Land and Environment Court of New South Wales CITATION : Iramoo Flyer Pty Ltd v Berrigan Shire Council [2008] NSWLEC 255 APPLICANT Iramoo Flyer Pty Ltd PARTIES : RESPONDENT Berrigan Shire Council FILE NUMBER(S) : 10756 of 2007 CORAM: Pain J KEY ISSUES: Costs :- exercise of Court's discretion to award costs in Class 1 proceedings - whether fair and reasonable to order costs against unsuccessful Applicant LEGISLATION CITED: Environmental Planning and Assessment Act 1979 Land and Environment Court Rules 2007 r 3.7 ACM Landmark Pty Limited v Cessnock City Council [2006] NSWLEC 256 Bailey v Oberon Shire Council [2007] NSWLEC 273 CASES CITED: Iramoo Flyer Pty Ltd v Berrigan Shire Council [2008] NSWLEC 1188 James Godfrey v Wollondilly Shire Council (No 2) [2007] NSWLEC 280 JR & EG Richards (NSW) Pty Ltd v Scone Shire Council [1995] NSWLEC 200 Pyramid Pacific Pty Limited v Ku-Ring-Gai Council [2006] NSWLEC 522 DATES OF HEARING: 2 September 2008 DATE OF JUDGMENT: 3 September 2008 APPLICANT Ms S Duggan SOLICITOR LEGAL REPRESENTATIVES: Kell Moore Solicitors RESPONDENT Mr S Burchett SOLICITOR B G Halliday Solicitors JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Pain J 3 September 2008 10756 of 2007 Iramoo Flyer Pty Ltd v Berrigan Shire Council JUDGMENT 1 Her Honour: Hussey C dismissed the Applicant's Class 1 appeal in Iramoo Flyer Pty Ltd v Berrigan Shire Council [2008] NSWLEC 1188 on 21 May 2008. The Applicant had sought consent for subdivision of a large lot of rural zoned land. The appeal was against the Council's refusal of a development application for a two lot, rural subdivision at Tocumwal. The subdivision proposed a non-contiguous lot with portions separated by approximately 8.5km. The Council has filed a Notice of Motion seeking an order that its costs of the proceedings be paid by the Applicant. 2 An affidavit of Mr Rogers, the Council's solicitor, dated 2 June 2008, was read which sets out various correspondence and communications between the parties concerning the conduct of the proceedings. An affidavit of Mr Halliday, the Applicant's solicitor, dated 10 July 2008 was read which annexed additional documents concerning the proceedings and discussed aspects of the proceedings. 3 These Class 1 proceedings were commenced on 7 August 2007. A Statement of Facts and Contentions was filed by the Council on 10 October 2007. It raised four issues as follows: 1. (a) That the proposal fails to satisfy s 4B(2) (and accordingly s 109J) of the Environmental Planning and Assessment Act 1979 (the EP&A Act) as it is not capable of being registered as a subdivision as one of the proposed allotments comprises two parcels of land that are not contiguous (by a significant distance), without reasonable justification. (b) In the alternative, the proposed subdivision produces lots that are not contiguous and therefore does not result in the orderly and economic use of the land. 2. That the proposal is contrary to the objectives of the General Rural Zone as set out in cl 9 of the Berrigan Local Environmental Plan (LEP) as it fails to protect, enhance or conserve the agricultural land in a manner that sustains its efficient and effective agricultural production potential. 3. That the proposal as a natural consequence of the subdivision proposed will result in clearing of the land to facilitate the proposed agricultural use which, contrary to s 79C(1)(b) of the EP&A Act will have an unacceptable impact on the natural environment as the separate agricultural use of the smaller allotments produced by the proposed subdivision will require or result in: (a) soil degradation; (b) destruction of native vegetation for bushfire protection and agricultural pursuits; (c) pollution of the Murray River. 4. Contrary to s 79C(1)(c) of the EP&A Act the site is not suitable for the proposal in that lots as proposed are not suitable for agricultural use due to the environmentally sensitive nature of the lots, including that the site is heavily vegetated, flood prone and parts of it bushfire prone. 4 The Applicant filed its Statement of Facts and Contentions on 1 November 2007. 5 The Council relied on the expert evidence of a planner, Mr Laycock, and Mr Ryan, an agricultural consultant. A letter dated 14 September 2007 was sent from the Council's solicitor stating that the application could not be upheld because the land was non-contiguous. The Applicant's solicitor replied to the contrary. The Council's solicitor wrote on 26 February 2008 asking the Applicant's solicitor what experts were to be relied on. On 28 February 2008 the Council's solicitor advised that an agricultural expert had been briefed. A 3 March 2008 letter from the Applicant's solicitor to the Council's solicitor stated that the only expert evidence would be that of Mr Mitsch, surveyor. On 26 March 2008 the names of the experts to be relied on by the Council were identified to the Applicant's solicitor and their statements of evidence were served that day. 6 The Applicant's solicitor sent a letter dated 26 March 2008 enclosing a short statement of what Mr Mitsch would address signed by the Applicant's solicitor. That clearly failed to comply with the requirements for the form and substance of expert evidence under the Court rules. After further correspondence, a statement of Mr Mitsch was prepared and served just before the hearing. 