Ogilvie v Rovest Holdings Pty Ltd

Land and Environment Court (NSW)|2023-06-22|Before: Moore J, Mr J

Solicitors: Mills Oakley (Applicant) Maddocks Lawyers (First Respondent) Pikes & Verekers Lawyers (Second Respondent) File Number(s): 179897 of 2020 Publication restriction: No

TABLE OF CONTENTS Introduction Representation The written submissions The hearing The evidence Discretion on giving effect to my determinations The written submissions Introduction The Company's submissions The Applicant's submissions The Company's submissions in reply Consideration of discretionary outcomes The supplementary hearings on the draft orders The responses to the proposed draft orders The first supplementary hearing on discretion The second supplementary hearing on discretion Costs Introduction The Company's written submissions on costs The Council's written submissions on costs The Company's written reply submissions on costs The oral submissions The Company's submissions The Council's submissions Consideration Costs of the supplementary discretion hearings Introduction Consideration Orders

Introduction

On about 23 December 2020, Rovest Holdings Pty Ltd (the Company) made application to Blayney Shire Council (the Council). The first element of this application was to seek development consent to use the site of the former Blayney Bowling Club as a motel.
The second element sought consent pursuant to s 68 of the Local Government Act 1993 (the Local Government Act) for approval for the installation of prefabricated modular units on the site, with these modular units to form the accommodation facilities to be operated as the motel.
Both elements of the application were made pursuant to s 4.12 of the Environmental Planning and Assessment Act 1979 (the EPA Act), a provision which permits a single development application to be made for consent to carry out development and to carry out nominated forms of activity for which consent is necessary as a consequence of the operation of s 68 of the Local Government Act.
On 10 August 2021, the Council approved the Development Application to use the site, and also approved the modular units and associated facilities to be installed and/or constructed on the site to form the motel.
On 2 November 2021, Mr Peter Ogilvie (the Applicant) commenced these Class 4 proceedings, challenging the validity of the Council's approval.
The primary argument advanced on behalf of the Applicant was that the modules were to be classified as "buildings" (and thus requiring development consent pursuant to the EPA Act) rather than "movable dwellings" as defined in the Dictionary to the Local Government Act (this being the position advanced on behalf of the Company).
It is to be noted that the Applicant did not seek any interim restraint being imposed on the Company conducting installation and/or construction activities on the site. As a result, the Company was free to act on the development consent for the use of the site and, more importantly, the Local Government Act approval for the installation and/or construction activities necessary to establish its proposed motel on the site.
On 16 March 2023, I handed down my decision (Ogilvie v Rovest Holdings Pty Ltd [2023] NSWLEC 17 ‑ my principal decision). I concluded that the consent granted by the Council was invalidly given for two reasons.
For the purposes of understanding the matters that are dealt with in this decision concerning the exercise of discretion based on the findings of invalidity and concerning costs of the hearing arising out of my principal decision, familiarity with my principal decision is assumed.

Representation

The Applicant was represented at the primary hearing on discretion and costs (as he had been at the hearing giving rise to my principal decision) by Mr T To, barrister. Mr To's participation in this supplementary hearing was confined to the phase addressing questions of discretionary relief. As two further supplementary hearings were necessary on the terms of the discretionary outcome orders, the Applicant was then represented by Mr J Oldknow, solicitor.
The Company was represented by Mr M Wright SC. Mr Wright participated in both phases of this supplementary hearing. Mr Wright also represented the Company at the two further supplementary hearings on discretion.
As the Council had filed a submitting appearance save as to costs, its solicitor, Mr T Ward, took no part in the first phase of the discretion hearing, but participated for the purposes of resisting the proposal that the Council should be ordered to pay any of the Applicant's costs of the proceedings.

The written submissions

Written submissions were provided in advance of the principal supplementary hearing. Those written submissions comprehensively and succinctly addressed the matters relevantly in contest between the pairings of the parties as earlier noted. Given the comprehensive nature of the various written submissions and the comparative brevity of the hearing, with respect to the two aspects in contention between the parties in contest, it is appropriate to reproduce, in the relevant element of this decision, the entirety of the written submissions addressing that element on each of these positions. As will be seen from that which follows, this decision is divided into two distinct parts, reflecting the nature of the separate discretionary relief and costs' contests requiring determination.

The hearing

The primary supplementary hearing in these proceedings, addressing both discretion and costs, was, effectively, in two separate phases. The two phases of this hearing were conducted efficiently and were completed in less than two hours in total.
The first phase, which addressed matters requiring resolution as to what were to be the functional outcomes arising from my principal decision, required consideration of the written and oral submissions made by Mr Wright and Mr To on what should be the functional process arising with respect to addressing the two separate bases upon which I had determined that the Council's approval of the Company's proposed motel development was invalid.
Second, given that there was acceptance by both the Company and the Council that the Applicant was entitled to his costs of the proceedings (and there being no submission by Mr To that the Applicant was entitled to his costs on other than the ordinary basis), there was a separate contest between the Company and the Council as to whether or not the appropriate order for the payment of the Applicant's costs should be a joint liability of the Company and the Council (the position proposed for the Company), or whether the Company should be bear sole liability for the Applicant's costs (the position advanced by the Council). It is to be noted that the fallback position advanced for the Council was that, if the Council was to bear some of the burden of paying the Applicant's costs, there should be an apportionment of those costs resulting in the Council's share being less than 50% of those costs.
As a result of these two distinct issues requiring resolution, this hearing was effectively conducted in two separate phases, with that addressing questions of discretionary outcomes taking place first.

The evidence

The Applicant's evidence comprised an affidavit of Ms Amelia Adams dated 8 May 2023.
The First Respondent's evidence comprised affidavits from:

Mr David Walker dated 14 April 2023;
Mr Adam Goodsir dated 17 April 2023;
Mr Brendan Rouse dated 17 April 2023.

None of those who had deposed the affidavits listed above were required for cross‑examination.
The First Respondent also tendered a bundle of documents exhibited to Mr Rouse's affidavit. This became Exhibit 1.

Introduction

The phase of the hearing which addressed the question of discretion is dealt with in more detail after I set out below the written submissions on discretion (being submissions on behalf of the Company; response submissions on behalf of the Applicant; and reply submissions on behalf the Company). The relevant elements of those written submissions are reproduced below (noting that preambular material has been omitted, and those matters relating to the question of the Applicant's costs are addressed in the second part of this decision dealing with that separate topic).

