Ross v Lane Cove Council

Judgment 1The respondent Lane Cove Council seeks its costs of this discontinued planning appeal by Mr Raymond Ross in Class 1 of the Court's jurisdiction.

Costs on discontinuance of a planning appeal 2Costs in Classes 1, 2 and 3 of the court's jurisdiction are governed by r 3.7(2) of the Land and Environment Court Rules (LECR). Rule 3.7(2) provides: 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. 3Subclause 3.7(3) sets out, non-exhaustively, circumstances in which the Court might consider the making of a costs order to be fair and reasonable including: ... (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, ... 4Council submits that it is fair and reasonable to make a costs order against Mr Ross because he has acted unreasonably in the conduct of the proceedings. 5A no discouragement principle underlies the no costs rule in planning appeals. In Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, (2008) 158 LGERA 224 at [9] - [10] I wrote (omitting citations): 9. In the context of the presumptive rule that there will be no order as to costs in planning appeals, the power to make a costs order is in the broadest of terms, that is, what is "fair and reasonable in the circumstances". All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight. ... 10. One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes. In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, that persons generally should not be discouraged from exercising their rights of appeal via the prospect of an adverse costs order. This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation. ... 6The list of circumstances in r 3.7(3) is similar to the indicative guidelines formulated in Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] before the 2007 amendments to the rules under the costs regime applicable to proceedings in classes 1, 2 and 3 of the Court's jurisdiction. This list does not include the additional circumstance of discontinuance of a class 1 appeal which had been added to the Grant v Kiama list prior to the 2007 amendments in Vigor Master Pty Ltd v Warringah Council [2006] NSWLEC 140 at [16] following Manly Warringah Rugby League Club Pty Ltd v Warringah Council [2006] NSWLEC 88 at [13] (all decisions of Preston CJ of LEC). 7Manly Warringah and Vigor were decided in the context of a costs regime (analysed in Manly Warringah) relating to planning appeals which was different in three respects from that introduced by the 2007 rules. First, there was a costs rule which empowered the Court to order a discontinuing party to pay the costs of the other party in any civil proceedings. Secondly, there was a costs rule applicable to proceedings in classes 1, 2 and 3 of the Court's jurisdiction which was similar to r 3.7(2) of the 2007 rules except that it did not refer to "in the circumstances" but to "in the circumstances of the particular case". Thirdly, there was a Practice Direction that no costs order was to be made in planning and building appeals "unless the circumstances are exceptional". 8It was in the context of this earlier costs regime that it was held in Manly Warringah that "ordinarily" the filing of a notice of discontinuance without the consent of the other party will be a circumstance which makes it fair and reasonable that there be an order for costs because it usually represents abandonment of the claim but that the relevant consideration in every case is whether the discontinuance was reasonable conduct on the part of the discontinuing party in the circumstances of the case: at [13]. If this suggests a presumption in planning appeals that a discontinuing applicant should pay the respondent's costs which may be rebutted by the circumstances, I do not think it has survived the introduction of the new costs regime in 2007. 9Under the current costs regime, in Classes 1, 2 and 3 of the court's jurisdiction there is no presumption that a discontinuing applicant should pay the respondent's costs. Such a presumption appears in r 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR), which provides that a plaintiff is to pay the defendant's costs in discontinued proceedings unless the court otherwise orders. While applicable to proceedings in classes 4 and 8 of the Court's jurisdiction, this rule does not apply to proceedings in classes 1, 2 and 3: Schedule 1 of the UCPR. On the contrary, r 3.7(2) of the LECR contains a presumptive rule that there should be no order for costs on discontinuance of class 1, 2 or 3 proceedings subject to one exception. Where costs are sought the question is simply whether the sole exception to the presumption applies, namely, that the Court considers the making of the costs order "is fair and reasonable in the circumstances". 10For example, if there was no reasonable basis for a planning appeal, that would be a strong circumstance supporting a costs order against the discontinuing applicant. But if, for example, an applicant, in the light of evidence that has emerged during the proceedings or an "amber light" by the presiding Commissioner, decides that the resultant increased risks of litigation are such that a planning appeal should be discontinued, with resultant savings in time and costs of the other party and saving of the Court's time, that may be a circumstance weighing against ordering the discontinuing party to pay the costs of the other party. In such a situation in a planning appeal, it may be sensible to discontinue, and not sensible to discourage the applicant from discontinuing by raising a presumption that it should pay the respondent's costs and to encourage it to continue and lose by a r 3.7(2) presumption that there will be no costs order. 11I would make an additional observation about r 3.7(3)(c) of the LECR, which provides that a circumstance in which the Court might consider the making of a costs order to be fair and reasonable is that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings. Council submitted in writing, but did not press at the hearing, that the no-discouragement principle cannot have the same weight when an applicant, as a result of his own illegal acts in carrying out unapproved development, is given the opportunity to bring an application seeking to regularise them, as in the present case. Had this submission been pressed, I would have rejected it because it suggests that the costs of all applications to regularise unauthorised works should be paid by the applicant. Past unlawful use is not a relevant issue in determining whether a prospective consent should be granted or a modification allowed: ACM Landmark Pty Ltd v Cessnock City Council [2006] NSWLEC 256 at [35] per Preston CJ of LEC. In my view, past unlawful use is also not sufficient, of itself, to support a conclusion that the applicant has acted unreasonably in circumstances leading up to the commencement of the proceedings within the meaning of r 3.7(2)(c). Persons who have carried out unauthorised works act reasonably in seeking to regularise the situation by a retrospective approval and should not be discouraged from doing so by the prospect of an adverse costs order. In my view, "circumstances leading up to the commencement of the proceedings" do not include the factual basis on which proceedings are brought (such as the existence of unauthorised works) but are concerned with the more direct conduct of a party conducing the proceedings, such as effectively inviting the proceedings: Grant v Kiama at [15(d)].