The Applicants' submissions at the costs hearing
77As I earlier noted ([9]-[10]), the applicants base their costs application on allegations of unreasonable, or irrational, conduct by the Council, and/or of its having an improper purpose in defending the proceedings.
78In respect of allegedly unreasonable conduct by Council in the lead-up to the commencement of the class 1 appeal (r 3.7(3)(c)), the applicants submit (par 19):
"(a) Council had issued an occupation certificate confirming the structure was sound and suitable for use;
(b) The Council had no evidence that the minor encroachment by the dwelling into the easement land presented any risk to the use of the easement by the upstream dominant tenements;
(c) In the issue of the Order, and, it is submitted, in the refusal of the Application, the Council was not acting to achieve compliance with the consent or Construction Certificate but to achieve the recording of 'details' on the certificate of title absolving it of responsibility if works were carried out within the easement causing damage to the dwelling.
(d) It was unreasonable of the Council to have an objective of securing the recording of 'details' on a certificate of title to absolve it of responsibility when:
a. There was no evidence that the encroachment represented a risk to the use of the easement by the upstream tenements;
b. There was no evidence work on the easement would present any risk of damage to the dwelling;
c. There was no basis for the Council to conclude that damage to the dwelling in such circumstances may result in a liability to it;
d. It is unclear, but if the Council was intending to distance itself from its role as Principal Certifying Authority, this was not an appropriate means to do so;
(e) The above considerations were irrelevant and manifestly unreasonable in the assessment of whether a building certificate should be issued under the EPA Act."
79The respondent points out (reply subs par 7) that the "occupation certificate" relied upon in submission (a) above was only an 'interim" certificate (see also [36] above). Council also challenges the "objective" in submission (d) above (see reply subs pars 8-10): The court should distinguish carefully between the exercise of one discretion in October 2007 and another in February 2011.
80The applicants submit (par 27) that the Senior Commissioner found "no basis" for not granting the building certificate, and, acting reasonably and for "legitimate, rational purposes, directed to the appropriate legal considerations", the Council would not have resisted the application and precipitated the appeal. The respondent contends that that submission takes par [12] of the Senior Commissioner's judgment out of context, and I will return to this issue below (at [103]).
81Clearly the Council was concerned about the unsatisfactory outcome of some of its inspections, and Tramoli appears to have taken a conservative stand - he (1) considered that he had no discretion, in the circumstances of the building application, to allow the encroachment to stand, (2) felt no need to review the Council file until 22 June 2007, and (3) obtained no legal advice regarding the orders that he proposed be made against the applicant owners, despite not knowing of any such order/requirement having been previously imposed.
82The applicants make much of the failure of the Council officers to obtain legal advice before imposing the requirement that the applicants endorse their certificate of title with an absolution of the Council for any damage caused to their building by any works required in the easement.
83Although they made serious efforts to comply, and did not challenge the s 121B order by proceedings in this court, the applicants argued before me, on the costs issues, that the notation requirement was "extraordinary", without precedent in the Council, and invalid at law. They argue that a s 121B order requires compliance with a development consent, that the Council requirement regarding registration on title does not do so, that it was, therefore, invalid as "wildly beyond power" (see T2, p35), and that it amounted to unreasonable conduct on the part of the Council, leading up to the proceedings (Rule 3.7(3)(c)).
84Had Council sought legal advice, its attention may have been drawn to decisions of this court, such as Galandon Pty Ltd v Narrabri Shire Council (1983) 51 LGRA 5, or Hutchison 3G Australia Pty Ltd v Waverley Council [2002] NSWLEC 151; (2002) 123 LGERA 75, which would indicate that a Council's insistence on such a waiver of liability is ultra vires, not being a relevant planning consideration for a Council in deciding to grant or refuse a consent.
85The applicants also argue (pars 20-22) that insistence upon it amounts to an "improper purpose", offendingRule3.7(3)(e). Before me they argued that it was "improper" (but "not mischievous or malevolent"), because it was "so irrational", and "so contrary to the true legal planning position" (see T2, p39, LL41-46). According to the Council, the issuing of a building certificate in this case would not be "in the public interest", as it would have the practical effect of authorising an encroachment upon an easement (see generally T2, pp37-8). The Senior Commissioner did not embrace that submission to its full effect (T2, p39).
