Reported Decision : (2005) 142 LGERA 154 Land and Environment Court of New South Wales CITATION : Statewide Developments Pty Limited v Minister for Infrastructure and Planning [2005] NSWLEC 353 APPLICANT: Statewide Developments Pty Limited ACN 080 404 842 PARTIES : RESPONDENT: Minister for Infrastructure and Planning FILE NUMBER(S) : 10300 of 2005 CORAM: Lloyd J Costs :- in Class 1 - respondent's actions were unreasonable - delay in issuing formal revocation of s 121B order - fair and reasonable that costs be awarded in the circumstances KEY ISSUES: Environmental Planning and Assessment Act 1979 (NSW), ss 121B, 121ZG, 121ZK, 121ZL, 123, 125 LEGISLATION CITED: Land and Environment Court Act 1979 (NSW), ss 69, 96 Land and Environment Court Rules 1996 (NSW), Pt 16 r 4 Adderton v Windy Dropdown Pty Limited [2001] NSWSC 410; CASES CITED: Care v Canterbury City Council (2001) 115 LGERA 252 DATES OF HEARING: 01/06/2005 DATE OF JUDGMENT: 07/01/2005 APPLICANT: D T Miller (barrister) SOLICITORS: Phillips Fox LEGAL REPRESENTATIVES: RESPONDENT: S A Duggan (barrister) SOLICITORS: Christine Hanson JUDGMENT: - 14 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Lloyd J Friday, 1 July 2005 LEC No. 10300 of 2005 STATEWIDE DEVELOPMENTS PTY LIMITED v MINISTER FOR INFRASTRUCTURE AND PLANNING [2005] NSWLEC 353 JUDGMENT Introduction 1 LLOYD J: This is an application for costs by the applicant, Statewide Developments Pty Limited ("Statewide") against the respondent, the Minister for Infrastructure and Planning (the "Minister"), in proceedings in Class 1 of the Court's jurisdiction. 2 Section 69 of the Land and Environment Court Act 1979 (NSW) (the "Court Act") describes the jurisdiction of the Court in relation to costs. Sub-section (2) of s 69 relevantly provides that: (a) costs are in the discretion of the Court, (b) the Court may determine by whom and to what extent costs are to be paid, and (c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis. 3 The jurisdiction of the Court is also governed by Pt 16 r 4 of the Land and Environment Court Rules 1996 (NSW) (the "Court Rules"), which applies to certain proceedings in classes 1, 2 and 3 of the Court's jurisdiction, including the present proceedings. Part 16 r 4(2) relevantly states: No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable. 4 The language of the rule maintains the general presumption that there will not ordinarily be any order for costs in proceedings to which the rule applies, unless in the particular case there is some circumstance which would make it fair and reasonable that there should be an order for costs. In other words, costs will not be ordered in proceedings to which the rule applies unless in the particular case it is fair and reasonable to depart from the underlying presumption. Chronology of Events 5 In order to determine whether in the present case the underlying presumption should be displaced, it is necessary to have regard to the circumstances of this particular case, which may be best summarised by reference to the following chronology of events. 6 On 24 June 2004, the Land and Environment Court granted development consent for the erection of 11 interconnected residential buildings, a café/mixed business, basement car parking, associated site works, demolition of all remnant structures and remediation of contamination at Nos. 10-16 Marque Street, Rhodes (the "site"). 7 On 10 March 2005, the Minister issued Emergency Order No.15 (the "order") under s 121B of the Environmental Planning and Assessment Act 1979 (NSW) (the "EP&A Act") to restrain Statewide from carrying out works contrary to the conditions of the consent 8 On 18 March 2005, Ms Elisabeth Wild, on behalf of Statewide, wrote to the Minister stating that the applicant had satisfied the terms of the order in full. She further stated that Statewide was incurring daily holding costs of approximately $27,000 due to the order, and as such, Statewide reserved the right to appeal against the order and seek compensation under s 121ZL of the EP&A Act if the order was not lifted. 9 On 22 March 2005, at the request of Ms Susan Budd, acting for the Minister, Ms Wild again wrote to the Minister formally stating that Statewide had complied with the order and attaching documents in support of this contention. 10 On 24 March 2005, following an inspection of the works by Mr John Sparkes, on behalf of the Minister, Ms Budd telephoned Ms Wild, and confirmed that the Minister was satisfied that the terms of the order had been satisfied. Ms Budd prepared a file note in relation to this telephone conversation which states that she informed Ms Wild that the Minister would agree to lift the emergency order on an undertaking that no further works be carried out until an application for modification of the development consent under s 96 of the EP&A Act was approved. The Minister did not, however, take any further steps to formally revoke the order. 11 On 5 April 2005, Mr Mark Beaufoy, acting for Statewide, informed the Minister that he was instructed to file an appeal against the order pursuant to s 121ZK of the EP&A Act and seek compensation under s 121ZL of that Act, for expenses incurred by Statewide as a consequence of the refusal of the Minister to lift the order. 