Land and Environment Court of New South Wales CITATION : The Warehouse Pty Limited & Anor v City of Sydney Council [2007] NSWLEC 488 APPLICANTS: The Warehouse Pty Limited ABN 14 306 963 589 PARTIES : Reachdaze Pty Limited ABN 89 162 416 958 RESPONDENTS: City of Sydney Council FILE NUMBER(S) : 11503 of 2005 CORAM: Lloyd J KEY ISSUES: Costs :- appeal against deemed refusal by the council - three sets of amended plans filed by the applicants - question of appropriate floor space ratio - whether order for costs fair and reasonable LEGISLATION CITED: Environmental Planning and Assessment Act 1979 s 97 Land and Environment Court Rules 1996 Pt 16 r 4(2) Kennedy v Woollahra Municipal Council [2005] NSWLEC 226; Currency Corporation Pty Ltd v Wyong Shire Council [2007] NSWLEC 219; Gee v Port Stephens Council (2003) 131 LGERA 325; Grant v Kiama Municipal Council [2006] NSWLEC 70; CASES CITED: Hunter Development Brokerage Pty Ltd v Cessnock City Council (No. 2) (2006) 151 LGERA 46; Macdonald v Mosman Municipal Council (No. 2) (2000) 107 LGERA 211; Marinkovic v Rockdale City Council [2006] NSWLEC 601; Radray Constructions Pty Limited v Hornsby Shire Council (2006) 145 LGERA 292; Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333; Warehouse Pty Limited v City of Sydney Council [2007] NSWLEC 25 (20 February 2007) DATES OF HEARING: 22 May 2005 DATE OF JUDGMENT: 10 August 2007 APPLICANTS: Mr A E Galasso SC SOLICITORS: Mallesons Stephen Jaques LEGAL REPRESENTATIVES: RESPONDENT: Dr S Pritchard (barrister) SOLICITORS: Maddocks JUDGMENT: - 2 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Lloyd J Friday, 10 August 2007 LEC No. 11503 of 2005 THE WAREHOUSE PTY LIMITED & ANOR v CITY OF SYDNEY COUCIL [2007] NSWLEC 488 JUDGMENT 1 HIS HONOUR: The respondent council applies by way of notice of motion for costs arising from a proceeding which was commenced by the applicants on 14 December 2005. The proceeding involved an appeal against the deemed refusal by the council of a staged development application to demolish existing structures and to create a mixed-use development on an amalgamated site consisting of Nos. 1-5 Link Road, No. 947 South Dowling Street, No. 132 Epsom Road and Nos 87-103 Epson Road, Rosebery. Senior Commissioner Dr J Roseth upheld the appeal: see The Warehouse Pty Limited v City of Sydney Council [2007] NSWLEC 25 (20 February 2007). 2 During the course of preparation for hearing of the proceeding, the applicants filed three sets of amended plans - a first set was filed on 12 May 2006, a second set was filed on 1 September 2006 and a third set was filed on 6 November 2006. The period from the commencement of the proceedings until the filing of the first set of amended plans on 12 May 2006 is already the subject of a costs order. In its notice of motion, the council seeks orders that the applicant pay the council's costs thrown away in relation to all amendments to plans since 12 May 2006 and also that the applicant be solely responsible for the costs of the court-appointed expert's costs from May 2006 onwards. The council does not seek costs thrown away in respect of the third set of plans, filed 6 November 2006. Therefore, the council seeks costs thrown away from 13 May 2006 to 27 October 2006, which is the date when the parties reached in principle agreement on a third set of amended plans. 3 The applicants have also filed a notice of motion seeking their costs in relation to the proceedings on 19, 20, 23 and 24 October 2006. The applicant submits that it wasted four days of hearing time in maintaining a position in relation to floor space ratio, which was initially resisted but ultimately accepted by the council. 4 Since the proceeding is in class 1 of the Court's jurisdiction, the position is governed by Pt 16 r 4(2) of the Land and Environment Court Rules 1996: "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." Background facts 5 On 13 February 2006, the council filed a statement of issues and a statement of basic facts. The statement of basic facts refers to the South Sydney Development Control Plan 1997 ("the DCP") Floor Space Ratio Map as having a base FSR of 1.5:1 and a maximum FSR of 2:1. The council raised concerns about the applicant's development application, in particular in relation to the floor space ratio (FSR), its calculation thereof, the inadequacy of public open space and its entitlement to bonus floor space. The Court appointed an independent expert on 3 March 2006. On 30 April 2006, the court-appointed expert indicated that he was in agreement with council. 6 The applicants served amended plans on the council on 12 May 2006. On 8 June 2006 the applicants were given leave to rely on those amended plans. On 3 August 2006, the court-appointed expert provided the parties with his preliminary report regarding the amended plans dated 12 May 2006. In that report the court-appointed expert stated that he did not consider that the proposed FSR bonus was justified. On 11 August 2006 the council filed an amended statement of issues and an amended statement of basic facts. On 23 August 2006, the court-appointed expert provided his statement of evidence, which contained views consistent with those he had expressed in his preliminary report dated 4 August 2006. 7 On 7 September 2006, the Court ordered that the applicants have leave to rely on the amended plans dated 1 September 2006. The applicants served those amended plans on the council on 15 September 2006. The applicants served further amended plans on the council on 19 September 2006. The court-appointed expert provided a report on the plans that were served on the council on 19 September 2006. Again, the court-appointed expert held the view that the proposal did not justify the bonus floor space sought by the applicants. 8 The council renotified the plans and filed revised statements of facts and basic issues on 4 October 2006. The applicants were given leave to file an expert report to reply to the evidence of the court-appointed expert. On 6 October 2006, the Court granted leave for the council to have its own experts attend a joint conference with the applicants' expert and the court-appointed expert. On 10 October 2006, the council filed further revised statements of issues and basic facts. 