The Company's submissions

The written submissions for the Company on the question of how I should exercise my discretion in light of my two findings of invalidity concerning the development consent granted by the Council were in the following terms (footnotes omitted): Status of the works at the Site 3. The First Respondent has taken steps to commence and carry out the works approved under the Consent and the s 68 Approval following the grant of consent on 10 August 2021. 4. In his affidavits dated 4 December 2022 (Second Goodsir Affidavit) and 17 April 2023 (Third Goodsir Affidavit), Adam Goodsir, the First Respondent's project manager, deposed that: 4.1 In August and September 2022, preparatory works were carried out to install the lead‑in services at the Site, pour the foundations, and construct the footings for the Modular Units; 4.2 In October 2022, 23 of the 26 Modular Units were delivered to the Site and craned into position; 4.3 In December 2022, the Modular Units were connected to services, including electricity, water, sewer and stormwater, and initial landscaping works were undertaken; 4.4 In November 2022, the slabs for the verandahs were poured; 4.5 In January and February 2023: (a) services were installed underneath the carpark, and the eastern side of the carpark was shaped and formed; (b) a further 2 Modular Units were delivered to the Site and installed on the foundations, bringing the total number of installed Units to 25 (out of 26); (c) the power system was upgraded, including via the installation of two new power poles and a new substation; (d) 22 of the verandahs were delivered to the Site and connected to the Modular Units; 4.6 On 3, 9 and 16 March 2023, the concrete was poured for the eastern part of the carpark; and 4.7 On 9 and 10 March 2023, the remainder of the landscaping works were completed, including perimeter planting. 5. However, since the date of the Judgment, all works have been suspended on Site except for those works required to make the Site safe and secure and to ensure that existing rights of carriageway have been maintained. Discretion to refuse or withhold relief 6. By its Amended Summons, the Applicant seeks relief to the following effect: 6.1 declaratory relief in prayer 1; 6.2 an order in prayer 2 that the Consent be set aside; 6.3 a prohibitory injunction permanently restraining the First Respondent from carrying out works under the Consent in prayer 3; and 6.4 a mandatory injunction requiring the First Respondent to demolish and remove all work carried out under the Consent from the Site in prayer 4. 7. The Court's power to grant relief is set out in s 9.46 of the EPA Act: Where the Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach. 8. In exercising its broad discretion under s 9.46 of the EPA Act, the Court may according to the justice of the particular circumstances, soften the application of the rules that would otherwise produce an unjust result in the particular circumstances. The Court may therefore grant such relief or withhold relief. 9. In Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 (Sedevcic), Kirby P identified a number of guidelines applicable to the exercise of the Court's discretion under s 124 (now s 9.46) of the EPA Act. 10. In F Hannan, Street CJ said that the power given under the EPA Act to "make such order as it thinks fit" enabled the Court to "mould the manner of its intervention in such a way as will best meet the practicalities as well as the justice of the situation before it". His Honour continued at 313: … It is the duty of that Court, in formulating "such order as it thinks fit", to have regard at all times to the pursuit of the objects of the Environmental Planning and Assessment Act as set out in s 5. This involves, in appropriate cases, the evaluation of matters extending beyond the mere determination of the rights and matters in dispute between the immediate parties. It involves due weight being given to the public interest and the interests of other affected persons in the overall context of the pursuit of the objects broadly set out in s 5… Exercise of the Court's discretion 11. The exercise of the discretionary power to issue or withhold relief involves the consideration of factors such as: 11.1 the nature of the breach; 11.2 the adverse or beneficial effect of the breach on the environment; 11.3 the conduct the subject of the breach of law; and 11.4 the public interest in the enforcement and administration of the law. 12 In the present circumstances, the Court would not grant the relief sought in prayers 1 to 6 of the Amended Summons, or any relief, for the following reasons: 12.1 firstly, the nature of the breach ‑ the breach is a purely technical breach which is unnoticeable other than to persons well versed in the relevant law; 12.2 secondly, the effect of the breach on the environment ‑ there is no evidence that the breach has any adverse effect on the environment or the amenity of the locality; 12.3 thirdly, the conduct the subject of the breach ‑ (a) there has been no disentitling conduct by the First Respondent, who was entitled in the circumstances to carry out the works the subject of the the granting of the relief would result in substantial hardship to the First Respondent; 12.4 fourthly, the public interest ‑ on balance, the public interest is served by the exercise of discretion to refuse the grant of relief, notwithstanding the general public interest in the proper enforcement of the law. 13. Each of these reasons is addressed in greater detail below. Reason 1 ‑ The breaches are a technical breach only 14. The Courts have held that when assessing discretion, it is relevant to consider whether a breach complained of was "a purely technical breach which was unnoticeable other than to a person well versed in the relevant law". 15. The Court found here that the Council had failed to characterise the Modular Units correctly as buildings with the consequence that consent ought to have been sought for the installation of the Units under the EPA Act, and not the LG Act. 16. This is a technical breach of the law. It is 'technical' in the sense that there is evidence before the Court that the Council undertook an assessment of the Modular Units under the EPA Act including for their use as a motel and in granting consent, was satisfied having regard to the matters in s 4.15 of the EPA Act, that the impacts of the installation and use of the Modular Units were acceptable. 17. In his affidavit dated 14 April 2023 (Walker Affidavit), Mr Walker identifies at paragraphs [14]‑[18] those parts of the Council's Assessment Report where an assessment was made of the Modular Units under the EPA Act. At paragraph [18], he concludes: …In my opinion, subject to his Honour's findings in relation to clause 6.2 of the BLEP, the Council has carefully assessed the impacts arising from the installation of the Modular Units, and their use for the purpose of a motel, as per the heads of consideration in section 4.15 of the EP&A Act. In granting consent to DA4/2021, the Council was satisfied that the environmental impacts of the Proposed Development were acceptable. 18. The breach is similar to that considered by Stein J in Parramatta City Council v R A Motors Pty Ltd where his Honour held that there was no evidence before the Court as to the "effect of the use on the amenity of the area" or the "difference (if any) in planning terms between the sale of used trucks and the sale of used cars". 19. The Council's failure to assess the Development Application correctly having regard to the mandatory matters in cl 6.2, as found at J[113]‑[114], is similarly a technical breach for which there is no evidence of any actual or potential environmental harm. 20. It follows that these technical breaches can be regularised. In particular, Mr Walker identifies at paragraph [21] that he has been instructed by the First Respondent to prepare the following applications: 20.1 an application for a Building Information Certificate (BIC) in relation to the works that have been carried out on the Site, including the installation of the Modular Units, underground services, footpaths, bollard lighting, and works to the existing clubhouse for the purpose of providing communal kitchen/laundry facilities; and 20.2 a new development application seeking consent for the use of the Site for the purpose of a motel. 21. Neither the Applicant nor the Council have filed any evidence disputing the prospect that the breaches may be regularised. The prospect of regularisation is a factor that would be weighed heavily by the Court in exercising its discretion to decline to grant the relief sought in the Amended Summons. Reason 2 ‑ No evidence of adverse environmental impact 22. There is no evidence to suggest that the breaches identified by his Honour in the Judgment give rise to any actual or potential adverse impact to the environment or the amenity of the locality. 23. To the contrary, as Mr Walker says, the Assessment Report indicates that Council was satisfied that the environmental impacts of the works were acceptable. 24. Further, Mr Goodsir outlines the extensive works that would be required to undo the works that have already been carried out at the Site in reliance on the Consent, including: 24.1 the removal of the Modular Units by disconnecting them from services and craning them onto the back of trucks for transportation to an as yet unknown storage facility; 24.2 the use of heavy machinery to cut up the concrete footing pads, footpaths, and carpark, and removal of those concrete sections offsite for crushing; 24.3 the use of large excavators to dig large trenches throughout the Site to manually remove the essential services conduits that have been laid; 24.4 the hiring of an electrician to disconnect the new substation, and potentially the new power poles, for removal offsite; 24.5 the engagement of a demolition Company to rip out the interiors and appliances that have been installed in the main clubhouse building to provide reception, kitchen, laundry and bathroom facilities for the proposed motel; and 24.6 the hiring of labourers to dig up all of the landscaping that has been planted at the Site. 25. Mr Goodsir says that the carrying out of these works would result in a "severe" degree of disturbance to the surface of the Site and that "it is likely that the damage to the surface of the Site would be so significant as to make the Site largely undevelopable in the future". 