86The issue for Council, in deciding the application for a building certificate, was the structural adequacy of the dwelling, and the applicants argue that the concerns of a few upstream proprietors do not amount to a matter of "public interest" (T2, pp40-1). A consent can be completely contrary to an easement, and such private rights, estates and concerns do not constitute "a relevant planning concern" under the statutory planning regime. They were, therefore, "irrelevant considerations" for Tramoli, and he simply ignored the possibility that he/Council could consider the encroachment "favourably".
87Hodgson JA said in Sydney City Council v Ipoh Pty Ltd [2006] NSWCA 300; (2006) 149 LGERA 329, at 331:
"The question of whether a person can lawfully carry out development on land depends upon both (1) considerations associated with title to the land and (2) considerations associated with questions of environmental planning.
The granting of development consent by a council concerns (2) but not (1)".
88The question between the parties should have been addressed before the applicants were compelled to come to court, and they are, therefore, entitled to be compensated for the costs involved.
89The applicants submit (pars 23-4) that, if the court does not agree that the Council's purpose was "improper" underRule3.7(3)(e), the court "should at least accept that ... the Council was taking into account irrelevant considerations", when it refused the application and resisted the appeal, namely the estates of the upstream tenements, and so acted unreasonably under Rules 3.7(3)(d) and (f).
90On the question of the Council's approach being "irrational", Mr Seymour relied upon the present Chief Judge's decision in ACM Landmark Pty Limited v Cessnock City Council [2006] NSWLEC 256 ('ACM'). In that matter, which concerned a crematorium, the applicant was almost entirely successful before a Commissioner of the court, who imposed conditions, largely accepted by the applicant, who then sought costs, on the basis "that the evidence was all one way" ([72]). Among the Council's submissions rejected by the Commissioner was, as the Chief Judge described it (in [63]), "that the adverse effect on the amenity of the proposed modification, the so called morbidity issue, caused there to be more than a minimal environmental impact". The Council submitted that such resident concerns "were not unreasonable for persons to hold" ([77]).
91The Chief Judge accepted the submission that ([73]) "it is inappropriate for a council to accept concerns of objectors which are without a rational foundation, thereby requiring an applicant to incur the substantial costs of prosecuting a class 1 appeal". He went on to say ([85] and [90]):
"85 The issue relating to morbidity was said to be an issue falling under the heading of the amenity of a locality. It was an intangible, social or psychological amenity impact. As such, in accordance with paragraph 8(c) of the Pre-hearing Practice Direction, the Council was required to clearly identify the nature and extent of each impact and, where practicable, quantify that impact. Here, of course, there was no articulation that this was an amenity impact. There were vague references to amenity in issue 3.1 of the issues, however, that was explained by the very specific particulars in paragraphs (a) to (d) of that issue. Nowhere in that particularisation is there any statement of this amenity impact of heightening the sense of morbidity in the local community. The articulation in issue 7.9 that there would be significant social impacts is of course a different issue to one of an impact on amenity and in particular the heightening of a sense of morbidity. It is possible that such an issue could lead to a social impact but it is by no means clear from the articulation in issue 7.9 that that is what is being stated.
...
90 Having regard to the findings of Commissioner Watts on the evidence, which findings, having looked at the evidence, were really the only ones which were reasonably available, there was only one result which could have occurred in this case and that was that the modification application be approved. Having regard to the cases to which I referred in Grant v Kiama Council [2006] NSWLEC 70 (22 February 2006) at paragraph 15, I am of the opinion that in the circumstances of this case it is fair and reasonable that there be an order for costs, namely that the Council pay the applicant's costs of these proceedings".
92Mr Seymour submits (pars 25-26) that the Council's position in the appeal was based upon "an irrational belief that the encroachment into the easement would be detrimental to the upstream tenements or possibly result in damage to the dwelling" on the land, a position totally contrary to the evidence. He said (T2, p44, LL16-48), that a similarity between ACM and the present case is that:
"... the suggestion that all of this could be resolved by a simple certification from Mr Mears (sic) was not flagged in any of the contentions, it was only flagged during the course of the evidence. It's raised initially by the Senior Commissioner. The applicant's response is, well, there is that certification in place; the council position, no, it should be accurate, it should be in writing and it should be concerning particular issues. And that's the first we hear of it.
HIS HONOUR: And we should have an exclusion, or an indemnity.
