Land and Environment Court of New South Wales CITATION : Menangle Sand & Soil Pty Ltd v Wingecarribee Shire Council & Ors [2000] NSWLEC 100 APPLICANT: Menangle Sand & Soil Pty Limited ACN 001 425 921 FIRST RESPONDENT: Wingecarribee Shire Council PARTIES : SECOND RESPONDENT: Sydney Catchment Authority THIRD RESPONDENTS: Olivia Isherwood, Timothy and Carol Hyde, Sam and Susan Ballas, Julie and Christopher Stott and Elizabeth Bell FILE NUMBER(S) : 10760 of 1999 CORAM: Lloyd J KEY ISSUES: Costs :- discontinuance - planning and building appeal - addition of two further respondents - expansion of issues beyond those specified in the council's notice of determination - no hearing date fixed - applicant acted promptly in discontinuing - no order for costs LEGISLATION CITED: Land and Environment Court Rules 1996 Pt11 r 5(1) Bryant v Lismore City Council, Talbot J, 4 July 1997, unreported; Chris Lonergan & Associates v Byron Shire Council, Pearlman J, 27 April 1998, unreported; David Crane & Associates Pty Limited vKogarah Council, Lloyd j, 10 June 1998, unreported; CASES CITED: Gilling v Hawkesbury City Council, Bignold J, 7 May 1998, unreported; Kentgreen Dural Pty Limited v Hornsby Shire Council, Bignold J, 7 May 1998, unreported; Manly Wharf Pty Limited v Manly Council (1997) 98 LGERA 245; Tobaquero v Campbelltown City Council [2000] Bignold J NSWLEC 68, unreported DATES OF HEARING: 31/03/00 DATE OF JUDGMENT: 06/20/2000 APPLICANT: A J Houston (Solicitor) SOLICITORS: Messrs Houston Dearn O'Connor LEGAL REPRESENTATIVES: THIRD RESPONDENTS: T F Robertson (barrister) SOLICITORS: Woolf Associates JUDGMENT: IN THE LAND AND Matter No: 10760 of 1999 ENVIRONMENT COURT Coram: Lloyd J OF NEW SOUTH WALES Decision date: 20 June 2000 Menangle Sand & Soil Pty Limited ACN 001 425 921 Applicant v Wingecarribee Shire Council First Respondent Sydney Catchment Authority Second Respondent Olivia Isherwood, Timothy and Carol Hyde, Sam and Susan Ballas, Julie and Christopher Stott and Elizabeth Bell Third Respondents REASONS FOR JUDGMENT 1. This an application by the third respondents, Olivia Isherwood and others, for an order that the applicant pay the third respondents' costs following the discontinuance of the proceedings by the applicant. The first respondent, Wingecarribee Shire Council ("the council"), and the second respondent, the Sydney Catchment Authority, had both consented to the discontinuance. The application for costs is made pursuant to the Land and Environment Court Rules 1996, Part 11 Rule 5(1) which states: (1) If a party to any proceedings discontinues them in whole or in part, the Court may, on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought and who does not consent to the discontinuance. 2. The application in this case must be considered in the light of the Court's Practice Direction 1993, which provides: The practice of the Court, is that no order for costs is made in planning and buildings appeals, unless the circumstances are exceptional. 3. The circumstances which led to the commencement of the proceedings and subsequent discontinuance thereof are as follows. On 29 September 1998 the council by a notice of determination refused its consent to the applicant's development application for a sand quarry at Kangaloon. On 23 September 1999 the applicant commenced the proceedings, being an appeal under section 97 of the Environmental Planning and Assessment Act 1979 ("the EP&A Act") against the council's refusal of the development application. On 23 November 1999 the Registrar granted leave for the joinder of the Sydney Catchment Authority as second respondent. On 11 January 2000 the Registrar granted leave for the joinder of eight objectors to the development as third respondents. Statements of issues were then filed and served by the first, second and third respondents. The first respondent's statement of issues raised three new issues which were not raised in the grounds of refusal of the development application. The second respondent's statement of issues raised for the first time five new issues. 4. Immediately following its receipt of the statements of issues from all three respondents, the applicant reviewed its position and decided to discontinue the proceedings. The applicant states that it acted in timely way in reaching its decision to discontinue shortly after receiving the respondents' statements of issues and before the proceedings were set down for hearing. The applicant's principal reasons for discontinuing are said to be: a) changes to the legislative regime occurring after the determination of the development application, particularly the gazettal on 1 February 1999 of State Environmental Planning Policy No. 58 ("the SEPP No. 58"); the gazettal on 17 February 1999 of the Special Areas Strategic Plan of Management pursuant to the Sydney Water Act 1994 ; the commencement on 8 January and 16 April 1998 of the Sydney Water Catchment Management Act 1999 ; and the promulgation of the Sydney Water Catchment Management Act (Transitional Arrangement) Regulation 1999 ; b) the expansion of the issues beyond those specified in the council's notice of determination; c) the addition of two further respondents; d) the anticipated substantial increase in legal costs, counsel's fees and expert witnesses' expenses arising from (a), (b) and (c) above, none of which were of the applicant's making or within its capacity to control and which compromised the financial viability of the proceedings. 5. The new issues raised in the statements of issues and which went beyond those relied upon in the council's notice of determination of the development application are as follows: the impact of the development on the water table; the impact of traffic on roads within the immediate vicinity of the proposed development; whether there was compliance with SEPP No. 58; the incompatibility of the use within the " Metropolitan Special Area " and the water catchment for the Nepean Reservoir; inconsistency with the objectives of the Special Areas Strategic Plan of Management ; the adequacy of the water quality monitoring program; the risk of pollution to Doodles Folly Creek; and four specified deficiencies in the environmental impact statement. 