Reported Decision : 133LGERA 429 Land and Environment Court of New South Wales CITATION : Gales Holdings Pty Ltd v Tweed Shire Council (No. 2) [2004] NSWLEC 351 APPLICANT: Gales Holdings Pty Ltd PARTIES : RESPONDENT: Tweed Shire Council FILE NUMBER(S) : 10213 of 2003 CORAM: Bignold J KEY ISSUES: Costs :- Class 1 proceedings discontinued LEGISLATION CITED: Land and Environment Court Rules, Pt 11 r 5, Pt 16 r 4 Bennette v Byron City Council (2001) 116 LGERA 235; Gales Pty Ltd v Tweed Shire Council [2003] NSWLEC 194; Gormick Constructions Pty Ltd v Sydney City Council (2002) 123 LGERA 42; CASES CITED: Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219; Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245; Menangle Sand and Soil Pty Ltd v Wingecarribee Shire Council (2000) 108 LGERA 209; Palerma Pty Ltd v Liverpool City Council (2003) 124 LGERA 83 DATES OF HEARING: 30/03/2004 DATE OF JUDGMENT: 07/02/2004 APPLICANT: Ms J Jagot, Barrister SOLICITORS Woolf Associates LEGAL REPRESENTATIVES: RESPONDENT: Mr J Webster, SC SOLICITORS Stacks/Northern Rivers JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES BIGNOLD J 2 July 2004 10213 of 2003 GALES HOLDINGS PTY LIMITED v TWEED SHIRE COUNCIL (No. 2) JUDGMENT HIS HONOUR: 1 A dispute as to costs has arisen following the filing on 21 August 2003 of a Notice of Discontinuance by the Applicant (without the consent of the Respondent) of class 1 proceedings being an appeal pursuant to the Environmental Planning and Assessment Act 1979 against the Council's deemed refusal of its development application for the development of a major shopping centre on land at Kingscliff. 2 The Council claims all of its costs incurred in the discontinued proceedings. This is the principal claim which is resisted by the Applicant which makes its own claim to costs in respect of specified discrete interlocutory steps in the proceedings. This is a subsidiary costs claim which I take to be something of a defensive claim. The Council questions the competence of a discontinuing party to make such a claim for costs. 3 The litigation history of the proceedings which was both complex and inconclusive, was extensively examined at the hearing. Much of it had been considered just one week prior to the discontinuance when Talbot J vacated the August hearing date that had been allocated for the determination of a preliminary question raised by the Council as to whether the development application should have been accompanied by a species impact statement (SIS) and also vacated the September hearing dates that had been allocated for the determination of the planning appeal on its merits and at the request of the Council, re-allocated the September dates for the hearing of the Council's preliminary question. 4 On that occasion, his Honour reserved the question of costs of the hearing before him and the question of costs thrown away by vacating the August hearing date. One week after the hearing before Talbot J, the Applicant filed the Notice of Discontinuance, and one week thereafter, his Honour delivered his reserved judgment on the question of costs, ordering each party to pay its costs of the hearing before him and of costs thrown away by vacating the allocated August hearing: see Gales Pty Ltd v Tweed Shire Council [2003] NSWLEC 194. 5 I have read the transcript of the hearing before Talbot J on 14 August 2003. It is apparent that the Applicant was seeking the vacation of both the August and September hearing dates principally because the parties to the litigation had from the beginning of July 2003 commenced discussions and negotiations seeking to resolve all outstanding issues concerning the future planning and development of the Applicant's substantial landholdings at Kingscliff (including the proposed shopping centre development application, the subject of these proceedings). 6 The disputed question of costs fully debated before me had been somewhat anticipated or foreshadowed at the hearing before Talbot J on 14 August 2003 when Senior Counsel for the Applicant made the following submission recorded at pp 3 and 4 of the transcript: So there are if you like wrapped up in the development application and in the issues before the Court, wider strategic questions that are if you like quintessentially planning rather than development decision making issues. Now it is in that context, and as well one has to admit in the context of Mr Parker having found an additional threatened species on the site which hadn't previously been known and therefore hadn't been investigated by our consultants, that we approached council through an intermediary in I think early July 2003, with a view to vacating both hearing dates to these proceedings and entering into negotiations with council to see if we could achieve a compromise or some resolution to the strategic