Valoth v Parramatta City Council

Inspections 24Council's senior building surveyor attended the subject premises on 31 July 2006, and undertook a mandatory footings inspection. At the completion of the inspection, the builder was requested to provide a written explanation as to why the mandatory pre-commencement piers and strip footings inspection was not requested and undertaken, together with the submission of an identification survey report. (The notes of Council's inspection appear at Tramoli, pp41-42, and Exhibit 1, tab 11). 25On 4 August 2006, surveyors Burton & Field Pty Ltd provided AFA with a survey indicating that the rear foundation wall stood over the easement to drain water by up to 0.24m. According to the index to the Council bundle (Exhibit 1), that survey was provided to the Council on or about its date. 26On 14 September 2006, the Council building surveyor attended the subject premises and undertook a mandatory slab inspection. At the completion of that inspection the builder was again requested to provide a written explanation why the mandatory pre-commencement piers and strip footings inspection was not undertaken, together with a full survey report showing RLs and distances to boundary, along with other certifications. There is a report of the inspection at tab 13, and that document notes, amongst the directions given, "submit for survey report showing RLs and distances to boundary". A typewritten version of the notes and directions is included in the facsimile (at tab 13) shown as sent on that date to the builder. It is headed "unsatisfactory inspections 5 Regiment Grove". 27On 19 September 2006, a senior building surveyor attended the premises and undertook a mandatory steel inspection. At the completion of the inspection a copy of the report outlining the concerns was provided to the builder, again requesting the builder to provide a written explanation of various matters (Tramoli, p43, and Exhibit 1, tab 14). 28On 18 October 2006, a senior building surveyor undertook a mandatory slab inspection. At the completion of the inspection the builder was requested to provide all documents that had been requested in the facsimile message of 14 September 2006. (A copy of the inspector's report is at tab 15, and a further copy of the fax of 14 September is at p44). 29On 23 October 2006, a senior building surveyor reinspected the steel. (His report is at Tramoli, p45). 30Tramoli deposes (par 16) that, on 25 October 2006, Council received various documents from the builder, including documentation purporting to be the structural certification of the piers and strip footings by Meares, and a survey report and sketch, dated 4 August 2006, prepared by Burton & Field, indicating the 0.24m encroachment, together with an explanation of why the mandatory footings inspection was not requested. Council's official knowledge of the relevant encroachment, therefore, dates from at least October 2006. (See tab 17; but see also [25] above, indicating August 2006. Some of the materials at tab 17 bear dates later than 25 October 2006, indeed as late as August 2007). 31Tramoli first became involved with the matter on 13 February 2007 (T2, p15, LL11-12), and he deposes (pars 17-19) to a further series of inspections conducted in February 2007, and (par 20) to "a mandatory final inspection" on 22 June 2007, all without Tramoli having inspected the Council file (T2, pp15-16).

Survey Issues 32The June 2007 inspection revealed a number of matters requiring attention. 33After checking the Council file, Tramoli set out a list of such matters in a letter to AFA, dated 25 June 2007 (Exhibit 1, tab 16). The list in the letter included (as item 11), "submit surveyor's reports detailing building position, reduced levels, building height and distances to boundaries", and (as item 12), "the builder is to certify that all works have been constructed in accordance with the plans and specifications and are completed in accordance with the relevant standards". 34The "final inspection" report called for another survey, because the October 2006 survey (T2, p17, LL4-5) "didn't stipulate all the requirements as required, so (sic?) the reduced levels and distances to boundaries". In particular (T2, p18, LL39-46), "the survey submitted didn't clearly show" that the actual setback from the southern boundary was "10.950 metres", "in accordance with its approval". In his oral evidence, Tramoli confirmed that his report was issued to tell the applicants what they "needed ... in order to obtain an occupation certificate". 35On 20 August 2007, Council received a structural certification, by Meares, of the slab (Tramoli par 21, and p47). 36On 9 October 2007, Council issued to AFA an interim occupation certificate (tab 18). The applicants submit that this certificate confirms that the structure to which it referred was sound and suitable for its approved use, but Ms Rose notes (reply subs par 33) that that certificate is irrelevant - the occupation of the building would not interfere with the easement, but the building itself and its footings might. 37Curiously, AFA lodged an application for an interim occupation certificate six days later, on 15 October 2007 (tab 21). (This disparity could not be explained by Tramoli during cross-examination - T2, p21, LL1-4). 38On 10 October 2007, Tramoli again reviewed the Council file, and prepared a filenote (par 23, and Exhibit 1, tab 19), indicating that the Burton & Field's survey dated 24 October 2006 had been received by Council and showed the building over the water easement by 240mm. Any excavation required (for access to pipes) within the easement "should not enter the zone of influence". Tramoli's note also records that "this has been discussed with Laurie Whitehead, Service Manager Construction & Development Control" ("Whitehead"). During his oral evidence, Tramoli indicated on several occasions that actions he took in this matter were discussed, in advance, with Whitehead, but not with any lawyer. 39The Burton & Field valuation survey report dated 24 October 2006 (p48) is substantially the same as the one dated 4 August 2006 (tab 12), except that it notes that levels were taken to indicate the finished slab levels as shown in the sketch attached to it (p 49), which, in turn, is an updated version of the sketch attached to the August report (tab 12).

