Kelly v Randwick City Council

The costs application

1. On 30 July 2018, Mr Kelly filed a Notice of Motion seeking that the Council be ordered to pay, on an ordinary basis, his costs of the strata subdivision application appeal. Although procedural listings for this Notice of Motion were adjourned by consent on a number of occasions whilst Mr Kelly awaited supply of the transcript of the proceedings before the Commissioner to be supplied, I am satisfied that there has been no unnecessary procedural delay with respect to Mr Kelly's costs application.
2. The costs application falls to be determined pursuant to the special provisions in the Land and Environment Court Rules 2007 (the Court Rules) that displace, relevantly in Class 1 merit appeals, the presumption that costs will follow the event and substitute, in lieu of that presumptive outcome, the position that costs will only be ordered in favour of a successful party in such proceedings if it is fair and reasonable to do so. The relevant provisions of the Court Rules will also require later consideration.

Introduction

1. There are two preliminary matters to be noted concerning the costs hearing before me. First, I advised the advocates, Mr Tomasetti SC for Mr Kelly, and Dr Smith for the Council, that the nature of the hearing I was conducting was neither a review of the merits of the Commissioner's decision, nor any form of notional appeal pursuant to s 56A of the Court Act to consider whether the Commissioner had made any error of law in her decision.

The extensive photocopying for the costs hearing

1. Second, and a matter to be reflected in the orders that I make at the conclusion of this decision with respect to the costs of this costs hearing, I was concerned at the very large amount of photocopying that each of the parties had undertaken in the preparation of the various folders of material tendered or otherwise put before me.
2. I indicated that, although costs of a costs application are ordinarily made in favour of the successful party on that application, I proposed to limit the extent to which photocopying costs could be recovered.
3. It has been the practice of the Court to exhort parties to avoid unnecessary photocopying, as it is frequently the position that a decision-maker in the Court will be taken to but a small portion of the photocopying material tendered or otherwise put before that decision-maker.
4. In these proceedings, I indicated to Mr Tomasetti and Dr Smith that my view was that recovery of photocopying costs in this costs application should be limited to 10% or 15% of the material actually photocopied.
5. Having now been taken through relevant elements of the photocopied material, and having regard to the amount of material provided to me as part of the Council's case (the Council being the successful party on this costs application), I have concluded that the photocopying costs to be incorporated in the costs order for this motion are to be limited to recovery of 20% of the costs of the photocopying undertaken by or on behalf of the Council.

The relevant elements of the Randwick Local Environmental Plan 2012

1. The environmental planning instrument against which Mr Kelly's original development application was assessed and, particularly, the development application for strata subdivision that resulted in the Court's decision in Mr Kelly's favour, in the contested Class 1 appeal, is the Randwick Local Environmental Plan 2012 (the LEP). Only two provisions of the LEP were engaged in the contest before the Commissioner. Those provisions were cl 4.1A and cl 4.6.
2. The first of these provisions dealt with the approach to be taken to applications for strata subdivision of approved development, whilst the second provision is one which provides the now conventional basis by which an applicant can request dispensation from compliance with a development standard which would otherwise act as a barrier to a proposed development.
3. In this instance, although there was a contest before the Commissioner as to whether a request for dispensation to compliance with a development standard was necessary, the terms of the clause itself were not in contest and it is, therefore, unnecessary to set out that provision.
4. On the other hand, the terms of cl 4.1A were in contest. This provision is in the following terms: 4.1A Minimum subdivision lot size for strata plan schemes in Zone R2 (1) The objective of this clause is to ensure that land to which this clause applies is not fragmented by subdivisions that would create additional dwelling entitlements. (2) This clause applies to land in Zone R2 Low Density Residential. (3) The size of any lot resulting from a subdivision of land to which this clause applies for a strata plan scheme (other than any lot comprising common property within the meaning of the Strata Schemes (Freehold Development) Act 1973 or Strata Schemes (Leasehold Development) Act 1986) is not to be less than the minimum size shown on the Lot Size Map in relation to that land. (4) Despite subclause (3), if the subdivision is of a lot on which there is a dual occupancy (attached): (a) the size of each lot resulting from the subdivision is not to be less than 400 square metres, and (b) 1 dwelling must be situated on each lot resulting from the subdivision.

