Universal Childcare Pty Ltd v Leichhardt Municipal Council

Introduction 1 His Honour: The Council successfully resisted the Applicant company's appeal in this matter ([2007] NSWLEC 808 per Bly C), and now seeks to recover part of its costs. To succeed, the Council has to persuade the court that in all the circumstances it is "fair and reasonable" for the court to (1) make a costs order of some sort, and then (2) fashion an order that it finds "fair and reasonable" to meet those circumstances. 2 The orders sought by Mr Ayling SC for the Council are: " 1. That the applicant in the proceedings (respondent on the notice of motion dated 21 December 2007) pay the respondent's costs incurred by the applicant's amended application and unreasonable delay in providing information and documents that were necessary to enable the consent authority to gain a proper understanding of, and give proper consideration to, the application as follows: (a) The costs unnecessarily incurred including all attendances related to the correspondence and reports referred to in annexure A to the affidavit of Jacinta Anne Reid sworn 9 July 2008. (b) The costs of the amended application including the cost of all supplementary reports by Court appointed experts dealing with the amendments and all attendances relating to the amended application. 2. The costs referred to in paragraph 1 shall be quantified as agreed or assessed, and paid within 28 days thereof. 3. That the applicant in the proceedings (respondent on the notice of motion dated 21 December 2007) pay the respondent's costs of the notice of motion ". 3 The bundle constituting "Annexure A" to affidavits from Jacinta Reid and Margaret Lyons contains a total of 28 items "submitted" on dates ranging from 16 April 2007 (the day before an extensive interlocutory hearing before Biscoe J) to 21 November 2007 (the first day of the two day hearing before Bly C and some 15 months after the relevant pre-DA meeting), and dealing with survey, contamination, stormwater, flooding, traffic, acoustics, architectural plans, childcare centre management, and landscaping. At least one (item 7) was a flood study dated 5 February 2007, but not submitted until 30 April 2007 (sought by Council in its pre-DA letter of 15 September 2006). An acoustic report (item 17) dated 15 May 2007 was not submitted until 12 June 2007. One of the amended architectural plans dated 16 November 2007 was version "K" indicating many revisions; others were numbered "D" and "E". By August/September 2007 the initial plans had been so substantially amended that the Council decided they should be re-notified (19 September-10 October). No parties' single expert reports are included. The amended application in its final form was eventually refused consent by the court - judgment was delivered on 13 December 2007. 4 The history of the project will be more fully described after I set out the basic legal principles to be applied to the costs application. The principles 5 The presumptive starting point on costs, when the court is dealing with Class 1 proceedings, is that there will be "no order as to costs". There must be "some circumstance that justifies making an order". See Residents Against Improper Development Inc and Another v Chase Property Investments Pty Ltd (2006) 149 LGERA 360 ("RAID") per McClellan ChJ CL at [219]-[251]. 6 The courts have acknowledged that "the administration of justice requires a high level of consistency in approach", when the wide discretion available to the court is exercised, and it must be exercised judicially. See Port Stephens Council v Sansom (2007) 156 LGERA 125 ("Sansom") at [46]-[52], in which case the Court of Appeal reviewed the long line of then-relevant authorities such as Gee v Port Stephens Council (2003) 131 LGERA 325, RAID (above), and Hunter Development Brokerage Pty Ltd v Cessnock City Council (No.2) (2006) 68 NSWLR 177, and the discussion in Jerrold Cripps QC's 2001 Report on this court (Spigelman CJ at [15]-[16]). That wide discretion is not fettered by the "non-discouragement" principle underpinning the basic rule or presumption that there be "no order". That principle requires the court to be careful not to act in such a way in relation to costs that it will discourage applicants entitled to appeal from doing so because of the risk or threat that failure would more likely result in an order for costs against them. See Sansom at [54], [76], [92], [93] and [97]. 