First Council Order notified 40On 12 October 2007, Tramoli (par 24) issued a Notice of Intention to Issue an "Order No 2" pursuant to s 121B of the Environmental Planning and Assessment Act 1979 ('EPA Act'). The Notice of Intention said (tab 20 - emphasis mine): "It is noted that on the Survey report dated 24/10/06 by Burton & Field Pty Ltd, that the wall of the building is encroaching over the easement by 240mm. Prior to the issuing of the Occupation Certificate Council requires you to have this encroachment registered on the property title and clearly state that should any works be required within the easement, any damage caused to the building shall NOT be the responsibility of the Council." 41Tramoli testified (T2, p22, LL4-5) that he had never before issued any order in such terms. It was (T2, p22, LL7-20) a "first" for Council, and was formulated by Tramoli, Whitehead, and a Council drainage engineer. It went on to require the applicants to submit to Council "a copy of the property title to be endorsed and then it is to be registered with the Lands Title Office". 42The intended form of order attached to the notice was headed "Order No 15", and required the applicants to do the following: "1. Register details on the Property Title stating the encroachment over the easement, should any works be required within the easement, any damage caused to the building shall NOT be the responsibility of the Council. Due to the encroachment, a copy of the draft wording shall be submitted to Council for approval. 2. Upon registration with the Lands Title Office, submit a copy to Council. 3. Complete all landscaping works as per condition 2 of Development Consent." 43The respondent's submissions note (par 20) that, after the "notice of intent", Council received correspondence from the applicants' then solicitor, indicating that "steps would be taken to vary the easement such that the building would no longer encroach upon it". The submissions assert that because of the time such a variation was expected to take, Council decided to issue the interim occupation certificate (see [36] above).

Negotiations continue 44On 12 November 2007, Malouf Solicitors of Parramatta, then engaged by the applicants, wrote to the Council (tab 22), making submissions in response to the Notice of Intention: When the applicants acquired the property, the relevant development application did not disclose that the approved dwelling was encroaching upon the easement. Prior to the construction of the dwelling, a preliminary survey, on 28 February 2006, disclosed that the rear wall extended over the easement by varying length up to a maximum at one point of 0.965mm. Maloufs suggested that, in consultation with Council, the builder had amended the construction by reducing the size of the proposed building so as to encroach by a much lesser amount. "Our clients instruct us that this reduction in the size of the dwelling met with Council's approval and a second set of Plans were lodged with Council and approved ... The end result was again a varying encroachment upon the easement but to a lesser maximum length of 0.244millimetres (mm) and limited to rear corner wall of the building." 45Maloufs requested that the notice be withdrawn, so as to relieve the applicants from creating a dealing to be registered upon their title in favour of the Council. (Various documents were annexed to the representation, and copies are included in the tab).

First Council Order made 46On 21 January 2008, Council responded (par 27, pp56-59, and tab 23), direct to the applicants. It would appear that the Council had conducted a further inspection on 18 January 2008 (wrongly shown as 2007 in the letter), which indicated that the newly constructed dwelling had not been built in accordance with the modified approval 845/2005/A. Council pointed out that on the original approval plans was the statement "confirm dimensions and lines on site prior to construction". The revised CC did not allow the building to encroach the easement. Council's stamped approved drawing differed from a document enclosed with the Maloufs representation. The Council letter concluded that the building had encroached into the easement, and had not been constructed in accordance with the approved plan. If it had been constructed in accordance with the CC plans, the building would have cleared the easement by approximately 400mm. 47The foreshadowed s 121B order was enclosed (tab 23), consistent with the draft order which had been previously served. The applicants now contend that the order was invalid, but they did not challenge it until this costs hearing. Instead they sought time to comply with it, and an opportunity to negotiate with Council

Applicants seek to comply 2008-2009 48On 21 February 2008, Mr Valoth emailed Tramoli, requesting an extension of time to comply with the 21 January order, as he was having another survey done (par 28, p51, and tab 25). 49On 22 February 2008, Council received (par 29) from Burton & Field a further survey report dated 21 February 2008 (tab 24), described as "Final Survey Certificate forwarded on behalf of AFA ...". Again an encroachment of 0.24m is noted, but the details are slightly different from the October 2006 document. 50On 4 March 2008, Mr Valoth emailed Maloufs, with a copy to the Council, requesting them to prepare documents for registering the details of the encroachment on the property title (par 30, pp52-54, and tab 26). 51The next event disclosed by the materials before the court was a letter from Maloufs to the Council, dated 28 April 2009 (par 32, p50, and tab 27), which says: "Upon instructions received, we are in the process of completing arrangements to comply with the Order made pursuant to Section 121B of the Environmental Planning and Assessment Act, 1979 in relation to the above property. It would be appreciated if you would advise whether you have a precedent as to the wording that Council would require for the encroachment to be registered on the Title Deed. Please advise." 52Tramoli deposes (par 31, p55, and tabs 28 and 29) that, between 11 May and 21 June 2009, discussions ensued between Mr Valoth and himself, via email, in respect of the correct forms to be completed and lodged with the Land Titles Office to comply with the order of 21 January 2008. There was a change of solicitor within the firm, and Mr Valoth had been hospitalised with a heart condition for a few months (pp60-63), hence the delay. Valoth enquired as to whether the order could be waived, as the encroachment was only "250cms" (sic). 53The builder certified, on 25 June 2009 (pp66 and 71), that he was in the process of negotiating with authorities to move the easement away from the building in order to avoid a loss of value. Mr Robilliard presumes (his par 5.18) that that letter was directed to the Council. While it appears among Council's material, Tramoli does not refer to it, specifically (but see par 33 and pp51-71 of his affidavit). 54On 14 April 2010, Mr Valoth appears to have chased up AFA regarding its investigation of the movement of an easement (pp64 and 67). There are multiple copies of some of these emails (up to and including p71, and at tabs 30 to 32).

