Lend Lease GPT (Rouse Hill) Pty Ltd v Hills Shire Council

Land and Environment Court (NSW)|2010-11-17|Before: Sheahan J, Dr J

Introduction 1His Honour : The Council succeeded in these class 3 proceedings, but the question of costs was reserved. See my judgment of 27 July 2010 - [2010] NSWLEC 130. My substantive decision has been appealed, but the Council now seeks both its costs of and incidental to the proceedings, and its costs on its Notice of Motion for costs. 2The proceedings involved the applicant's challenge to a series of notices of rates and charges levied by the Council on land held by the company to be developed as a " regional town centre " at Rouse Hill.

The Relevant Statutory Regime 3The Local Government Act 1993 (' LG Act' ) makes special provision for rates and charges which are levied at a Council's discretion, but the provisions regarding land rates are quite specific. Section 554 provides that " all land in an area is rateable unless it is exempt from rating ", and s 555 provides for exemptions. The present proceedings were brought under s 555(1)(a), which provides that " land owned by the Crown, not being land held under a lease for private purposes " qualifies for exemption from land rates. Section 560(2) provides (subject to a non-applicable exception) that the lessee of land owned by the Crown is liable to pay such rates to the Council. Section 574 provides for a right of appeal against a rate notice. 4Counsel for the parties agree that this is the first case in which a costs order has been sought in proceedings brought pursuant to s 574 of the LG Act .

The Relevant History 5The facts and circumstances of the challenge were set out in great detail in my earlier judgment and need not be repeated here, but, put shortly, the relevant lands were held under a commercial arrangement, agreed by the parties to be in the nature of a lease from the Crown to the company. 6Under the arrangement, the developer took full responsibility to carry out the agreed development, accepted all risks associated with so doing, and guaranteed a substantial financial return to the Minister and the Government over a ten year period. 7There was no significant difference between the parties as to the principles which apply to the granting of a rating exemption, but a serious difference existed between them on the correct characterisation of the manner in which, and the purpose for which, the subject lands were held at relevant times. 8The Council submitted that the purpose and functions of the applicant under the arrangement were not of a type in which the Crown would normally be involved, but were part of (as I noted at [9] and [91]) " essentially a private sector project facilitated and encouraged through the Government's making available the necessary land ". (See Sydney City Council v Garbett Pty Ltd ("Garbett") (1993) 80 LGERA 289, at 297). 9The applicant contended, on the other hand, that it was holding and using the land for a public and not a private purpose, albeit that it may make an incidental private profit in fulfilling its part of the arrangement. 10In the end, the Council's submissions prevailed, and I held that the closest analogy to the arrangement involved in this case was that which was to be found in Garbett . The private purpose of the applicant predominated over, and could not be seen as subsidiary to, the public purpose of the government in promoting orderly development, and facilitating the development of community infrastructure. Such development is not a function the Crown ordinarily performs, whereas ensuring it occurs, and facilitating and supervising it, may be (see pars [100]-[102] of my judgment). 11My conclusion was that the rating exemption provided for in s 555(1)(a) of the LG Act should not be extended to the land held under the arrangement, and the applicant's appeals against the rate notices were, therefore, dismissed.

The Costs Regime 12Costs in this court are governed by s 98 of the Civil Procedure Act 2005 which provides that, subject to rules of the court, or the provisions of any Act, costs are in the discretion of the court. 13Paragraph 42.1 of the Uniform Civil Procedure Rules 2005 ('UCPR') sets out the general rule that costs follow the event, unless some other order should be made. By virtue of UCPR Rule 1.5 and Schedule 1, r 42.1 does not apply to class 3 proceedings. However, r 3.7(1) of the Land and Environment Court Rules 2007 clearly applies to specified proceedings in class 3 of the court's jurisdiction, including appeals and applications under s 574 of the LG ACT . The parties agree that it applies to the present proceedings. 14Rule 3.7 replaced the former Part 16 rule 4, which provided for the assessment of costs orders as " fair and reasonable " to be made " in the circumstances of the particular case ". That last qualification does not appear in the new rule. Rule 3.7(2) makes it clear that the court must consider any order for costs to be " fair and reasonable in the circumstances " (simpliciter!). 15Rule 3.7(3) lists certain circumstances which the court might consider justify an order on a fair and reasonable basis. Rule 3.7(3)(a) provides: "(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". 16Sub paragraphs (b)-(f) of r 3.7(3) set out considerations focussing particularly on the " unreasonable " conduct of a party as a basis for a costs order. In this case no issue of such conduct arises, and the case falls to be determined by the provisions of r 3.7(3)(a).