12 On 6 April 2005, pursuant to s 121ZK of the EP&A Act, Statewide commenced the foreshadowed Class 1 appeal the subject of this costs application. 13 On Friday 8 April, Statewide filed a notice of motion requesting that the hearing of the appeal be expedited. The motion was subsequently listed for hearing on 14 April 2005. 14 In response, at approximately 5pm on the same day, Ms Budd faxed a letter to Statewide stating that, notwithstanding that no undertaking had been given by Statewide, the Minister was satisfied that the terms of the order had been satisfied and agreed that the order should be lifted. In addition, however, the Minister required Statewide to give an undertaking by 5pm Monday 11 April 2005: (1) that Statewide will ensure future Stage 2 remediation works comply with the conditions of consent DA-298-08-2002-I; and (2) that Statewide Developments agrees not to undertake any further remediation work unless and until: a. All conditions of development consent which require fulfilment prior to the commencement of remediation works have been complied with to the satisfaction of the Department; and b. Where the conditions of development consent cannot be complied with because of the manner in which excavation and remediation works have been conducted to date, the development consent is modified under s 96 of the EP&A Act so as to ensure future works are in accordance with the consent. 15 On 11 April 2005, in response to a request from Statewide, the Minister extended the time for giving the undertakings until 5pm Tuesday 12 April 2005 given that the applicant: (1) had not undertaken any remediation work over the weekend following the receipt of the Department's letter dated 8 April 2005, and (2) would not conduct any remediation work until it had made a submission in response to the Department's letter of 8 April 2005. 16 On 12 April 2005, Statewide wrote to the Minister noting that in the letter of 8 April 2005 the Minister agreed to "lift", not "revoke" the order and requested confirmation in writing that the Minister had revoked the order pursuant to s 121ZG of the EP&A Act. Further, the letter stated that Statewide did not agree to give any undertakings and believed that it was not in breach of the consent and there was no basis for the Minister to commence Class 4 proceedings to restrain it from carrying out the development pursuant to the consent. 17 In a letter dated 13 April 2005, Statewide again requested the Minister to confirm in writing that the order had been revoked. Statewide also informed the Minister that if the appeal proceeded, it would seek compensation under s 121ZL of the EP&A Act and would rely on this letter in relation to costs. 18 On the same day, the Minister confirmed in a "without prejudice" letter that the advice of Ms Budd of the 24 March 2005 was accurate, and that the Minister was satisfied that the terms of the order had been satisfied. The Minister also enclosed a letter formally revoking the order. 19 On 28 April 2005, Mr Beaufoy, for Statewide, wrote to the Minister outlining Statewide's position and making a settlement offer in relation to the question of costs. In particular, Mr Beaufoy submitted that the Minister should pay Statewide's costs of $14,839.20 for the period from 18 March 2005 until 13 April 2005, being the date that Statewide provided confirmation of compliance with the order and the date that the Minister formally revoked the order respectively. However, Mr Beaufoy also stated that to avoid further costs being incurred, Statewide was prepared to settle the question of costs by agreeing to consent orders that the Minister pay its legal costs in the sum of $10,000. Statewide's Submissions 20 Mr D T Miller, appearing for Statewide, submits that an order for costs limited to the period from 24 March 2005 to 13 April 2005 would be fair and reasonable in the circumstances of this particular case. The following submissions are made to support this contention: i. Requirement 1 of Sch 1 of the order required Statewide to "cease forthwith any remediation works, including excavation, works in the Stage 2 remediation area". ii. There was no provision in the order for remediation works and excavation works in the Stage 2 remediation areas to recommence following Statewide's compliance with the other requirements of the order. iii. Following the letters of Ms Wild of 18 March 2005 and 22 March 2005, the Minister was on notice that Statewide had complied fully with the terms of the order and also of the significant daily holding costs of approximately $27,000 being incurred by it while the order remained in place. Further, the Minister was informed that Statewide reserved its rights to appeal against the order and seek compensation under s 121ZL of the EP&A Act if the order was not lifted. iv. Despite these letters, the Minister took no action to revoke the order. Therefore, on 6 April 2005, Statewide was forced