Reported Decision : (2008) 158 LGERA 224 Land and Environment Court of New South Wales CITATION : Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103 APPLICANT: Arden Anglican School PARTIES : FIRST RESPONDENT: Hornsby Shire Council SECOND RESPONDENT: Unilever Australia Pty Limited FILE NUMBER(S) : 10636 of 2006 CORAM: Biscoe J KEY ISSUES: Costs :- whether fair and reasonable in the circumstance to order an intervener in a planning appeal to pay the costs of issues which it raised and lost. Civil Procedure Act 2005 (NSW) s 98 Courts Legislation Amendment Act 2007 (NSW) Electronic Transactions (ECM Courts) Amendment (Land and Environment Court) Order 2007 (NSW) LEGISLATION CITED: Land and Environment Court Act 1979 (NSW) ss 39A, 56A, 69 Land and Environment Court Rules 2007 (NSW) rr 3.7(2), 3.7(3) Land and Environment Court Rules 1996 (NSW) Pt 16 r 4 Uniform Civil Procedure Rules 2005 (NSW) Uniform Civil Procedure Rules (Amendment No 20) 2007 (NSW) Grant v Kiama Municipal Council [2006] NSWLEC 70 CASES CITED: Port Stephens Council v Sansom (2007) 156 LGERA 125 Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council (2007) 156 LGERA 150 DATES OF HEARING: 28 February 2008 DATE OF JUDGMENT: 7 March 2008 APPLICANT: Mr I Hemmings, barrister SOLICITORS: Hunt & Hunt LEGAL REPRESENTATIVES: FIRST RESPONDENT: N/A SECOND RESPONDENT: Ms S Duggan, barrister SOLICITORS: Baker & McKenzie JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES BISCOE J 7 March 2008 10636 of 2006 ARDEN ANGLICAN SCHOOL v HORNSBY SHIRE COUNCIL & ANOR JUDGMENT 1 HIS HONOUR: The applicant seeks to take flight from the presumptive rule that costs are not ordered in planning appeals. A third party intervened by obtaining leave to be joined as a respondent to a merit appeal in Class 1 of the Court's jurisdiction against refusal of a council development consent. The intervener raised issues and lost. The question before the Court is whether, in the circumstances, costs should follow that event, that is, whether the intervener should pay the successful applicant's costs of those issues. 2 The applicant is Arden Anglican School (the School). The first respondent is Hornsby Shire Council. The second respondent is Unilever Australia Pty Ltd (Unilever). 3 The School appealed against the council's refusal of development consent to use part of an office park building and gardens for a school for year 11 and 12 senior students, associated with its existing campus over the road. Unilever is a significant tenant and occupier of the business park. Its offices are immediately adjacent to the proposed school and a means of access to the school. 4 Unilever obtained leave to be joined as a respondent under s 39A of the Land and Environment Court 1979, which provides: 39A Joinder of parties in certain appeals On an appeal under section 96(6), 96AA(3), 96A(5), 97 or 98 of the Environmental Planning and Assessment Act 1979 , the Court may, at any time, on the application of a person or of its own motion, order the joinder of a person as a party to the appeal if the Court is of the opinion: (a) that the person is able to raise an issue that should be considered in relation to the appeal but would not be likely to be sufficiently addressed if the person were not joined as a party, or (b) that: (i) it is in the interests of justice, or (ii) it is in the public interest, that the person be joined as a party to the appeal. 5 Section 98 of the Civil Procedure Act 2005 relevantly provides that, subject to the rules of Court, costs are in the discretion of the Court. This provision now applies in lieu of the relevantly identical s 69 of the Land and Environment Court Act 1979, which was repealed with effect from 28 January 2008 as part of a raft of legislative changes which brought this Court under the regime of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005: see Courts Legislation Amendment Act 2007; Land and Environment Court Rules 2007; Uniform Civil Procedure Rules (Amendment No 20) 2007; Electronic Transactions (ECM Courts) Amendment (Land and Environment Court) Order 2007. 6 The starting point is the presumptive rule that there will be no costs order. Rule 3.7(2) of the Land and Environment Court Rules 2007, which applies to Class 1 proceedings, provides: 3.7 Costs in certain proceedings (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. 7 Rule 3.7(3) provides that "circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following". The list that follows is similar to the indicative guidelines formulated under the old rule in Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] by Preston CJ, and approved by the Court of Appeal in Port Stephens Council v Sansom (2007) 156 LGERA 125 at [56]. 8 The new rule 3.7 replaces the former Part 16 r 4 of the Land and Environment Court Rules 1996, which provided that in proceedings such as these "No order for the payment of costs will be made…unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable". The words "of the particular case" do not appear in the new rule. 9 In the context of the presumptive rule that there will be no order as to costs in planning appeals, the power to make a costs order is in the broadest of terms, that is, what is "fair and reasonable in the circumstances". All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight. These principles were identified in the context of the former Part 16 r 4 by the Court of Appeal in Port Stephens Council v Sansom (2007) 156 LGERA 125 at [48], [53] and [54] and Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council (2007) 156 LGERA 150 at [33] and [35]. Those judgments were delivered on the same day by an identically constituted Bench of five judges. Spigelman CJ delivered the leading judgment in each case. The presence of the words "in the particular circumstances of the case" in the old rule influenced his Honour to hold that a general characterisation of proceedings such as "merits review" or "capacity", cannot be determinative or, indeed, entitled to presumptive weight: Sansom [60]. In the present case, there was no suggestion that the absence of these words from the new rule bears on the outcome. 