7 "Indicative guidelines" have evolved to assist in the consistent exercise of the costs discretion in Class 1 (and Class 2) matters, and in deciding in particular cases whether the presumptive "no costs" rule is overcome. See discussion of Sansom, e.g., in Arden Anglican School v Hornsby Shire Council & Anor (2008) 158 LGERA 224 per Biscoe J. 8 In that evolution process, the relevant Rules and various judicial pronouncements have sought to identify particular circumstances in which the court might find an order "fair and reasonable". For example, Rule 3.7(3) of the 2007 Land and Environment Court Rules lists the following "circumstances", among others, which might support Mr Ayling's submission that an order be made in Council's favour in this case: "(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, (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 ." 9 In Grant v Kiama Municipal Council [2006] NSWLEC 70 ("Grant") (at par ) Preston ChJ similarly nominated as a relevant "circumstance": "(c) where a party fails to provide or delays unreasonably in providing information or documents required as part of the application for approval, including statements required by the relevant statute such as an environmental impact statement or species impact statement …, or statement of environmental effects … or statements or information required by an environmental planning instrument, or information or documents centrally relevant to the development the subject of the application and necessary to enable a consent authority to gain a proper understanding of and to give proper consideration to the application ..." 10 As the Chief Justice noted in Sansom - in which the Court of Appeal (sitting five judges, the other four of whom agreed with the judgment of the Chief Justice) endorsed (at [56]) the principles stated by Preston ChJ in Grant - such lists of "circumstances" as appear in the Rules and Grant are not a complete catalogue, but a collection of examples, of circumstances where a costs order may be made in Class 1 proceedings. 11 The Grant principles have been consistently applied by the judges of this court - by me in cases like Holroyd City Council v Peter Kubacki & Anor [2007] NSWLEC 804 and Pikoulas v Canterbury City Council (No.4) [2008] NSWLEC 166, and by other judges of the court in the cases I cited in those matters, and in other cases such as Motorplex (Australia) Pty Ltd v Port Stephens Council [No.2] [2007] NSWLEC 770, Hakim and Anor v Canada Bay City Council and Anor [2008] NSWLEC 118, Moussa v Owners Corporation of Strata Plan 65404 & Ors (No.2) [2008] NSWLEC 121, Pepperwood Ridge Pty Ltd v Newcastle City Council [2008] 160 LGERA 164; and Owners of Strata Plan 74664, 74662, 74667, 74670, 74668 v Auburn Council [2008] NSWLEC 230. 12 Each case turns on its own particular facts and those facts have to be closely scrutinised on each occasion to ascertain if making an order is "fair" and/or "reasonable". In his submissions Mr Ayling drew a distinction between fairness and reasonableness, suggesting that the former test might be a little more subjective and the latter a little more objective. The Chief Justice in Sansom (at [48]) said that they were broad criteria, embracing all rational considerations relevant to the judgment to be made. 13 Although the case was decided before Grant, Sansom, and the 2007 rule changes, Talbot J's comments in Aldi Foods Pty Ltd v Holroyd City Council (2005) 142 LGERA 141 ("Aldi") (at [5]) remain pertinent: "The Rules make it plain that the approach to an application for an order for costs in class 1 proceedings is fundamentally unchanged from the historical position to the extent that the underlying principle is that there will generally be no order as to costs. Accordingly, unless it is in the circumstances of the particular case otherwise fair and reasonable, the Court will approach the exercise of its discretion on the basis that parties are to remain confident they may commence or defend proceedings without the onerous threat of incurring liability for costs other than their own, even if they are not the successful party. In other words costs will not be awarded in the proceedings referred to in Part 16, rule 4 unless it is fair and reasonable to depart from the underlying assumption in the circumstances of the particular case. Reasonableness is to be determined according to the ordinary sense of the word. The award of costs has to be fair as well as reasonable. Thus not only must it be reasonable for costs to be awarded but it must also be just and equitable." 14 It is only when the facts are clear that the principles can be applied. In the present case there is an extraordinary volume of documentary evidence before the court, and competing sworn evidence from the solicitors for the parties on the significance of those documents and particular events, all of which evidence I have examined to arrive at the following history of the matter. Relevant History 15 On 11 September 2006 the Applicant consulted the Council's Executive Planner (Adele Cowie) with its plans, prior to lodgement of its Development Application to develop a childcare centre at 153-159 Balmain Road, Leichhardt. The proposal involved demolition of the existing buildings on those blocks (2 houses and an old factory), erection of a new two-storey building to be used as the centre, and associated parking/access arrangements. The Centre was to offer 74 child places and operate 7am to 7pm Monday to Friday. 