Understanding the mathematics

1. To understand the nature of the dispute before the Commissioner concerning the interpretation of the LEP, it is necessary to understand the various computational characteristics arising from the site and from the attached dual occupancy to which the Council had granted development consent. To assist in this process, it is appropriate to reproduce a copy of the plan of the site that depicts the footprint of each of the approved attached dwellings.
2. This plan appears below:
3. As can be seen, the site is rectangular. It has an area of 543.5 square metres. It can also be seen that the two approved dwellings are mirror-image, reversed in design. The strata title subdivision proposes to divide the site, equally, along its north-south centreline. The result of the now approved strata subdivision is that, at ground level, each strata allotment will have title to 271.75 square metres of what had been the unsubdivided allotment.
4. What is not evident from the above plan, however, is that each of the approved dwellings is of three levels. It was not in dispute that the floor area, in total, of each dwelling will be 408 square metres.
5. The issue which engaged the Commissioner for her determination was, in the first instance, whether the area of 271.75 square metres at ground level or whether the total floor area of each approved dwelling of 408 square metres was engaged for the purposes of cl 4.1A of the LEP. It is to be observed that, if the former (as contended for by the Council) was correct, a request pursuant to cl 4.6 of the LEP would need to be answered in favour of Mr Kelly for the proposed strata subdivision to be capable of being approved.
6. If not, there was no need for any dispensation to permit departure from the development standard in cl 4.1A of the LEP and any cl 4.6 request was redundant.

Introduction

1. Given the confined nature of the dispute between the parties (effectively not being whether the proposed strata subdivision should be approved but merely the pathway by which this outcome was to be achieved), the Commissioner's reasons were appropriately brief. The Commissioner set the scene for that which needed to follow in [2] and [3] of her decision, paragraphs in the following terms: 2 The hearing was preceded by conferencing of town planning experts in accordance the directions of the Court. The result of the expert's conference was resolution of the planning issues previously pressed by the Council. It is accepted by the Council that the two lot strata subdivision is acceptable and should be approved subject to the agreed conditions of consent. 3 However there is a legal argument between the parties as the interpretation of cl. 4.1A Minimum subdivision lot size for strata schemes in Zone R2: Contention 1, of the Respondent's Statement of Facts and Contentions (Exhibit 1).
2. The Commissioner then set out some background and the planning controls relevant, in her assessment, to consideration of Mr Kelly's appeal. At [12], the Commissioner noted the decision of Dixon C (as the Senior Commissioner then was) in DM & Longbow Pty limited v Willoughby Council (2017) NSWLEC 1358 (DM & Longbow) as informing the Commissioner as to one aspect of interpretation of the LEP provision she needed to consider. In this context, it is appropriate to note that the decision in DM & Longbow was appealed pursuant to s 56A of the Court Act and no error was found in the first instance interpretation by the (now) Senior Commissioner (see DM & Longbow Pty limited v Willoughby Council (2017) NSWLEC 173). At this point, it is also appropriate to note that the LEP provision engaged in DM & Longbow had but broad similarity to cl 4.1A of the LEP but certainly was not in the same terms as cl 4.1A here engaged.

The Applicant's position before the Commissioner

1. Relevant to this costs application, the Commissioner then set out, between [20] and [24], her summary of the submissions made by Mr Tomasetti concerning the interpretation of, relevantly, cl 4.1A. It is pertinent to note, specifically, that the submission made by Mr Tomasetti as to the appropriate interpretation of cl 4.1A(4) was summarised by the Commissioner, briefly, in [24] of the element of her decision setting out the submissions made on behalf of Mr Kelly.
2. The Commissioner then set out, from [25] to [32], the submissions advanced by Ms Hudson concerning the provisions of the LEP. In particular, at [28] and [29], it is appropriate to note that the Commissioner recorded: 28 In Ms Hudson's submission the Council's interpretation of the clause excludes a lot created from a strata subdivision from being relied on to meet the development standard of 400 square metres in cl 4(a). 29 Further Ms Hudson submits that when read with the intent of the clause, to ensure land is not fragmented, the reference to 'lot' in cl 4(b) is not a reference to a strata lot.