26. At paragraph [33] of the Walker Affidavit, Mr Walker similarly says that: In my opinion, the carrying out of the decommissioning works described by Mr Goodsir would result in adverse environmental impacts by way of noise and traffic movements that would not occur if the works were left in situ while Rovest seeks to regularise the works via a BIC application and development application for use of the Site as a motel. 27. In these circumstances, there is no utility in making the orders sought in prayers 1 to 6 of the Amended Summons, and the granting of prayer 4 in particular presents a greater risk of adverse impacts to the environment and residential amenity than simply allowing the works to remain in situ while steps are taken by the First Respondent to regularise the development. Reason 3 ‑ The First Respondent's conduct 28. The First Respondent was entitled, as a matter of law, to act on the Consent. 29. The First Respondent defended the proceedings and had reasonably arguable grounds to defend the validity of the Consent. It has conducted the proceedings efficiently. 30. Further, as explained by Mr Rouse in the Rouse Affidavit, there were compelling reasons for the First Respondent to take steps to carry out the development the subject of the Consent. Most significantly, Condition 100 imposed a 5 year limitation period on the operation of the Consent commencing from the date of determination. Mr Rouse explains that this time limit created a financial imperative to commence works as any delays, including to await the final hearing of these proceedings, would significantly impact the commercial viability of the motel enterprise. 31. The First Respondent has not acted in any way to escalate or accelerate its works schedule in order to gain any "forensic advantage" in the proceedings in relation to the status of the works at the time of Judgment. It has been frank and transparent in its conduct in lawfully implementing the Consent. 32. The Applicant knew that the First Respondent was acting on the Consent. 33. There was no dispute that the use of the Site in the B2 zone as a motel was permissible with development consent, nor that consent had been granted for this use. The Applicant's case was premised only on a technical question as to whether the Modular Units came within the definition of "building" in the EPA Act and whether the Modular Units complied with the LG Reg 2005 (a matter found unnecessary to be decided in the Judgment). 34. For his own reasons, the Applicant made the deliberate decision with the benefit of legal advice not to seek an interlocutory injunction to restrain the First Respondent from carrying out work in reliance on the Consent or to seek an expedited hearing. Through the indirect evidence contained in the Affidavit of Amelia Galina Adams dated 8 May 2023, the Applicant asserts that his reasons for not seeking interlocutory relief were: 34.1 the Applicant did not wish, or could not afford, to be exposed to the risk of an adverse costs order in respect of any application for interlocutory injunctive relief; 34.2 the Applicant did not wish, or could not afford, to give the usual undertaking as to damages that would be provided in respect of any interlocutory injunctive relief; and 34.3 the solicitors for the Applicant appear to have advised the Applicant that the First Respondent was carrying out the works at its own risk because the First Respondent was given notice of the Applicant's intention to commence the proceedings by letter dated 15 September 2021, and the proceedings were commenced prior to any physical works being carried out at the Site. 35. The decision in Rossi v Living Choice Australia Ltd (No 3) [2013] 211 LGERA 238 (Rossi) makes clear that a decision to carry out works in reliance on a consent that has been issued "is not disentitling conduct which weighs against it in the balancing exercise I must undertake". 36. Similarly, in Temelkovski v Wright, Pain J said at [33]: In written submission the Applicant's stated that, on the assumption that leave to commence these proceedings is granted and the matter is listed for an early hearing, there would be no need for orders restraining the First Respondent from relying on the consent. Relying on the consent would be at the risk of the First Respondent. I do not agree that is where the risk lies particularly where an application for an expedited hearing is not made. Until such time as a development consent is declared invalid the holder is legally entitled to rely on it. The litigation risk of work continuing would be the Applicant's' in my view particularly given the extent of work undertaken by the First Respondent and her husband. The failure to promptly apply for and obtain an interlocutory injunction has the possible consequence of further work being carried out in reliance on a consent. In exercising its discretion to grant substantive and consequential relief, the Court considers the extent of work completed by a consent holder and the impact a declaration of invalidity of a development consent and any consequential orders would have on her or him. It may well be in an Applicant's interest to apply for an interlocutory injunction to seek to preserve the status quo until the conclusion of the substantive proceedings where an undertaking to stop work or an undertaking to give notice of commencing work is not forthcoming from a consent holder. Such a circumstance was considered by me in Rossi v Living Choice Australia Ltd (No 3) [2013] NSWLEC 46; (2013) 211 LGERA 238 at [400]. In that case I declined to declare a development consent invalid in part because no interlocutory injunction had been applied for and obtained and substantial development work continued while the proceedings were heard and determined. [Emphasis added] 37. The Applicant has been represented throughout the proceedings by very experienced solicitors and counsel. His decision not to seek interlocutory relief or expedition are factors that weighs strongly against the grant of the relief sought in the Amended Summons. 38. Further, the Court now has the benefit of evidence of the substantial hardship that would be suffered by the First Respondent if the Court were to make the orders sought in prayers 1 to 6 of the Amended Summons, particularly the mandatory injunction in prayer 4. 39. As to financial hardship, Mr Goodsir estimates that it would cost the First Respondent approximately $937,475 to demolish and remove the works that have been carried out at the Site pursuant to the Consent, excluding the costs incurred in relation to the storage of the Modular Units and the substation offsite. 40. These costs would be in addition to the $6,480,987 which Mr Rouse says has already been expended by the First Respondent to facilitate the redevelopment of the Site for the purpose of a motel. 41. Further hardship would also arise because the grant of the relief sought by the Applicant would render the First Respondent's proposed 'bricks and mortar' motel on 'Lot 2' commercially unviable, for the reasons given by Mr Rouse at paragraphs [30]‑[32] of his affidavit.39 Reason 4 ‑ The grant of relief is not in the public interest 42. The exercise of discretion in s 9.46 involves due weight being given to the public interest and the interests of other affected persons in the context of the pursuit of the objects of the EPA Act. 43. This is not a case where the First Respondent has sought to win some "private advantage…which others cannot enjoy" or where damage has been (or may be) done to the environment which the "orderly enforcement of environmental law" ought to avoid. 44. Rather, the First Respondent has carried out the works on the Site lawfully pursuant to the Consent, noting the time constraints created by the 5 year limitation period, and has not, in the process of doing so, caused adverse environmental impacts to the Applicant or the public at large. 45. Further, following the delivery of Judgment on 16 March 2023, the First Respondent: 45.1 took immediate actions to cease carrying out any further works under the Consent, other than those works required to make the Site safe, secure, and accessible in accordance with existing rights of carriageway; and 45.2 has taken urgent steps to prepare applications which seek to regularise the works that have been carried out at the Site and the future use of the Site as a motel. 46. If the Court were to grant the relief sought in the Amended Summons without first providing the First Respondent with an opportunity to regularise the development, a number of adverse impacts would flow to third parties, including: 46.1 a loss of potential future jobs created by the operation of the motel; 46.2 an inability to deliver potential economic benefits to the local economy from the creation of jobs and increased patronage of local businesses by patrons of the proposed motel; and 46.3 a potential short fall in accommodation options to service the Blayney area and surrounding districts. Conclusion on discretion 47. In light of the findings in the Judgment, the First Respondent does not seek to rely upon s 25B of the Land and Environment Court Act 1979 but does rely upon the Court's general discretion to grant or withhold relief. 48. The proper exercise of the Court's discretion under s 9.46 requires the Court to "think" about whether any order being sought is "fit" to remedy or restrain the relevant breach, and in doing so, the Court must be satisfied that it is just in the circumstances to make the orders being sought. 49. For the reasons outlined in paragraphs [14]‑[46] above, the Court would, in the proper exercise of its discretion, decline to grant the relief sought in prayers 1 to 6 of the Amended Summons, or any relief. 50. In the alternative, if the Court were minded to grant the relief sought by the Applicant in prayers 1 to 6, that the effect of any such orders be deferred, suspended or otherwise stayed for 12 months to allow the First Respondent to: 50.1 make such further applications as may be necessary to regularise the works that have been carried out at the Site; and 50.2 regularise the use of the Site as a motel. 51. Further in the alternative, the Court would, in accordance with s 9.46(3) of the EPA Act, adjourn the proceedings to enable the Second Respondent to make such applications including those referred to at paragraph [20] above.

