> Land and Environment Court of New South Wales CITATION : J & J O'Brien Pty Limited v South Sydney Council (No. 2) [2003] NSWLEC 301 APPLICANT J & J O'Brien Pty Limited PARTIES : RESPONDENT South Sydney Council FILE NUMBER(S) : 11039 of 2000; 10367 of 2001 CORAM: Cowdroy J KEY ISSUES: Costs :- class 1 appeal - discontinuance of proceedings - scope of agreement between parties for payment of costs LEGISLATION CITED: Land and Environment Court Act 1979, s 56A, s 69(2) Land and Environment Court Rules 1996, Pt 11 r 5 David McGregor v Bathurst City Council (Pearlman J, Land and Environment Court, 10 May 1995, unreported); CASES CITED: Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council (1998) 193 CLR 72; Perry Properties Pty Limited v Ashfield Municipal Council [2000] NSWLEC 264 DATES OF HEARING: 17/11/2003 DATE OF JUDGMENT: 12/04/2003 APPLICANT Mr P. Dodson (Barrister) SOLICITORS Aubrey F. Crawley & Co LEGAL REPRESENTATIVES: RESPONDENT Mr A. Simpson (Solicitor) SOLICITORS Pike Pike & Fenwick JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 11039 of 2000 10367 of 2001 Cowdroy J 4 December 2003 J & J O'Brien Pty Limited Applicant v South Sydney Council Respondent Judgment No. 2 Introduction 1 By notice of motion filed on 17 September 2003 the respondent ("the council") seeks an order that the applicant pay its costs of two class 1 appeals which were discontinued by the applicant. The usual rule for costs pursuant to Pt 11 r 5 of the Land and Environment Court Rules 1996 ("the Court Rules") requires the discontinuing party to pay costs. However, the applicant claims that an agreement between the parties concerning costs displaces the usual rule. Facts 2 These proceedings concerned the appeals against the council's refusal to approve two development applications, each relating to alterations to the Marlborough Hotel located at 145 King Street, Newtown. On 4 December 2001 Commissioner Hoffman delivered judgment in which he dismissed the appeals ("the decision"). 3 On 20 December 2001 the applicant filed a notice of motion appealing the decision pursuant to s 56A of the Land and Environment Court Act 1979 ("the Court Act"). The hearing of such appeal ("the s 56A appeal") was fixed for 6 August 2002. 4 On 7 February 2002 the applicant lodged a third development application, namely development application U02-00097 ("the revised DA") with the council in an attempt to meet the deficiencies referred to by Commissioner Hoffman in the decision. 5 A letter dated 2 August 2002 from the applicant to the council proposed that the hearing of the s 56A appeal be adjourned to enable the council to consider the revised DA. The letter relevantly provided:- I refer to my recent telephone conversations with you regarding terms upon which the current Section 56 A appeal hearing date would be adjourned. In order to bring the application to a positive and favourable finality for our company with out [sic] the necessity of further litigation, the following steps need to be carried out and agreed upon: 1. By consent adjourn the Section 56 A appeal to a callover immediately after the date of the meeting of the Council (and/or Planning Committee) finally determining the application; ... 5. In the event that consent is not granted or granted upon terms unacceptable to us, that Council agree to have the Section 56 A appeal set down on the first date convenient to us for hearing. 6 On 5 August 2002 an agreement was reached between the parties to adjourn the hearing of the s 56A appeal fixed for 6 August 2002 ("the agreement"). On the afternoon of 5 August 2002 senior counsel of the applicant and of the respondent attended upon Pain J to seek the adjournment, which was granted. Her Honour was provided with a note recording the agreement as follows:- Notes of agreement re: vacating s 56A appeal date 6 August 2002 1. The council will not oppose the applicant's application to vacate the hearing date for the s 56A appeal. 2. The matter be stood over to a callover in 6 weeks, that being the period in which the council will determine the development application presently before it. 3. Costs reserved. 4. On the favourable determination of the development application on conditions acceptable to the applicant the appeal will be withdrawn with no order as to costs. 7 Following the adjournment of the s 56A appeal and an order made by Pain J to list such proceedings in six weeks, they were listed for the Registrar's callover on 17 September 2002. On this date these proceedings were stood over to the Registrar's callover on 15 October 2002 and again to 29 October 2002. The Court file shows that on 29 October 2002 the Registrar fixed new hearing dates of 20 February 2003. It is not evident why these proceedings were repeatedly stood over but their re-listing is consistent with the provisions of paragraph numbered 5 of the applicant's letter dated 2 August 2002. 8 On 15 November 2002 the applicant filed a class 1 appeal following a deemed refusal of the revised DA by the council. Such appeal became proceedings 10910 of 2002. 9 On 14 February 2003 Talbot J ordered that the hearing date of 20 February 2003 for the s 56A appeal be vacated pursuant to the applicant's notice of motion filed 10 February 2003. 10 By notice of determination dated 26 February 2003 the council refused the revised DA. 11 The parties appeared before the Registrar on 28 February 2003 when it was ordered that the determination of new hearing dates for the s 56A appeal would be stood over until 9 July 2003. On 9 July 2003 the s 56A appeal was again stood over and placed in the Registrar's callover list for 9 September 2003. 12 The class 1 appeal in proceedings 10910 of 2002 was upheld in part by Commissioner Hoffman on 15 August 2003. Alterations to the first floor of the Marlborough Hotel were approved, but not the proposed rooftop facilities. 