planning questions which lie at the bottom I suppose of the proceedings before the Court. We saw that as a more sensible way of going than running the case in the circumstances. We understand that Mr Webster's position, he'll tell your Honour himself, that council doesn't oppose the vacation of those dates, and is consequently prepared to enter into discussions with us as the major land holder in this area. The only question is that they seek costs, we say well if we discontinue at the end of the day as a consequence of these discussions, then they can seek costs then. We're not aware of any costs thrown away by the adjournment, because if the case proceeds, such evidence preparation as has hitherto been undertaken would not be wasted, and it's inappropriate now because there are no exceptional circumstances for the Court to make an order for costs if it decides in its discretion to vacate the hearing dates. 7 My reading of the transcript gives the clear impression that the Applicant was seeking to temporarily suspend progress with the litigation (including the Council's preliminary question) until the parties' wide ranging discussions or negotiations had been concluded, that his Honour was reluctant to leave the proceedings in indefinite suspense (though he recognised that the litigation was lacking appropriate directions and case management) and that the Council was pressing for the early determination of the preliminary question. 8 In the result, his Honour vacated both allocated hearing dates but re-allocated the September dates for the hearing of the Council's preliminary question on the basis that the Applicant would probably present a competing case to the Council's contention that an SIS was required (depending upon the Council's case, noting that at that stage, Mr Parker's second report had not been served on the Applicant). 9 In so ordering, his Honour ultimately rejected the Council's application for costs. 10 The disputed question of costs following the Applicant's discontinuance of the proceedings raises different considerations from those that no doubt informed his Honour's decision not to make any order for costs. However, except for what occurred at the hearing before his Honour and what occurred in the ensuing week immediately prior to the discontinuance of the proceedings (when the Council served a copy of Mr Parker's second report of his fauna assessment, which had already been prepared before the hearing before Talbot J) the relevant facts pertaining to this litigation were unchanged from those extensively discussed in the hearing before his Honour and even more extensively discussed in the hearing before me. The Council's costs claim based upon the Applicant's discontinuance would appear to be seeking to re-open his Honour's decision on costs. 11 For the reasons that are hereinafter set forth, like his Honour, I also have concluded that there should be no order as to costs in respect of the discontinued proceedings, principally because of the impact of the litigation history and of the parties' relevant conduct throughout that history on the relevant costs discretion exercisable by the Court in this case. 12 The relevant litigation history reveals the following facts— (1) 19 December 2002 —Applicant lodges development application with the Council; (2) 27 February 2003 —Applicant commences present proceedings against the Council's deemed refusal of its development application; (3) 31 March 2003 —Registrar gives directions for the Council to file and serve its Statement of Issues; (4) 22 April 2003 —the Council serves draft Statement of Issues raising 16 issues but not including the necessity for an SIS to accompany development application; (5) 28 April 2003 —Registrar allocates hearing dates for appeal from 23 to 30 September 2003; (6) 5 May 2003 —the Council files an amended Statement of Issues including the issue that the development application does not include the requisite SIS but this amended Statement is not served on Applicant until 5 June 2003 ; (7) 6 June 2003 —the Council abandons its Notice of Motion seeking vacation of allocated hearing dates until Environment Australia makes its assessment pursuant to the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 , s 75 and instead, without prior notice to the Applicant, seeks determination of preliminary question whether the development application is invalid for absence of accompanying SIS. Chief Judge Pearlman gives direction for Council's preliminary question to be determined at a preliminary hearing on 19 August 2003; (8) 14 August 2003 —Talbot J vacates the allocated hearing date for the Council's preliminary question and the allocated hearing dates for the full appeal and re-allocates the latter dates for hearing of the Council's preliminary question; (9) 21 August 2003 —Applicant files Notice of Discontinuance; (10) 28 August 2003 —Talbot J delivers reserved judgment on costs ordering each party to pay its own costs. 