Pet Carriers International Pty Limited v Botany Bay City Council

Judgment 1The applicant, Pet Carriers International Pty Ltd ('Pet Carriers'), was unsuccessful in each of these appeals. The first appeal was under s 97 of the Environmental Planning and Assessment Act 1979 ('EPA Act') against the refusal by the respondent, Botany Bay City Council ('the Council'), of a development application to use a building for a pet transportation business. The second appeal was under s 121ZK of the EPA Act against an order issued by the Council under s 121B of the EPA Act to Pet Carriers to cease the use of the building for a pet transportation business. The Court (Commissioner Brown) upheld the first appeal and granted development consent for the pet transportation business, and upheld the second appeal and revoked the Council's order: Pet Carriers International Pty Ltd v Botany Bay Council [2013] NSWLEC 1077. The Council has appealed under s 56A of the Land and Environment Court Act 1979 ('the Court Act') against the Commissioner's decisions on questions of law. I have determined that the Council's appeals should be dismissed: Botany Bay City Council v Pet Carriers International Pty Ltd [2013] NSWLEC 147. 2Pet Carriers has applied, by notices of motion dated 15 May 2013, for an order that the Council pay Pet Carriers' costs of the appeals heard and disposed of by the Commissioner. 3Under s 69(2) of the Court Act costs are in the discretion of the Court, however, that power is subject to the Court rules. The Land and Environment Court Rules 2007 Pt 3 r 3.7 makes special provision for costs in certain proceedings; including proceedings in Class 1 of the Court's jurisdiction. Pet Carriers' appeals under s 97 and s 121ZK of the EPA Act are in Class 1 of the Court's jurisdiction. Rule 3.7(2) provides that, in proceedings to which r 3.7 applies: The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. 4Rule 3.7(3) identifies, without limitation, some circumstances in which the Court might consider the making of a costs order to be fair and reasonable. Pet Carriers relies on the circumstances in r 3.7(3)(a) and (f): (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, ... (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable. 5Pet Carriers submitted that the central issue in both appeals was the question of the permissibility of the use of the building as a pet transportation business. The Council contended that the use was prohibited, being either "airport-related land use" or "air freight forwarder" (both of which are innominate prohibited developments), and not "commercial premises" (a nominate permissible development). Pet Carriers submitted that this circumstance was within r 3.7(3)(a). 6Pet Carriers also submitted that the Council had maintained its defences to the appeals where the defences did not have reasonable prospects of success or it was otherwise unreasonable to do so. Pet Carriers submitted that the Council failed to properly and objectively consider the characterisation of the use and only maintained its characterisation of the development as a prohibited use to placate the objectors. Pet Carriers submitted that the only controversial merit issue concerned the response of the objectors to the few occasions when dogs on the premises were heard to bark. Pet Carriers had stated that it would address this problem by making the accommodation for the dogs noise proof. This should have put the Council on notice that a condition of consent could easily have been imposed to ensure that such noise attenuation measures were undertaken. The Council's conduct in continuing to press for outright refusal of the development application on the ground of noise impacts, rather than approval on conditions ensuring noise attenuation, was unreasonable. These circumstances, Pet Carriers submitted, fell within r 3.7(3)(f). 7The Council submitted that the circumstances do not come within any of the exceptions that would make it fair and reasonable to order costs against the Council and instead that there should be no order as to costs. 8The Council submitted that the permissibility of the use was required to be considered as part of the consideration of the development application. The determination of that question was not preliminary to an evaluation of the merits of the development application but rather was heard and determined at the same time as the merits of the development application were evaluated. The manner in which Pet Carriers' business was currently being carried on (and would be likely to be carried on if consent were to be granted) was relevant both to the question of the merits of the application and its permissibility. The Council submitted, therefore, that the circumstances in r 3.7(3)(a) were not met. 9The Council submitted that Pet Carriers has not established that the Council's defence did not have reasonable prospects of success or that maintenance of the defence was unreasonable so as to fall within r 3.7(3)(f). The Council submitted that the words in r 3.7(3)(f) "did not have reasonable prospects of success" are similar to the language in s 347(1) of the Legal Profession Act 2004 and the former s 198J of the Legal Profession Act 1987 of "without reasonable prospects of success". In Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 at [132], the Court of Appeal held that the words "without reasonable prospects of success" impose a test of "whether a claim or a defence was so lacking in merit or substance as to be not fairly arguable". 