SEYMOUR: Yes, that seems to have gone by that stage. Once it's before the Senior Commissioner, that issue, even though that, we would say, has been the primary motive in getting us to court, isn't necessarily flagged. My friend doesn't raise it with the Senior Commissioner in that exchange. It's more there this allegation that there's a public policy that one must never build in easements. Although, again, not particularised in the ACM Landmark style, not particularised.
So, both the issue about public policy of no building in easements and also simple solution, have Mr Mears (sic) certify the work and the way it was done, not particularised, not raised. The way it's raised is very peripheral. If that had been the central issue, it could have been addressed well before the matter even got to court. Nevertheless, once it was in court, it could have been raised in the contentions, it might have resulted in a much shorter period of time in terms of the length - it was a relatively short hearing, I acknowledge that, but we never should have been exposed to the costs that we have been in this matter, if that was indeed a simple solution.
So we would say that there are some similarities to ACM Landmark, both in the procedural sense that there was a failure to really flag this to us, and the issues were worked out during the course of the hearing, and then more importantly, the way the issues were framed by the council were irrational in this sense, beyond the scope of the Act, seeking outcomes that were not legitimate concerns for the council to have."
93Mr Seymour also referred me to Bailey v Oberon Shire Council [2007] NSWLEC 273, where Pain J was asked to order costs because there was no evidence to support the issues raised by objectors against the subject approval of a telecommunications facility. Her Honour considered ACM, Aldi, Grant, and Telstra. She said (at [27]):
"27 In light of the above, the Applicant argued that the Council, properly advised, should have known it had no or very poor prospects of succeeding on the appeal against its refusal to grant consent (Grant [15(f)] and Telstra Corporation Ltd v Hornsby Shire Council (2006) 148 LGERA 124 at [41] and [43]). Moore C found that the adverse effects claimed by the objectors (OTC) were unsubstantiated and without reasonable evidentiary foundation, see Telstra [41], [43]. The Council had a statutory responsibility to evaluate the reasonableness of objections received by it and failed to undertake that task (Telstra [42]). The Council was on notice from at least 13 November 2006 that the court appointed planning expert entirely supported the proposal and consequently should have entered into consent orders. In doing so this still would have provided to the objectors the opportunity to be heard in any hearing about whether consent orders ought be issued."
94In Belgiorno-Nettis v Mosman Municipal Council [2004] NSWLEC 731, the then Chief Judge, McClellan J, said (at [3]):
"3 ... Just as there is a responsibility upon applicants to ensure that applications which they make to Council are in proper form and capable of approval, the responsibility falls upon councils to ensure that when rejecting a proposal its decision has a rational basis. If this obligation is ignored applicants will be put to unnecessary expense in bringing appeals and it will be appropriate for the Court to make orders for costs."
95The applicants' supplementary written submissions of 14 December 2011 took issue with the respondent's written, oral and supplementary written submissions, noting (par 2) that their combined effect was to make three points:
(i) That the applicants' analysis of Council's past conduct was irrelevant, as the only matter to investigate was the discretion to issue or not issue the building certificate.
(ii) That the Senior Commissioner's decision demonstrates that no building certificate could have issued without the particular information provided, late, by the applicants, and means that the court's decision was made on the merits, providing no "fair and reasonable" circumstance to justify a costs order.
(iii) That the refusal to issue the building certificate was justifiable because of the applicants' non-compliance with the CC.
96The applicants reject those submissions (par 3), and submit (pars 4-8), in turn:
(i) Rule 3.7(3)(c) makes the Council's prior conduct (the legally invalid order, the mistaken rejection of the existence of a discretion, and the inappropriate refusal of the certificate) relevant on costs.
(ii) Council made no request for the information it now says was a necessary precondition to the issue of a building certificate, and did not include it among its contentions on the appeal. Council had an obligation to raise this matter with the applicants before they incurred the costs of an appeal, and admitted in evidence that the information could have been sought earlier.
(iii) Any failure to comply with the CC (and so the development consent) gave rise to the need for the building certificate. What is relevant on the appeal and on costs is why that was refused.
(iv) The refusal and Council's contentions on the appeal were based upon "improper or irrelevant considerations of alleviating (sic?) the Council of responsibility for the construction of the dwelling within the easement", an "improper outcome".