The Applicant's submissions

In reply to the above submissions on behalf of the Company, the Applicant's submissions on discretion were in the following terms: Discretion 3. The Amended Summons seeks four substantive aspects of relief: a declaration of invalidity, an order setting aside the Consent, a restraint on the First Respondent on acting on the Consent, and an order requiring demolition of works carried out unlawfully. 4. The Court has a discretion to withhold relief. The broad principles set out in the First Respondent's submissions, at paragraph 6‑11 are not in issue. See, also, Dincel Construction System Pty Ltd v. Penrith City Council [2021] NSWCA 133 at [60]‑[68] (Payne JA, Gleeson and Brereton JJA agreeing). Breaches are not purely technical 5. Contrary to the First Respondent's position, the breaches are not 'purely technical'. The failure to assess the modules under the EPA Act, and to properly consider stormwater matters, each carries with it a real potential for consequences for any resulting development. 6. In the case of Ground 1, the failure to assess the modules as buildings had a consequence that compliance with the National Construction Code/Building Code (BCA) of Australia was not required ‑ it would otherwise be a mandatory requirement, by way of condition of consent: cf. clause 98 of the then applicable Environmental Planning and Assessment Regulation 2000. 7. The First Respondent's planner, Mr Walker, accepts that the modules may not comply with the BCA. (He discusses this topic in the context of a foreshadowed application for a Building Information Certificate). 8. A potential consequence of non‑compliance is that fire safety matters have not been considered in the way that they would be required for buildings. This may have the consequence that separation distances between the modules/buildings need to be increased compared to the arrangement of modules proposed in the development application. This has a consequence both for visual appearance and the numbers of persons who might be able to be accommodated, and hence potential amenity impacts such as noise. 9. This concern was at the heart of the Applicant's objections to the development application ‑ but, because of the way the Council assessed the application, was not thought to be required to be considered, and was not considered. (In this context, it may be noted the First Respondent promoted the position to Council that the modules were not buildings). 10. The Council's conclusion on this issue, if proper consideration were to be undertaken, cannot be safely assumed. This is also because the form of modules and their arrangement may be different to that originally proposed. 11. On Ground 2, the absence of any material in the application to inform consideration of the matters required by clause 6.2(3)(a) and (b) also have the potential to result in non‑satisfaction and/or a different arrangement in order to attempt to secure satisfaction. 12. For example, this could mean that portions of the site are not rendered impermeable, so as to increase the water permeable surfaces such that it can be said the design has "maximised the use": cf. sub‑clause (3)(a). It potentially alsomeans that the on‑site detention basin proposed in the development application, may change in size and location, including being located above ground, or be supplemented with another structure, in order to provide additional capacity for retention for use as an alternative water supply: cf. sub‑clause (3)(b), with resulting implications for the layout of the site. 13. Thus, the breaches are not 'purely technical'. Effects of breach on the environment 14. The breaches have potential impacts on the environment, but it is not confined to whether the works carried out to date create themselves create impacts, or the impacts from removal. 15. The relevant impacts extend to the prospect that a differing form of development may be necessary to satisfy the necessary requirements, with more beneficial environmental outcomes, compared to the present, as outlined above. 16. The First Respondent also relies on evidence of the works required to remove the modules and demolish supporting elements. However, the Court would find, on the First Respondent's own evidence, that removal of the modules does not require substantial work, or time, to effect. 17. As set out further below, the Applicant does not oppose an opportunity for regularisation. Orders for removal and demolition can be framed to be subject to regularisation, within a reasonable time period. Disentitling conduct 18. There is no disentitling conduct on the part of either the Applicant or the First Respondent. 19. It is accepted that no interlocutory injunction was sought. The entirely reasonable reason for this is explained in the affidavit of Amelia Galina Adams affirmed 8 May 2023, particularly paragraphs 17, 19‑21. 20. The First Respondent acted on the Consent, some 11 months after being put on notice of potential legal challenge. It was entitled to do so, but equally did so with knowledge of the risk that such work might be held to be unlawful, and subject to the potential that an order for demolition might be made. 21. The First Respondent continued to act on the Consent following the warning of the Court on 22 November 2022, that continuing beyond then or beyond the hearing would be at its own risk. The considerable works undertaken following this warning are set out in the Affidavit of Adam James Goodsir affirmed 17 April 2023 at paragraph 7. 22. The First Respondent's apparent reliance on the time‑limited nature of the Consent is more illusory than real, as the factual context shows. The First Respondent always intended that the development would be operated permanently, but was content to amend its application to propose a time limit to secure the initial grant of consent: see e‑mail chain from Mr Walker to Mr Dicker between 11 June and 16 June 2021. 23. The First Respondent also seeks to mount a case on 'hardship'. Its evidence does not demonstrate this; rather, there may be a cost to effect removal and demolition, but nothing to substantiate how that cost necessarily results in hardship, particularly when an opportunity for regularisation is sought by the First Respondent. It also may be compared with the millions of dollars of profit it said to Council it would make from the operation. 24. Further, any risk associated with framing another motel use to be reliant on the present use is a result of the First Respondent's choices, presumably made deliberately, about how to structure its affairs. Other matters 25. The First Respondent accepts, appropriately, that the s 25B of the Land and Environment Court Act 1979 should not be relied upon in the circumstances of this case. 26. This is correct given the failures of consideration implicitly in the upholding of Grounds 1 and 2, and the necessity that a proper consideration by Council is necessarily multi‑factorial, and a balancing exercise. See, Hoxton Park Residents Action Group Inc v. Liverpool City Council (No 3) (2012) 190 LGERA 119 at [40] (Biscoe J). It is further made inappropriate by the prospect that elements of the development may need to be adjusted in order to satisfy a consent authority of the required matters. 27. There is no reason to withhold relief in terms of prayers 1‑3 of the Amended Summons. Declarations and orders in these terms will crystallise the Court's findings. 28. The Applicant does not oppose the First Respondent being given an opportunity 'regularise' what has been undertaken. He sees this as a balanced outcome, given that no interlocutory relief was sought, and given that the First Respondent commenced to implement the Consent (albeit with knowledge of the risks of so doing). The nature of the development, and the ready ability of the modules to be removed (eg. in as little as 7 days) is also a factor. 29. An order requiring removal of the modules and demolition of works undertaken should be made, but can be made subject to an opportunity to regularise the use and works, with an appropriate time period (and assuming an appropriate assurance is given that these applications will be pursued). 6 months is not inappropriate, allowing for time for assessment by Council. Liberty to apply to vary the time period may be appropriate, should the prospect of delays or merit appeals from such applications prove necessary.

The Company's submissions in reply

Reply submissions were provided on behalf of the Company to those which had been submitted on behalf of the Applicant concerning discretion. Those reply submissions were in the following terms: Introduction 1. In his outline of written submissions filed 24 May 2023 (AS), the Applicant concedes that the First Respondent should be "given an opportunity [to] 'regularise' what has been undertaken" and further says that this would be a "balanced outcome, given that no interlocutory relief was sought". However, he maintains that the relief sought in prayers 1 to 3 of the Amended Summons should still be granted. 2. The Applicant asserts: 2.1 in relation to Ground 1, the Court cannot be satisfied that the development, once regularised, will be identical to that which is currently constructed, for example, because the configuration of the Modular Units might be subject to change; and 2.2 in relation to Ground 2, the failure of the Second Respondent properly to consider clause 6.2(3)(a) and (b) means that certain potential benefits may not be realised because, for example, greater opportunities to "maximise the use of permeable surfaces" may be lost. 3. These submissions must be considered in the context of the balancing exercise that the Court is required to undertake under s 9.46 of the EP&A Act, which is concerned with imposing orders which are "fit" and "just" to remedy or restrain the relevant breach. For the reasons set out in the FRS, in the proper exercise of its discretion, the Court would decline to grant the relief sought in prayers 1 to 4 of the Amended Summons, or any relief. 4. Contrary to AS [5], the test whether a breach is technical does not ask whether the breach gives rise to "a real potential for consequences for any resulting development". Any breach may have potential consequences. Rather, the question is whether the breach gives rise to any actual or potential environmental harm or adverse impacts on the amenity of an area. 5. Contrary to AS [11], the Court did not find that there was an "absence of any material" before the Second Respondent to inform its consideration of the matters required by clauses 6.2(3)(a) and (b) of the BLEP. As outlined at FRS [62]‑[63], the Judgment does not disclose any findings against the First Respondent. The legal error found at J[113]‑[114] was caused solely by the Second Respondent. 6. At AS [14], the Applicant asserts that "[t]he breaches have potential impacts on the environment". There is no evidence of these asserted potential impacts. They are matters to be considered in the Second Respondent's assessment of the BIC Application and the Use DA. 7. In response to AS [20]‑[21], the Applicant claims incorrectly that the First Respondent assumed the "risk" of carrying out works in reliance on the Consent while the proceedings were on foot. It was the Applicant who elected not to seek interlocutory injunctive relief or an expedited hearing. The First Respondent has been free to act on the Consent and the Local Government Act approval. Applications to regularise the works have now been lodged with the Second Respondent 8. As foreshadowed in the Walker Affidavit and at FRS [20], on the instructions of the First Respondent, Premise has now lodged the following applications with the Second Respondent: 8.1 on 14 April 2023, a new development application seeking consent for the use of the Site for the purpose of a motel DA2023/55 and Portal Application Number PAN‑322735 (the Use DA); and 8.2 on 24 May 2023, an application for a Building Information Certificate BIC‑17086 (BIC Application), in relation to the works that have been carried out on the Site, including the installation of the Modular Units, underground services, footpaths, bollard lighting, and works to the existing clubhouse for the purpose of providing communal kitchen/ laundry facilities. Orders sought by the First Respondent 9. The First Respondent refers to paragraphs FSR [49]‑[51] as to the question of relief.