Application made for a Building Certificate 55On 7 September 2010, Robilliard Lawyers communicated with Council that they were now acting for the applicants, and submitted the subject application for a building certificate "for sale of property" (par 34, and tabs 33 and 34). The Council receipt is dated 13 September 2010. Tramoli deposes (par 34) that the application was accompanied by a copy of the Burton & Field survey dated 4 August 2006 (but it does not appear in tab 34). Mr Robilliard wrote again to Council on 19 October 2010 (par 35, and tab 35), seeking a response to the letter of 7 September. 56On 25 October 2010, Tramoli wrote to Robilliard Lawyers (tab 36) seeking further information prior to the consideration of the application. The letter referred to the approvals or certificates of 30 October 2005 and 22 May 2006, and commented that the survey of 3 August 2006 was "not a final identification survey", apparently because it did not record all the distances to boundaries, including the rear, in a way that demonstrated that the building had been constructed in accordance with the CC, namely 10.950m from the rear boundary. 57On 3 November 2010, Robilliard advised Council that his client was obtaining a further survey report (par 37, and tab 37), and, on 15 November 2010, Robilliard forwarded a survey, dated 6 November 2010, from D J Hore & Associates (par 38, and tab 38). 58On 16 February 2011, Robilliard enquired of Council when the building certificate would issue (par 39, and tab 39). 59On 23 February 2011, Tramoli, using a "standard template" Council document (T2, p23), undertook an assessment of building certificate application No BC/100/2010 (par 40, and tab 40). He determined to recommend that it be refused. Encroachment of the corner of the building was noted, and, in response to the question on the assessment form "Can the encroachment be considered favourably?", Tramoli responded "No". In his oral evidence he confirmed that it was not for him to decide if it could be "considered favourably" (T2, p23, LL45--50). 60Under the heading "Reasons for Refusal", Tramoli commented: "subject building has not been constructed in accordance with approval CC/845/2005A dated 22 May 2006. Building has been built over an easement to drain water". He confirmed in his oral evidence (T2, p24, LL4-41) that those two reasons provided sufficient grounds for him to refuse the application, and, in his opinion, also for the court to refuse the appeal. He did not consider that he had a discretion he could exercise.

Building Certificate refused 61On 28 February 2011, Tramoli issued a Notice of Determination, refusing the building certificate application (par 41, and tab 41), on the grounds that the subject building had not been constructed in accordance with the CC dated 22 May 2006, and that part of the building had been built over an easement to drain water.

Second Council Order notified 62On the same day, Tramoli issued a Notice of Intention to Give an Order under Section 121H of the EPA Act (par 42, and tab 42), requiring partial demolition and removal of the encroaching portion of the unauthorised development. The attached draft order would require: "1. Partially demolish and remove the encroaching portion of the unauthorised development (i.e. Class 1a, the rear Southern middle corner of dwelling house and Class 10b retaining wall as indicated on the submitted survey report prepared by D.J Hore & Associates dated 6 November 2010). 2. All demolition works must comply with AS2601-2001 (Demolition of Structures) and all demolition materials are to be disposed of at an accredited waste station. 3. The partially demolished/altered development must be rectified to comply with the performance requirements of the Building Code of Australia Volume 2 2010. 4. A professional structural engineers certificate must be submitted to Council upon completion of all rectification works confirming that the rectification works are structurally adequate and comply with the performance requirements of the Building Code of Australia Volume 2 2010. 5. Submit a Final Identification Survey Report from a registered surveyor confirming that the rectified development is no longer encroaching upon the 2.5m wide stormwater drainage easement."

These Proceedings are Brought 63On 11 April 2011, the applicants filed their class 1 application, seeking an order directing the Council to issue a building certificate. The application also sought costs. A copy of the application for a building certificate "for sale of property", dated 13 September 2010, was attached, along with the 4 August 2006 survey, the Hore Associates survey of 6 November 2010, the Notice of Refusal, and the Notice of Intention (all in tab 43). 64Council filed its Statement of Facts and Contentions on 10 May 2011 (Exhibit 2 before Senior Commissioner Moore, and part of Exhibit 2 before me). The facts were not controversial, but the contentions were as follows: "1. Non-Compliance with Development Consent 1.1 The proposed development has not been constructed in accordance with the approved Construction Certificate CC/845/2005/A. 1.2 there is a current Notice of Intention to Issue an Order (2) pursuant to the Act requiring demolition the portion of the dwelling encroaching the easement. Particulars Environmental Planning & Assessment Act 1979: Section 149D(1)(1a)(ii). 2. Development Encroaches Easement The constructed development has been partially built over a drainage easement. Particulars Part of the timber retaining wall has been constructed 0.09m within the easement. Part of the subject residence and attached guttering has been constructed 0.24m and 0.41m within the easement. 3. Public Interest Issuing of a Building Certificate for the Sale of Land with the constructed development is not in the public interest for the reasons contained within Contentions 1 and 2." 65The applicants filed their Statement of Facts and Contentions on 15 June 2011 (Exhibit A before Senior Commissioner Moore, and part of Exhibit 2 before me). Their contentions were as follows: "1. Non-compliance with development consent 1.1 the applicant says that the Court in the exercise of it's discretion would not order that part of the building be demolished, altered or rebuilt. Particulars: Paragraph 1 of Council's Notice of Intention to Give an Order dated 12 October 2007; 1.2 The purpose of Section 149D is to regularise departures from development consents and the circumstances of the present case do not warrant Council taking action in accordance with Section 149D(1)(a)(ii). 1.3 The departure is de minimis. 