into the unnecessary position of having to file an appeal against the order. Further, because of the significant holding costs being incurred on an ongoing basis, on 8 April 2005 Statewide filed a notice of motion seeking to have the hearing of the appeal expedited. v. The letter faxed to Statewide by the Minister at close of business on 8 April did not clearly and unequivocally state that the Minister had lifted the order unconditionally. For example, although stating, "[n]otwithstanding the failure to give the required undertaking the Minister agrees to lift the order", the letter continued "[i]n agreeing to lift the order the Minister does not however agree that the design details provided in satisfaction of Sch 1(5) are necessarily an appropriate response". Further, the letter requested undertakings wholly unrelated to the order. Statewide did not agree to give any undertakings requested by the Minister in the letter of 8 April 2005, believing that it was not in breach of the consent and there was no basis for the Minister to commence Class 4 proceedings to restrain it from carrying out the development pursuant to the consent. vi. The practical effect of the Minister's request for undertakings and threat to file Class 4 proceedings was to attempt to avoid the Class 1 appeal in relation to Statewide's compliance with the conditions of the consent and the requirements of the order, but still prevent Statewide from undertaking the remediation work. vii. Although the Minister's "Without Prejudice" letter of 13 April 2005 stated that the Minister confirmed the advice of Ms Budd of the 24 March 2005 that the Minister was satisfied that the terms of the order had been satisfied, Ms Budd's file note of 24 March 2004 did not actually reflect this. Fundamentally, prior to 13 April 2005 Statewide had never been notified of the Minister's satisfaction in those clear and unequivocal terms. viii. In Care v Canterbury City Council (2001) 115 LGERA 252 McEwen AJ noted (at par [25]) that "[o]rders under s 121B can have a catastrophic effect and consequence upon the business and lives of persons affected by them, and for that reason the operation of notices given under the section should be strictly construed". Therefore, the Minister cannot use a s 121B order, with all of its potential civil and criminal consequences, as a means of achieving some form of desired planning result or some other enforcement result that it would have achieved in the ordinary way by taking proceedings under the Act. ix. Statewide was significantly concerned about the civil and criminal, and particularly, commercial consequences of the order and took steps to comply with it quickly. Until the order was revoked by the Minister in accordance with s 121ZG of the EP&A Act, Statewide was prevented from doing any further remediation or excavation work on the site and continued to incur significant holding costs. If Statewide had commenced work before the order was formally revoked, it could have been prosecuted for an offence under s 125 of the EP&A Act or become subject to Class 4 proceedings brought under s 123 of that Act. Given the prompt actions of Statewide to comply with the order, the Minister ought to have equally have taken expeditious steps to revoke the order though delayed such revocation unreasonably. x. The appeal was rendered nugatory by reason of the final revocation on 13 April 2004. However, it was a revocation consequent upon a capitulation rather than a compromise as only at the eve of the application for expedition was there revocation in unconditional terms as required by s 121ZG of the Act. In Adderton v Windy Dropdown Pty Limited [2001] NSWSC 410, Bryson J noted the difference between a compromise and a capitulation and held that costs can be ordered where one party has wholly succeeded in what it would have achieved and where another party has adopted an unreasonable position. xi. Any attempt of the Minister to amplify the costs enquiry wider than Statewide's satisfaction of the order is irrelevant. The circumstances that might have led to the order being made, being whether there were or were not conditions of consent that were or were not infringed, are irrelevant to the question of whether Statewide is entitled to a costs order. xii. The Minister should pay Statewide's legal costs incurred by it following the telephone conversation of Ms Wild and Ms Budd on 24 March 2005 when the latter was aware of Statewide's full compliance with the orders, up to and including, 13 April 2005, being the date on which the Minister confirmed in writing that the order had been revoked pursuant to s 121ZG of the EP&A Act. xiii. Had the Minister revoked the order upon receiving this confirmation that Statewide had complied with the requirements of the order, these legal costs would not have been incurred. xiv. Statewide wrote to the Minister to reasonably attempt to resolve the question of costs and indicating it sought costs on a limited basis and the Minister unreasonably responded with a simple denial without reasons. The Minister's Submissions 21 