13 On 9 September 2003 the applicant discontinued the s 56A appeal. Council's submissions 14 The council submits that it should be entitled to costs thrown away by the discontinuance of the s 56A appeal. Council says that the agreement was made on the basis that the s 56A appeal would be discontinued and the council would pay its own costs of these proceedings only if there were a "favourable determination" by the council of the revised DA. The council submits that a "favourable determination" of the revised DA was not granted by the council and that the agreement did not contemplate an appeal arising from such determination. 15 In the alternative the council submits that if the agreement is construed to include approval of the revised DA by the Court, the applicant has not achieved a "favourable determination" since Commissioner Hoffman only allowed the appeal in part in proceedings 10910 of 2002. 16 Council relies upon the contents of a letter written to its solicitors by its senior counsel on 6 August 2002 reporting the orders made by Pain J. The letter relevantly states:- 3. Costs (of 6 August 2002) reserved. The agreement to the effect that if the development application currently before the council is approved and conditions are acceptable, the section 56A appeal will be discontinued, no order as to costs, was mentioned but is not the subject of any order. Applicant's submissions 17 The applicant submits that the agreement was to apply whether the application for development approval of the revised DA was approved by council or by the Court. It submits that the council seeks to limit the agreement to a "favourable determination" being given only by the council. Additionally the applicant maintains that it was ultimately successful as a result of the judgment of Commissioner Hoffman delivered on 15 August 2003. Findings 18 Pursuant to s 69(2) of the Court Act the Court has a broad discretion to award costs. Such discretion must be exercised judicially: see Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72. The Court has consistently applied the principle that costs follow the event in appeals instituted under s 56A of the Court Act: see David McGregor v Bathurst City Council (Pearlman J, Land and Environment Court, 10 May 1995, unreported) and Perry Properties Pty Limited v Ashfield Municipal Council [2000] NSWLEC 264. Where discontinuance occurs Pt 11 r 5 of the Court Rules applies, thereby requiring the discontinuing party to pay the other party's costs. Such rule applies to costs in appeals pursuant to s 56A of the Court Act, since such proceedings are treated as ordinary litigation. 19 In the present circumstances Pt 11 r 5 of the Court Rules would normally entitle the council to an award of costs against the discontinuing party. The question for determination is whether the agreement would render it unreasonable for the applicant to be ordered to pay such costs, even though it was the discontinuing party. The resolution of this question requires an examination of the terms of the agreement, and of the respective submissions of the parties. 20 Paragraph numbered 1 of the applicant's letter of 2 August 2002 refers to the adjournment of the s 56A appeal to a callover "…immediately after the date of the meeting of the Council (and/or Planning Committee) finally determining the application." Paragraph numbered 5 makes provision for the setting down of the s 56A appeal "[i]n the event that consent is not granted or granted upon terms unacceptable to us…". 21 The letter dated 2 August 2002 between the applicant and the council, and the note submitted to Pain J makes plain the intent of the agreement. In the event that council approved the revised DA, the s 56A appeal was to be discontinued and each party was to pay its own costs. If approval was not granted to the revised DA, or if consent was granted on terms which were unacceptable to the applicant the appeal was to be set down for hearing "on the first day convenient to us": see paragraph numbered 5 of the applicant's letter dated 2 August 2002. The agreement does not contemplate the circumstance that a class 1 appeal might be instituted arising from the council's refusal of the revised DA. The subsequent listing of the s 56A appeal before the Registrar and the allocation of a hearing date are consistent only with the interpretation of the agreement as submitted by the council. 22 This construction is also consistent with the applicant's understanding of the agreement, as is evidenced by the affidavit sworn by Mr Peter Tsathas, solicitor for the applicant, on 10 February 2003 and relied upon before Talbot J to vacate the hearing of the s 56A appeal on 14 February 2003. Paragraph 3 of the affidavit provides, inter alia:- 3. …On 5 August 2002, Pain J. by consent vacated the hearing date to enable the respondent Council to consider a further development application concerning the first and second storeys of the hotel. 23 In the events which have happened the agreement does not bind the parties. The Court therefore applies the usual order as to costs. Since the council has succeeded in its application for costs, it is appropriate that the cost of this motion should also be paid by the applicant. 24 The applicant sought the respondent to pay the costs of these proceedings. The submissions were confined to the payment of the costs of the s 56A appeal. The Court was not required to determine the issue of the costs of the whole of the class 1 proceedings generally and accordingly will make no order in respect thereof. Orders 25 The Court orders that:- 1. The applicant pay the respondent's costs of the s 56A appeal in these proceedings; 2. The respondent's costs of this motion be paid by the applicant. 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.