> Land and Environment Court of New South Wales CITATION : Voorderhake Partnership Pty Ltd v Ku-Ring-Gai Council [2003] NSWLEC 12 APPLICANT Voorderhake Partnership Pty Ltd PARTIES : RESPONDENT Ku-Ring-Gai Council FILE NUMBER(S) : (1)0135 of 2002 CORAM: Cowdroy J KEY ISSUES: Costs - Practice and Procedure :- planning and building appeal - new issue raised by respondent determinative of proceedings - application for costs by unsuccessful party Environmental Planning and Assessment Act 1979 s 79C LEGISLATION CITED: Land and Environment Court Act 1979 s 69 Land and Environment Court Practice Direction 1993 par 10 State Environmental Planning Policy No. 5 Bentley & Ors v Drummoyne Council & Ors [No 2] [1999] NSWLEC 103; Latoudis v Casey (1990) 170 CLR 534; Maule v Liporoni (No 2) (2002) 122 LGERA 216; CASES CITED: Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673; Misra v Campbelltown City Council No. 2 [Costs] [2002] NSWLEC 63; Ohn v Walton (1995) 36 NSWLR 77; Oshlack v Richmond River Council (1998) 193 CLR 72; Over Our Dead Body Society Inc. v Byron Bay Community Association Inc [2002] NSWLEC 99 DATES OF HEARING: 23/01/03 DATE OF JUDGMENT: 02/20/2003 APPLICANT Ms C Schofield (Solicitor) SOLICITORS Pike Pike & Fenwick LEGAL REPRESENTATIVES: RESPONDENT Ms J Smith (Solicitor) SOLICITORS Wilshire Webb JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES (1)0135 of 2002 Cowdroy J 20/02/2003 VOORDERHAKE PARTNERSHIP PTY LTD Applicant v KU-RING-GAI COUNCIL Respondent Judgment 1 The applicant seeks an order pursuant to s 69(2) of the Land and Environment Court Act 1979 ("the Court Act") that the respondent ("the council") pay the applicant's costs of the appeal which was determined in favour of the council on 29 November 2002. History of the application 2 On 6 April 2001 the applicant made a development application to the council for the development of land known as 2 Normurra Avenue, North Turramurra ("the land"). The applicant sought to demolish an existing building on the land and to construct four dwellings pursuant to State Environmental Planning Policy No. 5 ("SEPP 5"). 3 Council received objections to the development proposal. Some objections related to the risk of bush fire and of the consequent difficulties of the evacuation of elderly persons from the North Turramurra area ("the fire issue"). In his report to the council dated 27 December 2001 Council's Director of Environmental & Regulatory Services specifically referred to such concerns. By Notice of Determination dated 19 February 2002 council refused development consent on grounds unrelated to the fire issue. 4 This appeal was instituted by the applicant on 3 September 2002. A draft statement of issues was formulated by the council was filed, but the fire issue was not raised. 5 On the 21st day June 2002 the hearing was fixed to commence on 22 November 2002. A final statement of issues was served by the council on 11 November 2002 which made no mention of the fire issue. At 5.06pm on 15 November 2002 a letter was received by the applicant's solicitors from the council's solicitors which, for the first time, identified the fire issue as one which would be relied upon. On 20 November 2002 the evidence of Mr Christopher Russell, a resident objector, was served which addressed the fire issue. 6 The hearing commenced on 22 November 2002 before Commissioner Hussey. Although objection was taken to the fire issue, the Commissioner allowed it to be heard. Later that day, at approximately 6.00pm the evidence of Mr Graham Douglas of the New South Wales Rural Fire Services ("RFS") which dealt with the fire issue was served. 7 The hearing continued on 25 and 26 November 2002 and the Court delivered its judgment on 29 November 2002 in which the appeal was dismissed. 8 The ground for dismissal was founded solely upon the fire issue. 9 The evidence establishes that as early as 25 January 2002 council had written to Planning NSW seeking an exemption of SEPP 5 development in, inter alia, North Turramurra, on the grounds of bushfire risk and emergency access. A further letter had been written by the council to Planning NSW on 19 February 2002. By letter dated 3 May 2002 the council wrote to the Minister for Planning seeking support for a moratorium in respect of SEPP 5 for developments within the Ku-ring-gai municipality in localities which were identified as posing bushfire risks or which were considered to constitute hazards in the event of emergency evacuation. On 27 June 2002 the council wrote to Commissioner Kopberg of the RFS expressing concern of evacuation difficulties in the event of bushfire in the North Turramurra area. 10 The applicant was unaware of such correspondence. The applicant's solicitors had written to the solicitors for the council on 10 October 2002 seeking further and better particulars of the draft statement of issues and on 31 October 2002 such particulars were provided. No mention was made of any objection on the basis of the fire issue. Applicant's submissions 11 The applicant submits that the council should bear the costs which the applicant has incurred in this appeal on the basis that the council's conduct in the proceedings amounted to "exceptional circumstances", as referred to in par 10 of the Land and Environment Court Practice Direction 1993 ("the Practice Direction") which provides:- The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional. 