The Council's position before the Commissioner

1. An examination of the transcript of the hearing before the Commissioner discloses that, consistent with the Council's Statement of Facts and Contentions, the Council considered that, for satisfaction of the minimum allotment size requirements in cl 4.1A, the minimum size of the land area (as opposed to the floor area of a strata dwelling) was required to satisfy the development standard set by the LEP of 400 square metres.
2. For this purpose, the Council relied on not only cl 4.1A(3) but also cl 4.1A(4). Ms Hudson, the solicitor appearing for the Council at the hearing before the Commissioner, made it clear in her submissions that, for the purposes of cl 4.1A(4)(b), it was submitted that a proper reading of that provision meant that the word "lot", in that provision's specific context, meant the ground area and did not apply to any floor space area calculation.
3. The transcript makes it clear that this proposition was advanced on behalf of the Council as a quite separate proposition from any other issues arising for consideration in interpretation of the LEP.
4. Ms Hudson explained why the Council regarded that this element of the LEP was engaged to prohibit the proposed subdivision absent the upholding of a request pursuant to cl 4.6 of the LEP (Transcript, 15 June 2018, page 14, lines 5 to 33). This element of the LEP had not previously been interpreted. It was her submission that the interpretation advanced on behalf the Council made it necessary for the granting of a dispensation request, by the vehicle of cl 4.6 of the LEP, was necessary to permit the proposed strata subdivision to be approved. For reasons not needing to be explored, the Council did not oppose the granting of the dispensation.
5. As a consequence, the Council's position was that the proposed strata subdivision was appropriate to be approved on the basis of granting the dispensation request and, thus, removing the impediment of the minimum area development standard said to apply as a consequence of cl 4.1A(4)(b).

The Commissioner's conclusions

1. The Commissioner set out, commencing at [33], her analysis of, and conclusions concerning, the competing submissions which had been made to her. In noting that she was applying the interpretation adopted by the (now) Senior Commissioner in DM & Longbow, the Commissioner expressly adopted the submissions that had been made by Mr Tomasetti, as set out in her decision in [21] to [23].
2. It is to be observed that this explicit adoption of elements of Mr Tomasetti's submissions did not include the submissions he had made concerning the interpretation of cl 4.1A(4). The Commissioner dealt with this element of cl 4.1 in the following paragraphs of her decision.
3. Her consideration of the competing positions concerning this provision was brief, but separate, and was set out in [39] and [40] in the following terms: 39 For Council's interpretation to be sustained it is necessary for the reference to "lot" in cl. 4.1(4), (a) and (b) to be a reference to "land" or "site area". I am satisfied when read as a whole that this is not the intent of the clause. 40 Further the drafting of cl. 4.1A is such that the term 'land' is utilised in both sub-cl. (1) and (2) and specifically not in the remainder of the clause. I am satisfied that this distinction in the drafting of the clause has a purpose.
4. The consequence of the Commissioner's analysis and conclusions was that it was not necessary for Mr Kelly to rely on a request made pursuant to cl 4.6 of the LEP to provide a foundation for approval for the proposed strata subdivision because the interpretation of cl 4.1A(4)(b), adopted by the Commissioner, meant that, at a floor area for each dwelling of 408 square metres, the 400-square-metre minimum size required by cl 4.1A was satisfied.
5. As I have earlier noted, for the purposes of this costs' determination, I am not undertaking any form of notional legal review of the Commissioner's reasoning and her decision in this regard cannot (and is not) challenged for the purposes of this determination.

