proceeded on the basis of the earlier plans, despite the later plans which were, it appears in hindsight, more acceptable than the earlier plans, and despite queries as to that course from the other parties. After two days of hearing, the applicant changed his course, and sought substitution of the later plans, which meant that the opposition of the council and the resident objectors to the proposed development substantially evaporated. In those circumstances, the costs of the council and the resident objectors were thrown away, and that came about as a consequence of the applicant seeking substitution of the later plans. Those circumstances are, in my opinion, exceptional and would entitle an order as to costs.

The agreement between the parties, as set out in the short minutes of order, is another factor to take into account. As I have earlier said, I think that agreement was a compromise agreement made by the applicant, fully informed and in possession of legal advice. Recognition of that agreement by the Court is in line with the modern approach of encouraging litigants to settle their disputes where possible and it is accordingly an agreement which should be given some weight in the exercise of the Court's discretion.

Both Mr Thompson and Mr Robertson pointed out that upholding the agreement accords with the obiter remarks of Bignold J in Robinson v Shoalhaven City Council & Ors (1985) 55 LGRA 135 at 137-8, where his Honour declined to set aside a costs order because "[t]o do so would repudiate the agreement struck by the parties for no sound reason ...".

I think the just and reasonable order in the circumstances is that the applicant pay the costs of both the council and the resident objectors.

In accordance with the foregoing, my formal orders are as follows:

2. The notices of motion of the respondent and the resident objectors are upheld.

3. The applicant must pay the costs of the respondent and of the resident objectors:

(a) of the hearing on 3 and 4 November 1994 and costs thrown away as a result of the applicant's reliance on amended plans A01 to A012 dated 14 September 1994; and

I HEREBY CERTIFY THAT THIS AND THE PRECEDING 18 PAGES ARE A TRUE AND ACCURATE RECORD OF THE REASONS FOR JUDGMENT HEREIN OF THE HONOURABLE JUSTICE M L PEARLMAN AM.