16 On 15 September 2006 Ms Cowie wrote at length to the Applicant, indicating that Council was "unable to support the proposal as presently submitted, due to significant non-compliances with Council's planning controls", and requesting additional "information", which was needed to accompany any DA, so that the Council could properly consider the proposal, including: · A stormwater drainage concept plan, incorporating on-site detention facilities. · A flood study · A traffic (and parking) study · An SEPP 55 (remediation) assessment · Consultation with neighbours regarding noise, traffic, and other amenity issues. 17 Council was particularly concerned with inappropriate streetscape appearance, non-compliance with the building location zone, amenity implications for neighbouring properties, and lack of justification for the demolition of the existing brick house at 159 Balmain Road - keeping 159 and incorporating it into the overall design "perhaps as staff accommodation" would, it was said, achieve a "better street presentation". 18 The second last paragraph of the letter said: " Council is prepared to consider further amendments to the proposal aimed at addressing those non-compliances, and offers you the opportunity to submit modified plans, and attend one additional meeting with Council staff at no further charge. Please note, this opportunity will remain available for three months from the date of this letter. Any meeting held after the elapse of three months will be subject to the applicable pre development application process and charges ". 19 I accept what Mr Ayling says (T6, L32ff) about the letter indicating a helpful rather than difficult approach by the Council - in a letter running to more than three closely typed pages, Council was saying to the proponent that it needed certain information to measure, assess and consider the physical impacts of the proposal. Far from foreshadowing a refusal of consent, the letter contained constructive suggestions, including that the DA not be lodged until some of those identified issues had been further explored in the more informal, and less costly, pre-DA process which had commenced. For example, the letter puts the Applicant on notice that, while the former use of the site indicated that remediation would be necessary pursuant to SEPP 55, such remediation would not itself necessitate development consent, and it would be preferable for the remediation to form part of the DA assessment process, due to the need to demolish existing structures if the project went ahead. 20 The invitation extended for further discussion (see par [18] above) was never taken up, and, as Mr Ayling submitted (T7, L8ff), "there is no indication … that the specific requirements of the council in relation to those matters that are identified … [was] taken seriously and complied with". 21 Development Application No. D/2006/760 ("the DA") was lodged on 19 December 2006 with plans materially similar to those discussed on 11 September. On 9 January 2007 Council advised the Applicant that the DA would not be supported, as its pre-DA concerns had not been addressed, and, specifically, the following information had not been provided: flood study, stormwater concept plan, remedial action plan, and an up to date traffic report. The Council invited the Applicant to withdraw the DA, and enter further discussions on a "substantive redesign", but the Applicant responded, on or about 19 January 2007, that it would not withdraw, and that it wanted Council to fulfil its duty to assess the DA. Flood and remediation reports would "be provided shortly", and the Applicant would obtain additional traffic information. It is to be noted that cl.55 of the EPA Regulation makes clear that a Council is not obliged to entertain amendments to an undetermined application. 22 An unfavourable assessment report dated 30 January 2007 resulted in Council's refusal of the DA on 5 February 2007 on twenty stated grounds. The main issues identified in the refusal were bulk, scale, streetscape, parking, traffic, neighbour amenity, flood study, remediation, and demolition of an "intact cottage" at 159 Balmain Road. Four of the grounds relied on LEP 2000, 11 on DCP 2000, 3 on failure to support the DA with a flood/stormwater study, up to date traffic report and remediation action plan, and the other two grounds were stated to be "site not suitable" and "not in the public interest". 23 The Class 1 appeal was lodged, against the refusal (erroneously described as the deemed refusal) of the DA, on 16 February 2007. 