Consideration of discretionary outcomes

At the commencement of the discretion phase of the hearing, I had indicated that I had carefully read the written submissions on behalf of the Company and those of the Applicant concerning how the question of discretion should be treated, in light of the findings of invalidity which I had set out in my principal judgment.
I indicated that, having done so, it was appropriate that the parties should address me on the question of how I should approach crafting orders to reflect this concession from the Applicant. Under these circumstances, I indicated to Mr Wright that, although I had not reached any final conclusion that the submissions for the Company proposing that there be no relief granted should be rejected, in light of the Applicant's concession and the applications made to the Council on behalf the Company, he would need to address me further to persuade me that no relief should be granted. For the reasons which follow, the hearing turned to address a practical outcome being achieved.
For the reasons explained in my principal judgment, the erection and operation of a motel on the site is permissible, as such use is specified in the Land Use Table of the Blayney Local Environment Plan 2012 (the LEP), within each of the zones, which, together, encompass the whole of the site. In the written and oral submissions for the Applicant on the question of discretion as to what consequences should flow from the invalidity of the development consent granted by the Council to the Company, it is conceded that it is appropriate to permit the Company to be given an opportunity to regularise its position.
The appropriate course of action for this, as also conceded on behalf of the Applicant, would be for the Company to apply to the Council for a Building Information Certificate and, if such an application was made and is successful, for the Company to apply to be given consent for the use of the structures for the purposes of a motel. Such is the entirely conventional process (Ireland v Cessnock Council (1999) 110 LGERA 311; [1999] NSWLEC 250) in such circumstances where regularisation of illegal and/or invalidly consented to development is sought. As a consequence, broader principles of whether or not discretion should be exercised at all (in the fashion considered in Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335) do not arise.
In his written and oral submissions, Mr To addressed the matters which, he submitted, gave rise to matters which, as a consequence of an assessment pursuant to the EPA Act, would necessarily be addressed by the Council in the two‑step Building Information Certificate and Consent for Use process before the structures could be approved and their use as a motel addressed.
For reasons set out in Mr To's written submissions, there are issues which potentially arise for consideration as part of the two‑step process that is necessary for the Council to follow before it would be appropriate to regularise the Company's use of the structures as a motel. The appropriateness of requiring such a two‑step approval process to be engaged in by applications to the Council from the Company, would ensure that these matters were appropriately addressed and, if modification of the Company's actually constructed development was necessary prior to the Company being permitted to use the structures for the purposes of a motel, any necessary modifications to those structures would be effected. The potentiality for such modifications arising would be appropriately addressed through the two‑step process. The desirability of undertaking that process for the reasons outlined in the submissions on behalf of the Applicant is, in my assessment, self‑evident and provides a proper basis for concluding that it would be inappropriate to exercise the available discretion and decline to order any contingent relief, as is now submitted for the Company to be appropriate.
Even if on a contingent basis, the Company has already made the necessary applications to the Council. I had been made aware of these applications by virtue of the Company's legal representatives having e‑mailed to my Associate and to the Applicant's legal representatives a copy of a screenshot from the Planning Portal showing that these applications had been made; and the dates upon which they had been made; and foreshadowing that the screenshot would be tendered at the hearing. The screenshot of the Planning Portal was subsequently tendered, becoming Exhibit 2.
Mr Wright indicated the Company accepted that the appropriate course now to be followed was for there to be a discussion on how the relief should be crafted so as to permit the Company a proper opportunity to pursue successful outcomes of the two applications. Mr To indicated that such a purposive approach to the crafting of relief orders was entirely appropriate.
Mr Wright initially proposed that the Company should have 12 months for the processes to be completed, whilst the position advanced by Mr To for the Applicant was that a shorter period of time, namely, six months, was appropriate.
I indicated that that a more appropriate approach, in my assessment, was to craft the appropriate orders so that, with respect to those aspects of the regime to be established that were contingent on the outcome of the applications to the Council (whether by determination that by the Council or on appeal from the decisions of the Council), the Company should be given liberty to apply to the Court to revisit the terms of any compliance order for demolition and, if the Company was successful in obtaining the necessary approvals, for any demolition order to be discharged.
If this approach was appropriate, I indicated that I would draft orders to that effect and provide them to the parties and give an opportunity for comment on them. If the orders were acceptable for the parties, I would make them in chambers but, if either party wished to be heard further on my draft orders, a short supplementary hearing could be held prior to finalisation of the outcomes of the discretion and costs hearing. Mr Wright and Mr To indicated that this course was acceptable to their clients.
As a result, as I indicated I would do, on 2 June 2023 I had my Associate e‑mail my draft orders to the legal representatives of the parties inviting them to advise me, by the close of business on 7 June 2023, whether orders in those terms were acceptable or whether either (or both) of the active parties wished to be heard further on the terms I proposed.
The e‑mail sent by my Associate on 2 June 2023 was in the following terms: His Honour has prepared a draft of the final orders he would propose to make in these proceedings (save as to the determination of the issue of costs) and has asked me to circulate the terms of these draft orders to the parties (the draft orders being provided to the Second Respondent for information only). His Honour has asked me to indicate that, as he proposed, if there is no indication from either the legal representatives of the Applicant and/or of the First Respondent that they wish to be heard further concerning these proposed orders, his Honour proposes to incorporate the orders in those terms in his final decision. Any proposal that either the Applicant and/or of the First Respondent wishes to be heard further concerning these proposed orders should be provided to me by 4.00 pm on Wednesday 7 June 2023. If there is such a wish to be heard further, his Honour will advise when he can be available for a further short hearing (maximum 30 minutes) at 9.00 am in the following six working days.
The draft orders attached to the e‑mail were in the following terms: 48 The orders of the Court are: Noting that the First Respondent applied to the Second Respondent: (a) on 14 April 2023 for development consent to use the structures erected on, and other associated works undertaken at, 62 Osman Street, Blayney being Lot 1 DP162646, Lot 8 DP505215, Lot 20 DP569741, Lots 11‑14 Section 13 DP758121 and Lot 10 DP1114679 (the site) for the purposes of a motel; and (b) on 24 May 2023 for a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site: (1) The Court declares that the development consent granted by the Second Respondent to the First Respondent on 10 August 2021 ('Development Consent'), in respect of development application no. DA4/2020 ('Development Application') on the site is invalid and of no effect; (2) The Court orders that: (a) the First Respondent, by itself and by its employees, servants and agents, are restrained from carrying out any works under or in accordance with the Development Consent. (b) any works carried out purportedly in reliance on the Development Consent are to be demolished and removed from the site within six (6) months from the date of these orders; (c) order (2)(b) is suspended until the Second Respondent has determined the applications made as noted above; (d) If the Second Respondent determines to issue a Building Information Certificate for the structures erected on, and other associated works undertaken at, the site and grants development consent the structures erected on, and other associated works undertaken at, the site for the purposes of a motel, order (2)(b) is discharged; (e) Liberty to apply in the event that: (i) the Second Respondent refuses the application for a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel and the First Respondent commences proceedings in the Court to appeal against any such refusal; or (ii) the Second Respondent grants a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site subject to conditions and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel subject to conditions and the First Respondent commences proceedings in the Court to appeal against any such condition; (f) Liberty to apply for any extension of time to comply with order (2)(b); (g) The exhibits are returned; and
It is to be observed that, in addition to the above draft orders, a further order would be required addressing the outcome of my consideration of the costs' liabilities ‑ a matter dealt with in the second phase of this discretion and costs decision.

The responses to the proposed draft orders

On 6 June 2023, my Associate received an e‑mail from Ms Adams on behalf of the Applicant. The e‑mail was in the following terms: Dear Associate We confirm that the Applicant does not wish to be heard further in relation to His Honour's proposed orders. The only suggested amendment by the Applicant would be the insertion of the underlined words in draft order 2(d): "(d) If the Second Respondent determines to issue a Building Information Certificate for the structures erected on, and other associated works undertaken at, the site and grants development consent for the use of the structures erected on, and other associated works undertaken at, the site for the purposes of a motel, order (2)(b) is discharged;"
On 7 June 2023, however, my Associate received an e‑mail from Ms O'Mara, on behalf of the Company, indicating that it wished to be heard further on the appropriate terms for the orders addressing the question of discretion.
As a consequence, a short supplementary hearing on this point was listed to be held on 13 June 2023, a date mutually convenient to the representatives of the parties.