13 I have not included in the litigation history the several other procedural matters which are the subject of the Applicant's discrete costs claim involving the Applicant's Notices to Produce and the Applicant's request for particulars. 14 Another significant event in the litigation history occurred on 18 June 2003 when the Council determined the Applicant's development application by refusing consent for a number of reasons (which generally appear to cover the same ground as the issues that had been raised in the Council's amended Statement of Issues). 15 Yet another important matter not included in the summary of the litigation history concerns the circumstances in which the Council disclosed to the Applicant Mr Parker's two fauna assessments, which included his recent discovery of a threatened fauna species (the wallum sedge frog) that had not been noted in the Applicant's expert materials supporting the development application. 16 The parties' competing submissions on costs commonly accepted the applicability to the disputed costs question of the recently made Rule of Court contained in Pt 16 r 4 which was made after the discontinuance of the proceedings and which relevantly provides: 4. Costs in certain proceedings . (1) This rule applies to the following proceedings in classes 1, 2 and 3 of the Court's jurisdiction — (a) proceedings under Sections 95A, 96, 97, 98, 109K, 121ZK, 121ZM and 149F of the Environmental Planning and Assessment Act 1979; …………. ………….. ………….. (2) 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. 17 Additionally, the Council relies upon Pt 11 r 5(1) of the Rules of Court which provides as follows: 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 18 The Council's argument raises the question of the relationship between Pt 11 r 5(1) and the recently made Pt 16 r 4 of the Rules of Court. 19 A similar question concerning the relationship between Pt 11 r 5 and the Court's Practice Direction concerning costs in building and planning appeals (which Practice Direction has been replaced by the new Rule of Court) had been considered in Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245 at 248 to 250 where I expressed the following conclusions: My review of the decided cases has revealed that the preponderating weight of authority supports the following proposition (which I would adopt in answering the question that I have earlier posed): Ordinarily costs will be awarded against a discontinuing party because the discontinuance of the proceedings either (a) satisfies the exceptional circumstances test within the meaning of the Court's Practice Direction or (b) operates as an established exception to that Practice Direction. Having regard to the all embracing terms of the Practice Direction (as to which see the Chief Judge's judgment in Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365 the preferable basis for the proposition I have enunciated may be that the discontinuance of the proceedings satisfies the exceptional circumstances test. However I would emphasise that although an order for costs against the discontinuing party will ordinarily flow from the discontinuance of the proceedings, it may be established that the discontinuance reflects, not a total abandonment of the applicant's claims, but a compromise or settlement of them, in which circumstances it may be just that there be no order as to costs following upon the discontinuance of the proceedings. Moreover the party against whom the proceedings have been discontinued may forfeit its presumptive entitlement to costs if it has been guilty of any relevant misconduct in the litigation. 20 Those general conclusions have been applied in subsequent decisions eg see Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219 and Menangle Sand and Soil Pty Ltd v Wingecarribee Shire Council (2000) 108 LGERA 209. In the latter case, Lloyd J's consideration of many of the decided cases in this Court enabled him to enumerate the following general principles: (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 [1997] NSWLEC 91; Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245; Chris Lonergan & Associates v Byron Shire Council [1998] NSWLEC 78; Gilling v Hawkesbury City Council [1998] NSWLEC 142; David Crane & Associates Pty Limited v Kogarah Council [1998] NSWLEC 121; Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219; Tabaquero v Campbelltown City Council [2000] NSWLEC 68). 21 After discussing a number of the decided cases, Lloyd J makes the following relevant observation at 214: In those cases in which an order 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. 