Costs - r 3.7 of the Court Rules

1. As I have earlier noted, the Court Rules make special provision, in r 3.7, for the purposes of costs' consideration in, amongst other proceedings, Class 1 merit appeals. It is appropriate to set out the terms of this provision: 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act): (a) all proceedings in Class 1 of the Court's jurisdiction, (b) …, (c) ..,. (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. For the purposes of the application made by Mr Kelly, primary reliance is placed on r 3.7(3)(a). That is because, it is submitted on behalf of Mr Kelly, that the sole matter to be addressed and determined by the Commissioner was the relevant construction of cl 4.1A of the LEP, particularly the terms of cl 4.1A(3) and (4) of the LEP.
3. In this context, it is appropriate to note that r 3.7(3) does not mandate the making of an order for costs if the nature of the proceedings can be regarded as squarely being within r 3.7(3)(a). The relevant operative word in the introductory element to r 3.7 is "might". It is still necessary, even if I was to conclude (which I do not) that the proceedings before the Commissioner could be characterised in the fashion proposed by Mr Tomasetti, that I be satisfied that it is fair and reasonable to make a costs order in Mr Kelly's favour.

The additional Council assessment work

1. In his written submissions, Dr Smith proposed that one aspect of that which had occurred in the lead-up to the hearing arose from the additional work which had had to be undertaken by Council's staff in an assessment of the dispensation request made by Mr Kelly, pursuant to cl 4.6 of the LEP, seeking to be relieved of the obligation to abide by what the Council regarded as the correct minimum lot size interpretation mandated by cl 4.1A of the LEP.
2. There are two reasons why I reject the proposition that Mr Kelly's "belt‑and‑braces" approach should be regarded as being, in any way, constituting, or contributing to constituting, disentitling conduct.
3. First (and sufficient in itself to reject this proposition), the Council itself insisted, from the beginning, that Mr Kelly would need to seek to rely on a request for a dispensation to be granted pursuant to cl 4.6 of the LEP, even though the Council staff had indicated that, if such a request was made, it was unlikely to be supported. This is here a matter of irrelevance as it involved matters of merit assessment rather than any inference that Mr Kelly accepted that there was any legal necessity to make such a request. Having invited such a request (even if antipathetic to it), the statutory responsibility to assess such a request as a legitimate element of a development application fell upon Council's planning staff.
4. Second, it is to be remembered that, in making the development application giving rise to these proceedings, Mr Kelly paid an application fee at the time of lodgement of this development application. As a consequence, the Council staff was under a statutory obligation to assess Mr Kelly's development application and its attendant cl 4.6 request. Indeed, as Mr Kelly had paid the prescribed fee for this service to be provided, it is impossible to see how the provision of the assessment service for which the mandated statutory fee had been paid could be regarded as incurring additional and unnecessary work and cost for the Council in such circumstances.