24 On 5 April 2007 Council filed a comprehensive statement of issues under nine headings, setting out the deficiencies of the information provided from the "complete assessment" point of view, and the inadequacies, for example, of the traffic and acoustic reports on the file. Otherwise the particular concerns remained those indicated in the 15 September 2006 letter (see pars [16] and [17] above) and overshadowing of No.151 Balmain Road. 25 Council's solicitors offered on 5 April 2007 not to seek costs if the appeal were discontinued by 10 April. That offer was extended to 12 April, but not accepted. By that stage Council was warning the Applicant of the additional costs it was incurring in trying to have the Applicant remedy its lack of appropriate information. Thereafter the court proceedings assumed a regrettably adversarial character. 26 Council declined the Applicant's suggestion (on 5 April) that the parties attempt mediation, on the grounds that Council still lacked sufficient information to properly formulate its position on the DA. Council also declined to accept further material in the form of amendment, rather than having a proper, or at least a complete, DA to assess. The subsequent filing of some of the "missing" information resulted in adjustment of the issues in the appeal as it progressed through the court, and some technical (not necessarily merit) deficiencies in the application were later identified by Parties' Single Experts. 27 The shortcomings of the DA which were still evident at 17 April 2007 were fully ventilated when the matter came before Biscoe J, and the Council told His Honour it should not have to run the case "on a shifting landscape". It wanted to force the matter on, to be determined on the basis of the inadequate information which the Applicant had "presently before the Court". His Honour noted the Applicant had been "tardy in putting on information". The Applicant's position on that occasion was that the Council's refusal came while the Applicant was gathering and had only partially compiled the further information Council was seeking by the time the DA went in. Mr P McEwen SC (for the Applicant on that occasion) told His Honour the missing material would be on by 1 May, and that the Applicant had settled on 76 as the number of child places (cf 74 in the DA). 28 That undertaking by Mr P McEwen was given against the background of Ms Reid, solicitor for the Council, saying to Biscoe J (T17 April 2007, p2 L46-p3 L2): " The applicant hasn't indicated what evidence it wishes to put on, whether there are amended plans, further documents which the council has put it on notice since the pre-development application meeting in September of last year were required. What the council says is that this application is a little different to the ordinary where the applicant hasn't listened to any information that the council has given it or feedback with respect to that application and that the council shouldn't be prejudiced by having to accept in dribs and drabs further information in support of the application. If I could take you to the statement of issues filed in the matter dated the 3 April 2007, you'll see that the council alleges insufficient information in support of the application as well as it being a fundamentally ill-conceived proposal ". 29 For the appeal to proceed as then constituted was an inappropriate use of the court, the Council argued, as the court is not "a vehicle to encourage the Council to come to the conference table with you" (T14, L6-7). In the end, Biscoe J determined that s.34 offered the best way forward to resolve the parties' dispute, and made directions, with a view to an on-site hearing commencing on 5 June 2007. 30 The amended application as it stood in April/May 2007 was notified 16 to 30 May, and five objections were received. The 5 June hearing date was vacated. Repeated callovers followed and material was continually submitted. Parties Single Experts on traffic and acoustics were appointed and produced reports. The rival town planners met and produced a joint report. A target hearing date of 15 July (noted as such on the file, but not confirmed by the Council in this costs hearing, and disputed by the Applicant) passed while this was happening, and a hearing was fixed for 27-28 August. On 10 August the Applicant filed a Notice of Motion for amended plans. The August hearing dates were vacated and the 21-22 November listing arrived at. 31 After Commissioner Brown gave some case management directions, and Ms Lyons had put on her affidavit of 15 August 2007, seeking to crystallise materials required from the Applicant for the hearing, Mr Whealy wrote to Ms Reid on 20 August 2007 in congenial resolution-focussed terms regarding ten outstanding matters, not many of which Council found satisfactorily resolved by what he proposed in that letter. Again Council expressed concern about the costs occasioned to both parties by the Applicant's partial provision of information. 