Nazero Constructions Pty Ltd v North Sydney Council

RESPONDENT: North Sydney City Council FILE NUMBER(S) : 10020 of 2002 CORAM: Lloyd J KEY ISSUES: Costs :- in class 1 - planning appeal - preliminary questions of law - exceptional circumstances - discretion - no order as to costs Land and Environment Court Act 1979 s 69 LEGISLATION CITED: Land and Environment Court Rules 1996 Pt 6 r 1 Land and Environment Practice Direction 1993 cl 10 Supreme Court Rules 1970 Pt 31 r 2 Berk v Woollahra Municipal Council [No. 2] (1992) 78 LGERA 180; CSR Ltd v Fairfield City Council & Anor [2001] NSWLEC 221; Gibson v Mosman Municipal Council (2001) 116 LGERA 397; CASES CITED: McDonald Industries Ltd v Sydney City Council (1980) 43 LGRA 428; Michael Realty Pty Ltd v Carr & Anor [1975] 2 NSWLR 812; Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365; Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333 DATES OF HEARING: 17/09/2002 DATE OF JUDGMENT: 11/06/2002

On 17 September 2002 I heard and determined preliminary questions of law raised in Class 1 proceedings of the Court's jurisdiction. The preliminary questions of law were heard and determined as separate questions pursuant to Pt 31 r 2 of the Supreme Court Rules 1970, which applies in this Court (Land and Environment Court Rules 1996, Pt 6 r 1). My findings on the questions of law in favour of the submissions made by the counsel for the respondent, North Sydney Council ("the council"), were determinative of the whole proceedings, with the result that the appeal against the deemed refusal of applicant's development application was dismissed.
Mr S D Rares SC, who (with Mr A M Pickles) appears for the successful respondent, now applies for the costs of the hearing of the preliminary question of law.
In the exercise of the Court's discretion to make an order for costs under s 69 of the Land and Environment Court Act 1979 it has become the settled practice of the Court to make no order for costs in planning appeals in Class 1 of the Court's jurisdiction unless the circumstances of the case are exceptional. This practice has been developed in decisions of the Court from its earliest days (see, for example, McDonald Industries Ltd v Sydney City Council (1980) 43 LGRA 428 at 445). Subsequent decisions have explained the reason for the practice as being to encourage dissatisfied parties to seek review of planning decisions made by local councils rather than discourage them by burdening them, if unsuccessful, with the risk of an adverse order for costs. (See, for example, Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333 at 334, Berk v Woollahra Municipal Council [No. 2] (1992) 78 LGERA 180 at 184). Clause 10 of the Land and Environment Practice Direction 1993 now relevantly provides: 10. Costs in Classes 1 and 2. The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional. The Practice Direction, however, merely reflects the way in which the Court has in its previous decisions exercised its discretion to make an order for costs in planning appeals.
If orders were to be made for the costs of separate determination of preliminary questions of law in planning appeals, it would defeat the reason for the practice that I have described. Take the present case. The council raised a number of issues, including legal issues as to whether the proposed development was permissible under the terms of the relevant environmental planning instrument. Why should an applicant who appeals to the Court in the belief that it will not have to pay the council's costs, be penalised in costs because the council raises such an issue? It would tend to discourage parties from bringing appeals to the Court if council were to raise legal issues on which they eventually succeed. And why should the applicant be penalised in costs because the parties have taken the advantage of having the legal issues determined separately? The separate determination of a question from any other question under Pt 31 r 2 of the Supreme Court Rules 1970 remains part of the one set of proceedings. I can see no logic in adopting a different approach to the exercise of Court's discretion for costs in such circumstances. What would happen, if, as is sometimes the case, the appeal involves mixed questions of law and fact? It is clear that they all form part of the one set of proceedings. I can see no sense in adopting a different approach to the separate determination of questions of law than the settled approach to the question of costs in the determination of the merits of an appeal.
In Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365, Pearlman J reviewed cases on the practice of the Court in exercising its discretion to make an order for costs of preliminary questions of law in planning appeal. Her Honour held (at 370) that the Court should not be seen to adopt a practice that costs will normally follow the event in the determination of preliminary questions of law and further held that the Practice Direction should apply. Her Honour re-affirmed this approach in CSR Ltd v Fairfield City Council & Anor [2001] NSWLEC 221. Considerations of judicial comity and consistency (Michael Realty Pty Ltd v Carr & Anor [1975] 2 NSWLR 812 at 820) as well as the considerations to which I have referred in the preceding two paragraphs, require that I follow her Honour's decisions in those cases.
I note, however, that in Gibson v Mosman Municipal Council (2001) 116 LGERA 397 Talbot J made an order for the costs of the separate determination of a preliminary question of law in a planning appeal. In that case, however, as appears from the reasons of Talbot J, the question raised was "the issue of jurisdiction of the Court to determine a vital issue in the appeal". The question raised in the present case, however, does not concern the jurisdiction of the Court. Rather, the question relates to whether or not the proposed development was permitted by the planning controls in the relevant environmental planning instrument. That is a question which is clearly within the jurisdiction of the Court.
I turn now to the facts of the present case. The question is whether there are exceptional circumstances which justify the making of an order for costs. The Court previously granted development consent in reliance upon existing use rights for alterations and additions to an existing duplex building. Duplexes were prohibited on the property under the relevant environmental planning instrument at that time. The development consent permitted a change of use to another prohibited use, namely a residential flat building. The consent was granted on the basis that external walls and the roof of the existing building remain. Subsequently, the applicant made an application to modify the consent pursuant to s 96 of the Environmental Planning and Assessment Act 1979 so that the external walls and roof of the existing duplex building could be demolished. A commissioner of the Court held that the Court had no jurisdiction to hear the application for modification because the modified development would not be materially and substantially the same development as that for which development consent had been granted by the Court. The applicant nevertheless went ahead and demolished almost the entire building. The present application is an appeal against the council's deemed refusal of a development application seeking consent to reinstate those parts of the building which should have been retained so as to allow the original development consent to be realised. The preliminary question was, in substance, whether this was now legally permissible under the relevant current planning controls.
Mr Rares SC makes the following submissions in support of his application for costs: (i) the matter was a legal question heard by a judge rather than an ordinary planning appeal heard by a commissioner; (ii) the parties dealt with the legal issue like an ordinary court proceedings that might have been be brought in Class 4 of the Court's jurisdiction; (iii) the Court found as a matter of law that the applicant could not do what it had applied for; (iv) the case so far has involved strictly legal questions; (v) it was ordinary adversarial litigation; (vi) the applicant was seeking, in a legally incompetent way, to effectively challenge what the commissioner had said could not be done, namely, demolish the existing walls and roof, rebuild and utilise the development consent that had been previously granted.
In my opinion there is nothing is these facts which take the matter outside the principles applying to the question of costs and to which I have earlier referred. The applicant was served with a statement of issues by the council which included legal issues. That is not unusual. The legal questions were raised in the cause of a planning appeal. That is not unusual. Those questions were heard and determined separately from the merit issues. That is not unusual. The applicant brought its appeal on the understanding that it would not have to pay the council's costs if it lost. That is not unusual. The determination of the legal issues resolved the whole appeal, thereby saving the parties the additional costs of canvassing the merits of the application. That is not unusual. My conclusion is that there are no exceptional circumstances which would attract an order for costs.
The respondent's application for costs is dismissed.

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