Settlement of proposed Condition 6

1. Dr Smith also submitted, in his written submissions, that the outcome of the proceedings could not be regarded as an unalloyed success for Mr Kelly, in light of the fact that Condition 6 (a condition arising from the fact that there were no stormwater drainage plans forming part of this strata subdivision application) remained in contention until resolved during the late stages of the hearing before the Commissioner.
2. As can be seen from the transcript of the hearing before the Commissioner (Transcript, 15 June 2018, page 18, lines 31 to 49), a council engineer was present for the hearing and agreement between the Council and Mr Kelly was able to be struck, resulting in a common outcome on this issue. Dr Smith advanced the Council's position on this point in his written submissions in the following terms: 47. Where an Applicant is successful in proceedings that is not, of itself, sufficient to displace the presumption reflected in r 3.7(2) (Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142 at [40]). As Pepper J also observed in that case, if success, of itself, was sufficient to override the presumption, the provisions of r 3.7(2) would be rendered otiose. 48. At the commencement of the hearing there remained one condition of consent in dispute (Condition 6). The Council's subdivision engineer attended the conciliation to assist with the interpretation of that condition. The condition was not ultimately deleted, as sought by the Applicant, rather it was amended pursuant to an agreement reached between the parties. 49. On this basis, it is submitted that the outcome of the proceedings was not whole "the event" sought by the Applicants (see TL & TL Tradings Pty Ltd v Parramatta City Council [2017] NSWLEC 142 at [76]-[79]). The Applicants' result when viewed against what they had sought at the beginning of the proceedings could only be considered a partial success.
3. I have revisited the paragraphs in TL & TL Tradings Pty Ltd v Parramatta City Council [2017] NSWLEC 142 (TL & TL Tradings), a decision of my own, to understand the foundation for this submission. The relevant paragraph in my judgment noted that, in Sze Tu v Lowe (No 2) [2015] NSWCA 91, Gleeson JA (Meagher and Barrett JJA concurring) (Sze Tu) wrote, at [39]: 39 How "the event" should be defined will depend upon the nature of the litigation. Generally the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim.
4. It is unnecessary to trace the history of proposed Condition 6 from its first iteration in the Council's "without prejudice" conditions of consent (provided to Mr Kelly by email on 31 May 2018 (Exhibit 1 folio 186) and filed with the Court that day) and the discussion between Mr Kelly and the council engineer during a break in the hearing (recorded as occurring at page 18 of the transcript - at a point approximately three-quarters of the way through the hearing) at which a mutually acceptable Condition 6 was able to be arrived at.
5. It is sufficient to observe that, in the context of TL & TL Tradings, there remained a genuine merit disagreement between the parties potentially requiring the Commissioner to adjudicate upon that matter of disagreement. Although settlement of this condition was quite independent of the matters otherwise genuinely in contention between the parties, it remained in dispute for a large portion of the time of this contested hearing.
6. The separate necessity to resolve the issues concerning the condition stands as a relevant impediment to me considering it to be fair and reasonable to make a costs order in Mr Kelly's favour.
7. This is because the necessity to resolve the terms of Condition 6 remained alive until at least three-quarters of the way through the hearing before the Commissioner. As later discussed, "the event" that was the outcome of the totality of the hearing activities before the Commissioner was not only the development consent being granted but also the resolution of the terms of Condition 6.