The Competing Submissions 17The respondent Council submits that the presumption in favour of " no order as to costs " is displaced in the circumstances of the present case. The question before the court at the substantive hearing was not a question of merit, but a strict legal question involving the application of a statutory exemption, namely the question whether the land was held under an arrangement other than " a lease for private purposes ". The proceeding, therefore, involved the determination exclusively of a question of law, or no less than a mixed question of fact and law. The resolution of that question disposed of the entire proceeding. 18The applicant (submissions, par 3) accepts that the proceedings could come within r 3.7(3)(a), but urges care in attaching weight to the characterisation of the proceedings. Section 574 confers a direct right of appeal and is " singled out for inclusion " in the " no costs " regime (r 3.7(1)(c)(iv), and Tp4, LL43-46), leading to a conclusion that is " fair and reasonable " not to award costs to the Council. 19In Universal Childcare Pty Ltd v Leichhardt Municipal Council ("Universal") [2008] NSWLEC 277, I expressed the view that r 3.7(3) derived from " indicative guidelines " that had evolved in the caselaw to assist in making consistent the exercise of the costs discretion. See also Preston CJ in Grant v Kiama Municipal Council ("Grant") [2006] NSWLEC 70, at [15], and any number of cases (listed in the respondent's submissions, par 11), which deal with questions of law arising either as preliminary questions in class 1 - where the answer to the question may dispose of the whole case without a merits hearing - or in appeals under s 56A (such as my decision in Sky Design and Concepts Pty Ltd v Pittwater Council (No.5) (" Sky Design ") [2009] NSWLEC 174). 20The Council's submission is that the present case is even stronger than any of those cases because it involved no considerations of merit at all. The question of law at the centre of the proceedings was the only question in the proceedings. The proceedings should be regarded as akin to ordinary revenue litigation, where the court is called upon to determine whether or not the applicant is liable pursuant to a particular statutory provision. Dr Kildea submits that the present case fits my description (in Sky Design at [14]) of " a serious adversarial proceeding involving argument of legal principles, in which the traditional 'costs follow the event' is the more apposite principle ". 21In oral argument, Dr Kildea also took the court to the decision of Talbot J in Teller Properties Pty Ltd v Randwick City Council (" Teller ") (1994) 84 LGERA 369. The argument raised in Teller was that the same question at the centre of a class 1 or class 2 appeal may well have been brought up for consideration in a class 4 matter seeking declaratory relief, where the tendency would always be for the court to exercise its discretion in favour of the successful party. The basis put to His Honour was that an appeal based solely on merit was an extension of the administrative process and, absent any unreasonable or disentitling conduct which would constitute " exceptional circumstances " (under the old formulation of the costs principles), each party would be expected to bear its own costs. 22His Honour examined some apparently inconsistent authority within the court, and then said this (at 371): "Where questions of law only are referred to a judge, then the court is, in effect, being asked to make a declaration in regard to the law. The alternative would be for either party to commence class 4 proceedings. For procedural reasons, this is often done, even where there are class 1 or class 2 proceedings already on foot. Parties should not be forced to do this solely to achieve a result with costs. Such a dispute is not confined to the mere exercise of discretion based on merit. It is a determination of the legal rights between the parties. There is no reason, in my opinion, why, in those circumstances, the question of costs should not be decided by the exercise of the court's discretion in the normal way. This, I suggest, explains the reason why Stein J had little difficulty with principle. Where there are mixed questions of fact and law, the position is not so clear. I do not propose to enter into that question in this case, as it is not necessary to do so. I suggest that the dictum of Bignold J could be applicable in many of those cases. The applicant was wholly successful in the determination of the question of law and, in the circumstances, is entitled to an order for costs including costs thrown away by the decision of the Council not to rely on the issues of merit." (See also His Honour's commentary on the principles, in his judgment in NSW Golf Club Ltd v Valuer General [2007] NSWLEC 322). 23In his submissions on the applicant's behalf, Mr Free focussed on the fact that a specific reference was made to appeals such as this in r 3.7(1)(c)(iv). Unless the presumptive rule can be displaced by considerations " of sufficient weight to overcome " it, there will be no order as to costs - Port Stephens Council v Sansom ("Sansom") (2007) 156 LGERA 125 (at 141) per Spigelman CJ, with whom four other judges in the Court of Appeal agreed. It is to be noted that Sansom was decided before the introduction of rule 3.7(3). 24Rule 3.7(3) says only that the court " might consider " the making of a costs order to be fair and reasonable. It does not provide that such proceedings are to be treated in every case as " outside the costs regime ". Nor does it mean that it is necessarily, or even usually, " fair and reasonable " to make an order in such cases. 25Mr Free says (submissions, par 5) that " it is inappropriate to treat the presence of one of the circumstances in r 3.7(3) as having determinative or even presumptive weight ", and he relies upon the following comments of Biscoe J in Arden Anglican School v Hornsby Shire Council (2008) 158 LGERA 224, at [9]-[10] to support his submission that fitting the rule " in a technical sense " is not sufficient: "9. In the context of the presumptive rule that there will be no order as to costs in planning appeals, the power to make a costs order is in the broadest of terms, that is, what is "fair and reasonable in the circumstances". All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight. These principles were identified in the context of the former Part 16 r 4 by the Court of Appeal in Port Stephens Council v Sansom (2007) 156 LGERA 125 at [48], [53] and [54] and Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council (2007) 156 LGERA 150 at [33] and [35]. Those judgments were delivered on the same day by an identically constituted Bench of five judges. Spigelman CJ delivered the leading judgment in each case. The presence of the words "in the particular circumstances of the case" in the old rule influenced his Honour to hold that a general characterisation of proceedings such as "merits review" or "capacity", cannot be determinative or, indeed, entitled to presumptive weight: Sansom [60]. In the present case, there was no suggestion that the absence of these words from the new rule bears on the outcome. 10. One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes: Sansom at [26]; Thaina at [65]. In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, that persons generally should not be discouraged from exercising their rights of appeal via the prospect of an adverse costs order: Sansom at [22] - [23]. This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation..." 26Biscoe J went on to quote some further paragraphs ([71]-[74]) from Spigelman CJ's judgment in Sansom which explained the point. In O'Keefe v Water Administration Ministerial Corporation (No.2) [2010] NSWLEC 89, Pepper J referred to His Honour's decision in Arden , but found that the class 3 proceedings before her were not " adversarial ", and that there should be no order as to costs. Each case turns on its own facts and circumstances. 27Mr Free contends (par 6) that " it would be an odd result if r 3.7(3)(a) had the effect of reversing the 'no costs' presumption in respect of a class of proceedings that are included in the operation of r 3.7 by express reference ", as it would constitute a significant discouragement to prospective appellants. (The " discouragement principle " is fulsomely discussed by Biscoe J in Maurici v Chief Commissioner of State Revenue (No.8) (2007) 155 LGERA 115). Further, Mr Free distinguishes Teller on the basis that it was a separate determination of a question of law, but his argument appears to me, with respect, to point to a distinction without a difference. Likewise with his detailed attempts to distinguish (in submissions, pars 9-15) the other cases relied upon by Dr Kildea, including Grant . 28Mr Free's written submissions conclude (par 16) with a plea that the court consider the following features of the present case as " militating against the making of an order for costs ", having regard to the factors in r 3.7(3): (a) that Lend Lease did not act unreasonably in the commencement or conduct of the proceedings; (b) that Lend Lease conducted the proceedings with due expedition and efficiency and did not delay in providing information or documents; (c) that there was no significant dispute between the parties about the principles to be applied (see my principal judgment at [7], and also [7] above) - it cannot be suggested that the company adopted any irrational position or wasted the court's time; (d)Lend Lease acted throughout in good faith and did not engage in any conduct that could " dislodge the presumption " against a costs order.