22 In the following concluding paragraph of his judgment, Lloyd J not only makes the point that the case before him was clearly distinguishable from cases involving a discontinuance close in time to an allocated hearing date, but adds a new dimension to the resolution of a costs question— 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 Immigration & 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. 23 Although in Gormick Constructions Pty Ltd v Sydney City Council (2002) 123 LGERA 42 I expressed the view at 52 that a case attracting the Rules of Court concerning costs in discontinued proceedings was to be differentiated from the type of case governed by the principles expounded in Ex parte Lai Qin this reservation on that feature of the decision in Menangle Sand and Soil did not preclude my adoption in Gormick and in other cases of the general principles enunciated by Lloyd J: see also Bennette v Byron City Council (2001) 116 LGERA 235, Palerma Pty Ltd v Liverpool City Council (2003) 124 LGERA 83 (per Cowdroy J). 24 In my opinion, those general principles remain applicable, mutatis mutandis, now that the Court's Practice Direction has been replaced by the new Rule of Court contained in Part 16 Rule 4 because it is clear that that new Rule was intended to (a) wholly replace the Practice Direction; (b) control the costs discretion conferred by s 69(2) of the Land and Environment Court Act ("Subject to the rules and subject to any other Act—(a) costs are in the discretion of the Court"); and (c) to maintain the general principle that costs are not awarded in planning appeals and the like unless it is fair and reasonable in the circumstances of a particular case, to make an order for the payment of costs. 25 Accordingly, I would hold that the relationship between the Rules of Court Pt 11 r 5 and Pt 16 r 4 is to similar effect as has been held in respect of the previous relationship between Pt 11 r 5 and the Court's Practice Direction subject to the obvious and necessary textual substitution in the formulation of the general principles enunciated in Menangle Sand and Soil of the words "fair and reasonable" appearing in Pt 16 r 4 for the words "exceptional circumstances" appearing in the Court's Practice Direction. 26 So understood, I am of the opinion that the Applicant's discontinuance of the proceedings was a reasonable response to what had emerged in the Council's case belatedly (in respect of the fauna that had been identified in the development application supporting expert materials) and somewhat obscurely (in respect of the Wallum sedge frog) as the preliminary question concerning the need for an SIS to support the Applicant's development application, particularly in the context of the parties' voluntary entering into discussions and negotiations concerning the future planning and development of the Applicant's extensive land holdings in Kingscliff (including the land the subject of the pending appeal raised by these proceedings). In short, the Council could, and should, have raised the issue concerning the need for an SIS much earlier in the proceedings, detached from and untrammelled by, the multitudinous planning issues it had raised in its Statement of Issues. Moreover, as the litigation history I have summarised clearly reveals, the raising by the Council of the preliminary question immediately suspended all questions concerning the merits of the appeal and in this respect, and importantly in relation to the decided cases, at the time the proceedings were discontinued there was no substitute hearing date allocated for the hearing of the appeal on its merits. In any event, a merits hearing was indeed problematic in view of the Council's preliminary question. 27 For all the foregoing reasons, in my opinion the Applicant's discontinuance of the proceedings was a reasonable and justified response to what was (and perhaps more relevantly was not) happening in the litigation particularly in the immediate context of the parties' discussing the larger questions (subsuming the questions raised by the pending appeal) of the future planning and development of the Applicant's land holdings at Kingscliff. The discontinuance did not create a circumstance where it was fair and reasonable to make a costs order against the discontinuing party in accordance with the available power conferred by Pt 11 r 5. 28 Ultimately, I have concluded that conformably to Pt 16 r 4 there should be no order as to costs in the discontinued proceedings, because the litigation history and the parties' conduct in it do not justify the conclusion that it is fair and reasonable to make a costs order against either party. 29 Accordingly, I order that each party's Notice of Motion claiming costs against each other be dismissed with no order as to costs. The exhibits are to be 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.