The failure to release the town planners

1. I have earlier discussed the nature of the Joint Expert Report prepared by the town planners as indicating that there were no issues, within their expert discipline, which would stand as a barrier to approval of the proposed strata subdivision. The joint report expressly addressed all of the town planning matters potentially arising from Mr Kelly's proposed strata subdivision and agreed all were resolved.
2. However, the town planners had been required to attend the hearing because Mr Kelly had not agreed to release them from the obligation to attend.
3. Dr Smith submitted: 6) The Applicant did not agree to the planners being 'excused' from the hearing and required the Council's planner to attend the hearing which caused unnecessary costs to the Council. In this regard, prior to the morning tea break, the planners were excused on the basis that they were not required to give oral evidence. The conduct of the Applicant in requiring the planners to attend the hearing in circumstances where they had reached agreement on the evidence was unreasonable.
4. I have earlier noted that, on 30 May 2018, the town planners conducted a joint conference and produced a Joint Expert Report. The Joint Expert Report explained why there were no town planning merit issues requiring consideration in the proceedings. The transcript before the Commissioner also records (Transcript, 15 June 2018, page 18 [of 24], lines 18 to 45) an exchange between the Commissioner and Mr Tomasetti and Ms Hudson about the fact that there was no need to have oral evidence from the planning experts and that they ought be excused. At line 45 of this exchange, the Commissioner formally excused those experts.
5. It is in this context that I turn to consider the circumstances under which the town planners attended the hearing and were excused without any evidence being required of them.
6. On Friday 8 June 2018, Ms Hudson sent an e-mail to Mr Kelly (Exhibit 2, folio 439) dealing with a number of matters concerning the hearing which was to take place before the Commissioner. The third of those points was in the following terms: The Council does not propose to cross-examine the Applicant's planning expert. The Council suggests, given the agreement of the parties' planning experts in the joint report, there is no need for those experts to attend the hearing and, subject to your agreement, the Council would seek to request that the Court excuse those experts from attending the hearing (a request to be made by Online Court).
7. On 12 June 2018, Mr Kelly sent an e-mail to Ms Hudson (Exhibit 2, folio 442) attaching the Applicant's response to the Council's draft conditions of consent. This was part of an ongoing e-mail discussion in an attempt (which proved to be largely successful) to settle the terms of conditions of consent if development consent was to be granted. This e-mail did not respond to Ms Hudson's proposal that the expert planners be excused from attending the hearing.
8. On 12 June 2018, Ms Hudson replied to an earlier e-mail from Mr Kelly concerning the conditions of consent. This e-mail (Exhibit 2, folio 447) also included, as its final sentence, the following: In this instance, can you please confirm whether you still require Council's planning expert for the purposes of cross examination at the hearing of the proceedings, and whether you will agree to the matter commencing in Court at 10am on Friday, 15 June 2018?
9. Mr Kelly did not respond to this e-mail so, on 14 June 2018, Ms Hudson sent a further e-mail to Mr Kelly (Exhibit 2, folio 450) with a request in the following terms: Can you please confirm your position in relation to the matters raised below as soon as possible? If the parties seek to have the matter commence in Court tomorrow, instead of on-site, we would need to let the Court know before midday today (that is the cut-off for online court communications).
10. In the e-mail chain (at folios 450 and 451), it is clear that the "matters raised below" were those matters set out in Ms Hudson's e-mail of 12 June 2018 - including the request that the Council's planning expert be excused from attendance.
11. On 14 June 2018, Mr Kelly responded to Ms Hudson's e-mail of 12 June 2018 - with the e-mail chain disclosing (Exhibit 2, folio 453) that the Applicant was content to have the matter start in Court; reiterating that there remained one further matter in contention concerning the proposed conditions of consent; and requesting Ms Hudson to make the OnLine Court request for the in-court commencement. The e-mail to which Mr Kelly was responding was that which included, as set out above at [63], the request for the excusing of the Council's planning expert from being required to attend the hearing on the following day.
12. The final pre-hearing e-mail in this sequence (Exhibit 2, folio 464), from Ms Hudson to Mr Kelly, merely forwards to Mr Kelly a copy of the OnLine Court communication response that the hearing the following day was to start in Court at 10.00 am rather than on site.
13. What this e-mail exchange discloses is that, from Friday 8 June 2018, the Council saw no need for the attendance by either town planner at the hearing on 15 June 2018. Expressly, as set out in Ms Hudson's 8 June 2018 e-mail, the Council did not propose to cross-examine the Applicant's planner.
14. The transcript of proceedings before the Commissioner of 15 June 2018 discloses that, prior to them being excused, the planners played no part in the proceedings.
15. Given the continuous non-response by Mr Kelly to the notification by the Council that it did not require his expert planner for cross-examination, and the continuing non-response to the request that the Council's planner be excused (with the necessary implicit inference that the Applicant's town planner could also be excused), this constitutes an element of conduct by Mr Kelly which is to be regarded as demonstrating, in this regard, he has acted unreasonably in the conduct of the proceedings (r 3.7(3)(d) of the Court Rules).