Consideration 29As already noted, all these cases, albeit that this may be the first involving a s 574 application, turn on their own particular facts and circumstances. 30On the facts and circumstances of this matter, and with great respect to the well marshalled arguments put by Mr Free for the applicant company, the submissions made on Council's behalf by Dr Kildea are clearly to be preferred. 31This matter is indeed akin to revenue litigation. It concerned a dispute of some commercial import to both parties, neither of which, as sophisticated and well-resourced litigants, would normally be thought to be an appropriate object of the non-discouragement principle when it comes to deciding the burden of costs. 32The applicant may well assert the four " militating " factors recorded in par [28] above, but costs are compensatory rather than punitive. Latoudis v Casey (1990) 170 CLR 534. Courts will often consider allegations of unreasonable or disentitling conduct, but none are made in this matter ([16] above), and refusal to order costs against a party is not a decision to be made to somehow reward a party for " good " conduct. If it were so, a professed " model litigant " would win all its costs disputes, regardless of merit. 33Clearly this is a case where costs should follow the event, the event here being the Council's successful defence of its rates notices against the company's claim for exemption.

Conclusion and Order 34The applicant is ordered to pay the respondent's costs of both the substantive proceedings, and the hearing on the respondent's application for costs.

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: 20 April 2011

(2008) 158 LGERA 224

(2007) 155 LGERA 115

(2007) 156 LGERA 125

(2007) 156 LGERA 150

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