10 One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes: Sansom at [26]; Thaina at [65]. In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, that persons generally should not be discouraged from exercising their rights of appeal via the prospect of an adverse costs order: Sansom at [22] – [23]. This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation. Spigelman CJ explained this in Sansom at [71]-[74]: 71 …An appeal from a consent authority is similarly an element of the management of the scheme of the EPA Act by that authority. To treat such a review as equivalent to a lis between adversarial parties is, in most cases, a considerable oversimplification. In particular, it does not give weight to the public interest regulatory responsibilities of the consent authority, which should itself be anxious to ensure that it has made the correct decision. In such a context, characterisation of the proceedings either as merits review or as equivalent to adversarial litigation does not appear to me to be a particularly useful approach to the formulation of the judgment for which r 4(2) provides. 72 In my opinion, a significant purpose served by planning appeals is to improve the quality of the decision-making process. This is a purpose which any statutory consent authority should be presumed to be anxious to achieve as an incident of its exercise of the statutory powers which Parliament has reposed in it. Individuals and corporations who challenge such decisions do not have the same obligations. They do, however, have a legitimate expectation that the decision-making process will result in the correct or preferable decision. 73 One of the critical differences between ordinary civil litigation and planning appeals is the absence of a reciprocal relationship between the interests of the parties. They are not, or should not be, adversaries in the sense that can be said of the usual kind of civil litigation in courts. 74 Underlying Justice McClellan's approach [in Gee v Port Stephens Council (2003) 131 LGERA 325] is an assumption that each side in a planning appeal should be treated the same as a matter of fairness: whether the proceedings are classified as merits review or as raising an issue of capacity. In my opinion, a comparison of the interests to which I have referred at [71]-[73] of these reasons, suggest that an unsuccessful consent authority should be more likely to suffer an adverse costs order than an unsuccessful applicant. 11 In the present case, the Commissioner identified seven issues raised by the council and thirteen different issues raised by Unilever. There appears to have been no overlap except that (a) the council's Issue 2 appears to overlap with Unilever's Issue 7 and (b) Unilever's noise issue (Issue 6 of Unilever's issues) was among objectors' concerns identified in the council's list of issues (Issue 7 of the council's issues). The parties' issues were summarised by the Commissioner at [33] – [34]: The amended issues of the 1st and 2nd respondents relate to this amended proposal. It was said, if I can summarise, that the presence and activity of school students is incompatible with the high amenity and prestige image provided by the business park for its tenants, particularly those who have international headquarters on site. One particular location of impact being the entry stairs off Oxford St that necessitate the students moving past the interview rooms' windows and entry lobby of Unilever in Building C, and the use of the associated terrace to move to and from Oxford St to gain access to the proposed school lobby. There is also concern about the students using the Cambridge St entrance, and walking through the gardens to/from Building C. It seems that there is a public Right of Way through the gardens via the stairs and terrace of Building C, that allows anyone to walk between the two streets. There is concern of the mixing of students and the public and customers and staff of the other tenants on the terrace and stairs. 12 The mere joinder of Unilever as a respondent did not enliven the discretion to award costs against it. The issues Unilever raised were all merits considerations. They were generally different from the issues raised by the council. If the council had raised them and lost, no costs order would have been made against the council. 13 However, the School submitted that costs should be awarded against Unilever because it stepped outside the non-discouragement principle and converted the proceedings into a lis in the nature of ordinary civil proceedings. This was said to be because of its expressed reasons for joinder, the nature of the issues it raised, the evidence it led and the result in the proceedings. In particular, the School relied on the following matters: (a) In its Issues 8 and 13, Unilever raised whether the development was consistent with the zone objectives (specifically, in Issue 8) and more generally with commercial premises (Issue 13). The School submitted that these issues, which are typically raised by a council if available, were not raised by the council and were rejected by the Commissioner (judgment at [97] – [98]). (b) Issue 10 raised disabled access in relation to which the Commissioner found (judgment at [88]): Also the issue in regard to disabled access has been resolved by admission of even the second respondent's expert and appropriate conditions can deal with that. (c) Unilever was concerned about acoustic impact, yet it would not permit any noise insulating works to be carried out, nor even for repairs to faulty window seals to be fixed, both at the School's expense (judgment at [79]). (d) The opposition to the school students was based significantly upon the evidence of Dr Tronc. Not only was the evidence rejected by the Commissioner (in all respects), it ranged from the impractical (school discipline of Year 11 & 12 students at a private church school would be ineffective: judgment at [37]) to bordering on the fanciful: voyeurism (at [40](q)) and terrorism (at [40](r)). (e) Unilever's expressed reasons for joinder recorded on the transcript were: (i) its desire to be able to actively participate in the preparation of conditions of consent; (ii) the raising of new issues (not raised by the council); (iii) the "sufficiency of the council's raising of the issues" ; and (iv) the fact that council did not raise the objectors' concerns as an "issue" . 