The first supplementary hearing on discretion

At the 13 June 2023 short supplementary hearing, the Applicant was represented by Mr J Oldknow, solicitor, and the Company by Mr Wright.
Mr Wright handed up a set of draft orders which the Company proposed were appropriate to be made as the desirable outcome on discretion. Those orders proposed two changes of a comparatively inconsequential nature, those changes suggesting the inserting of words into paragraphs (2)(d) and (e)(i) and (ii). These paragraphs would then read (changes underlined): (2) The Court orders that: (a)‑(c) … (d) if the Second Respondent determines to issue a Building Information Certificate for the structures erected on, and other associated works undertaken at, the site and grants development consent to the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or grants development consent for the purposes of some other permissible use, order (2)(b) is discharged; (e) liberty to apply in the event that: (i) the Second Respondent refuses the application for a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or other permissible use and the First Respondent commences proceedings in the Court to appeal against any such refusal; or (ii) the Second Respondent grants a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site subject to conditions and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or other permissible use subject to conditions and the First Respondent commences proceedings in the Court to appeal against any such condition;
However, of a more detailed nature, Mr Wright proposed that draft order (2)(b) be amended substantially. Order (2)(b) in the draft which I had circulated read: (b) any works carried out purportedly in reliance on the Development Consent are to be demolished and removed from the site within six (6) months from the date of these orders;
The draft proposed by the Company sought to exempt a range of works (by reference to plans proposed to be listed in the order) as not being required to be demolished or removed from the site if the Company's applications to the Council (and on appeal to the Court, if necessary) failed completely. The Company's proposed version of draft order (2)(b) was in the following terms: (b) any works carried out purportedly in reliance on the Development Consent are to be demolished and removed from the site within six (6) months from the date of these orders, except for: i. stormwater infrastructure works, more particularly described in the plans identified at Item 1 of Schedule 1; ii. works to the former Blayney Bowling Club building on Lots 12 and 11, Section 13 DP 758121, more particularly described in the plans identified plans at Item 2 of Schedule 1; iii. electrical work and works to install water and sewer services, more particularly described in the plans identified plans at Item 1 of Schedule 1; iv. waste storage area and other hardstand areas, more particularly described in the plans identified plans at Item 3 of Schedule 1; v. area for loading and unloading, more particularly described in the plans identified plans at Item 4 of Schedule 1; vi. carpark, more particularly described in the plans identified plans at Item 1 and 4 of Schedule 1; and vii. landscaping works, more particularly described in the plans identified plan at Item 5 of Schedule 1.
I indicated to Mr Wright that it was appropriate that the Applicant and his legal representatives should have the opportunity to consider these expansive exclusions and that it would be necessary to hold a second short supplementary hearing on discretion. Mr Wright did not demur from this proposition. As a consequence, the matter was adjourned to a further short hearing on the morning of 22 June 2023. Mr Wright proposed that the Company should provide, on thumb drives to me and to the legal representatives of the Applicant, electronic copies of each of the plans that the Company proposed be exempted from the requirement for demolition or removal from the site.

The second supplementary hearing on discretion

At the further supplementary hearing on discretion which was held on 22 June 2023, I indicated to Mr Wright that I had examined, briefly, all 32 plans which had been delivered to me the afternoon before on a USB thumb drive. I indicated that I was significantly concerned at the prospect of accepting everything shown on those plans as being excluded from any demolition requirement if my proposed draft order (2)(b) eventually became triggered as a consequence of failure of the Company to persuade the Council or the Court that the Company's Building Information Certificate and/or Development Application warranted approval for the Company's use of what had been constructed or installed on the site.
I indicated that the plans appeared to be comprehensive and also appeared to approve elements such as the structures on the site which were clearly to be required to be removed if the Company's applications were ultimately unsuccessful.
I also indicated that it seemed to me that I would be required to undertake a merit assessment of what was proposed to be preserved if I was to consider exempting any of that which existed on the site as a consequence of the Company's reliance on the consent which was to be set aside.
I said that I considered that, quite apart from being an extraordinarily time‑consuming process, it was entirely inappropriate that I be invited to undertake such a task which, clearly, encompassed potentially complex technical matters such as plans involving drainage or effluent disposal.
However, I told Mr Wright that there were, I accepted, some elements of the works undertaken on the site by the Company which might warrant not requiring demolition, even if, overall, the Company was unsuccessful with its Building Information Certificate and/or Development Applications ‑ I instanced the internal alterations to the former Bowling Club building, portion of which had been converted into a reception area and a laundry.
I indicated that I was happy to provide an appropriate opportunity, to be embodied in the liberty provision in my draft order (2)(f), that could be triggered if the Company found itself in circumstances where it was unsuccessful with its applications but where there might be elements of the works carried out on the site by the Company to which the Council (or the Court on appeal, if that arose) agreed might be appropriate to be permitted to remain.
At this point, I drafted and provided to Mr Wright and to Mr Oldknow a form of words which I was prepared to insert into draft order (2)(f) if such an approach was accepted by both the Company and the Applicant as being an appropriate method of addressing this element of the Company's concerns. I invited Mr Wright and Mr Oldknow to seek instructions on such an approach and on the appropriate wording (if the approach was to be adopted). I indicated that, if a form of wording for an addition to draft order (2)(f) was to be agreed to between the Company and the Applicant and such an agreed form of wording was acceptable to me, I would incorporate that approach in my final orders.
However, I also indicated that I would stand the matter over until the morning of 23 June 2023 to permit further argument if agreement was unable to be reached between the Company and the Applicant on such an approach or, if agreement was reached, I considered that the wording was not acceptable.
Later that afternoon, my Associate was advised of a form of wording which had been agreed to by the Company and the Applicant as additional words to be inserted in my draft order (2)(f). I examined that wording, discovering that it was to the effect which I had earlier proposed to the parties taking part in these supplementary discretion hearings. As a consequence, an amendment to my original draft order (2)(f) is incorporated in the final orders on discretion set out below and no nomination of any of the 32 plans proposed by Mr Wright to be incorporated in the orders was now required to be considered for such a purpose.

Introduction

As earlier noted, the Applicant seeks his costs of the proceedings on an ordinary basis. The Applicant's written submissions commenced by confirming this in the following terms: Costs 30. The Applicant notes no submission is made by the First Respondent that he should not have the costs of the proceedings. Costs are sought on the ordinary basis. 31. The Applicant is not concerned about how the costs are ordered as between the First and Second Respondents (including if at all against the Council).
There is no dispute that the Applicant is entitled to his costs, on the ordinary basis, for these proceedings.
There is, however, a genuine dispute between the Company and the Council as to whether or not the Council should be liable for any portion of the costs of the proceedings, despite the fact that the Council had filed a submitting appearance on 16 December 2021 after the Applicant had commenced the proceedings on 2 November 2021.
The position advanced for the Company is that it and the Council should be jointly and severally liable for the Applicant's costs. The Council, however, advances the proposition that the entirety of the costs burden of the proceedings should fall on the Company.