6. Mr T F Robertson, appearing for the third respondents, made the following submissions: SEPP No 58 essentially repeats the admonitions relating to caution in dealing with development within water catchment areas and the need for management plans which were the subject of submissions to the council on the development application and thus raised no fresh issue; the development site was located within a special area under the relevant water legislation when the development application was considered and was referred to by the second respondent's in its submissions to the council and by the reporting council officer; the Special Area Strategic Plan of Management had been publicly exhibited in draft form when the council determined the development application and was referred to in submissions and by the reporting council officer; and each of the statutory changes occurred before the applicant commenced the proceedings and had been the subject of wide spread publicity because the government removed Sydney Water of its powers to regulate activities within the special areas. 7. Mr Robertson made the following submissions as to the additional issues: the impact of the development on the water table was the subject of a specific report commissioned by the applicant which was included in the environmental impact statement and was the subject of submissions on the development application; the impact on traffic was the subject of submissions to the council and was referred to by the reporting council officer; there was no new issue of substance arriving under the SEPP No. 58; the location of the development site within the Metropolitan Special Area and in the water catchment was the subject of submissions and was referred to by the council's reporting officer; the subject of the Special Areas Strategic Plan of Management was addressed in submissions to the council and by the council reporting officer; most of the submissions on the development application related to the water quality generally; the risk of pollution to Doodles Folly Creek was raised in submissions to the council on the development application; and, each of the shortcomings in the environmental impact statement were the subject of experts' reports and parts of submissions to the council on the development application. None of those issues were unknown to the applicant. Mr Robertson pointed to correspondence between the applicant's consultant, R W Corkery & Co Pty Limited and both the Environment Protection Authority and the council on these matters prior to the council's determination of the development application. In Mr Robertson's submission the applicant should have reasonably foreseen that such issues would be raised in the appeal, particularly since this was an application for designated development, which gave third party objectors a right of appearance. 8. Mr Robertson finally submitted that upon notification of the appeal and before its discontinuance the third respondents engaged a barrister and a solicitor to advise, to confer with regulatory authorities, and to appear. They engaged a number of experts. The third respondents' legal representatives and the experts who had been engaged performed a considerable amount of preparatory work before the discontinuance of the appeal, including a number of appearances by their legal representatives. 9. Mr A J Houston, appearing for the applicant, made the following submissions: SEPP No. 58 was a new policy with which the respondent had to deal as a new issue; the Special Area Strategic Plan of Management , although gazetted on 17 February 1999, was not placed on public exhibition until 17 September 1999 in a document dated August 1999, only six days before the appeal was lodged, so that would be unreasonable for the applicant to be aware of the content of the plan and of its ramifications at that time; the council had received 158 submissions on the development application, including 10 from government departments or statutory authorities, which raised some 134 separate matters; as required by the EP&A Act the council stated its reasons for refusal of the development application and in so doing identified only six areas of concern; until the statements of issues were served it was reasonable for the applicant to rely on the stated grounds of refusal; and the applicant was entitled to reconsider its position in the light of the expanded issues and the addition of two more legally represented respondents. 10. The question of costs has been considered in a number of cases where a planning or building appeal has been discontinued without the consent of the other party to the litigation. The following general principles emerge from those cases: a) in planning and building appeals it is first necessary to look for some exceptional circumstance so as to found an order for costs. This is a direct consequence of the Practice Direction to which I have referred; b) ordinarily, the filing of a notice of discontinuance without the consent of the other party to the litigation will satisfy the exceptional circumstance test. This is because the discontinuance usually represents an abandonment of the applicant's claim, so that costs incurred by the other party are necessarily wasted or thrown away; c) a relevant consideration in every case is whether the discontinuance was reasonable conduct on a part of the discontinuing party in the circumstances of the case, such as to negate the ordinary costs consequences of a discontinuance of the proceedings. Such conduct may be based on some action by the other party to the litigation or some supervening event beyond the parties' control. ( Bryant v Lismore City Council , Talbot J 4 July 1997, unreported; Manly Wharf Pty Limited v Manly Council (1997) 98 LGERA 245; Chris Lonergan & Associates v Byron Shire Council , Pearlman J, 27 April 1998, unreported; Gilling v Hawkesbury City Council , Bignold J, 7 May 1998, unreported; David Crane & Associates Pty Limited v Kogarah Council , Lloyd J, 10 June 1998, unreported; Kentgreen Dural Pty Limited v Hornsby Shire Council (1999) 103 LGERA 219; Tobaquero v Campbelltown City Council [2000] NSWLEC 68, unreported). 