9 The hearing of the appeal on the merits began before Senior Commissioner Dr J Roseth on 18 October 2006 and continued on 19, 20, 23 and 24 October 2006. On 24 October the court-appointed expert invited both parties to a further conference of experts with a view to finding a mutually agreeable solution. That conference took place on 26 October 2006 and in principle agreement was reached between the parties with respect to certain matters. 10 On 3 November 2006, the applicants prepared further plans reflecting the agreement reached at the conference on 26 October 2006. Those plans were served on the council on 6 November 2006. The plans of 3 November 2006 were re-notified on 14 November 2006. The council filed an amended statement of issues on 23 November 2006. 11 Senior Commissioner Dr J Roseth delivered judgment on 20 February 2007. The appeal was upheld based on the plans of 3 November 2006. On 2 April 2007 the council's solicitors wrote to the applicants' solicitors seeking payment for costs thrown away in reliance on the abandoned plans. On 24 April 2007 the applicants' solicitors replied to the council's solicitors indicating, inter alia, that their client agrees to pay costs thrown away in relation to the amendment of the development application in September 2006 on the condition that the council disclose the costs it seeks as costs thrown away in relation to the September 2006 amendment to the development application. The council's submissions 12 The council submits that the applicants have caused it to incur an unreasonable degree of costs. The council submits that the chronology shows that it is entirely fair and reasonable that the council be compensated for its costs thrown away by reason of the successive amendments to the plans lodged by the applicants and in preparing to defend an appeal on plans subsequently abandoned. 13 The council relies on a number of authorities to demonstrate that in this case it is fair and reasonable that it be compensated for its costs thrown away in reliance on the amended plans (served on 13 May 2006 and 19 September 2006) and that the applicants pay the entirety of the costs for the court appointed expert: Kennedy v Woollahra Municipal Council [2005] NSWLEC 226; Grant v Kiama Municipal Council [2006] NSWLEC 70; Currency Corporation Pty Ltd v Wyong Shire Council [2007] NSWLEC 219; Marinkovic v Rockdale City Council [2006] NSWLEC 601; Radray Constructions Pty Limited v Hornsby Shire Council (2006) 145 LGERA 292. 14 The council made further submissions in relation to the period between the first set of amended plans and the second set of amended plans. The council submits that the Court would not hesitate to make an order in relation to costs thrown away during that period. The council referred to Kennedy v Woollahra and noted that the Court's general approach to amended plans will, provided the interests of the council and any objectors are adequately protected, generally allow a party to bring forward amended plans for consideration in the appeal. 15 As the applicant's application for costs, the council submits that on 19, 20, 23 and 24 October 2006, the hearing was concerned with the applicants' second set of amended plans, which had been served on the council on 15 September 2006. The council submits that there is no basis at all for any order that council pay the applicants' costs of those hearing days in circumstances where the applicants elected to fight the appeal on the basis of the further amended plans served on 19 September 2006 and in respect of which the court-appointed expert had provided a final report saying he did not support those plans, that they did not justify a bonus floor space as claimed and that he had not altered his view on that issue. The council submits that it was not until 6 November 2006, when the applicants filed a third set of amended plans that reflected the in-principle agreement reach at the conference on 26 October 2006 that the issue of the floor space ratio largely fell away. The council submits that there was no evidence of any deal or paradigm shift by the court-appointed expert and council, and the evidence is that council was at all times concerned to uphold its development controls and to accept the advice of the independent expert in relation to the applicants' entitlement to bonus floor space ratio. The applicants' submissions 16 The applicants agreed, by letter dated 24 April 2007, to pay costs thrown away, in relation to the amendment in September 2006 only, on condition upon a disclosure by the council of the costs sought in relation to that amendment. That agreement does not include the costs of the hearing. The applicants' submit that the final amendment was derived as a negotiated result. The applicants' submit that the council maintained a position of a floor space ratio threshold limit of 1.5:1 at all times in the hearing up to the point of the negotiated result and the council fought with veracity against a proposal which resulted in an exceedence of that number. The applicants submit that there was thus an unnecessary protraction of the proceeding or there was a raising of an objection to a development which was subsequently abandoned by the council. 