Sydney City Council v Doltone House Wharf & Ors

Environmental Planning and Assessment Act 1979 s 76A Land and Environment Court Rules 1979 Pt 15 r 7 LEGISLATION CITED: Land and Environment Court Act 1979 Pt 16 r 4(2), s 69(2) Local Government Act 1993 s 68 Pt 15 r 7 Local Government (Approvals) Regulation 1999 reg 7 Sydney Regional Environmental Plan No 26 - City West cl 13

Byron Shire Council v Macadam (2001) 116 LGERA 418; Environment Protection Authority v Iron Gates Pty Limited (unreported, Pearlman J, 40189 of 1996, 26 September 1997); Kurnell Lodge Pty Limited v Bourne & Anor [2004] NSWLEC 329; CASES CITED: Latoudis v Casey (1990) 170 CLR 534; Norbis v Norbis (1986) 161 CLR 513; Oshlack v Richmond River Council (1998) 193 CLR 72; Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622

21653 of 2004 APPLICANT P Tomasetti SOLICITORS D C Balog & Associates RESPONDENT P Larkin SOLICITORS City Prosecutor's Office LEGAL REPRESENTATIVES: 41654 of 2004 APPLICANT P Larkin SOLICITORS City Prosecutor's Office

RESPONDENTS P Tomasetti SOLICITORS D C Balog & Associates

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

DOLTONE HOUSE WHARF PTY LTD (ACN 097 622 789) First Respondent

JONES BAY WHARF GROUP PTY LTD (ACN 106 829 109) Second Respondent

MONTE CRISTO LOUNGE PTY LTD (ACN 067 031 814) Third Respondent

JONES BAY WHARF GROUP PTY LIMITED Applicant

JUDGMENT 1 Cowdroy J: These proceedings have been listed before the Court in order to determine the question of costs. In the Class 4 proceedings, Sydney City Council ("the Council") seeks an order for its costs which order is resisted by the first, second and third respondents ("the respondents"). In the Class 2 proceedings, the applicant ("Jones Bay Wharf Group") seeks an order for its costs of the proceedings, which order is resisted by the Council.

2 The proceedings relate to premises at Lot 54 Strata Plan 70641 known as the Doltone House Jones Bay Wharf, 19-21 Jones Bay Wharf, 26-28 Pirrama Road, Pyrmont ("the premises"). The premises form part of the larger complex of Jones Bay Wharf.

3 In the class 4 proceedings, which were commenced on 24 December 2004, the Council sought a declaration that the respondents were in breach of s 76A of the Environmental Planning and Assessment Act 1979 ("EP&A Act") by using the premises as a function centre for which no consent had been given as required by cl 13 of the Sydney Regional Environmental Plan No 26 - City West. The Council also sought a declaration that the respondents were in breach of s 68 of the Local Government Act 1993 ("LG Act") by using the premises as a place of public entertainment without prior approval.

4 The respondents contended that the use was not unlawful, because it was carried out under the authority of a consent ("the existing consent") issued by the Minister for Jones Bay Wharf which permitted "commercial offices, showrooms, warehouses, maritime business uses including brokerage, chandlery, shore facilities and uses supporting charter vessel operations, ancillary retail cafes and restaurants".

5 By application dated 10 February 2005 the respondents applied on a without prejudice basis to Sydney Harbour Foreshore Authority ("SHFA") for development consent for use of the premises as a "restaurant/function/private dining with ancillary entertainment". On 23 February 2005, the proceedings came before the Court for interlocutory relief. On that occasion the Court adjourned the proceedings for one month to allow time for a decision to be made on the respondents' development application. The parties came to an agreement with respect to the operation of the premises in the interim.

6 No decision was forthcoming during the adjourned period, and the proceedings were further adjourned. On 20 September 2005, SHFA approved the respondents' development application ("the consent"). On 28 September 2005 the respondent agreed to conduct its activities pursuant to the consent and the previous agreement between the parties was dissolved. On 21 October 2005, the proceedings were discontinued and costs were reserved.

7 Prior to the commencement of the Class 4 proceedings, Jones Bay Wharf Group sought an approval from the Council to operate a place of public entertainment under s 68 of the LG Act. That application was refused on 14 December 2004 on the basis that there was no consent to operate a place of public entertainment at the premises. On 24 December 2004 Jones Bay Wharf Group appealed the Council's decision.

8 The proceedings were similarly adjourned pending the outcome of the development application to SHFA. On 21 October 2005 consent orders were entered granting approval to Jones Bay Wharf Group to operate a place of public entertainment described as a "restaurant, functions, and private dining with ancillary entertainment" at the premises.

9 The Council seeks its costs in the Class 4 proceedings on the basis that, by seeking and obtaining development consent, its claim has been satisfied by the respondents. It refers to Pt 15 r 7 of the Land and Environment Court Rules 1979 ("LEC Rules") as well as the principles that a successful litigant is entitled to payment of its costs. The Council relies upon the decisions in Byron Shire Council v Macadam (2001) 116 LGERA 418; Environment Protection Authority v Iron Gates Pty Limited (unreported, Pearlman J, 40189 of 1996, 26 September 1997) and Kurnell Lodge Pty Limited v Bourne & Anor [2004] NSWLEC 329.