7 The matter was heard on 9 April 2008. At the hearing the Applicant sought leave to file in Court the report of an agricultural expert. Leave was refused by the Commissioner. At [11] of his judgment the Commissioner stated that the subdivision is to facilitate the land being mainly used for agriculture by way of cattle grazing and forestry. At [12] he stated that Mr Mitsch provided a history of the land owners intention for the subject land for its use of lifestyle and enjoyment in combination with the primary purpose of agricultural activities and that no specific evidence was presented on the proposed agricultural or forestry activities. At [13] he referred to the evidence of Mr Ryan who undertook an agricultural suitability assessment and his conclusion that the proposed apportionment of non-contiguous lots for intended agricultural use would detract from the agricultural worth of the current lots. He considered this evidence in detail at [14]-[19]. He also considered the evidence of Mr Laycock planner at [20]. At [22]-[23] he stated: It is apparent to me that the planning controls endeavour to preserve and enhance agricultural land use opportunities in the 1(a) General Rural zone. The controls specify that the minimum lot size for subdivision of land in this area is 120 ha. Furthermore, the controls provide that any subdivision application identifies the land use primarily for agricultural purposes and that intended for the purpose of a dwelling house. In my assessment, the applicant has not provided a satisfactory response to this requirement. However, both Mr Ryan and Mr Laycock have undertaken detailed assessments, which results in their opinions that this proposal does not adequately satisfy development controls. 8 The Commissioner concluded in [32] that the proposal did not adequately satisfy the zone objectives of promoting the proper management of agricultural land by protecting, enhancing and conserving its agricultural potential. Rather it would fragment it. Relevant legislation 9 Rule 3.7 of the Land and Environment Court Rules 2007 (the Court Rules) deals with costs in Class 1 proceedings. It relevantly provides: (1) This rule applies to the following proceedings: (a) all proceedings in Class 1 of the Court's jurisdiction, … (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: … (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents: (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, 10 Costs in Class 1 matters were previously considered under Pt 16 r 4 of the Court Rules as then in force and similar considerations applied then as now. Council's submissions 11 The Council relies on ss (3)(b)(ii) and ss (3)(d) of r 3.7 because of the failure of the Applicant to address the main issue raised in the proceedings of the need for the subdivision to comply with the LEP requirement for the General Rural zone of the preservation of agricultural land. 12 Clause 9 of the Berrigan LEP specifies a mandatory matter about which the Court had to be satisfied before it could give consent to the carrying out of development on land to which the LEP applies. The relevant zone objective 1(a) requires the protection, enhancement and conservation of agricultural land so that its efficient and effective agricultural production potential is sustained. Clause 12 requires that any proposed subdivision would be used for the purposes of agriculture. 13 The Council's refusal of the development application and issues 2, 3 and 4 in the Statement of Facts and Contentions refer to the need to consider the capacity of the land proposed to be subdivided to be used for agricultural purposes. The Applicant produced no evidence in relation to the agricultural capacity and suitability of the land to support the subdivision application. In order to address the contention that it raised, the Council was required to retain an agricultural expert to give evidence in relation to the suitability of the subdivided land for agriculture and agricultural capacity of that land. Hussey C noted that in his judgment at [12] and observed at [22] – [23] of his judgment that this was an essential matter that had to be addressed and he accepted the expert evidence of the Council. The primary reason for the refusal of the DA was the Commissioner's conclusion at [32] that the proposal would not meet the zone objectives to promote the proper management of agricultural land. 14 This was a crucial issue in the proceedings and the Council had no alternative but to adduce evidence in support of its contention on that issue. The Applicant failed to rely on any evidence and so failed to provide necessary information to enable the Court to gain a proper understanding and give proper consideration to the application. 15 It was irrelevant to consider what this particular Applicant wanted to do. The right to subdivide the land is a right in rem which, if granted, would have travelled with the land. It was necessary to consider whether the DA satisfied cl90 of the LEP. 16 Contrary to the Applicant's submissions the Council was not late in raising the issues. Notice was given of the expert evidence intended to be called on 28 February 2008 and on 26 March 2008. It was served 14 days before the hearing in conformity with the relevant court rules. 