The Company's written submissions on costs

The Company's position on costs is encapsulated by the element of its written submissions filed, to the extent that they addressed the issue of costs in addition to the earlier dealt with question of discretionary relief. The Company's written submissions on costs were in the following terms: Costs 52. The usual rule in Class 4 is that costs follow the event, as reflected in r 42.1(1) of the Uniform Civil Procedure Rules 2005, subject to the wide discretion a court has to determine costs under s 98 of the Civil Procedure Act 2005 (CP Act). 53. In light of the Judgment, the First Respondent makes no submission that the Applicant should not have the benefit of a costs order on the ordinary basis. 54. Costs are compensatory, not punitive. There would be no reasonable basis to order costs on an indemnity basis. Allocation of costs as between the First and Second Respondents 55. In Class 4 proceedings, a council cannot necessarily immunise itself from a costs order by filing a submitting appearance. While the Council in these proceedings filed a submitting appearance on 16 December 2021, it does not follow that the Council should not be ordered to pay costs. 56. What is required is a principled exercise of discretion under s 98 of the CP Act, having regard to all of the circumstances of the case. 57. It is a relevant circumstance that the submitting party caused or contributed to the error to which the proceedings related. 58. As to Ground 1 of the Amended Summons, the Council itself embraced and adopted the characterisation of the Modular Units as not being buildings under the EPA Act. It gave detailed consideration to the characterisation of the Modular Units and determined that the Modular Units were properly the subject of assessment and approval under s 68 of the LG Act. That is squarely the Council's own error. 59. As to Ground 2 of the Amended Summons, the Court was required to consider whether the Second Respondent had failed to form the requisite state of satisfaction required by cl 6.2(3) of the BLEP. 60. Clause 6.2(3) is expressed in the following terms: Development consent must not be granted to development… unless the consent authority is satisfied that… [Emphasis added]. 61. Compliance with cl 6.2(3) is a matter solely within the control of the Second Respondent, it is the mental state of satisfaction of the Council that is the precondition or "essential preliminary" to the exercise of the power to grant consent. 62. This is reflected in paragraphs J[104] to J[114] of the Judgment which make plain that the legal error was caused by the actions of the Second Respondent. For example, his Honour finds at J[108] that: Although the third element of the clause can be seen to be addressed by the assessing officer, there is no evidence contained in the assessing officer's report that any consideration was given to the first and second elements. The assessing officer's report does not set out all the three elements required by cl 6.2 to be considered. 63. Paragraphs J[108] to J[114] do not disclose any finding as against the First Respondent which may be said to have contributed in any way to the legal error caused by the Second Respondent, as found by his Honour at J[113]‑[114]. 64. The lack of consideration of the matters required by cl 6.2(3) are errors caused solely by the Second Respondent. 65. The circumstances are therefore distinguishable from the facts in Lu v Walding (No 3) [2022] NSWLEC 15, which concerned judicial review proceedings commenced by a landowner against their neighbour (the first and Second Respondents) and the Northern Beaches Council. In that case, the Applicant was ultimately successful in establishing legal error due to the failure of the respondent landowners to provide evidence of owners' consent, albeit in circumstances where neither the landowners nor the Council were alive to the error. Pain J was not satisfied that the Council "should have detected the error" and conversely found that the Council was entitled to rely on the documents submitted with the application. On that basis, the respondent landowners were solely liable for the Applicant's' costs of the proceedings. 66. It is also distinguishable from Hy‑Tec Industries (Queensland) Pty Ltd v Tweed Shire Council (No 2) [2020] NSWLEC 5 which concerned judicial review proceedings in which the beneficiary of a development consent sought declarations regarding the operation of that consent granted by the First Respondent, Tweed Shire Council, and an order setting aside a determination of the Second Respondent, the Environmental Protection Authority (EPA), to vary the condition of an Environment Protection Licence. In the primary decision, Pain J found that the council led the EPA into error. Her Honour then relied on this finding to order that the council should be solely responsible for payment of the Applicant's costs. 67. In the present case, it was the Council's errors as found in respect of Grounds 1 and 2 that has given the Applicant cause to have recourse to the Court in respect of the First Respondent's Consent. The Council should therefore be jointly and severally liable for the Applicant's costs of the proceedings.

The Council's written submissions on costs

The Council filed written submissions in response to those advanced on behalf of the Company that the Council should be jointly and severally liable for the Applicant's costs of the proceedings. The Council's written submissions on this point were in the following terms: 1. The Applicant seeks their costs of these proceedings on an ordinary basis. As detailed in the First Respondents submissions, the Applicant did not seek injunctive orders, and so the First Respondent has acted upon its consent. 2. The Applicant in its written submissions accepts that the First Respondent should have an opportunity to regularise those works now undertaken: at para 28. 3. Were the Court minded to exercise its discretion to stay any demolition orders to allow the First Respondent to seek to regularise the development (and those applications were determined favourably), then the consequence would be that these proceedings have been of limited utility. Reply to First Respondent's Written submissions on costs 4. As to paragraph 58, the Second Respondent does not agree that the erroneous characterisation of the Modular Units was 'squarely the Council's own error'; Council relied upon information provided by the First Respondent which sought approval under s 68 of the Local Government Act 1993 as moveable dwellings. 5. Whilst the Second Respondent accepts that the Court has found that the characterisation was incorrect, clearly Council was not totally without a rationale for adopting this characterisation, as demonstrated by the detailed submissions and evidence the First Respondent provided in these proceedings defending the characterisation. 6. As to paragraph 65, the Second Respondent submits that the circumstances in these proceedings are comparable to Lu v Walding (No 3) [2022] NSWLEC 15 (Lu), insofar as the Second Respondent: 6.1 received erroneous information from the First Respondent, being the characterisation of the structures they proposed to erect, and 6.2 filed a submitting appearance at an early stage, whereas the First Respondents actively defending the proceedings. 7. Although the Court has found that the Second Respondent erred in approving the development application, this does not necessitate that the Second Respondent should be liable in costs. The Second Respondent highlights that in Lu the submitting Council was not totally blameless; its own deficient records provided "a secondary explanation for how these unusual circumstances arose" (at 159), noting that; 7.1 The Court held that the error was compounded by the Council's inadequate records in relation to the road reservation. The Council relied on SIX Maps, however, that website has a disclaimer suggesting it should not be so used: Lu v Walding (No 2) at [252]. 7.2 The Council as landowner should have worked out the error: Lu v Walding (No 3) at [115]. 7.3 Council did not ensure that a boundary survey or site plan was provided with the DA despite this being a requirement in Sch 1 Pt 1 cl 2(1)(a) and (2) of the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation): Lu v Walding (No 2) at [253]. 8. Conclusion 9. As to paragraph 67, and in general, the Second Respondent maintains its position (as per its earlier submissions) that it should not be ordered to pay the Applicant's costs of these proceedings. The Applicant's costs of the proceedings should be ordered to be paid by the First Respondent on the basis that they actively defended the proceedings, and their application materials can be seen to have contributed to the error in Ground 1. 10. In the alternative, the Second Respondent submits that were the Court minded to order costs against it, that the majority ought to be apportioned to the First Respondent in light of their active defence of the proceedings. It is open to the Court to apportion costs between unsuccessful parties: see for example Rossi v Living Choice Australia Ltd (No 2)[2015] NSWCA 301.

The Company's written reply submissions on costs

The Company made no written reply submissions on costs.

The Company's submissions

Mr Wright's oral submissions on costs can be summarised briefly, given the comprehensive nature of his written submissions on this matter as earlier set out.
With respect to the finding of invalidity on the basis that the structures installed by the Company at the site were buildings requiring consent pursuant to the EPA Act and ones not capable of approval pursuant to s 68 of the Local Government Act, Mr Wright pointed to the discussion of this point in the council officer's assessment report. This element of the council officer's assessment report demonstrated clearly, he submitted, that the Council had independently considered the question of whether or not an application pursuant to s 68 of the Local Government Act was an appropriate basis upon which to consider the Company's proposed development. This aspect of the assessment report demonstrated, he proposed, that the Council had independently reached that conclusion and had not merely blindly followed any material provided by the Company in support of its application made pursuant to s 68 of the Local Government Act.
With respect to the second upheld complaint of invalidity made by the Applicant (that the Council had failed to consider and reach the relevant mandatory satisfaction of compliance with all matters raised by cl 6.2 of the LEP), Mr Wright submitted that the element of the council officer's assessment report dealing with this clearly demonstrated that the failure was entirely one arising from the Council's processes and that there was no demonstrated defect in the application information provided by the Company capable of leading to a conclusion that the Company had led the Council into error on this point.
These positions led, in summary, to his submission that there should be joint liability between the Company and the Council for the Applicant's costs and that there was no basis as to why there should be anything other than an equal sharing of the liability for those costs.

The Council's submissions

In light of the comprehensive nature of written submissions provided for the Council on the question of costs, the oral submissions made by Mr Ward can also be summarised in short compass.
With respect to the question of whether or not approval was capable of being given to the Company for its proposed motel founded on an application pursuant to s 68 of the Local Government Act, Mr Ward proposed that I should be satisfied that the Council had, in short, been led into that error by the fact that the Council had lodged its application under that statutory provision and had provided supporting documentation on the assumption that the provision provided the appropriate and lawful basis upon which the Council agreed to grant approval. The Council, for this reason, should not be liable for any of the Applicant's costs attributable to this aspect of the proceedings giving rise to my principal decision. With respect to the second basis for my finding of invalidity ‑ the failure to consider and reach the necessary state of satisfaction with respect to each of the elements listed in cl 6.2 of the LEP mandated to be addressed - in response to a question from me concerning the relevant passage of the assessment report, Mr Ward was unable to point to any basis upon which I could conclude that that failure arose from any deficiency in information provided by the Company in support of its application.
Finally, in response to a further question from me concerning the Council's alternative proposition that there should be some differential apportionment for the costs' liability, Mr Ward proposed that the conduct of the substantive hearing and the nature of the matters requiring to be addressed to determine its outcome made it clear that the question of the categorisation of the structures installed on the site by the Company was the primary focus of the dispute and that the Court's question of the deficiency in the Council's consideration of cl 6.2 of the LEP was of lesser importance.
If I concluded that the Council should bear some portion of the Applicant's costs, that proportion should reflect the extent to which the proceedings, giving rise to my principal decision, were engaged by these two issues giving rise to invalidity findings and that this would warrant a differential and lesser apportionment of any costs' burden to the Council.