10 Jones Bay Wharf Group seeks its costs in the Class 2 proceedings on the basis that the Council's decision to refuse consent on 14 December 2004 was unreasonable.

11 Section 69(2) of the Land and Environment Court Act 1979 invests this Court with a broad discretion with respect to the award of costs. The power is unlimited, save that such power is to be exercised judicially.

12 Part 16 r 4(2) provides: 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 the particular case, fair and reasonable.

13 The Court is guided in the exercise of its discretion by the LEC Rules. Part 15 r 7 provides: The Court may order the respondent to pay the costs of the proceedings where a respondent satisfies or causes to be satisfied the claim of the applicant after the proceedings have been commenced.

14 In Latoudis v Casey (1990) 170 CLR 534 the High Court enunciated the principle that a successful party is usually entitled to its costs. This principle was reaffirmed by the decision in Oshlack v Richmond River Council (1998) 193 CLR 72 where Kirby J set out the principles concerning award of costs (see at 120-3). However, the usual order for costs is not a rigid rule: see Gaudron and Gummow JJ in Oshlack at 86, adopting the remarks of Brennan J in Norbis v Norbis (1986) 161 CLR 513 at 537.

15 In Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, McHugh J observed at 624: Where there has been no hearing on the merits, however, a court is necessarily deprived of the factor that determines whether or how it will make a costs order.

16 In Lai Qin McHugh J cautioned against the Court entering upon a hearing of the merits in a costs application where a hearing has not determined the rights of the parties. His Honour observed (at 624): The Court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

17 In Macadam the Court awarded costs in favour of the applicant following the grant of consent to the challenged use. Talbot J concluded that the applicant had been "successful in causing the respondent to satisfy the claim made against her. That is clearly the case." The applicant was accordingly entitled to costs.

18 In Iron Gates Pearlman J made an award in favour of the Environment Protection Authority ("EPA") following the issue a pollution control licence and pollution control approval. The respondent in that case had alleged that no licence or approval was required, but had sought them in any event. Her Honour considered that the issue of the licence and approval achieved the result sought by the EPA. In that case, however, interlocutory relief had been granted by the Court. Further, the applicant in those proceedings was the body administering the relevant licences.

19 Lai Qin is not referred to in either Macadam or in Iron Gates but the decision was referred to by Lloyd J in Kurnell. In that case his Honour found that an undertaking provided by the respondent satisfied the claim of the applicant. He considered that the position was similar to that in Macadam.

20 In the present proceedings, the Council's application proceeded on the basis that the conduct of the respondents' business was illegal. The respondents denied this at all times, and relied upon the existing consent granted for the whole of the wharf which allowed the operation of a restaurant. The respondents maintained that a restaurant use included the use of the premises for functions. Its decision to apply for development consent for use specifically as a function centre was made without prejudice in an attempt to avoid litigation.

21 Both parties during the hearing today acknowledged that there was a serious question to be tried in these proceedings. The existing consent raised the possibility that the respondents had a complete defence to the proceedings. That question was never determined.

22 The Council claims that the grant of consent by SHFA satisfied its claim. It draws attention to the fact that an advisory note on the consent stated: The applicant is responsible for obtaining an approval to operate a [sic] under s 68 Local Government Act, 1993 for the operation of a place of public entertainment for the relevant portions of the premises.

23 The lodgement of the development application and application for approval under s 68 of the LG Act do not, in all the circumstances, indicate that the respondents were required to obtain further consents. The development application was made without prejudice, the respondent maintaining that the consent authorised by both the restaurant and private functions. Further, these proceedings were not instituted by SHFA, the authority responsible for monitoring compliance with SREP 26. Whilst this is not a conclusive indication of any illegality in the conduct of the respondents' operations, it suggests that SHFA was not concerned that a breach of the existing consent was occurring.

24 The Council claims that it is the "successful party" and as such is entitled to its costs (Latoudis v Casey). The Court is not satisfied that the Council can be regarded as the successful party when it is not clear that the SHFA consent was required. The Court cannot satisfied that the SHFA consent was required or that approval under s 68 was necessary without adjudicating upon the merits of the case. Both parties have acted reasonably, and accordingly the Court does not consider that costs should be awarded in favour of the Council.

25 Costs in class 2 are not awarded unless it is fair and reasonable in the circumstances. The Council reasonably believed that the Minister's existing consent did not authorise the operation of a function centre at the premises. Under reg 7 of the Local Government (Approvals) Regulation 1999, the existence of a consent was a matter the Council was entitled to consider. Its refusal was consistent with the position it adopted in the Class 4 proceedings, namely that the consent did not authorise the respondents current use.

26 The Council's decision was made before SHFA granted consent. Shortly after the consent was granted, the Council agreed to consent orders granting approval under s 68 to operate a place of public entertainment on the premises.

27 The Court does not consider that it would be fair and reasonable to require the Council to pay the costs of Jones Bay Wharf Group in these circumstances. Accordingly the Court will make no order for costs.

1. No order for costs in proceedings 41654 of 2004.
2. No order for costs in proceedings 21653 of 2004.
3. The exhibits be returned.

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