17 The only evidence called by the Applicant was that of a surveyor, Mr Mitsch, who provided no evidence on this issue. Accordingly, the Applicant was doomed to fail on this appeal. The costs incurred by the Council were significant and increased because of the need to adduce both planning and agricultural experts to defend the appeal. The costs of the agricultural expert retained by the Council totalled $17,600 plus GST, and the town planner totalled $6,885 in addition to the legal costs incurred. Applicant's submissions 18 The Applicant argued that no expert evidence was required to be produced by it in support of its case as it was an application to subdivide the land not an application for approval of a specific agribusiness. 19 The Council failed to adequately identify to the Applicant early enough in the proceedings the detail of the issues raised in the Statement of Facts and Contentions. The Council failed to provide its expert agricultural evidence in a timely fashion. There was insufficient time for the Applicant to respond to that evidence. 20 The Council's primary issue in the proceedings and one which occupied a great deal of correspondence was the assertion that the non-contiguous nature of the parcels of land comprising lot 151 prohibited the grant of this subdivision. This was incorrect in light of advice from the relevant department with which the Council was provided. 21 It is not incumbent on a party in Class 1 proceedings to call expert evidence. The Council's expert evidence was before the Court and it was not necessary for the Applicant to also call expert evidence given the role of the expert witness to assist the Court. As the Applicant was intending to continue its current farming use on the property there was no need to undertake an analysis such as that carried out by Mr Ryan. Mr Ryan's evidence was unnecessarily detailed given that consent for subdivision was sought. 22 The Council's assertion that the Applicant failed to engage its own agricultural expert witness flies in the face of the policy of the Court that parties should seek to avoid unnecessary expert evidence and to encourage the use of single experts. It was never suggested to the Applicant by the Council that it was required to effectively prepare a business plan for a particular use with expert evidence supporting its commercial viability. A reasonable alternative view as to the relative agricultural merit of the proposed and current uses of the land was put before the Court in general terms. Specific analysis of the facts established by the Council's expert in his report and cross-examination of him by leave granted and submissions about his evidence was conducted. The Commissioner was not satisfied by that alternative analysis and considered Mr Ryan's view was to be preferred. The Commissioner's findings in [25], [26] and [31] were value judgments ordinarily to be made in any review of an application for development consent. Such a process was within the usual course of proceedings. 23 The circumstances are similar to those considered in ACM Landmark Pty Limited v Cessnock City Council [2006] NSWLEC 256 and Pyramid Pacific Pty Limited v Ku-Ring-Gai Council [2006] NSWLEC 522. 24 There was no s 34 conference as a result of the Council's actions. (This is contested by the Council who noted that the order was made by the Registrar that there be no s 34 conference in light of the history of the matter.) Finding 25 As provided in the Court Rules, in Class 1 proceedings the parties usually pay their own costs unless it is fair and reasonable to order otherwise in the particular circumstances of a case. The Council is seeking an order that all its costs both legal and expert be paid for the whole of the proceedings as it argued these were destined to fail due to the failure of the Applicant to call the necessary evidence to address the zone objectives which were required to be considered by the Court in reaching its decision. Compliance with the zone objectives was key to the Court's determination. The Applicant did not call expert evidence such as that of Mr Ryan, an agricultural expert, but relied on Mr Mitsch, surveyor/planner. 26 The Applicant has lodged this Class 1 appeal and the matter is heard de novo by this Court. The Applicant appeared to rely in written submissions and in the affidavit evidence on circumstances that were before the Council when it resolved to refuse the application but this is irrelevant to this appeal. In a Class 1 appeal the Court must determine the matter on the basis of the issues and evidence placed before it. 27 One of Applicant's submissions was that there was an onus on the Council to support its original decision to refuse consent, and the appeal was a review of the Council's decision to refuse consent. That is not the nature of a Class 1 appeal. The submission that an applicant exercising its right of review in the Court is not required to produce expert evidence not required before the Council when it first made the decision to refuse consent is wrong. The submission that a departure from this is contrary to a legitimate expectation that such a right can be exercised without adverse costs consequences is misconceived. 