Consideration

1. Although Mr Tomasetti and Dr Smith each proposed, from the differing perspectives of their clients advanced in these costs proceedings, that the authorities to which they took me should have me conclude what would be the outcome of the "fair and reasonable" test posed by r 3.7 of the Court Rules, I am satisfied that the appropriate resolution of Mr Kelly's application can be determined on a much less complex basis.
2. Whilst, taking Mr Kelly's case at its highest, the question that remained for determination by the Commissioner from the time in the proceedings (but only after Condition 6 had been resolved by discussion between the parties during the short adjournment in the latter part of the hearing) could be regarded as falling within r 3.7(3)(a), there are two other factors requiring consideration for the reasons earlier set out.
3. They are the fact that Condition 6, an issue of unalloyed engineering consideration, remained to be resolved for the entirety of the pre-trial preparation and for a considerable portion of the hearing itself. Whilst Condition 6, as resolved by agreement, did not reflect the version which the Council initially proposed, it is also the position that the email exchanges between the parties from the date of the initial provision of the Council's proposed conditions to Mr Kelly, make it clear that Mr Kelly did not wish to have any condition to the general effect of that encompassed by Condition 6 incorporated in the conditions of consent.
4. Whilst the Council did not achieve precisely the condition which it initially considered was appropriate, the extent of capitulation from each party's opening position was clearly significantly greater on Mr Kelly's part.
5. In the context of what, in the overall wash up of the proceedings should be regarded as "the event", in a Sze Tu sense, it is clear that the Council's position on interpretation of cl 4.1A(4) - particularly cl 4.1A(4)(b) - whilst not adopted by the Commissioner was not so clearly untenable as not to warrant being advanced. Indeed, it is clear from a reading of DM & Longbow (at first instance) that the condition in the Willoughby Local Environmental Plan 2012 which provided the broad guidance on the area calculation basis for proposed strata subdivision, did not include any element equivalent to cl 4.1A(4) of the LEP here engaged. DM & Longbow certainly did not render the interpretation advanced by Ms Hudson on behalf the Council absolutely untenable.
6. As a consequence, although the approach to cl 4.1A submitted by Mr Tomasetti for Mr Kelly prevailed and Mr Kelly was granted consent for his proposed strata subdivision, the result is more nuanced because of the necessity to resolve Condition 6 and the interpretation matter required to be determined. This means that the overall outcome derived from the proceedings before the Commissioner (rather than purely the matters she was required to address and determine) can only be regarded as a blended one.
7. In addition, for the reasons I have earlier set out, Mr Kelly's failure to acquiesce in the excusing of the expert town planners, despite repeated requests by the Council's legal representatives for this to occur, is conduct on Mr Kelly's behalf which can only be regarded as unreasonable (r 3.7(3)(d) of the Court Rules). This is particularly so in circumstances where the Council had engaged an external town planning consultant for the purposes of these proceedings, rather than relying on a Council employee. Whilst I have no evidence of what additional cost might have been occasioned to the Council by Mr Kelly's failure to agree to the release of the planners, it is nonetheless self-evident that the requirement that the Council have its consultant planner attend the hearing would have incurred additional expense to the Council when there was no justification for this to occur.
8. As I have earlier noted, the terms of cl 3.7(3) of the Court Rules make it clear that, in addition to the matters therein set out not being an exhaustive list of matters potentially justifying a costs order being considered to be "fair and reasonable", it is also clear that the use of the word "might", as earlier discussed, clearly necessitates a decision maker faced with a costs application considering whether the totality of the matters when balanced together warrant the making of such an order.

Conclusion on Mr Kelly's costs application

1. I am satisfied, having regard to the totality of the matters requiring consideration in this costs hearing that the element which stands in favour of Mr Kelly in the hearing before Dickson C that arose as a consequence of the necessity for interpretation of cl 4.1A(4) of the LEP and whether or not a cl 4.6 request required to be sustained in order to grant development consent for the proposed strata subdivision, weighing this in Mr Kelly's favour is sufficiently balanced by: 1. the unreasonable conduct of Mr Kelly in not agreeing to release the Council's planner from attendance at the hearing despite Mr Kelly being on notice from 30 May 2018 that the Council did not consider that planning evidence was required and that the Council did not propose to cross-examine Mr Kelly's planner; coupled with 2. the fact that Condition 6 remained a matter of active dispute between the parties until approximately three-quarters of the way through the hearing before Dickson C.
2. For the reasons I have set out in the above summary of how the relevant conduct of both parties is to be viewed, the factors sufficiently cancel out so that I am satisfied that there is no proper basis upon which I could conclude that it would be fair and reasonable to make a costs order in Mr Kelly's favour.