2. Development encroaches easement 2.1 The easement is not vested in the Council. The Council has no interest in the easement. The easement benefits 12 upstream owners namely Lots 88-99 inclusive and obtaining the consent of those upstream owners to alter the position of the easement is so difficult as to be all but impossible. 2.2 On the proper construction of the easement, pursuant to Section 181A of the Conveyancing Act, the relevant terms of the easement are set out in Schedule 8 Part 3 which provides, inter alia, that every person who is at any time entitled to an estate in possession in the dominant tenement may 'enter upon the servient tenement and to remain there for any reasonable time for the purpose of laying, inspecting etc'. That provision means that any proprietor of the dominant tenement may enter any part of the servient tenement to service the easement, not limited to the actual site of the easement. It follows that the activities of servicing the easement will not be prejudiced in any way by the encroachment. 2.3 The encroachment will not affect the use or enjoyment of the easement in any way. 2.4 The encroachment upon the easement is not a matter which would entitle the Council to take action under Section 149D(1). 3. Public Interest The Applicant applied for a building certificate, not a 'Building Certificate for the Sale of Land' (whatever that might be). It is in the public interest that minor non-compliances with development consents be regularised by recourse to Section 149D." 66The appeal came on for hearing before Senior Commissioner Moore on 22 June 2011, following an unsuccessful s 34 conference and a view of the site. The parties were content for the Senior Commissioner to hear the matter after he terminated the s 34 conference. 67The transcript of the hearing before Senior Commissioner Moore (Tramoli, pp72-93) records that Mr Robilliard appeared for the applicants and Ms Rose for the respondent. The most relevant passages of transcript occur during the concurrent evidence of Tramoli and Malcolm Smith. Both had been involved in the on-site meeting. During their evidence the following exchanges occurred: (a) (at T1, p11, LL12-28, and p12, LL1-11): "In the circumstances, Mr Robilliard, where I agree with the opinion as expressed by both of these gentlemen that if there were to be works on the pipe that required excavation in the area I am not confident that it would require an application to the council in circumstances where if there is no ability to supervise the work in a fashion that would impose conditions on it to ensure that the integrity of the building were maintained, I would need to be satisfied, would I not, that if such works were proposed to be carried out, the integrity of the building would be maintained provided the activity was confined to works within the drainage easement of the nature of works that are permitted by the easement. The only way it would seem to me, given the notation on page 1 of 3 behind tab 8, that piers are to be in accordance with the geotechnical report covering this site, to deal with whether or not these gentlemen can have the degree of certainty on an expert evidence basis that I would intuit I would need to have, would I not need to be able to have recourse to that report and to have these gentlemen examine it. ... ... The plan to which I have taken you, refers to another document which would seem to me is potentially critical to knowing the nature of that which is certified in the document dated 3 August 2006. Now I don't have that document. And I don't know whether it is available or not, for example, whether Mr Mears(?) relied on that document when he drew up the plan that is sheet 1 of 3, dated 14 August 2005. And whether an enquiry of Mr Mears would enable a copy of that document to be obtained. Or indeed whether anybody knows what the geotechnical engineer is who drafted the report with respect to the site." (b) (at T1, p14, L47 - p16, L38 - emphasis mine, referring to the geotechnical report (which had just been tendered as Exhibit 3)): "SENIOR COMMISSIONER: I assume both the witnesses have read the document that is now exhibit 3. I see they both have copies of it in front of them. Mr Smith, could I get you to repeat for the record in an evidentiary sense what you heard Mr Mears (sic) say to Mr Robilliard with respect to the piering that has taken place on the site that is the subject of the application. WITNESS SMITH: Mr Mears (sic) indicated that he had an involvement from a structural engineer's viewpoint on a number of properties in that general vicinity of the site. He indicated that he was aware of the pipe easement along the rear of these properties. He also indicated that the piers were installed and they were socketed 1 metre into shale. He also indicated that the concrete piers had steel reinforcement. He didn't indicate why that was the case but he assumed it was something to do with the geotechnical report or his own design requirements. That's all I heard. SENIOR COMMISSIONER: Do you have a set of plans? WITNESS SMITH: A set of structural engineering plans? SENIOR COMMISSIONER: No, the structural engineering plans that I referred to earlier as being behind tab 8 appear to be based on the original design of the building and not on the final construction certificate version of the rear of the building. Do you have any structural plans that reflect the final version of the building? WITNESS SMITH: No. I have a version that shows the original outline of the building. It has a stamp of Parramatta City Council reference is 845/05. SENIOR COMMISSIONER: Yes, that's the plan that I have open in front of me. It would appear to indicate that - assuming that the pier locations are likely to be replicated - is constructed that each relevant right angle corner of the structure is supported but by a pier whatever might be the location of any intermediate piers between the corners, is that correct? WITNESS SMITH: That would be normal practice. SENIOR COMMISSIONER: Do you accept that, Mr Tramoli? WITNESS TRAMOLI: Yes. SENIOR COMMISSIONER: So, Mr Tramoli, in light of what Mr Mears (sic) has told Mr Smith, and the certification from Mr Mears (sic) as to the construction of the piers and footings, do you see any reason why I should not accept that the corner that intrudes into the drainage reserve will be supported by a pier that is socketed into the fashion that was described by Mr Smith? WITNESS TRAMOLI: Senior commissioner, I would like to see written certification from the structural engineer to say that yes, he did see at subsequent depth was socketed in the minimum requirements as set out by the geotech report. And I would like to know what actual depth that they did go down to. SENIOR COMMISSIONER: Assume for the purposes of this question, that Mr Mears (sic) was to provide a certificate with