Ms S A Duggan, acting for the Minister, submits that given the circumstances of this particular case, it is would not be fair and reasonable to make a costs order in favour of Statewide for the period 24 March 2005 until 13 April 2005. In support of this conclusion, Ms Duggan relies upon on the following submissions: i. Pursuant to Pt 16 r 4 of the Court Rules, the Court may only make a costs order where the making of a costs order is, in the circumstances of the particular case, fair and reasonable. As such, Statewide must demonstrate that the conduct of the Minister in this case was conduct that was outside what would be anticipated in the usual conduct of proceedings. That is, in order to satisfy the Court that the usual order that there is no order as to costs should not apply, Statewide must show the Minister's conduct was extraordinary in the context of the litigation. ii. Statewide's application for costs must be considered in light of the context of the appeal proceedings and the conduct of Statewide. There has been a history between the Minister and Statewide in relation to work done on the site in an alleged unlawful fashion. The relationship between the Minister and Statewide prior to the order, which informed the issue of the order, must be considered in determining whether or not the Minister was entitled to seek the undertakings it sought between the 24 March and 8 April and whether or not it is fair and reasonable that the usual order as to costs should be set aside. The Minister issued the s 121B order to restrain Statewide from carrying out works contrary to the conditions of the development consent. Contrary to Mr Millar's submissions, this use of s 121B of the EP&A Act, as an enforcement provision, inherently allows the achievement of a desirable planning outcome. iii. The Minister concedes that by the 24 March 2005, Statewide had complied with the order, though the order was not formally revoked until 13 April 2005. This was due to the Minister's concern that a fundamental and necessary consequence of the unlawful work that Statewide had performed was that it could no longer continue to do remediation works in conformity with the consent. iv. Thus, during the period from 18 March 2005 until 13 April 2005, the Minister was pursuing a course of negotiation with Statewide in relation to reaching a position where both parties were satisfied that sufficient works had been done in order for the order to be lifted, and in addition, to ensure ongoing compliance with the consent by requesting Statewide to give an undertaking to obtain a s 96 modification approval for the works. The Minister position was that any remediation prior to modification would be in breach of the consent and therefore any action necessary to prevent the breach would be expected, beginning with such a negotiation process though potentially requiring Class 4 action. v. Statewide lodged this appeal not due to any unreasonableness on the part of the Minister during the negotiation process, though rather to preserve its position. vi. The compliance with the order and the request for the undertaking to obtain a s 96 modification approval were two separate and independent objectives of the Minister to achieve overall compliance with the consent. vii. In the Minister's letter of 8 April 2005, the Minister indicated an intention to confirm the advice conveyed by Ms Budd on 24 March 2005 and lift the emergency order unconditionally. Although, Ms Budd's file note does not use those words, there is no evidence to prove that the letter of 8 April 2005 was not accurate. After the letter of 8 April 2005, there was no complaint by Statewide's solicitors that this "lifting" of the order was not sufficient for its purposes until 13 April when they wrote requesting formal revocation. Following this request, the Minister immediately formally confirmed the revocation. viii. This appeal was rendered nugatory by Statewide's compliance with the terms of the order and not by a capitulation of the Minister. The Minister has maintained the same reasonable position through the negotiation process aimed at compromise and no proper characterisation of this behaviour could be said to be a capitulation. ix. By considering the appeal in its context, including the nature of the order and the fact that there is a real and genuine dispute as to whether the unlawful works have rendered the consent nugatory, absent modification, and the subsequent negotiation process aimed at resolving this dispute, the position taken by the Minister from 24 March 2004 until 13 April 2005 was a position which was wholly reasonable and anticipated by the litigation. x. Accordingly, the Court should impose the usual order and each party should pay its own costs. Conclusion 22 The starting point is Pt 16 r 4(2) of the Court Rules, namely, an order for costs may only be made where there are some circumstances which would make it fair and reasonable that there should be an order for costs, noted in pars [3] and [4] above. I do not accept Ms Duggan's submission that the circumstances must be outside the usual or ordinary course of litigation or that there must be some extraordinary conduct. To repeat what I have said in par [4] above, the underlying principle is that there will generally be no order as to costs unless it is fair and reasonable in the circumstances of the particular case to depart from the underlying principle. 