14 Unilever's second, third and fourth reasons for joinders seem to be consistent with the intent of the joinder provisions in s 39A of the Land and Environment Court Act 1979. The first reason takes its context from the others. I do not see those reasons as weighing in favour of a costs order against Unilever. 15 The School sought to distinguish the present case from a case in which a proposed development would have a direct impact on an intervener where the council was not dealing with that impact issue adequately or at all. There, it was said, it would be unlikely that the presumptive no costs principle would be overridden. The School submitted that of the issues criticised at [13] above, only the acoustic issue had a direct impact on Unilever. 16 Section 39A of the Land and Environment Court Act 1979 is evidently intended to aid the correct or preferable outcome, the interests of justice or the public interest, regardless of whether or not an issue happens to impact on the party joined. Thus, a joined third party is not an adversary in the usual sense associated with civil litigation. Additionally, due to the nature of planning appeals, there are constraints on the possibility of compromise even if issues raised also serve the intervener's self interest. I do not accept that interveners are more at risk as to costs merely because they do not limit their issues to matters that directly impact upon them. That is inconsistent with the legislative intention evident in s 39A. Unilever raised issues which the council did not raise. That does not, of itself, make those issues less valid than if the council had raised them. The matters raised by Unilever were treated by the Commissioner as arguable merits considerations, which he weighed. 17 Moreover, in my view, the issues raised by Unilever all impacted upon it. Unilever was, and is, one of the primary occupants of the business park. The business park comprises three buildings on a large lot surrounded by landscaped gardens which are common area. Unilever occupies the whole of one building and the ground floor of another building which the School was proposing to use. There are pathways through the office park. Unilever had launch parties in the gardens and persons attended at their premises to undertake business with them. Unilever's position was that the business park had an amenity as a place of business which would be reduced by the introduction of a non-business activity, namely, a school. Its concerns as to effect on the community included noise, children's behaviour, management of the movement of students to and from the facility in circumstances where it was being split from the campus across the road; and sharing of a carpark which was to be relied upon for disabled access and teacher parking. The issues raised by Unilever impacted on the business amenity and thus on Unilever. 18 The School placed most emphasis on the fact that Unilever called as a witness a Dr K Tronc, consultant education administrator, who, on the issue of whether there was an inherent inconsistency in having a school in a commercial building, expressed views inimical to the proposal for a variety of reasons. The applicants submitted that Dr Tronc's evidence was a "collateral attack" and that his evidence ranged from the "impractical" to the "fanciful". The Commissioner analysed at some length the matters raised by Dr Tronc as to why the development should not be approved: at [40]. They included that the proposed development was unlikely to provide enough space for future requirements; a disabled student's access issue; noise, on which he deferred to acoustic experts; disobedience of no driving to school rules; school zone roads speed limit and safety for student pedestrians, on which he deferred to traffic experts; voyeurism by individuals preying on students; and terrorism having regard to the presence of a multinational company, Unilever, on site where the school might become a collateral target in the context where (he said) 25 schools in Australia had been subjected to terror style attacks. The Commissioner weighed Dr Tronc's views with the competing evidence but did not characterise his evidence in the way now suggested by the School. I am not persuaded that the attack now made on Dr Tronc's evidence justifies awarding costs against Unilever. 19 The School also submitted that Unilever was prepared to do whatever it could to prevent the application being determined. The school referred to the fact that the owner of the site was represented at the commencement of the hearing in order to say that it had not consented to the development application. As a result, there was an adjournment whilst the owner's consent was obtained. The School pointed to the fact that the Commissioner indicated that the owner's intervention was apparently partly due to representations by Unilever and other tenants of the office park who were concerned about the proposal: at [27]. I note that one of the issues raised by Unilever was whether the owner's consent had been obtained. I do not see why in the circumstances the School's failure to obtain the owner's consent should tell against Unilever in costs. CONCLUSION 20 The School has not satisfied me that it would be fair and reasonable in the circumstances to depart from the ordinary rule that there should be no order for costs of the proceedings. Normally the School would pay the costs of its unsuccessful notice of motion for costs. However there should be a proportionate reduction, because the discrete costs order sought in prayer 2 of Unilever's aborted appeal from the Commissioner's decision under s 56A of the Land and Environment Court Act 1979 was made by consent at the hearing after being contested in written submissions. 21 The orders of the Court are as follows: 1. The applicant's notice of motion filed on 3 October 2007 is dismissed except in relation to prayer 2. 2. The applicant is to pay 80 percent of the second respondent's costs of that notice of motion. 3. No order as to the costs of the proceedings. 4. The exhibits before the Commissioner may be returned. 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