10The Council submitted that its characterisation of the development as being for the prohibited purpose of "airport-related land use" was fairly arguable both as a matter of construction of the relevant local environmental plan and on the facts. A substantial portion of Pet Carriers' business (61%) involved the transportation of pets to and from Sydney (Kingsford Smith) Airport. Such use came within the definition of "airport-related land use". It was fairly arguable that such use was not ancillary to the permissible use of "commercial premises". 11Similarly, the Council submitted, it was fairly arguable that the development did not warrant approval but, if approval were to be granted, it should be granted on strict conditions. It was only through the joint conferencing of the experts that agreement was reached that the unacceptable acoustical and parking impacts could be addressed by conditions. Prior to that, there had been disagreement between the noise experts on the acoustical impacts. It was therefore not unreasonable for the Council to have raised, and to have maintained until the hearing, a defence that the development application should not be approved. 12The Council also submitted that it is relevant that Pet Carriers had been carrying out the development without development consent in breach of s 76A of the EPA Act. According to Pet Carriers' case, the development was permissible with consent as being for the permissible purpose of "commercial premises" yet Pet Carriers did not apply for consent but instead carried on the development illegally. The Council was justified in issuing a s 121B order directing Pet Carriers to cease its illegal development. Pet Carriers bore the responsibility of applying to the Council and appealing to the Court to make lawful its illegal development. 13In the circumstances of these appeals, I do not consider that the making of an order as to costs is fair and reasonable. My reasons accord with the Council's submissions. 14The characterisation of the purpose of the development, although determinative of the proceedings if the Court determined that it was prohibited, was not preliminary to, but instead involved an evaluation, of the merits of the development application. There was a factual dispute as to the proper classification of the purpose of the development. That factual dispute was also relevant to the evaluation of the merits of the development application. The characterisation of the purpose of the development was undertaken at the time of, and as part and parcel of, the determination of the development application in the appeals. The circumstances were not within r 3.7(3)(a). 15I am also not satisfied that the Council's defence of the appeals did not have reasonable prospects of success or was otherwise unreasonable so as to fall within r 3.7(3)(f). The Council's contention that the development was prohibited was fairly arguable. The fact that the Commissioner did not accept the Council's contention, and on the appeals against the Commissioner's decisions on questions of law I also rejected the contention, does not gainsay the finding that the contention that the development was prohibited was fairly arguable. 16It is also relevant that Pet Carriers' appeals were partly due to Pet Carriers' conduct of carrying on its development without first obtaining development consent. The Council was justified in issuing an order under s 121B of the EPA Act directing Pet Carriers to cease its illegal use. The Council had also received complaints from neighbours about the noise and parking problems. Pet Carriers appealed that order but it could only succeed on that appeal if it obtained development consent. Hence, Pet Carriers applied for such consent, and on being refused by the Council, appealed to the Court to obtain such consent. It was incumbent on Pet Carriers to show that the use was permissible and could be carried on in an environmentally acceptable manner so that consent could and should be granted. The Council's conduct in these matters cannot be said to be unreasonable. 17In the circumstances, there is no warrant to depart from the usual position under r 3.7(2) that there be no order as to costs in the appeals. 18In relation to the costs of Pet Carriers' applications for costs, the parties accept that costs should follow the event, notwithstanding that the applications for costs were made within proceedings in Class 1 of the Court's jurisdiction. This is because they involve a separate question, of a different nature, to the issues involved in the substantive Class 1 appeals. I consider it is fair and reasonable for Pet Carriers to pay the Council's costs of the unsuccessful applications for costs in the circumstances. 19Accordingly, I make the following orders: (1)The applicant's notices of motion dated 15 May 2013 are dismissed. (2)The applicant is to pay the respondent's costs in relation to the applicant's notices of motion dated 15 May 2013.