respect to that particular corner, that at that corner - that corner is supported by a pier that is socketed 1 metre into the underlying shale substrate. And that that pier has been poured not merely of straight concrete mix but has got steel reinforcing whether it is R12 or something else but appropriate steel reinforcing located in it. Would you be satisfied that that corner of the building would then be appropriately supported if there were a necessary for there to be excavation in its vicinity for the purpose of accesses the pipe? WITNESS TRAMOLI: From a professional point of view I would not feel comfortable due to the nature of the sloping site whether it be a straight cut down that easement. Should there be a leaking pipe further up on that site it can cause a detrimental effect because it is a filled site. It's only I think - I saw it mentioned on one of the pages - it's over lined over the existing. SENIOR COMMISSIONER: I want to make it clear, I'm not asking you a general question about structural integrity of the whole of the applicant's building, I am asking you a question about structural support of the triangular intrusion into the drainage reserve. That, at least as I understand the nature of the contest in these proceedings, Ms Rose will have the opportunity to tell me formally if there is some position to the contract, but it is my understanding that the totality of the nature of the contest between the parties is that triangular - is the appropriateness to certify that triangular area as opposed to the remainder of the built structure. So I'm just wanting you to confine your contemplation to an area that is about - right angle triangle of about a quarter of a metre on each of the sides adjacent to the right angle. I am not prepared to try and apply Pythagoras' theorem to work out the length of the hypotenuse at this time. Do you say that that area would be adequately piered for its support if there were a certificate of the nature that you say you would believe Mr Mears (sic) should and could provide? WITNESS TRAMOLI: Yes, senior commissioner. If he can provide the documentation, yes. SENIOR COMMISSIONER: Do you agree? WITNESS SMITH: Yes, senior commissioner." 68During his evidence before me, Tramoli was asked about some of the evidence I have just quoted, and, in particular, the passage I have emphasised, and the following exchange occurred between him and Mr Seymour (T2, p26, LL41-50): "Q. Is that an accurate record to your recollection of what you said on the day? A. Yes. Q. So your position then at that time was well Mr Mears (sic) has reported those things to Mr Smith, but it really should be put in writing? A. Correct. Q. What was it that you wanted to see in writing from Mr Mears (sic)? A. That there was an actual pier located in that corner of the building and that it did pass the zone of influence of that pipe located in that easement." 69At the substantive hearing, shortly after the passages quoted above (in [67]), some further exchanges occurred, upon which (at T2, pp38-9) the applicants rely before me. I quote those exchanges (T1, p17, L21-p18, L26, and then LL41-46): "ROSE: Senior commissioner, I would say that in relation to contention 1 in the statement of facts and contentions that given the information that has now been presented to council, that was the first reason that the building certificate application was not issued was that it did not comply with the development consent, that being the construction certificate. And when you go to 149D it's about forming a conclusion about whether there should be something that would stop you. SENIOR COMMISSIONER: I understand that. ROSE: In that sense whilst there is a non-compliance, the information and the practical issue about that issue, that being the safeness that you have discussed, I think that that probably - I think it is the case that that could be resolved. But as to issue 2 and issue 3, that remain in the statement of facts and contentions, has a remaining concern that as a consequence of a building certificate being issued there would be a practical effect that there is a variance or encroachment upon an easement and there's a breach in a sense of the terms of that easement. And that was another reason why council had that initial concern with issuing the building certificate, that being the practical effect that it authorises an encroachment upon an easement. SENIOR COMMISSIONER: Does a building certificate authorise the encroachment on the easement? Or does it simply acknowledge the fact that that which encroaches on the easement is structurally sound? You see if it is the latter proposition, any question of encroachment on the easement is a matter for private legal remedy between those with the benefit of the easement and the person who may have constructed, maintained or otherwise continued any encroachment on to the easement. ROSE: I understand. The issue is in a sense it is actually a public policy concern that council has. And that when the building certificate crossed its front counter it just had a concern that without - that people have an expectation, the publish has an expectation when it comes to things like easements and that there is a broad understanding in the community that an easement shouldn't be built over and that by issuing that building certificate it's causing an issue between private parties notwithstanding that the council isn't the beneficiary of the easement. By it undertaking that statutory action it does cause a problem. Council doesn't have a concern that practically taking the part - if it was the case that the Court decided to exercise its functions - if it thought it was necessary - and that's a precursor, to exercise a function under s 98 of the Conveyancing Act. I don't think that we would have very much to say about that practically. But it's about - council's concern is really about it is a public authority being seen to authorise, in a sense, encroachments over easements SENIOR COMMISSIONER: But it's not being asked to do that. And I don't understand that I am being asked to do that. I am being asked to approve certification of what amounts to the structural adequacy overall of the totality of that which is built on the site with the appropriateness of me doing so being in question with respect to the small triangle of development to which we have been referring. ... It would seem to me that if I were to have a certificate of the nature that I have discussed with the experts from Mr Mears, that is confirms that there's a pier of the nature that he describes under the that corner, that it might be appropriate for me to issue a building certificate or to direct the council to issue a building certificate, but to impose an additional condition on it." 70After further discussion, the Senior Commissioner proposed (T1, p20) that the hearing be adjourned, and (at L23) that he give directions for the filing and service of a certificate from Meares. After a short adjournment, the Council indicated that it agreed with the course proposed by the Senior Commissioner, provided that it had an opportunity to consider the certificate, when received. The matter was then adjourned and set down for further hearing on Wednesday 6 July, with the certificate to be filed and served by close of business on 1 July 2011. 