28 While the Council relied on J E Richards to argue that the Applicant bore the onus of proof it is more accurate to say that an applicant who wishes to obtain development consent must address all the relevant issues in order that the Court can be properly informed about the decision it must make. A failure to address a relevant issue may give rise to a finding of unreasonableness in particular circumstances. 29 The Applicant's counsel stated that what the Applicant wished to do in relation to the property was to continue its current use. Accordingly there was no need to provide detailed evidence of the kind provided by Mr Ryan. In any event his evidence was before the Court and was able to be tested by the Applicant before the Commissioner, an appropriate way in which to conduct Class 1 proceedings according to the Applicant. 30 The fact that the Council refused the application on the basis of the potential adverse impact on agricultural land and that the issue was again squarely raised in the Council's Statement of Facts and Contentions should have suggested to the Applicant the need to provide evidence on that issue. It was a threshold issue in light of cl 9 of the LEP. Whether that had to be expert evidence such as that of Mr Ryan which appeared to be quite detailed is unknown from the Applicant's counsel's submissions, but the fact is there was no such evidence provided by the Applicant at all in support of its application. 31 I agree with the Council's characterisation of the issue concerning the need to maintain land for agricultural production as a threshold issue which the Court had to consider in order to succeed in its application. That is the basis on which the appeal was lost before the Commissioner as stated at [32]. As submitted by the Council whether the subdivision application satisfied the zone objectives to promote the proper management of this agricultural land by protecting, enhancing and conserving its agricultural potential was central to the Commissioner's decision to refuse consent as identified in [32] of his decision. He accepted the evidence of Mr Ryan that this was best achieved by refusing the subdivision application. 32 The Applicant's legal representatives appear not to fully appreciate the necessity to raise all relevant matters in Class 1 appeals in this Court. This resulted in a failure of the Applicant's case to address the key issue which was the basis of the Commissioner's finding for refusal of the application. Whether Mr Ryan's evidence was unnecessarily detailed and therefore unnecessarily costly is impossible to evaluate on the submissions before me. There is no suggestion to that effect in Hussey C's judgment. 33 The circumstances here are quite different from ACM in which the Council failed to support its contentions with appropriate evidence and was ordered to pay costs. Rather the Council argues it is the Applicant who has failed to adduce necessary evidence in the absence of which this appeal as doomed to fail. The Applicant relied on Pyramid Pacific Pty Ltd where it was held that the Council should not be liable for costs when it relied on lay witnesses and did not call evidence in addition to that of the court appointed expert. The circumstances of that case bear no similarity to the matter before me. Examples of where the Court has ordered a partial award of costs in light of findings of unreasonable conduct of proceedings include Bailey v Oberon Shire Council [2007] NSWLEC 273 and James Godfrey v Wollondilly Shire Council (No 2) [2007] NSWLEC 280 amongst many others. All these cases considered Pt 16 r 4 of the Rules as then in force. 34 I do not consider I should award all of the Council's costs for the whole proceedings in favour of the Council and I do not consider it can be said that the Applicant's application was doomed to fail. While it is clear the Applicant sought to run its case on a "minimalist" basis and did not therefore call contradictory evidence to that of Mr Ryan (or attempted to do so too late) the Applicant did attempt to test his evidence in cross-examination. Essentially while more should have been done to contradict his evidence when his evidence was clearly contrary to the Applicant's case, the failure to do so does not suggest the whole proceedings were "doomed to fail". Further, there were other issues raised in the proceedings by the Council such as the issue of whether a non-contiguous lot could be created, and planning issues. Unreasonable behaviour in relation to these is not alleged. 35 While the Applicant argued there was unreasonable behaviour by the Council in relation to late service of the expert evidence and calling unnecessarily detailed evidence, I do not consider there was any unreasonable behaviour by the Council at all. It served relevant evidence in a timely manner. There is accordingly no disentitling behaviour suggesting the Council should not get some of its costs. 36 I consider it is fair and reasonable that the Applicant pay some, not all, of the Council's costs in this matter. Half of the costs of the agricultural expert retained by the Council should be paid by the Applicant. The Council seeks its costs of the motion and having been partially successful should have its costs of the motion paid. Orders 37 The Court makes the following orders: 1. The Applicant is to pay half the Council's costs of retaining the agricultural expert, Mr Ryan. 2. The Applicant is to pay the Council's costs of the Notice of 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.