32 Amended Statements of Issues and of Basic Facts were filed in October, but evidence was still being finalised at that time, much of it originally requested in September 2006, and much of it regrettably inadequate. (For example, Single Acoustic expert Cooper's report of 14 November 2007 discloses that the Applicant had by then still not adequately depicted proposed noise barriers, and had not adequately dealt with management and aircraft noise issues). Two days before the November hearing the Applicant's solicitor could not finalise a list of the documents the Applicant would rely upon at the hearing. 33 When Commissioner Bly heard the matter on 21-22 November he had before him objections received from a number of local residents. In par [13] of his judgment he summarised their main points thus: " The application … was advertised on two occasions resulting in the objections being received from a number of residents in Balmain Road and Waratah Street (at the rear of the site). These objections mainly raise the following concerns: · Traffic congestion in Balmain Road and Waratah Street and increased demand for on-street car parking thus reducing available parking for residents. · Unacceptable noise levels likely to be generated by the child-care centre resulting in reduced residential amenity during the lengthy hours of operation between 7 a.m. and 7 p.m. This is unlikely to be mitigated by the provision of noise barriers. Noise was of particular concern to the occupants of the neighbouring house to the north at 161 Balmain Road. · The proposed flat roofed modern structure will be out of character with the existing buildings in the locality. · There are already two family day-care centres operating in Waratah Street and an additional close-by child-care centre is not warranted. · Overlooking from the child-care centre resulting in loss of privacy. · Excessive bulk and scale and inappropriate building appearance when viewed from neighbouring properties to the east." 34 In par [15] of his judgment Commissioner Bly noted that there were twenty reasons for the Council's refusal, but that some had since been resolved. Those subsisting for his determination were summarised as follows: · Adverse impacts on the amenity of neighbouring dwellings including solar access, traffic, landscaping and building bulk contrary to the requirements of the planning controls. · The proposed building and the car park would be out of character with the streetscape and development in the locality contrary to the requirements of the planning controls. · The traffic, vehicular access and car parking arrangements are unsatisfactory. · The existing, relatively sound small detached dwelling at 159 Balmain Road should be retained. · Site remediation and flooding/stormwater drainage has not been resolved. 35 When the hearing moved from the site to the courtroom, the Respondent Council explained to the Commissioner that there remained three essential issues in the case (at [18]): · Whether the proposed development would have an inappropriate character for the locality and an inappropriate presentation in the streetscape taking into account the requirements of the planning controls. · Whether the amenity of the neighbouring and nearby residential properties would be adversely affected in terms of the design and bulk of the building, reduced solar access and loss of on street parking. · Whether the site is suitable for a child-care centre taking into account the noise generated by overflying aircraft associated with the Sydney airport. 36 The learned Commissioner noted the extensive disagreement between the expert planners (56 pages of comments cf 6 pages of agreements) on a range of matters touching upon those three essential issues (see pars [33]-[34] and [52]-[53] of his judgment). On the character/streetscape issue he concluded that he favoured Council's Ms Lillie on many of the key matters in dispute (see pars [35]ff). On the residential amenity issues he noted that the most affected neighbouring property was No.151 Balmain Road and that the Applicant had purchased it. As it was not amalgamated into the site and was not to be part of the project, the Commissioner concluded that the asserted impacts on it needed to be considered. In this respect he found in favour of the objectors (see pars [54]ff). In respect of aircraft noise, the Commissioner dealt with the provisions of Australian Standard AS2021-2000 and, while observing that the issue remained a live one, it was not determinative of the childcare use being found inappropriate for approval. 