12 The applicant submits that at all relevant times council considered the fire issue to be an important matter, as evidenced by its correspondence with Planning NSW and with the Minister. The applicant submits that it did not have the opportunity of obtaining the expert advice in response to the evidence of Mr Christopher Russell relating to the fire issue and that it was therefore treated unfairly. The applicant claims that had such issue been raised earlier the appeal may have been abandoned. The applicant says that the only issue which the Commissioner determined against it was the fire issue. 13 In support of its submission the applicant refers to other proceedings, namely (1)0574 of 2002 Playoust Churcher Architects v Ku-Ring-Gai Council which were extant simultaneously with this appeal. Such proceedings related to a similar development proposal located in close proximity to the applicant's land. In those proceedings the council specifically raised the issue of fire safety and evacuation. The applicant submits that council was accordingly aware of the fire issue and should have raised it in these proceedings in its initial draft issues. Council's submissions 14 The council says that the fire issue was not raised as an issue in the proceedings as it did not believe that it could legitimately rely upon such ground until November 2002. On 12 November 2002 the Deputy Premier and Minister for Planning, Dr Refshauge issued a media release which stated that the Government would strengthen planning laws to protect the elderly and disabled in bushfire prone areas. The Ministerial Statement states that the RFS would need to be consulted and its approval given before a SEPP 5 development could be granted consent by a council. The council submits that as a direct consequence it had a duty to raise such issue as a matter of public interest pursuant to s 79C of the Environmental Planning and Assessment Act ("the EP&A Act"). General Principles concerning the exercise of judicial discretion in relation to costs 15 The provision granting the Court discretion to award costs is contained in s 69(2) of the Court Act relevantly provides: 69(2) Subject to the rules and subject to any other Act: (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 … It is well established that the discretion granted to a court to award costs must be exercised judicially and not capriciously: see Latoudis v Casey (1990) 170 CLR 534. In Ohn v Walton (1995) 36 NSWLR 77 Gleeson CJ further explained the operation of judicial discretion with respect to costs at p.79 as follows:- The point of Latoudis v Casey is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made. When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow: 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated. 16 McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 said in reference to s 69 of the Court Act at p. 96: Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation [In re Elgindata Ltd [No. 2] [1992] 1 WLR 1207 ]….. By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. As McHugh J stated in Oshlack at p. 97 in reference to the expression the "usual order of costs" which embodies the compensatory principle:- The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party . The primary purpose of an award of costs is to indemnify the successful party [Latoudis (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. Kirby J in Oshlack observed at p. 122:- The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case bought by a party under the "open standing" rule and purportedly in the public interest), costs are ordered in favour of the successful party. 17 However at p. 88 the joint judgment of Gaudron and Gummow JJ in Oshlack adds a qualification to the above principles:- There is no absolute rule with respect to the exercise of the power conferred by a provision such as s69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party [Knight v Clifton [1971] Ch 700 at 710, 713-714, 716, 724-725; Tekmat Investments Pty Ltd v Ward (1988) 65 LGRA 444 at 446]. 18 In Over Our Dead Body Society Inc. v Byron Bay Community Association Inc. [2002] NSWLEC 99 Bignold J at par 30 found that the observations of Gaudron and Gummow JJ did not nullify the principles relating to the exercise of judicial discretion as stated in Latoudis. Whilst McHugh and Kirby JJ were in the minority in Oshlack the principles relevant to the exercise of the Court's discretion pursuant to s 69(2) of the Court Act enunciated by their Honours are the view of the majority: see Maule v Liporoni (No 2 (2002) 122 LGERA 216 at p. 225. Exercise of judicial discretion in these proceedings 19 The application presently before the Court is unusual, in the sense that the unsuccessful party is seeking an order that the successful party pay its costs, which contradicts the "usual order as to costs". The sole basis of the application is the fact that council raised the fire issue so late in the proceedings. 