Consideration

Although Biscoe J set out, in Cutcliffe v Lithgow City Council [2006] NSWLEC 463; (2006) 147 LGERA 330 (Cutcliffe), some general considerations as to whether or not a submitting consent authority should be required to contribute to the costs of successful Class 4 proceedings challenging the validity of a development consent, it is clear (Platford v van Veenendaal (No 2) [2018] NSWLEC 86 per Preston CJ and cited with approval in Lee Environmental Planning Pty Ltd v Reulie Land Co Pty Ltd [2020] NSWCA 254 at [40] per Payne JA, Leeming JA and Simpson AJA agreeing) that which Biscoe J set out in Cutcliffe is not to be regarded as any statement of principles of general application. Each instance where this consideration arises is to be addressed on the facts and circumstances of that case.
Here, for the reasons outlined in my principal decision, the Applicant succeeded on two distinct and separate grounds. The first, that the structures proposed to be (and have now completely been) erected on the site were "buildings" requiring approval pursuant to the EPA Act and were not "structures" capable of being approved pursuant to s 68 of the Local Government Act, arose by virtue of the application made by the Company pursuant to this latter legislation. It is unnecessary, for present costs' attribution purposes, to speculate as to why, and on whose advice, the application was so lodged. It is sufficient that that occurred and that action was defended by the Company acting as the sole contradictor in these proceedings.
The second basis upon which I held that the consent granted to the Company was defective (in a fashion which, in itself, would warrant the consent being set aside) arose entirely as a consequence of the failure of the Council's assessment process to consider all of the elements in cl 6.2 of the LEP mandating that formation of the necessary opinion of satisfaction of all elements in that clause was required before a consent could be granted.
The failure to consider all elements in that provision, and thus address all mandatory potentially relevant requirements of the LEP, is a responsibility that fell to the Council's assessing officer in the first instance. The failure to do so resulted in the decision‑making process to miscarry for the reasons explained in my principal decision.
That responsibility (and hence the triggering of a costs' consequence) lies squarely with the Council's processes. Although the Council did not act as a contradictor on this point, nonetheless, the error giving rise to this separate and sufficient basis upon which invalidity was established lay within the Council's control. It therefore follows that, in these circumstances, the Council should bear portion of the costs of the proceedings.
In reaching this conclusion, it is to be understood that this result arises not in any sense to punish the Council for this failure (costs being compensatory and not punitive), but to acknowledge that the validity of this element of the Applicant's challenge arose as a consequence of the defect in the Council's assessment process. Although the Company was obliged to act as contradictor on this point in order to seek to preserve its development consent, the necessity to do so did not arise as a consequence of any action on behalf of the Company.
For the reasons set out above, I have concluded that the Company and the Council should share liability for the Applicant's costs of the proceedings. It is, therefore, necessary to address the proposition advanced by Mr Ward that there should be a differential apportionment of costs' liability so that the Council should not bear equal responsibility for the Applicant's costs.
It is possible to apportion costs' liability is based on the extent to which issues arise contributing to the complexity of a hearing and the extent to which the hearing is engaged with distinctly different issues (James v Surf Road Nominees [2004] NSWCA 475 ‑ Surf Road Nominees). However, for the reasons noted above in my summary of Mr Wright's oral submissions, I am satisfied that differential apportionment is not appropriate in this instance. It is clear, from the two aspects of the assessment officer's report to which I was referred by Mr Wright, that the Council had independently considered the question of whether s 68 of the Local Government Act was an appropriate vehicle for approval of the Company's proposed development. That independent consideration demonstrated, I am satisfied, that the Council was not led into error in reaching its conclusion that such an application was approvable merely on the basis of material provided by the Company. That position and the fact that Mr Ward was unable to point to any basis upon which I could conclude that the defect in consideration of all elements of cl 6.2 of the LEP arose as a consequence of any act or omission by the Company, together require rejection of the proposition that the Council should bear any lesser proportion of liability for the Applicant's costs.
The appropriate costs' outcome, therefore, is that which has been proposed by the Company, namely, that the Company and the Council should be jointly and severally liable for the Applicant's costs of the proceedings of the primary proceedings.

Introduction

The supplementary discretion hearings arose as a consequence of the Company indicating that it wished to propose amendments to the draft orders which I had provided to the legal representatives of the Applicant and the Company following my first hearing on discretion and costs held on 31 May 2023. Nothing arising out of, or in connection with, those two further supplementary hearings on discretion could, in any fashion, be regarded as arising from any error of the Council, and the Council took no part in those hearings (although the Council had been provided with all relevant material relating to what the Company has sought through those hearings).

Consideration

I have earlier dealt with the general proposition advanced for the Company that the Company and the Council should be jointly liable for the Applicant's costs of the substantive proceedings. I have explained why this should be the position. However, the reasoning which I have there set out could not apply on any rational basis to the preparation for, and conduct of, these supplementary hearings on discretion when the Council has played no role and the contest arising has been one confined solely to the Company and the Applicant as protagonists.
Although the Applicant's role has been a somewhat confined one in this regard, nonetheless, the Applicant has incurred legal costs in participating (in what I consider to be an entirely appropriate fashion) in this supplementary discretion hearing process. The Applicant is clearly entitled to his costs of this participation.
Equally, I am satisfied that it would be entirely inappropriate to require the Council to contribute to meeting the Applicant's costs of these supplementary hearings on discretion. The orders below, therefore, will provide that the Applicant's costs of the supplementary discretion hearings are to be paid by the Company alone (this being, in effect, an apportionment approach consistent with the decision in Surf Road Nominees).
I have therefore concluded that the costs of the Applicant arising on and from the date that the Applicant's legal advisers were informed that the Company would seek to propose some alternative costs order are costs which should be met entirely by the Company.

Orders

The orders of the Court are: Noting that the First Respondent applied to the Second Respondent: 1. on 14 April 2023 for development consent to use the structures erected on, and other associated works undertaken at, 62 Osman Street, Blayney being Lot 1 DP162646, Lot 8 DP505215, Lot 20 DP569741, Lots 11‑14 Section 13 DP758121 and Lot 10 DP1114679 (the site) for the purposes of a motel; and 2. on 24 May 2023 for a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site: (1) The Court declares that the development consent granted by the Second Respondent to the First Respondent on 10 August 2021 ("Development Consent"), in respect of Development Application No. DA4/2020 ("Development Application") on the site is invalid and of no effect; (2) The Court orders that: (a) the First Respondent, by itself and by its employees, servants and agents, is restrained from carrying out any works under or in accordance with the Development Consent; (b) any works carried out purportedly in reliance on the Development Consent are to be demolished and removed from the site within six (6) months from the date of these orders; (c) order (2)(b) is suspended until the Second Respondent has determined the applications made as noted above; (d) if the Second Respondent determines to issue a Building Information Certificate for the structures erected on, and other associated works undertaken at, the site and grants development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or grants development consent for the purposes of some other permissible use, order (2)(b) is discharged; (e) liberty to apply in the event that: (i) the Second Respondent refuses the application for a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or other permissible use and the First Respondent commences proceedings in the Court to appeal against any such refusal; or (ii) the Second Respondent grants a Building Information Certificate concerning the structures erected on, and other associated works undertaken at, the site subject to conditions and/or development consent to use the structures erected on, and other associated works undertaken at, the site for the purposes of a motel or other permissible use subject to conditions and the First Respondent commences proceedings in the Court to appeal against any such condition; (f) liberty to apply for any extension of time to comply with order (2)(b), or to vary order (2)(b) in light of any merit findings made as a consequence of the Second Respondent's determination of the Building Information Certificate and/or development applications made by the First Respondent to the Second Respondent and/or any appeal from such determinations; (g) the exhibits are returned; (h) except as provided in order (2)(i) below, the First and Second Respondents are jointly liable to pay the Applicant's costs as agreed or assessed; and (i) costs incurred by the Applicant on and from 7 June 2023 are to be paid by the First Respondent on an as agreed or assessed basis.

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: 28 June 2023

Environmental Planning and Assessment Regulation 2000(NSW)

(2006) 147 LGERA 330

(1999) 110 LGERA 311

(2013) 211 LGERA 238

(2012) 190 LGERA 119

At a glance

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Judgment (26 paragraphs)

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Cases Cited (16)