Gibson v Mosman Municipal Council

Her Honour considered three earlier decisions of the Court by three different judges, namely the decision by Stein J in Nahum v North Sydney Municipal Council (1994) 83 LGERA 200, the decision by Bignold J in Cadonia Pty Limited v Leichhardt Council [1993] NSWLEC, 5 August 1994, unreported, and my decision in Teller Properties Pty Ltd v Randwick City Council (1994) 84 LGERA 369.

In Nahum at p 203, Stein J said:- In my experience on the Court, leaving aside extraneous discretionary factors which may come into play, the normal order where preliminary issues of law are determined by a judge is that costs will follow the outcome of the matter, notwithstanding the Practice Direction. This is because these sorts of legal questions have been regarded as constituting special or exceptional circumstances, justifying departure from the Direction.

Further at p 204 he states:- I have no doubt that the intent of the Practice Direction, save in exceptional circumstances, was that no order for costs should be made in class 1 and class 2. This was on the basis that it applied to merit hearings by assessors and judges, where the issues are of a discretionary planning nature determined on the particular merit assessment. The policy, embodied in the Practice Direction, was never intended to have application to the determination of pure questions of law.

In Cadonia Bignold J recognised that Nahum was capable of supporting the wide proposition that costs will normally follow the event in respect of the determination of preliminary questions of law. He then adopted what he referred to as the "preferable basis" for the decision, namely that the determination of a preliminary question of law constituted exceptional circumstances within the meaning of the Court's Practice Direction. There is nothing in his Honour's judgment which dissents from the statements made by Stein J in Nahum in relation to Stein J's experience and his understanding of the intent of the Practice Direction.

In Teller Properties, I approached the question of costs following the determination of a preliminary question of law on a conventional basis "untrammelled by the effect of the Practice Direction" . I recognised that what Bignold J had to say in Cadonia might be applied in circumstances where mixed questions of fact and law arise.

Following the decision of the Chief Judge in Outdoor Australia the Court has consistently applied the Practice Direction so that the raising of a preliminary question of law in class 1 or class 2 proceedings does not have the consequence that costs follow the event but rather it is a factor to be taken into account in considering whether there are exceptional circumstances. That is the position as it stood before the decision of the Court of Appeal in Maurici .

Handley JA, with whom Beazley and Giles JJA agreed, started with the proposition that "judges should not fetter judicial discretions with self-imposed rigid rules" . Reference is made to the remarks made by Lord Wright in Evans v Bartlam [1937] AC 473 adopted by Mason and Deane JJ in a joint judgment in Norbis v Norbis (1986) 161 CLR 513 at 519 - 20 and the principles enunciated by the High Court in Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72.

Although the Court of Appeal in Maurici was considering the effect of par 10A of the Practice Direction rather than par 10 there is no relevant distinction between the two paragraphs that would lead to a different conclusion in respect of par 10.

Handley JA summed up the Court of Appeal's conclusion in par 52 as follows:- Paragraph 10A of the Practice Direction construed as applicable to land tax appeals in Class 3, which purports to impose a rigid rule that costs should only be awarded in favour of the successful party in exceptional circumstances, cannot be given the effect which Lloyd J gave to it. Lloyd J treated para 10A as applicable to the case before him, and confined his attention to the question of exceptional circumstances. His exercise of discretion therefore miscarried.

Freed of the constraint of par 10 of the Practice Direction, the Court is obliged to rely on the formulation of guideline principles established by judicial adjudication (see Latoudis v Casey at p 541). It is clear that the Court of Appeal had regard to this aspect of the judgment (see Handley JA at par 47 and par 48 in Maurici ).

At the time Stein J made his observations in Nahum he was a judge who had enjoyed a long association with the Court. The same can be said about the experience of Bignold J at the time he delivered judgment in Cadonia. No challenge to the identification of the "normal order" referred to by Stein J at p 203 in Nahum has been drawn to my attention. I propose to follow Stein J in this case and hold that, in the circumstances, the applicant is entitled to an order for its costs in respect of the preliminary issue.

Alternatively, the raising of the issue of jurisdiction of the Court to determine a vital issue in the appeal goes beyond the resolution of merit issues which underlie the original basis for the adoption of the principle that there should be no order for costs in planning and building appeals except in exceptional circumstances ( McDonald Industries Ltd v Sydney City Council (1980) 43 LGRA 428). Although the raising of an issue for the first time on appeal does not necessarily lay the ground for a finding of an exceptional circumstance, as the then Chief Judge said in McDonald at p 446, my understanding is that the practice of not awarding costs related to matters where there were only merit issues to be decided.

Costs decisions in classes 1, 2 and 3 of this Court following Maurici ( Prince v North Sydney Council [2001] NSWLEC 165, Lloyd J, 21 June 2001, unreported; Care and Anor v Canterbury City Council [2001] NSWLEC 169, McEwen AJ, 21 June 2001, unreported; Oosthuizen v Sutherland Shire Council [2001] NSWLEC 137, Cowdroy J, 19 July 2001, unreported) all arose out of merit decisions by Commissioners. It was, therefore, not necessary to address the issue that arises in this case. Each judge was able to apply the conventional approach to the making of costs orders in planning and building appeals where no preliminary, separate or distinct issues of law are raised without relying upon Practice Direction 10.

I am satisfied that the applicant in the circumstances of this case is entitled to an order for costs in relation to the determination of the preliminary issue.

The formal order is as follows:- 1. That the respondent pay the applicant's costs of the hearing on 7 June 2001 and of the notice of motion dated 28 June 2001.

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