23 In this case I find that the circumstances of this case are such that it would be fair and reasonable that a costs order should be made in favour of Statewide for the period of 24 March 2005 to 13 April 2005. I accept the submissions of Mr Miller, on behalf of Statewide, at par [20] above. Accordingly, and contrary to Ms Duggan's submissions, I agree with him that the circumstances that might have led to the order being made are irrelevant to the question of whether Statewide is entitled to a costs order. 24 The telephone conversation between Ms Budd, acting for the Minister, and Ms Wild, acting for Statewide, clearly established that the Minister was satisfied that Statewide had fully complied with the order. Moreover, following the letter of Ms Wild of 18 March 2005, the Minister was on notice of the significant daily holding costs of approximately $27,000 which Statewide was incurring while the order remained in place. Notwithstanding this, the Minister failed to provide formal revocation of the order pursuant to s 121ZG of the EP&A Act until 13 April 2005. I reject Ms Duggan's submission that the Minister's letter of 8 April 2005 unequivocally stated that the Minister had "lifted" the order unconditionally. The means of removing an order is by revocation under s 121ZG of the EP&A Act. Moreover, the letter clearly contains a request for undertakings. I find that prior to 13 April 2005 Statewide had never been clearly notified by the Minister that he was satisfied with Statewide's compliance with the orders, neither had Statewide been notified that the order had been revoked. 25 The Minister's attempts at pursuing a course of negotiation until 13 April 2005 with Statewide in relation to ensuring ongoing compliance with the development consent by requesting it to give an undertaking to obtain a s 96 modification approval for the works was strictly unrelated to the order, the failure to comply with which had penal consequences. Moreover, Ms Duggan, on behalf of the Minister, conceded that the compliance with the order and the request for the undertaking to obtain a s 96 modification approval were two separate and independent objectives of the Minister to achieve overall compliance with the consent. 26 The imposition of the order in this case had catastrophic financial implications for Statewide and consequently Statewide quickly took steps to comply with the order. Noting the potential for the order to expose Statewide to significant civil and criminal consequences and cause such undue hardship (cf Care v Canterbury City Council (2001) 115 LGERA 252 McEwen AJ at par [25]), the Minister should not have used the order as a means of achieving some form of desired planning result or some other enforcement result that it would have achieved in the ordinary way by taking proceedings under the Act. The Minister ought to have taken equally expeditious steps to revoke the order. Following revocation, if the Minister still was of the opinion that Statewide's continued works would be in breach of the consent, he may have brought Class 4 proceedings to restrain Statewide from carrying out development in breach of the consent. 27 I therefore find that the actions of the Minister were unreasonable and the consequent delay of the Minister in issuing formal revocation of the order pursuant to s 121ZG of the EP&A Act was, in truth, a capitulation: Adderton v Windy Dropdown Pty Limited [2001] NSWSC 410, Bryson J. Moreover, Statewide wrote to the Minister to attempt to resolve the question of costs reasonably and the Minister unreasonably responded with a simple denial without reasons. 28 In all the circumstances, the Minister should pay Statewide's legal costs incurred by it following the telephone conversation of Ms Wild and Ms Budd on 24 March 2005 when the latter was aware of Statewide's full compliance with the orders, up to and including, 13 April 2005, being the date on which the Minister confirmed in writing that the order had been revoked pursuant to s 121ZG of the EP&A Act. Had the Minister revoked the order upon receiving this confirmation of Statewide's compliance, these legal costs would not have been incurred. Further, Statewide would not have suffered undue hardship as a consequence of incurring significant holding costs whilst the order remained in place. Court Orders 29 The Court orders that: (1) The Minister pay the costs of Statewide in relation to these proceedings for the period 24 March 2005 to 13 April 2005. (2) The Minister pay the costs of Statewide in relation to this application for costs. I hereby certify that the preceding 29 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. Associate Dated: 1 July 2005 ********** 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.