Presrod Pty Limited v Wollongong City Council

The Hearing 10Before the court, at the substantive hearing of this matter, there were four unseparated contentions by the Council - one concerning permissibility (which included several aspects), and three concerning questions of merit or impact (traffic, noise, and loss of privacy). 11The relevant development application ("DA"), which Council had refused, sought the conversion and reconfiguration of some suites in an existing hotel. 12Council consistently contended, even during its assessment of the DA (letter dated 9 November 2011, in Exhibit C1), that the development was prohibited, and that the site did not have the benefit of existing use rights. Council determined (notice dated 22 December 2011, in Exhibit C1) that the development ought to be refused on its merits, but was prohibited in any event as not satisfying a relevant zone objective. 13The appeal was heard by Commissioner Brown and myself on 28-29 May 2012. The first day was taken up by a comprehensive site visit and the hearing of objections in Wollongong. On the second day, in the courtroom, exhibits were tendered and explained, and submissions were made, on the two legal issues involved in the question of permissibility, absolutely central to the appeal, as well as on particular merits issues. No cross-examination of the contributing experts was required. We reserved judgment for some considerable time because of the complexity of the legal issues in their factual context.

The Outcome 14Our judgment of 29 October 2012 held that (1) the site did not benefit from existing use rights, pursuant to s 106 of the EPA Act ([59]-[67]); (2) that the project could not rely on earlier approvals, and modify them pursuant to s 109B ([83]-[86]); and (3) that, were it permissible, the amenity impacts of the proposal would not warrant its refusal ([87]-[91]). 15A Notice of Intention to Appeal to the Court of Appeal was eventually allowed to expire, on 30 January 2013. 16Following this court's primary judgment, Council wrote to Presrod's solicitors, on 5 November 2012 (Exhibit C2), arguing that it was entitled to its costs of the proceedings (estimated at $27,000), and offering to accept a lump sum of $20,000 in respect of them. 17Presrod's solicitors replied on 13 November 2012 (Exhibit P1), noting that Council had succeeded on only one of its four contentions, and urging agreement on a Consent Order that there be "no order as to costs". 18Council's general counsel responded, on 15 November 2012 (Exhibit C2), that the $20,000 figure it had offered to accept did not include the costs involved in Council's engagement of its consultant planner - "In other words, the costs of the ... merit issues are not sought ... and I will thus proceed to file a motion seeking Council's costs as they relate to the determinative issue", if Council's compromise was not accepted. 19Presrod sought, on 19 November 2012 (Exhibit P2), an extension of time to 26 November to consider Council's offer, but sent no further response (Reilly par 8).