17 The applicants seek their costs of 19, 20, 23 and 24 October 2006. Mr A E Galasso SC, appearing for the applicants, outlined what occurred on each of those days of the hearing. On 19 October 2006 the applicants' planning consultant gave evidence in relation to the applicants' entitlement to bonus floor space and how the package of public domain works proposed to be carried out by the applicants warranted the provision of bonus floor space above the nominated floor space of 1.5:1. On 20 October 2006 several experts gave evidence in relation to certain matters - the bonus floor space controls, the sufficiency of provision of open space, the sufficiency of the road network and the assessment against the residential flat design code. On 23 October 2006 several experts gave evidence about the sufficiency of the public domain works and the roads. On 24 October 2006 the council submitted that a development application could only obtain bonus floors space if the application provided public domain benefits over and above those in s 79C and those required under s 94 of the Environmental Planning and Assessment Act 1979. On 27 October 2006 the matter was re-listed and the parties informed the Court that they had reached near agreement on all substantive issues. On 20 December 2006 the council's advocate told the Court that the parties had reached agreement on all issues except certain matters. On 9 February 2007 the matter was mentioned before the senior commissioner, submissions were made on the remaining issues and directions were made concerning the preparation of conditions to deal with the topics that were the subject of the matters that were raised as outstanding between the parties on 20 December 2006. (Mr Galasso referred to the transcript of 9 February 2007.) 18 The applicants submit that the position advanced by council was that there could be no exceeding of the 1.5:1 floor space ratio. The applicants submit that they were required to address that case and in the result what was negotiated was the position in which the council ultimately accepted, even in the face of the position expressed by it at the hearing, a position on the other side of the 1.5:1 line. The applicants submit that in the circumstances it is entirely fair and reasonable that the applicant be compensated. The applicants submit that if the Court is minded to not grant to the council its costs then, subject to the matter of the costs of this motion, the applicants would not press for an order for costs for those days. 19 As to the September 2006 amended plans, Mr Galasso submits that what the court-appointed expert did was broker a result and that act of brokering brought this case well outside the position of a costs result following the event of an amendment. The amendment in this case was an amendment effected only after the parties had agreed to the negotiated position. The applicants submit that whatever was effected by the amendment was the effecting of something that was negotiated as a result rather than it being a unilateral course by an applicant to embrace a court-appointed expert recommendation in the face of a position of the council. That brings it, the applicants submit, well outside the realm of costs thrown away because the costs thrown away were the costs of the hearing that preceded it which were costs that the applicant had to incur because it had to run its case against a position of the council which argued against these public benefits being of any utility. 20 The applicants also made further submissions in relation to the public benefits issue generally and submissions as to the costs of this hearing. Conclusion 21 The rule to which I have referred in paragraph [4] above maintains the general principle that costs are not awarded in planning appeals unless it is fair and reasonable in the circumstances of a particular case to make an order for the payment of costs. 22 The justification for the rule is to encourage challenges to decisions of consent authorities in planning appeals without the applicant facing the threat of an adverse costs order as the price of failure: see, for example, Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333 at 334, Gee v Port Stephens Council (2003) 131 LGERA 325 at [40], and Hunter Development Brokerage Pty Ltd v Cessnock City Council [No. 2] (2006) 151 LGERA 46 at [47]. In the latter case the Court of Appeal upheld a decision of the trial judge to apply the rule and not award costs of the hearing of a preliminary question of law in proceedings in class 1 of the Court's jurisdiction. 23 In the present case, although I am unaware of all the details of the contest between the parties, I am left with the impression that a number of amendments were made to the proposed development in order to meet the council's objection to the provision of bonus floor space. It also seems that, in the end, the council appears to have accepted, and the senior commissioner agreed, that some bonus floor space would be appropriate. 24 Moreover, it often happens that the appropriate amount of floor space for a development, and even the kind of development itself, does not become apparent until after some evidence is given by relevant experts, which in turn necessarily involves some hearing time and the consequent making of amendments to the proposed development. This appears to have occurred in the present case. That is, both sides appear to have given ground from their respective starting positions. 25 In my opinion there is nothing in these circumstances which would take the case outside the general principle that costs are not awarded in planning appeals. Both the council's motion for costs and the applicant's motion for costs should be dismissed. 26 An unsuccessful motion for costs usually attracts an order for costs against the unsuccessful party, since the motion is not part of the planning appeal and so is not covered by Pt 16 r 4(2) of the Rules (MacDonald v Mosman Municipal Council (No. 2) (2000) 107 LGERA 211 at [15]-[18]). In the present case the council's motion for costs and the applicants' motion for costs have both failed. In these circumstances it is appropriate that there be no order for the costs of the hearing on costs. 27 The formal orders are: 1. The respondent's notice of motion for costs dated 6 March 2007 is dismissed. 2. The applicants' notice of motion for costs dated 7 March 2007 is dismissed. 3. No order as to the costs of each notice of motion. I hereby certify that the preceding 27 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. Associate Dated: 10 August 2007 ********** 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.