RCM Constructions Pty Limited & Anor v Ryde City Council

RCM CONSTRUCTIONS PTY LIMITED & MAYCOT PTY LIMITED - v - RYDE CITY COUNCIL (No. 2) [2004] NSWLEC 361

JUDGMENT 1 Lloyd J: This is a case about costs. On 31 May 2004 I determined two separate questions in an appeal brought by the applicants against the deemed refusal of a development application (RCM Constructions Pty Ltd & Maycot Pty Limited v Ryde City Council [2004] NSWLEC 266). The questions were: (1) whether the proposed development was prohibited development within the meaning of s 76B of the Environmental Planning and Assessment Act 1979 ("the EP&A Act"); and (2) if so, whether the present use of the subject land was an existing use, so that consent could be granted to the prohibited development. I found that the proposed development was, except for one part of the development site, prohibited development. I also found that the use of the land did not enjoy existing use rights. These answers were determinative of the appeal. The respondent, Ryde City Council ("council") now seeks an order that the applicants pay its costs, the questions having been determined against the applicants. Conversely, the applicants seek an order that the council pay their costs of the hearing.

The Court's practice as to costs in planning appeals 2 The position is at present governed by the Land and Environment Court Rules 1996, Pt 16, r 4, which applies to certain proceedings in classes 1, 2 and 3 of the Court's jurisdiction, including planning appeals. The rule is as follows: Costs in certain proceedings (1) … (2) No order for the payment of costs will be made in proceedings to which this rule applies unless the Court considers that the making of a costs order is, in the circumstances of a particular case, fair and reasonable. 3 The position was previously governed by a practice direction, since repealed, which stated that the practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional. 4 The operation of the present rule was explained by Bignold J in Gales Holdings Pty Ltd v Tweed Shire Council (No.2) [2004] NSWLEC 351. I respectfully adopt what was said by Bignold J (at [24]), namely, that the new rule was intended to: (a) wholly replace the practice direction; (b) control the costs discretion conferred by s 69(2) of the Land and Environment Court Act 1979; and (c) to maintain the general principle that costs are not awarded in planning appeals unless it is fair and reasonable in the circumstances of a particular case to make an order for the payment of costs. 5 The wording of the present rule in place of the practice direction was recommended in the report of the Land and Environment Court Working Party under the chairmanship of the Hon. J S Cripps QC, published in September 2001. The Working Party accepted the long-standing principle that costs are not generally awarded in planning appeals and did not recommend that there be any change to that principle. It stated, however, that there should be greater flexibility to make orders for costs in circumstances where it may be fair and reasonable to do so, such as where a party may have been put to unjustifiable expense. (Illustrations of circumstances in which costs might be ordered are set out in the report: http://www.lawlink.nsw.gov.au/report/lpd_reports.nsf/pages/rep_index.)

The relevant facts 6 In the determination of the separate questions I found that the present use of the subject land for the remanufacturing and resale of timber had commenced in about 1924. After the commencement of the first planning controls under the County of Cumberland Planning Scheme Ordinance 1957, the use became a prohibited use under the relevant zoning. The use remained a prohibited use under the Ryde Planning Scheme Ordinance 1979, which is the current environmental planning instrument applying to the land. On 28 November 1985 the council wrote a letter to the owner stating "that the use of the subject property for the purposes of a timber yard/sawmill is considered to benefit from the "existing use" provisions contained within the Environmental Planning and Assessment Act, 1979". 7 After the development application had been lodged the council sent a letter dated 5 December 2003 to the owner of the subject land stating, inter alia: As discussed with you prior to lodgement, it would have been better if you had attended a prelodgement meeting prior to lodging this development application. Your development application relies upon the existence of existing use rights. However, a cursory examination by Council Officers would indicate that you do not enjoy the benefits of existing use rights. This places your application in jeopardy. However, we are seeking legal advice to confirm whether or not existing use rights do exist. 8 The applicants commenced their appeal against the deemed refusal of their development application on 8 December 2003. On 17 December 2003 the council again wrote to the owner of the land stating: As you are aware, Council has sought legal advice from Counsel to determine whether your land enjoys the benefits of "existing use rights". Council will not be seeking any additional information in relation to this application prior to this advice being received. The assessment of your application and preparation of a report to Council will resume once Council has obtained this advice. 9 On 18 December 2003 the council wrote a further letter to the owner of the land stating, inter alia: At this stage it is considered premature to raise issues of design with you as Council is yet to be satisfied the site enjoys existing use rights. As you are no doubt aware, this proposal is reliant upon the site enjoying existing use rights. Council must satisfy itself that existing use rights in fact apply. Council has engaged Counsel to provide advice in relation to this issue. It is unfortunate that this advice has yet to be received, … 10 On 2 February 2004 the council filed a statement of issues in the proceedings in which it identified the issue of whether the proposed development is prohibited on the subject land. On 20 February 2004 the council requested that the two separate questions, which I have set out in par [1] above, be heard by a judge. 11 At the commencement of the hearing of the two questions, the council tendered a residential district proclamation made under s 309 of the Local Government Act 1919, which applied to the subject land and in which certain trades and businesses, including sawmills, were prohibited. The proclamation was made on 22 July 1921 and continued to operate concurrently with the County of Cumberland Planning Scheme Ordinance 1957 when that ordinance commenced.

