Land and Environment Court of New South Wales CITATION : Evans and Another v Maclean Shire Council and Another [2004] NSWLEC 89 APPLICANTS Sandra Evans Robert Evans PARTIES : FIRST RESPONDENT Maclean Shire Council SECOND RESPONDENT Integrated Site Design Pty Ltd (for Primrose Levi Pty Ltd) FILE NUMBER(S) : 10913 of 2003 CORAM: Talbot J KEY ISSUES: Costs :- disentitling conduct by successful party LEGISLATION CITED: Environmental Planning and Assessment Act 1979 s 98 Bostock v Ramsey Urban District Council [1900] 2 QB 616; Foodbarn Pty Limited and Others v Solicitor-General (1975) 32 LGRA 157; CASES CITED: Gee v Port Stephens Council [2003] NSWLEC 260, unreported; Mantel v Anstee and Another [2001] NSWLEC 202, unreported; Oshlack v Richmond River Council (1998) 193 CLR 72 DATES OF HEARING: 11/03/2004 DATE OF JUDGMENT: 03/19/2004 APPLICANTS Ms S Winters (Barrister) SOLICITORS NA FIRST RESPONDENT Mr J B Maston (Barrister) LEGAL REPRESENTATIVES: SOLICITORS Pickering Priestley SECOND RESPONDENT Mr A Hawkes (Solicitor) SOLICITORS Pike Pike & Fenwick JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 10913 of 2003 Talbot J 19 March 2004 Sandra Evans Robert Evans Applicants v Maclean Shire Council First Respondent Integrated Site Design Pty Ltd (for Primrose Levi Pty Ltd) Second Respondent Judgment Introduction 1 By application class 4 the applicants in the proceedings, Sandra and Roberts Evans, appealed against the determination of the first respondent, Maclean Shire Council ("the council"), to grant development consent to development application No. LDA 2003/0112 made by the second respondent, Integrated Site Design Pty Limited (for Primrose Levi Pty Ltd) in respect of the expansion of a caravan park at Palmers Island. 2 As can be seen from [1] in the judgment I delivered in the matter on 19 December 2003, an earlier application for development consent had been lodged with the council in 1999. That development application was rejected on the basis that it was in respect of designated development and required the lodgement of an Environmental Impact Statement ("EIS"). The second development application was lodged with an EIS as an application for the approval of designated development. 3 The applicants lodged an objection to the second development application and subsequently appealed to this Court, pursuant to s 98 of the Environmental Planning and Assessment Act 1979. 4 Following commencement of the proceedings the applicants sought to argue a number of issues. Firstly, a question of law was raised by way of a notice of motion filed on 18 August 2003. Secondly, both legal and merits issues were set out in a draft Statement of Issues dated 18 September 2003. Following a preliminary hearing before the Chief Judge on 21 and 22 October 2003, further points of law were raised by the applicants in a Revised Statement of Issues dated 30 October 2003. Hearing dates were allocated for four days commencing on 15 December 2003. 5 On 6 November 2003 the second respondent filed a notice of motion seeking leave to raise a preliminary question whether the development application the subject of the appeal is not an application for designated development and that, accordingly, the appeal is null and void. 6 On 1 December 2003 the applicants filed a notice of motion dated 27 November 2003 seeking leave to file class 4 proceedings for determination of a legal question raised in the appeal proceedings and that the class 1 proceedings be stayed pending determination of the class 4 proceedings. 7 Both notices of motion were stood over for hearing on 15 December 2003. The other three hearing days were vacated to enable the issues raised by the two notices of motion to be determined as preliminary matters. 8 At the hearing on 15 December 2003 all parties appeared represented by counsel. Mr Dimitriadis, who appeared on behalf of the council, did not rely on any evidence and made no separate submissions. 9 In a reserved judgment I decided that the second respondent was not estopped from raising the issue whether the application was in respect of designated development and that, in any event, it is imperative for the Court to determine for itself whether it has jurisdiction to hear an appeal. Furthermore, I held that as the sewerage treatment works upon which the applicants relied for the characterisation of the development as designated development was subordinate to the caravan park purpose, the development the subject of the appeal was not designated development. The line of authority established by the decision of the Court of Appeal in Foodbarn Pty Limited and Others v Solicitor-General (1975) 32 LGRA 157 was followed. 10 By notice of motion dated 24 December 2003 the second respondent seeks an order that the applicants pay its costs for the whole of the proceedings or, alternatively, in relation to the second respondent's notice of motion dated 6 November 2003. In argument Mr Hawkes, who appears for the second respondent, quite properly conceded that the second respondent's entitlement to costs, if any, should be restricted to the notice of motion dated 6 November 2003. 