The Costs Question 20Council's Notice of Motion was filed on 7 February 2013, and sought orders that: 1. The Applicant pay the Council's costs of the proceedings. 2. In the alternative to order 1, the Applicant pay the Council's costs of the proceedings, less the costs incurred by Council relating to the merit issues. 3. The Applicant pay Council's costs of this motion. 4. Such further or other orders as the Court sees fit. 21The relevant provisions are the following pars of r 3.7 of the Land and Environment Court Rules 2007 (emphasis mine): 3.7 Costs in certain proceedings (1) ... (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents: (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, ... (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. 22That rule was made in 2007, and closely adopts/resembles the principles which had been formulated by Preston J in his class 1 judgment in Grant v Kiama Municipal Council [2006] NSWLEC 70, especially at [15]. 23Council contends that "the question of permissibility was a central issue" (my emphasis), and that its determination "turned entirely on construction of statutory instruments" (submissions par 9). As that was a question the finding on which was determinative of the proceedings, and did not involve the "evaluation of the merits" of the application, Council argues that Presrod's case on permissibility offends r 3.7(3)(f), and that, in terms of r 3.7(3)(a), and as an exception to the general presumption of "no costs in class 1", the court should consider it "fair and reasonable" to make an order, "in the circumstances" of the present case, at least in regard to the relevant component of the Council's costs. 24Counsel for the Council referred the court to the dictionary definitions of the word "central", namely (Macquarie) "constituting that from which other related things proceed or upon which they depend", or "principal, chief, dominant", and (Oxford) "chief, essential, most important". 25Council notes that only five of the 93 paragraphs of our judgment were devoted to merits, but it is too simplistic to focus only on the reasoning section of the judgment. At least half of the hearing time, much of the tendered material, and a fair proportion of the balance of the judgment, set out and dealt with the objections and concerns of Council and its citizens. 26Although the permissibility question was not formally "separated" from those matters, the principles governing the costs of raising a preliminary point of law in class 1 proceedings are, Council submits, apposite to the claim for costs now before the court. I agree. 27In another decision given before the making of r 3.7, namely the Court of Appeal's five-judge decision in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 ("Sansom"), the Chief Justice stressed that, although the court's costs discretion is wide, judges should strive for a consistency of approach. 28On that basis, the Council argues that the situation in this matter resembles extremely closely the situation in which a "preliminary question" was dealt with by the present Chief Judge in BYT Nominees Pty Ltd v North Sydney Council (No 3) [2008] NSWLEC 294 ("BYT"), especially at [26]-[31]. The Chief Judge ordered the applicant in BYT to pay Council's costs of the question and of the application for costs ([37]-[38]). 29The proponents in both this case and in BYT were on notice of the Council's contention that the development was prohibited, and that Council did not accept the claim for existing use rights. In both cases, the question was properly arguable, whether on a preliminary basis as the only issue (as in BYT), or as part of a combined hearing (as here). 30Counsel for Presrod argued that BYT lends support to the submission that if you deal with a legal issue as a preliminary point, a costs order may follow the event, subject to some exceptions (Tp17, LL26-28). 31In terms of consistency of approach, Presrod relies upon the presumptive rule in 3.7(2), and the underlying "no discouragement" principle. 32Counsel for the Council took the court to Preston J's judgment in a s 56A appeal in a class 2 (tree) case, Ekermawi v Bennett (No 2) [2010] NSWLEC 40, where His Honour referred (at [58]) to the "presumptive rule" in r 3.7(2), and considered the application of r 3.8(3)(a) and (f). 33His Honour cited authorities in which "only a question of law" was involved, including Sky Design and Concepts Pty Ltd v Pittwater Council (No 5) [2009] NSWLEC 174 ("Sky Design'), and made an order for costs regarding the appeal, but declined to do so in respect of the original hearings. 34In Sky Design, I had said (at [13]-[14]): 13 A s56A appeal is, by its nature, litigation separate from the merits appeal from which it is brought. The so-called "no discouragement" principle operates in favour of no order for costs being made in the substantive problem-solving, merits review proceedings. See the discussion by Biscoe J in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224, especially at [9]-[10]. 14 However, a s56A appeal is a serious adversarial proceeding involving argument of legal principles, in which the traditional "costs follow the event" is the more apposite principle, but an order must be found to be "fair and reasonable" in all the circumstances of the case. 35Counsel for Presrod submitted, following the Court of Appeal's decision in Residents Against Improper Development Inc v Chase Property Investments Pty Ltd [2006] NSWCA 323; (2006) 149 LGERA 360 at [252] ("RAID"), that litigation needs to have the flavour of 'ordinary litigation', rather than merits review, for it to be "fair and reasonable" to depart from the presumptive rule, which was not the case in the present matter (Tp16, LL5-7). 36In the present matter, Presrod was on notice that its development was prohibited, and that it could not rely upon existing use rights (see above at [12]). Either party could have sought the separate determination of the preliminary permissibility question, even though a choice on that question is not a bar to a costs order. 37I am satisfied that the permissibility issues in this matter were both central and preliminary to any merit issues. 38The decision on the permissibility issue effectively disposed of the proceedings, but the merits of the proposal were canvassed by Commissioner Brown and myself, in case our decision on permissibility did not stand, on appeal. 39Counsel for Presrod submitted that no order should be made for an "issue by issue" approach to costs, as the form of the Council's costs application is not provided for in the rules (Tp18, LL3-5). 40I disagree. Rule 3.7(2) provides for the making of an order for the "whole or any part" of costs where the circumstances are "fair and reasonable". The Council offered to moderate its costs claim, and not seek (Exhibit C2) its costs for the contest on the merits, and such an outcome was indicated by the authorities. 41I am satisfied that it is fair and reasonable that the applicant be ordered to pay the costs of the substantive proceedings insofar as they relate to the permissibility issues, and also to pay the costs of the notice of motion.

ORDERS 42The orders of the court will be: (1)The applicant is ordered to pay the costs of the substantive proceedings, except those relating to the merits issues. (2)The applicant is ordered to pay the costs of the hearing of the Notice of Motion for costs. (3)All exhibits are returned to the parties.

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: 24 October 2013