Introduction

1. It is conventionally the case that, on a Notice of Motion seeking a costs order arising out of Class 1 merit proceedings, the unsuccessful party pays the successful party's costs on a "costs follow the event" basis and on the conventional "as agreed or assessed" basis. That is the presumptive position applicable in these circumstances.

The Council's purported Calderbank offer

1. On 1 March 2019, Ms Hudson sent a letter to Mr Kelly by e-mail. The terms of the e-mail and the letter were annexed to Ms Hudson's affidavit of 13 March 2019. The letter set out, at some length, the reasons why the Council considered that Mr Kelly's costs application would be unsuccessful. It is unnecessary for me to address the vast bulk of that which was set out in the letter.
2. However, there are two particular matters requiring observation with respect to this letter. The first is that the letter invited Mr Kelly to withdraw his costs application and indicated that the Council would not seek any order for costs against Mr Kelly for the Council's costs of the costs' motion to the date of that letter. The offer was left open until the close of business on Tuesday 12 March 2019, a period of seven working days after the date of the making of the offer.
3. At the conclusion of the lengthy explanation as to why the Council considered that Mr Kelly was not entitled to succeed on his costs motion, the Council's letter said: In the event that the applicant proceeds with its current motion, in accordance with r 18.6(2) of the Uniform Civil Procedure Rules 2005 we put you on notice that Council will also be seeking a separate order for its costs in the Class 1 proceedings.
4. The letter concluded with the following paragraph: We place you on notice of our intention to rely upon this letter in support of an application that the applicant pay our clients costs of the notice of motion end of the proceedings on an indemnity basis consistent with Calderbank v Calderbank 1075 3 All ER 333.
5. The suggestion was that the Council would seek its costs pursuant to r 18.6(2) of the Uniform Civil Procedure Rules 2005 (the UCPR). That rule is, relevantly, in the following terms: 18.6 Hearing of interlocutory applications (1) ... (2) On the hearing of a party's notice of motion, any other party may make any application in relation to the proceedings. (3) ...
6. It is to be observed that, at the hearing of Mr Kelly's Notice of Motion seeking a costs order in his favour, no such application pursuant to r 18.6(2) of the UCPR was in fact made by the Council.
7. As I pointed out to Dr Smith during the course of the costs hearing before me, the offer made to forgo an application for the Council's costs of the Class 1 hearing before Dickson C was illusory in the sense that, before me, no such application was made.
8. Indeed, apart from the threat of making such an application, it is difficult to see, given the Commissioner's decision and how the costs application was advanced by each party before me, that there would have been any reasonable prospect of a determination that it would have been fair and reasonable, in the context of the tests set by r 3.7 of the Court Rules, for there to have been a costs order in favour of the Council with respect to the merit hearing proceedings.
9. Ms Hudson's letter could not be regarded, under these circumstances, as constituting a valid Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333).

Conclusion on the costs of the costs motion

1. As a consequence, I am satisfied that there is no basis arising from the Council's legal representatives' letter of 1 March 2018 to contemplate making an indemnity costs order, in any terms, against Mr Kelly.
2. It is, therefore, appropriate that the costs order, with respect to this costs application, be that Mr Kelly should pay the Council's costs of the costs application (subject to the limitation on the Council's photocopying costs as earlier discussed).

Orders

1. It follows, from that which I have set out, the orders of the Court are: 1. The Applicant's application for a costs order in respect of the hearing before Dickson C is dismissed; 2. The Applicant is to pay the Respondent's costs of the costs application as agreed or assessed, with the Respondent's photocopying costs capped at 20% of the costs of the photocopying undertaken by the Respondent or on behalf of the Respondent by its legal advisers; and 3. The exhibits before Moore J and the Court Book are returned.

Amendments 25 March 2021 - [59] Mr Kelly's name corrected from 'Kell' to 'Kelly'. 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: 25 March 2021