H & W Pty Ltd v Lane Cove Council

Land and Environment Court (NSW)|2010-05-31|Before: Craig J

The applicant's submissions 14 The applicant submits that leave to discontinue the proceedings should be granted in accordance with subrule (1) of Pt 12.1 of the Uniform Civil Procedure Rules 2005. It submits that this leave should be granted on terms that each party pay its own costs of the proceedings. 15 The essential basis for the applicant's submission is that its Class 1 proceedings were properly arguable upon its understanding of the law prior to the decision given in Iris Diversified Property on 7 May 2010. It had retained counsel to appear on the hearing as well as experts who would address the merit issues and some of whom had already conferred with their counterparts retained by the Council. 16 It was submitted that although the decision in Iris Diversified Property did not present a complete bar to its prospects of success, it was a case which any commissioner of the Court would be bound to follow and, in likelihood, any judge of the Court determining the matter would, as a matter of comity, also follow. This had the consequence, so the argument ran, that a number of objections under SEPP 1 would be necessary to be made in order to meet the prohibitions otherwise imposed by the development standards contained in LEP 1987. In the result the standard of satisfaction necessary to be reached in order to sustain its objections under SEPP 1 significantly reduced its prospects of success to the point where they were assessed to be very poor. 17 The applicant pointed to the circumstance that it became aware of the decision in Iris Diversified Property when it was drawn to its attention by the Council's solicitors on 10 May. The implications of the judgment were considered by its legal representatives and ultimately the decision was made on 20 May that the proceedings should be discontinued. As I have earlier recorded, those instructions were conveyed to the Council's solicitors on 21 May. It was by reason of the Council's refusal to agree to discontinuance on the basis that each party bear its own costs that has necessitated the present notice of motion.

The Council's submissions 18 The Council submits that it is "fair and reasonable" that the applicant should, in the circumstances, pay its costs. Without intending any disservice to the detailed submissions advanced on behalf of the Council, in essence, the submission it puts is twofold: (i) that the subdivision sought as part of the development application was "doomed to failure" by reason of the provisions of LEP 1987, as subdivision did not involve the "use of land" within the meaning of cl 41 of the Regulation ( Wehbe v Pittwater Council [2007] NSWLEC 827; 156 LGERA 446); (ii) the decision in Iris Diversified Property did not compel the termination of the present proceedings; rather, it simply left the applicant with the option of lodging a number of SEPP 1 objections which it chose not to do.

It is not "fair and reasonable" to make an order for costs against the applicant 19 I have not found the resolution of this dispute easy. However, I have concluded that it would not be "fair and reasonable" in the circumstances of this case to order that the applicant should pay the respondent's costs. 20 While the discretion of the Court to make an order for costs has its foundation in s 98 of the Civil Procedure Act 2005, the opening words of subsection (1) of the section expressly provide that the discretion is subject to the rules of court. This Court has a rule which expressly deals with orders for costs in Class 1 proceedings. That rule is found in Pt 3.7 of the Land and Environment Court Rules 2007 (LECR). Subrule (2) provides as follows: "(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."

As has often been said, this subrule creates a presumption against the making of an order for costs, it being necessary on the part of the party applying for an order to demonstrate that it is "fair and reasonable" so to do ( Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125). That presumption is therefore my starting point for consideration. 21 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. 22 Having acknowledged the general position that will pertain as a consequence of the filing of a notice of discontinuance, it must also be recognised that there will be circumstances in which discontinuance is reasonable on the part of the discontinuing party and which will have the effect of negating the ordinary cost consequences. One such circumstance is where there has been a supervening event beyond the control of the party (Manly Warringah Rugby Leagues Club Pty Ltd v Warringah Council [2006] NSWLEC 88 at [13]). Provisions such as s 56 of the Civil Procedure Act and the requirement only to litigate issues that are genuinely in dispute are requirements which, in appropriate circumstances, should inform the making of a decision by a party to discontinue proceedings when a supervening event substantially impacts upon the factual or legal basis upon which legal proceedings were originally founded. 23 The Council did not contest that the decision of Pain J in Iris Diversified Property was a "supervening event". It acknowledged that the "event" required a change of course on the part of the applicant, necessitating the filing of a number of objections under SEPP 1. However, it contended, as I have earlier indicated, that it was unreasonable for the applicant not to take that course in seeking to sustain its development application by that means. 24 I cannot agree. The need for the applicant to support its application by reference to a number of objections under SEPP 1 considerably changed the burden that it was required to bear, compared with that imposed upon it had the "existing use" jurisprudence prior to Iris Diversified Property prevailed. The matters necessary to be addressed in order to sustain an objection under SEPP 1 have been articulated in a number of cases (see, for example, Wehbe at [36] ff). Confronted by a different factual and jurisprudential basis upon which it needed to argue its case, it seems to me that the applicant took an appropriate course by seeking to discontinue the proceedings when it did. 25 I should add that it was not part of the Council's case that the applicant delayed unreasonably in notifying its decision to discontinue once the decision in Iris Diversified Property became known to it. As earlier indicated, the decision of Pain J was drawn to the attention of the applicant on May 10 and the decision to discontinue notified on 21 May. 26 The Council also relies upon the fact that the subdivision component of the development application could not have succeeded. Determination of that part of the application did not turn upon the elucidation of the law contained in the judgment of Pain J. This contention was disputed by the applicant. It is unnecessary, for present purposes, to resolve this dispute. 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. 27 This component of the Council's application does not therefore persuade me that it is "fair and reasonable" to order costs against the applicant.

Conclusion 28 For these reasons I am not persuaded that it is fair and reasonable that the applicant should be ordered to pay the Council's costs. However, given that each party has acted reasonably and appropriately in bringing the notices of motion which they did, in the context of Pt 3.7 of LECR I am not disposed to require that either party should have any liability to the other for the payment of costs. 29 The orders that I make are therefore as follows:

The applicant be given leave to file in Court the notice of discontinuance of its proceedings in accordance with the notice annexed to its notice of motion dated and filed on 25 May 2010.

Each party pay its own costs of the proceedings.

Dismiss the Council's notice of motion dated 31 May 2010.

Order that each party pay its own costs of the notice of motion. **********

08/06/2010 - Line 5 should read as: Land and Environment Court Rules 2007 - Paragraph(s) 20

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CITATION : H & W Pty Ltd v Lane Cove Council [2010] NSWLEC 87 This decision has been amended. Please see the end of the judgment for a list of the amendments.

Iris Diversified Property Pty Ltd v Randwick City Council [2010] NSWLEC 58 CASES CITED: Manly Warringah Rugby Leagues Club Pty Ltd v Warringah Council [2006] NSWLEC 88 Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 Wehbe v Pittwater Council [2007] NSWLEC 827; 156 LGERA 446

(2007) 156 LGERA 125

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