11 By notice of motion dated 15 January 2004 the first respondent moved the Court for orders that the applicants pay its costs for the whole of the proceedings or, alternatively, the first respondent's costs in relation to the second respondent's notice of motion dated 6 November 2003. During the hearing Mr Maston, who appeared for the first respondent, made it clear that his client was seeking an order that the applicants pay the costs of the applicants' notice of motion dated 27 November 2003 as well as the costs in respect of the second respondent's notice of motion dated 6 November 2003. 12 Ms Winters appears for the applicants. They oppose both notices of motion. The competing arguments 13 The issues raised by the notices of motion, but in particular the issue in regard to designated development, were hotly contested and argued between the applicants and the second respondent at the hearing on 15 December 2003. Having been informed by the Chief Judge of the decision in Gee v Port Stephens Council [2003] NSWLEC 260, unreported in October Ms Winters says that the applicants elected to deal with the legal issues they intended to raise at the hearing, rather than press for those issues to be determined at a preliminary hearing. Nevertheless, they were required to argue the issue in respect of designated development as a consequence of the notice of motion filed by the second respondent on 6 November 2003. Having responded to the salutary observations by the Chief Judge at the interlocutory hearing, Ms Winters contends that the applicants should not now be penalised with a costs order in respect of the arguments raised by the second respondent. Responding to the suggestion by both respondents that following the filing of the notice of motion dated 6 November 2003 the applicants thereupon should have discontinued the appeal because the outcome was virtually inevitable, Ms Winters says that the issues raised were not "cut and dried". A reading of the judgment delivered on 19 December 2003 confirms this. 14 The simple submission made by Mr Hawkes is that in order to escape the usual order as to costs the applicants must show disentitling conduct on the part of the second respondent. He cited the view expressed by Bignold J in Mantel v Anstee and Another [2001] NSWLEC 202, unreported that disentitling conduct refers to conduct in the litigation. 15 The response to Mr Hawkes by Ms Winters is encompassed by what was said by McHugh J in a minority judgment in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-98 as follows:- "Misconduct" in this context means misconduct relating to the litigation, or in circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. 16 McHugh J referred to the decision of the Court of Appeal in Bostock v Ramsey Urban District Council (1900) QB 616 where the following was said at p 622:- …the judge is not confined, in considering the question whether there is good cause for depriving the successful party of costs, to the conduct of the parties in the litigation itself, but must consider the whole circumstances of the case and everything which led to the action. I think that in this case there was evidence of conduct on the part of the defendants such as to lead the plaintiff reasonably to think that he had a good cause of action against them, and which the judge was entitled to take into consideration as constituting good cause for depriving the defendants of costs. 17 Applying the observations by the Court of Appeal in Bostock to the present case, Ms Winters argues that, prior to commencement and during the litigation up to 6 November 2003, both the council and the second respondent consistently acted in respect of the development application and the consent as if they both related to designated development. There was no challenge to the standing of the applicants to maintain the appeal until 6 November 2003. The council had at all times followed due process as if the development application was in respect of designated development. The second respondent reacted to the first refusal by making an application for consent to designated development. It was, therefore, the conduct of the respondents that led the applicants reasonably to think that they had a right of appeal as objectors to a proposal for designated development. 18 Mr Maston and Mr Hawkes both say that Ms Winters' argument would have greater strength if the respondents were seeking costs in relation to the whole of the proceedings, rather than in respect of the notices of motion. When a view was formed that the development was not designated development then steps were taken to have that issue litigated and determined. The respondents contend, therefore, that as from that time all parties continued with the litigation at their own risks in relation to costs. 