12 I found that the present use of the subject land was for the purpose of remanufacturing and resale of timber and that the use may be described as either a sawmill or a timber remanufacturing industry. As such it was prohibited under the terms of the residential district proclamation. Since the use had commenced in about 1924, after the making of the residential district proclamation in 1921, there was thus no evidence of a lawful commencement of the use. Since the use was never conducted lawfully it could not give rise to an existing use under the EP&A Act. The parties' submissions 13 Mr T F Robertson SC, appearing for the council, submits that the question resolved by the decision was jurisdictional; that it was fundamental to the right of the applicants to make a valid development application (Chambers v Maclean Shire Council (2003) 126 LGERA 7 at 15 [37]-[38]); that the question determined a matter of legal entitlement (Gee v Port Stephens Shire Council (2003) 131 LGERA 325 at 336 [47]); that the existence of those legal rights was always fundamental to the making of a valid development application; that the council was careful to quarantine the issue at the commencement of the proceedings and alerted the applicants to the problem before the proceedings were commenced; that the applicants bore the onus to establish their claimed existing use rights; and that the council had been brought to the court unnecessarily had the matter been analysed properly. In these circumstances Mr Robertson submits that the council is entitled to an order for costs. 14 Mr P J McEwen SC, appearing for the applicants, submits that the council chose to put in issue the question of existing use rights where for many years it had raised no suggestion of an unlawful commencement of use; the council has known of the use for over 80 years and which it now says is an illegal use; the council wrote to the owner of the subject land stating that the use of the land for the purpose of a timber yard/sawmill had the benefit of the existing use provisions of the EP& Act, so that the applicants have been misled by the council; and that the residential district proclamation was only produced by the council in the morning of the hearing - there is no reference made to it in the written submissions which were produced at the commencement of the hearing and the residential district proclamation did not appear in the bundle of documents that was tendered. Mr McEwen submits that, rather than an order for costs in favour of the council, there should be an order for costs in favour of the applicants, at least until the commencement of the hearing. Conclusion 15 The starting point in considering any application for costs in cases such as this, as noted in pars [2] - [5] above, is the general principle that costs are not awarded in planning appeals unless it is fair and reasonable in the circumstances of a particular case to make an order for the payment of costs. 16 The reason behind the principle has been explained in many cases. Simply stated, it is to encourage dissatisfied parties to seek review of planning decisions made by local councils rather than discourage them by burdening them, if unsuccessful, with the risk of an adverse order for costs. The prevailing approach followed by judges of this Court is to extend this principle to the hearing and determination of questions separately from other issues. (See the cases cited in Broadwater Action Group Inc v Richmond Valley Council (No. 2) (2003) 129 LGERA 402 at 406 [7].) Parties should not be discouraged by the risk of an order for costs from identifying questions for separate determination and which may thereby obviate a lengthy and costly hearing on the merits. 17 In the present case the principle should be applied. It would not be fair and reasonable to make an order for costs. Although the applicants bear the onus of establishing existing use rights (Kogarah Municipal Council v Johnstone (1979) 41 LGERA 366 at 372-373), they believed that they had the benefit of existing use rights until the council produced the residential district proclamation on the morning of the hearing. The council ought to have been at all times aware of the residential district proclamation. It should have drawn the existence of the proclamation to the applicants' notice before the proceedings were commenced - or, at least, before the hearing - thereby bringing to the applicants' attention the fact that the use was not lawfully commenced. This was the basis upon which the council succeeded in refuting the applicants' claimed existing use rights. The belated production of the residential district proclamation, which was determinative of the proceedings, suggests that it would not be fair and reasonable for the council to now have an order for costs, particularly in the circumstances where it had previously misled the owner of the subject land by stating in writing that that use of the land did have the benefit of the existing use provisions of the EP&A Act. 18 Neither would it be fair and reasonable for an order for costs to be made in favour of the applicants. I accept the facts that the applicants had been misled by the council's letter of 28 November 1985 and by the council's apparent acceptance of the use of the land without question for some 80 years. However, when the residential district proclamation was produced at the commencement of the hearing the applicant nevertheless chose to argue that it did not apply to the particular use being carried out on the subject land. 19 There will, accordingly, be no order as to the costs of the hearing of the separate questions. Since both parties sought costs and have failed, there will be no order for the costs of the hearing of the applications for costs.

I hereby certify that the preceding 19 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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