11. The circumstances in Bryant v Lismore City Council were that after the case had been set down for hearing, the council advised the applicant that it would call nine experts and least one objector. This advice conflicted with the information provided at the call-over that only two experts would be called. The applicant discontinued having regard to the estimated costs and length of the hearing and the economic feasibility of the development. Talbot J accepted that the applicants' decision to discontinue in the circumstances was " understandable " and said that it was appropriate that the parties meet their own costs thrown away as the consequence of the abandonment of the hearing. 12. In Manly Wharf Pty Limited v Manly Council Bignold J made an order for costs against the discontinuing party where the discontinuance occurred some two months after the proceedings had been fixed for hearing and five weeks before the fixed hearing date. 13. In Chris Lonergan & Associates v Byron Shire Council , the applicant discontinued about a week before the hearing date, and after the council filed a late statement of issues. Pearlman J held that costs are compensatory, not punitive, dismissing the council's motion for costs. The council had been late in filing its statement of issues, and the applicant had acted promptly upon realising that its own solicitors had done nothing to prepare its case, by attempting to vacate the hearing date and then discontinuing as soon as this vacation was refused. Pearlman J held that "it is not unusual for the council to set about preparing a case, and then be faced with a discontinuance... I think that this is simply a case where matters have proceeded in a way that has led to a discontinuance". 14. In Gilling v Hawkesbury City Council the applicant discontinued as a result of the respondent's belated widening of the issues. Bignold J held that the discontinuance was " justified and reasonable and ought not carry any adverse consequences for the Applicant in costs .' 15. In David Crane & Associates Pty Limited v Kogarah Council I held that it had not been unreasonable for the applicant to discontinue the proceedings in circumstances where a new environmental planning instrument commenced in the period between the commencement of the proceedings and the hearing and which resulted in the a supervening change in the relevant planning law. 16. In Kentgreen Dural Pty Limited v Hornsby Shire Council Bignold J made an order for costs against the discontinuing party where the discontinuance occurred two months after the proceedings had been fixed for hearing and three weeks before the fixed hearing date. 17. In Tabaquero v Campbelltown City Council Bignold J made an order for costs against the discontinuing party where the discontinuance occurred three days before the fixed hearing date and three months after the hearing date had been fixed. 18. In those cases in which an orders for costs was made against the discontinuing party, the discontinuance had occurred well after the case had been set down for hearing and relatively shortly before the hearing date. It is self-evident that in those circumstances the other party to the litigation would have incurred substantial costs in its preparation for the hearing, which costs were necessarily wasted. 19. In the present case the applicant commenced the proceedings in circumstances in which the council had, as required by the legislation, stated its reasons for the refusal of the development application. The notice of determination lists six reasons. I have noted that the development application generated 158 submissions which raised some 134 separate matters. It was reasonable, in my opinion, for the applicant to assume that the council was of the opinion that only the six grounds set out in the notice of determination justified its refusal of the development application. That is to say, the applicant was led to believe the very many issues raised in submissions on the development application were not seen by the Council as grounds upon which the development application should be refused. The applicant was entitled, in my opinion, to assume that unless or until the grounds of refusal set out in the notice of determination were either expanded or added to in the respondents' statements of issues, those grounds would be the issues in the appeal. 20. The applicant in the present case filed its Notice of Discontinuance some two weeks after the last of the statements of issues were filed. The appeal had not yet been set down for hearing. In the face of two additional legally represented respondents and expanded set of issues, the applicant's conduct in reassessing its position and filing a timely notice of discontinuance was reasonable. None of these matters were of the Applicant's making or within its control. Even in those classes of case in which costs generally follow the event, where it appears that the parties have acted reasonably in commencing or defending the proceedings and the conduct of the parties continued to be reasonable until the proceedings came to an end, then the proper exercise of the cost discretion will usually mean that the court will make no order as to the costs of the proceedings (Re: Minister for Emigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 625, per McHugh J). This approach, it seems to me, applies with even greater force in planning and buildings appeals to which the Practice Direction applies. 21. I therefore make the following orders: 1. The third respondents' notice of motion for costs is dismissed. 2. The third respondents must pay the applicant's costs of the notice of motion. 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