19 In Gee McClellan CJ concluded at [41] and [60] as follows:- …the council is seeking to raise a question which will either be framed as a pure question of law or as a question of mixed fact and law. In the present case it was submitted, correctly, that a negative answer to the separate question would raise a complete bar to the grant of any development consent. In these circumstances although the applicant seeks a review of the merits of the proposal the proceedings will in respect of the preliminary question take on the character of conventional litigation in which questions of fact and law are determined. …in my opinion in circumstances where a council chooses to put in issue the capacity for approval either by raising a preliminary question of law or as here a preliminary question involving matters of both fact and law, the usual approach to costs in class 1 appeals is inappropriate. By raising the question of capacity to grant an approval the council raises matters appropriate for ordinary litigation, and seeks to avoid consideration of the merits of the application. In such a case, in my opinion, the usual order should be that costs follow the event. 20 I accept what Ms Winters says, namely that the Chief Judge was dealing with different circumstances, however, I have some difficulty with her submission that the applicants' appeal was not dismissed but rather that the class 1 proceedings were dismissed on the basis that the development was not designated development. It appears to be a distinction without a difference. Although the notice of motion filed on 6 November 2003 was not expressed in those terms nevertheless the Court was asked to hold that if the development application was not an application for designated development then the appeal was null and void. The formal order of the Court that the proceedings be dismissed had the consequence that the appeal was dismissed. It is true nevertheless that there has been no hearing on the determination of the merits of the development application. 21 In my opinion, the authorities make it clear that the Court may depart from the usual order as to costs in circumstances where the conduct of the successful party leading up to the action effectively invites the litigation. In this case, the principle needs to be modified to take account of the conduct of the respondents prior to 6 November 2003, including the conduct prior to the commencement of the class 1 proceedings, in order to determine whether the previous conduct of the respondents led the applicants to defend the notices of motion. 22 Prior to 6 November 2003 both respondents treated the proposed development as designated development and acted accordingly. The question, therefore, becomes whether the decision to raise the issue was such a startling reversal of the previous conduct that the applicants are entitled to be protected against the usual order for costs where their contention was to maintain the position previously adopted and maintained by the respondents. The position taken by the respondents after 6 November 2003 was a complete about face. The applicants, in my opinion, were left in an invidious position that justified their opposition. In my view, as a consequence of being led into the litigation as a whole by the previous conduct of the respondents they were placed in the position of being obliged to defend the contentions made by the second respondent and supported by the first respondent. 23 In the circumstances, I am satisfied that the conduct of the respondents leading up to the litigation and during the litigation itself up to 6 November 2003 was conduct that disentitles them to the usual order as to costs. These proceedings would not have been commenced, at all, if the second respondent and the council had not respectively proceeded with and processed the application as an application for designated development. The issues raised by the notices of motion would not have arisen. 24 The principle that a successful party is entitled to an order for costs in its favour is justified by considerations of fairness and compensation for expense that would not have been incurred if the litigation had not been brought. In the present case, the litigation was founded upon facts and circumstances created by the respondents. The subsequent change to that position was the final element in the conduct which disentitles the respondents to compensation in the form of an award of costs in their favour. 25 The applicants in the proceedings, being the respondents to the notices of motion dated 24 December 2003 and 15 January 2004, have been successful in relation to the costs application and, accordingly, are entitled to an order for costs in their favour in respect of the notices of motion. It is appropriate, therefore, that the respondents each be ordered to pay one half of the applicants' costs in respect of those notices of motion. 26 The formal orders of the Court are as follows:- (1) Notice of motion dated 24 December 2003 by the second respondent is dismissed. (2) Notice of motion dated 15 January 2004 by the first respondent is dismissed. (3) The first respondent is ordered to pay one half of the applicants' costs in respect of the notices of motion, 24 December 2003 and 15 January 2004. (4) The second respondent is ordered to pay one half of the applicants' costs in respect of the notices of motion, 24 December 2003 and 15 January 2004. 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.