71As summarised in the respondent's submissions (par 7), the court required the engineer to certify that: "(a) the relevant pier was located at the corner of the building adjacent to the easement; (b) the nature of the substrate to which the pier extended; (c) how far into the substrate the pier is socketed; and (d) the pier was adequate to protect the structure and any excavation in the drainage easement". 72Meares provided a certificate on 30 June 2011, and a revised version on 5 July 2011. The latter version became Exhibit C before the Senior Commissioner on 6 July. Both versions appear at pp94-95 of the Tramoli affidavit, and Exhibit C is set out in full in par [9] of the Senior Commissioner's judgment. It made the following four points: "1. The (sic) all piering on site was carried out in my opinion in accordance with the geotechnical report and the requirements of the structural plans prepared by my office. Including reinforcing of the piers. 2. That the substrate hit was in accordance with the geotechnical requirements. Being shale bedrock and were socketed in at least 0.5m. 3. The design followed the requirements of the geotechnical report and based on the fact that it is supported on the bedrock, it would permit work within the adjacent easement including removal of the pipe without damage to the dwelling. 4. Although the a (sic) set of engineering plans could not be found to match the dwelling as constructed, it is my opinion that the piering was carried out in accordance with the design intent, including the placement of piers within the strip footing adjacent to the site of the easement and at the corner of the building partially within the site of easement." 73When the matter returned to the court on 6 July, there was a short hearing lasting approximately 30 minutes (par 51), but, as I have already noted, no transcript is available. The Senior Commissioner upheld the appeal, and directed the Council to issue the building certificate. The applicants were directed to notify the "upstream" property owners, who benefited from the easement. The building certificate was issued on 12 July 2011 (par 52, and pp96-97). 74In his judgment (Exhibit 3 - [2011] NSWLEC 1184) the Senior Commissioner recounted briefly some of the above events, and then made the following points (pars [7]-[12]): "7. It seemed to me that, as part of the evidentiary process to enable me to do so in a proper fashion, I had to have some evidence as to the nature of the footings (particularly the piers supporting those footings) in the vicinity of the element of the building that was built into the drainage easement. The council did not contest any other structural or other issues with respect to the remainder of Mr and Ms Valoth's house. 8. As a consequence of that need emerging in the first hearing, I adjourned the matter to enable Mr and Ms Valoth's solicitor, Mr Robilliard, to obtain information from the engineer who had been responsible for supervising the structural aspects of the erection of Mr and Ms Valoth's house. 9. I have now been provided with a letter (Exhibit C) from Mr Patrick Meares, that supervising engineer ... 10. Of critical importance, in this letter, is that which is contained in the final paragraphs of the letter. These satisfy me as to two matters. The first is that the legitimisation by the issuing of a building certificate for the dwelling will not in anyway compromise the ability of the upstream beneficiaries of the drainage easement from entering into Mr and Ms Valoth's property for the purposes of carrying out works in that easement (in what would seem to me, from the engineering evidence I heard during the course of the site inspection from both parties, the extremely unlikely event that such works needed to be undertaken). 11. Second, I am satisfied that, if such works were necessary, there would be (in light of Mr Meares' letter) no risk to the structural integrity of Mr and Ms Valoth's dwelling nor would there be any risk to those who were entering into the Valoth property for the purposes of carrying out works within the drainage easement. 12. Under those circumstances, in my view, having been satisfied as to the structural adequacy of the building and of the lack of risk to those who might need to work in its proximity of the small unapproved corner of its location, there is no basis for me [sic - not] ordering and there is no impediment to me so ordering the issuing of a building certificate to Mr and Ms Valoth." 75The judgment went on to consider ([13]-[15]) the court's power to attach a variety of conditions to the exercise of the power to order the issuing of the building certificate. Neither representative questioned the power to make the orders or the appropriateness of them and the orders set out in par [16] of the judgment were as follows: "1. The appeal is upheld; 2. The respondent is to provide to the applicant, within 28 days of the date of these orders, a list of the registered proprietors of the upstream properties benefited by the easement for drainage and the address that the council has for each of those registered proprietors for the purposes of correspondence with them; 3. The respondent is directed to issue a building certificate for the whole of the dwelling erected on the applicants' property at the same time that the list in (2) is provided to the applicant; 4. Within 28 days of the receipt of the building certificate and the list of names and addresses of the registered proprietors of the upstream benefited properties, the applicant is to send a letter to each of those registered proprietors (but where two or more of them share the same name and address only one letter is required for those proprietors) that encloses a copy of these reasons for decision; 5. Within 14 days of the dispatch of those letters to the upstream beneficiaries of the easement, the applicant is to file and serve an affidavit establishing compliance with (4); and 6. The exhibits, other than Exhibits 2, A and C, are returned." 76On 14 September 2011, the applicants filed their Notice of Motion for costs.

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".