20 It is accepted that planning and building appeals "encompass the common category of appeals against the merit decisions of councils to determine applications for development consent or building approval.": (see Bentley & Ors v Drummoyne Council & Ors [No.2] [1999] NSWLEC 103 per Talbot J at par 21). The Practice Direction is therefore applicable to these proceedings. 21 In Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 the New South Wales Court of Appeal observed that the Land and Environment Court Practice Direction 1993 par 10A could not operate to fetter the discretion of this Court. In Misra v Campbelltown City Council No.2 [Costs] [2002] NSWLEC 63 at par 6-10 this Court considered the effect of the Practice Direction following Maurici. This Court has traditionally regarded the Practice Direction as a guide only for the benefit of parties and the Court. It does not control the power of the Court to award costs. Findings 22 There is no rule which prevents this Court ordering that a successful party pay the costs of an unsuccessful party (see Oshlack at p. 88). However, such an award could only arise from extraordinary circumstances and only as the result of a finding that the conduct of the successful party had been unreasonable, thereby incurring the other party in avoidable costs. If such conclusion were drawn the unsuccessful party would be entitled to an order for costs to compensate it. It is therefore necessary to consider the facts to ascertain whether the conclusion could be drawn that the council acted unreasonably. 23 The Court finds that council was aware of the fire issue prior to November 2002 but considered at that time that it could not be sustained as a valid ground of objection to the proposed development, and that for this reason only, it was not raised as an issue. In respect of the Playoust matter the Court accepts council's submissions that different considerations applied to the site. The land the subject of that appeal, although in close proximity to the applicant's land, was situated in such locality that the raising of the fire issue was justified in those proceedings. 24 The fire issue was made an issue in this appeal directly in consequence of the Minister's statements and of the foreshadowed amendments to SEPP 5 which would have the effect of eliminating several areas within the Ku-ring-gai municipality from such development, including the applicant's land. 25 When council indicated its desire to raise the fire issue the applicant did not seek an adjournment. It did not adopt such course because it was concerned that the foreshadowed amendments would be implemented forthwith and thereby prohibit the proposed development. The applicant did not treat the fire issue as one which was determinative of the appeal. By proceeding with the appeal the applicant thereby acknowledged that the fire issue was one of merit for determination by the Court. Such issue may have been determined in favour or against the applicant and the applicant was prepared to take the risk that it would succeed. 26 For the reasons referred to above the Court does not consider that the council's conduct was, in the circumstances, unreasonable or "exceptional". The mere fact that issues have recently arisen which a party seeks to litigate does not, of necessity, constitute exceptional circumstances. Even if the issue had been raised at an earlier point in the proceedings there is no certainty that the Court would have determined such issue in the applicant's favour. Further there is no evidence that the applicant would have abandoned the appeal. In these circumstances the Court considers that the applicant is not entitled to costs. 27 The council has submitted that it should be entitled to an order that its costs of this motion be paid by the applicant. Although the applicant has been unsuccessful in the application for costs, the Court is mindful of the circumstances leading to the dismissal of the appeal before Commissioner Hussey. The fact that the first issue was raised so late was unfortunate for the applicant, and proved to be decisive. In these circumstances the Court does not find that the conduct of the applicant was unreasonable or "exceptional". For these reasons the Court considers that no order for the costs of this application should be made. Orders 28 The Court therefore orders: 1. The Notice of Motion that the respondent pay the applicant's costs be dismissed. 2. There be no order as to costs of this motion. 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.