37 Commissioner Bly's conclusions appear in pars [65]-[69] of his judgment. He was satisfied that the childcare centre and the proposed parking arrangements would function well, but the impacts on neighbours, streetscape, and the character of the area meant that the proposal should not be approved. He noted that Ms Lillie indicated she could well support a childcare centre in this location as there is likely to be appropriate demand. It was also an advantage that an unsightly factory building would be replaced with a building of architectural merit. However, the proposal failed to meet the planning controls - "… what is needed for this site is a development comprising landscaping, parking and built form that is responsive to the applicable planning controls" (par [68]). 38 In par [69] he noted, in conclusion, that he had not been persuaded that the proposal was relevantly consistent with LEP 2000 and its objectives, nor appropriately responsive to DCP 2000. Council's submissions 39 Mr Ayling submits that the voluminous material now before the court on this costs application "discloses a course of conduct over a lengthy period of time …, which gives rise to it being reasonable and fair that we should have our costs of dealing with many of these issues". The documents in evidence on the motion "are to a large extent correspondence between solicitors either dealing with the supply of information or responding to it" (T13, L20-25). The applicant "by its behaviour over a lengthy period", by neglecting to supply to the Council sufficient information "to enable the Council properly to assess the application", by its "general conduct … in not getting its act together …, not just delay, … multiplication of tasks, [and] constant variations … to the subject matter of the application" caused the Council to expend "a substantial amount of money over and above what it might rationally be expected to … expend in contesting this appeal" (T1, L36-40; and T28, L21-T29, L2). "… [T]here is a lot of material that needed to be provided in order to understand exactly how this application was going to be reflected in bricks and mortar, the levels, the way in which the driveways worked, the noise attenuation measures, a hundred other things that arose during the course of the hearing - or the course of preparation, which were all foreseeable and which all could have been dealt with by the engagement of competent experts at an early stage to prepare appropriate reports and submit them with the development application, or at the latest to submit them to at the time of the lodgement of the appeal so that the matter could have proceeded quickly…[T]hat is the exact opposite of what happened in this case. What we had was an eking out of information over a period of months, all of which resulted in the necessity for correspondence, email correspondence, mail correspondence, the preparation of additional documents, attendance of my solicitors at innumerable call overs, and indeed the vacation of the hearing dates on I think three occasions …" most of which "could have been avoided if more attention had been paid to the council's request at the outset and if more attention had been paid by the applicant to satisfying the simple requirement that it went to court it was ready to proceed and had all the information available to at least deal with those issues which it should have suspected and would have suspected were not likely to be controversial once the information was provided" (T29, L7-33). "…[W]e should be compensated in costs for all the work we had to do in chasing all these additional reports and all the correspondence we had to undertake in relation to the additional reports and supply the additional information and in gong to all the call overs that were brought about partly at least by the necessity to seek further information and the like. However that … can be determined if there be no agreement by … a costs assessor " (T31, L27-32). 40 Mr Ayling posed the question (T36, L5-12): "[I]s it reasonable to leave the public at the mercy of an applicant who can so conduct his appeal as to magnify the expense that the public has to bear by the behaviour that he engages in. The answer to that question is no, it's not reasonable to do that. Some sort of sanction, some sort of protection against that kind of outcome is desirable and the making of an order for costs in this case contrary to the primary position of the rule has that consequence therefore it's reasonable". 41 Mr Ayling went on to quote the example that it would not be reasonable for Councils to be allowed to compel applicants to spend massively in respect of simple appeals where approval should be a foregone conclusion. Nor is it reasonable for Councils to force applicants to pursue a court case so that the court can bear the odium of the decision. He concluded his oral submissions in chief (T36, L24-40):