The Respondent's submissions on costs 97The respondent relies on the fact that the Senior Commissioner "was not in a position to approve the building certificate application as it came before him", and needed to make "very specific directions about additional certification to be provided ... that satisfy (sic) him about a concern that he had about works being undertaken in the easement", an "overriding concern", which was actually "identified by Mr Tramoli on 10/10/07" (tab 19), that the building's "structural adequacy may be affected if works were to be undertaken there. The Senior Commissioner wanted information to be assured that if that occurred the building would be safe" (see T2, p47, LL14-21). 98A plan had identified the prospect that the building might be located over the stormwater drainage easement, and the modified CC indicated that it "should be constructed so that it did not enter the easement. The applicants then went ahead and built the building over the easement. Not in accordance with the" CC (T2, p47, LL42-47). The Council proceeded to verify the encroachment (T2, p48, LL1-6), and gave Notice of Intention. Ms Rose conceded in argument that Council's concerns "were probably not particularly well expressed" in the (proposed) order, but it was "trying to figure out a way to solve that problem" of work being done in the easement and putting the building at risk (LL16-28). 99In the end, the Senior Commissioner, not satisfied with the information before him, "saw another pathway to solve that problem", a course "that council hadn't envisaged previously" - a building certificate could issue if "there was certainty that nothing could happen when that excavation occurred" (T2, p48, LL30-33, and p49, L47-p50, L12). 100In specific response to the claim for costs pursuant toRule3.7(3)(c) (i.e. for the lead-up phase), the respondent's submissions (par 23) argue as follows: "Council issued a Construction Certificate and was the appointed the PCA. As PCA it undertook a series of mandatory and other inspections, consistently following up and making requests for information where it was not satisfied by matters observed on the site. Additional information was received which revealed an inconsistency with the approved construction certificate plans. When it was clear the building had been built over the easement to drain stormwater, Council issued a Notice of Intention to Issue an Order. The Applicant then provided information to the Council that it intended to vary the easement. When the Applicant applied for a Building Certificate, the application was refused on the basis that the building encroached on an easement and was not consistent with the construction certificate plans. Council's actions were reasonable at all times leading up to the Class 1 proceedings." 101The respondent relies (pars 24-30) on the transcript of the substantive hearing and the terms of the Senior Commissioner's judgment to make clear to the court that its conduct of the actual proceedings was entirely reasonable at all times, and flatly denies (pars 31-33) having any "improper purpose" at any stage of the matter. The Council, in the end result, willingly embraced the Senior Commissioner's suggested "way forward" ([70] above). 102The respondent's submissions say (pars 36 and 38): "36. The Respondent's conduct leading up to, and during the proceedings can only be described as reasonable. It was concerned about the Applicant having built over an easement to drain stormwater which benefitted (sic) a substantial number of upstream properties, and that the building was not built in accordance with the development consent. The building was built on a considerable slope, where particular conditions had been imposed on the general subdivision, relating to engineering necessary to build various dwelling houses. It was not clear that if work had to be carried out in the easement to drain water, the structure of the dwelling house would remain safe. Council refused the building certificate on the basis of the inconsistency with the development consent. ... 38. It was only after Senior Commissioner Moore required the Applicant to provide additional certification relating to the structural adequacy of the building that it became clear the building would be safe where excavation or work had to take place in the easement to drain stormwater. Whilst Council's initial concern was identified as inconsistency with the construction certificate plans, it was clear that the concerns actually related to the structural adequacy of the building and whether it would withstand works being undertaken in the easement of stormwater. Council's position was clearly reasonable having regard to the conclusions reached by Senior Commissioner Moore, that further information attesting to the structural voracity of the building was necessary before any Building Certificate could be issued. In the circumstances of this case, the Respondent's actions were reasonable and the Respondent respectfully submits that there is no basis to found an application pursuant to Rule 3.7 of the Court Rules." 103I quoted above (at [74]) pars [7]-[12] of Senior Commissioner Moore's decision. In its reply submissions (pars 14, 17 and 19), the Council submits: "14. Those paragraphs establish that it was regarded by the Senior Commissioner as an essential necessary precondition for upholding the appeal in favour of the Applicant (in granting the building certificate) that further evidence of an important nature be obtained (by the Applicants), tendered and considered. That evidence was to be obtained by the Applicants, and the Applicants had not attended to this prior to commencing the proceedings or prior to the adjournment of the proceedings referred to at paragraph [8] of the Judgment. That new evidence was expert evidence and concerned the functioning of the drainage easement onto which the dwelling on the Land the subject of the proceedings encroached (that being common ground): paragraph [10] of the Judgment, and the structural engineering issue as to whether works required for the functioning of the drainage easement posed any structural risk to that dwelling: paragraph [11] of the Judgment. ... 17. ... paragraph [12] of the Judgment says that after having been satisfied (on the evidence in Exhibit C referred to at paragraph [9]) as to the structural adequacy issue and the ability to carry out work required by the easement, there was no basis for the Court not to grant the building certificate. This is quite a different conclusion to the bald statement that there was no basis for not ordering a certificate simpliciter. ... 19. There is no finding in the Senior Commissioner's Judgment that suggests that the decision to grant the building certificate was other than a decision on the merits and that decision was importantly based on new evidence only obtained by the Applicants as a result of an adjournment in the proceedings. The Senior Commissioner exercised the broad discretion conferred by s.149F of the EPNA Act to grant the building certificate: paragraph [14] of the Judgment. 104In response to the applicants' Ipoh point, about the separation or interaction of property title and planning law, Ms Rose submits that Council is entitled, indeed obliged, to be concerned, "through the development assessment process and when assessing a building certificate application", about impacts on private entitlements in the circumstances of this case (see T2, p49, LL35-45), and relies (in reply subs par 21) on the importance attributed to those issues in the Senior Commissioner's judgment (pars [7]-[16]), and in his orders. 105Ms Rose distinguishes ACM on the basis that the process of granting a building certificate when the information is inadequate is different from the merits assessment of an objection to a proposed development approval, not supported by probative evidence (see T2, p50, LL35-38). She also notes (reply subs par 20) that the Senior Commissioner resolved the matter without making any finding that the Council was legally obliged to grant the certificate, or had acted "in any way improperly or unreasonably" in refusing to do so, in the absence of the expert opinion in Exhibit C. 106Relying on Aldi and Universal, Ms Rose put to the court (T2, p51, LL33-8) that "it really does need to be a very special case" for the court to award costs. The present matter is "quite an unusual case", and "council struggled to come to terms with" the approach to be taken. 107While negotiations were proceeding between the applicants and Council, involving the applicants' supposedly seeking to vary the easement itself, they decided to apply to Council for a building certificate. The respondent says that to make that application was not "fair and reasonable" in the circumstances (T2, p51, L39-p52, L5). The applicants' non-compliance with the terms of the consent remained (see reply subs pars 28-32). 108Ms Rose could not find a case with "any useful fact analogies". The court would not find the Council's attempts at resolution other than "fair and reasonable". She submitted (in reply subs par 23): "This is because until expert evidence in the nature of that ultimately obtained by the Applicants (after an adjournment at the hearing) and tendered in these proceedings was obtained, it would not have been justifiable or appropriate for Council, or the Court on appeal, to grant the building certificate. It was therefore the Applicant's failure to obtain such evidence or the absence of such evidence that can be said to have been causative of the Applicants' commencement and continuance of this appeal, but the same cannot be said of any conduct of Council prior to the proceedings as due to the absence of this evidence even if that conduct had been unreasonable Council would nevertheless have been obliged to have refused the building certificate, and the Court to have refused the appeal." 109She relied on the Chief Judge's decision in Jeffman Pty Ltd and Lawrence Dry Cleaners Pty Ltd v Environment Protection Authority of NSW, Sydney Water Corporation and Douglas and Hilary Hutchinson (No 2) [2011] NSWLEC 205, at [25], to submit (in reply subs pars 25f) that such issues of causation are of "central importance" to the application of Rule 3.7. The applicants' costs were not a direct result of any prior conduct by Council. 110If the court were minded to make an order for costs in favour of the applicants, the Council submits that it should exclude those costs involved in the unsuccessful s 34 conference - see ROI Properties Pty Ltd v Council of the City of Sydney [2010] NSWLEC 22. 111If the applicants' costs motion were to fail, they should be ordered to pay the Council's costs on it.

Consideration 112Put simply, the timeline of this matter comprises six phases - (1) the approval phase (2002 - 2006); (2) the construction phase (2006 - 2007); (3) the compliance issues phase (2007 - 2008); (4) the negotiation phase (2008 - 2010); (5) the building certificate phase (2010 - 2011); and (6) the class 1 appeal (see [63]-[75]). 113The major relevant features of each phase, again put simply, were - (1) the discovery of a possible encroachment, and the modification of the CC to preclude it (see [44] and [46]); (2) the failure of the applicants to ensure all the required inspections were done during construction, and confirmation that the dwelling was built encroaching upon the easement (see [23]-[30]); (3) the parties seeking, co-operatively, a solution to the non-compliant encroachment (see [40]-[54]); (4) the applicants' change in approach in September 2010, when they moved from negotiating a solution, such as securing a variation of the easement, or agreeing to and implementing a notation on their title, to seeking a building certificate (see [55]-[59]); (5) the Council's refusal of the certificate, and its giving of a Notice under s 121H, because no action had been taken to remedy the clear non-compliance with the consent (see [60]-[62]); and (6) the identification by the Senior Commissioner, and adoption by the parties, of an option which had not been previously considered by and between them (see [70]-[75]). 114Tramoli has been criticised for neither realising that the notation requirement was beyond power, nor seeking legal advice before imposing it, but the applicants had the benefit of legal advice and representation, and did not question it. 115They now attack the order requiring the notation, and overstate the significance of Council's decision to issue the interim occupation certificate while they complied with the requirement, or achieved a movement of the easement. Their contention 2.1 (in [65]) suggests that the latter of those two options could not be negotiated with the upstream beneficiaries, but the material before me indicates that they were content to seek the notation on their title. 116When they changed their legal representation in September 2010, their approach to the problem, a problem which may not have been of their making, but certainly emanated from their side, changed, and they sought to solve it by obtaining a building certificate. 117They achieved that objective, over a hardening line taken by Tramoli and the Council in February 2011, only because of a practical, or "lateral" approach, suggested by the Senior Commissioner. 118While Council admits that its position may not have been explained with crystal clarity at all times, I can find no unreasonable, irrational or improper conduct on its part. 119The appropriate result is that each side meet its own costs of the substantive proceedings, so the court's decision will be that there be no order as to them. 120However, I am not satisfied that it was reasonable for the applicants, in all the rather unusual circumstances of the case, to seek an order for the costs of the proceedings. 121They chose to bring the Notice of Motion, when the relevant principles, guiding the court regarding costs, were well settled, and the applicants failed to satisfy the court that an order should be made. 122I believe that they should pay the Council's costs on the motion.

Conclusion 123Accordingly the court will dismiss the applicants' Notice of Motion, with costs. 124The formal orders of the court are:- (1)The applicants' Notice of Motion filed 14 September 2011 is dismissed. (2)The applicants are ordered to pay the respondent's costs of and incidental to that motion, on a party-party basis, as agreed or assessed. (3)Exhibits 2 and 3 are to remain in the court file, but Exhibits 1 and 4 are returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 July 2012