Land and Environment Court New South Wales Medium Neutral Citation: Ross v Lane Cove Council [2013] NSWLEC 109 Hearing dates: 16 July 2013 Decision date: 17 July 2013 Jurisdiction: Class 1 Before: Biscoe J Decision: Respondent's notice of motion filed on 26 February 2013 is dismissed. Catchwords: COSTS - Discontinued Class 1 appeal against refusal of an application to modify a development consent - whether applicant should pay respondent council's costs - costs principles on discontinuance of planning appeals. Legislation Cited: Environmental Planning and Assessment Act 1979 ss 76A(1)(a), 96,149D Land and Environment Court Act 1979 s 56A Land and Environment Court Rules 2007 rr 3.7(2), 3.7(3) Uniform Civil Procedure Rules 2005 r 42.19, Schedule 1 Cases Cited: ACM Landmark Pty Ltd v Cessnock City Council [2006] NSWLEC 256 Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, (2008) 158 LGERA 224 Grant v Kiama Municipal Council [2006] NSWLEC 70 Lane Cove Council v Ross (No 4) [2012] NSWLEC 191 Lane Cove Council v Ross (No 14) [2013] NSWLEC 87 Manly Warringah Rugby League Club Pty Ltd v Warringah Council [2006] NSWLEC 88 Ross v Lane Cove Council [2012] NSWLEC 1364 Vigor Master Pty Ltd v Warringah Council [2006] NSWLEC 140 Category: Costs Parties: Raymond Ross (Applicant) Lane Cove Council (Respondent) Representation: COUNSEL: N Hogan (Applicant) N Eastman (Respondent) SOLICITORS: Duncan Scott (Applicant) Pikes & Verekers (Respondent) File Number(s): 11079/12 Judgment 1The respondent Lane Cove Council seeks its costs of this discontinued planning appeal by Mr Raymond Ross in Class 1 of the Court's jurisdiction. Costs on discontinuance of a planning appeal 2Costs in Classes 1, 2 and 3 of the court's jurisdiction are governed by r 3.7(2) of the Land and Environment Court Rules (LECR). Rule 3.7(2) provides: 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. 3Subclause 3.7(3) sets out, non-exhaustively, circumstances in which the Court might consider the making of a costs order to be fair and reasonable including: ... (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, ... 4Council submits that it is fair and reasonable to make a costs order against Mr Ross because he has acted unreasonably in the conduct of the proceedings. 5A no discouragement principle underlies the no costs rule in planning appeals. In Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, (2008) 158 LGERA 224 at [9] - [10] I wrote (omitting citations): 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. ... 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. 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. 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. ... 6The list of circumstances in r 3.7(3) is similar to the indicative guidelines formulated in Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] before the 2007 amendments to the rules under the costs regime applicable to proceedings in classes 1, 2 and 3 of the Court's jurisdiction. This list does not include the additional circumstance of discontinuance of a class 1 appeal which had been added to the Grant v Kiama list prior to the 2007 amendments in Vigor Master Pty Ltd v Warringah Council [2006] NSWLEC 140 at [16] following Manly Warringah Rugby League Club Pty Ltd v Warringah Council [2006] NSWLEC 88 at [13] (all decisions of Preston CJ of LEC). 7Manly Warringah and Vigor were decided in the context of a costs regime (analysed in Manly Warringah) relating to planning appeals which was different in three respects from that introduced by the 2007 rules. First, there was a costs rule which empowered the Court to order a discontinuing party to pay the costs of the other party in any civil proceedings. Secondly, there was a costs rule applicable to proceedings in classes 1, 2 and 3 of the Court's jurisdiction which was similar to r 3.7(2) of the 2007 rules except that it did not refer to "in the circumstances" but to "in the circumstances of the particular case". Thirdly, there was a Practice Direction that no costs order was to be made in planning and building appeals "unless the circumstances are exceptional". 8It was in the context of this earlier costs regime that it was held in Manly Warringah that "ordinarily" the filing of a notice of discontinuance without the consent of the other party will be a circumstance which makes it fair and reasonable that there be an order for costs because it usually represents abandonment of the claim but that the relevant consideration in every case is whether the discontinuance was reasonable conduct on the part of the discontinuing party in the circumstances of the case: at [13]. If this suggests a presumption in planning appeals that a discontinuing applicant should pay the respondent's costs which may be rebutted by the circumstances, I do not think it has survived the introduction of the new costs regime in 2007. 9Under the current costs regime, in Classes 1, 2 and 3 of the court's jurisdiction there is no presumption that a discontinuing applicant should pay the respondent's costs. Such a presumption appears in r 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR), which provides that a plaintiff is to pay the defendant's costs in discontinued proceedings unless the court otherwise orders. While applicable to proceedings in classes 4 and 8 of the Court's jurisdiction, this rule does not apply to proceedings in classes 1, 2 and 3: Schedule 1 of the UCPR. On the contrary, r 3.7(2) of the LECR contains a presumptive rule that there should be no order for costs on discontinuance of class 1, 2 or 3 proceedings subject to one exception. Where costs are sought the question is simply whether the sole exception to the presumption applies, namely, that the Court considers the making of the costs order "is fair and reasonable in the circumstances". 10For example, if there was no reasonable basis for a planning appeal, that would be a strong circumstance supporting a costs order against the discontinuing applicant. But if, for example, an applicant, in the light of evidence that has emerged during the proceedings or an "amber light" by the presiding Commissioner, decides that the resultant increased risks of litigation are such that a planning appeal should be discontinued, with resultant savings in time and costs of the other party and saving of the Court's time, that may be a circumstance weighing against ordering the discontinuing party to pay the costs of the other party. In such a situation in a planning appeal, it may be sensible to discontinue, and not sensible to discourage the applicant from discontinuing by raising a presumption that it should pay the respondent's costs and to encourage it to continue and lose by a r 3.7(2) presumption that there will be no costs order. 11I would make an additional observation about r 3.7(3)(c) of the LECR, which provides that a circumstance in which the Court might consider the making of a costs order to be fair and reasonable is that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings. Council submitted in writing, but did not press at the hearing, that the no-discouragement principle cannot have the same weight when an applicant, as a result of his own illegal acts in carrying out unapproved development, is given the opportunity to bring an application seeking to regularise them, as in the present case. Had this submission been pressed, I would have rejected it because it suggests that the costs of all applications to regularise unauthorised works should be paid by the applicant. Past unlawful use is not a relevant issue in determining whether a prospective consent should be granted or a modification allowed: ACM Landmark Pty Ltd v Cessnock City Council [2006] NSWLEC 256 at [35] per Preston CJ of LEC. In my view, past unlawful use is also not sufficient, of itself, to support a conclusion that the applicant has acted unreasonably in circumstances leading up to the commencement of the proceedings within the meaning of r 3.7(2)(c). Persons who have carried out unauthorised works act reasonably in seeking to regularise the situation by a retrospective approval and should not be discouraged from doing so by the prospect of an adverse costs order. In my view, "circumstances leading up to the commencement of the proceedings" do not include the factual basis on which proceedings are brought (such as the existence of unauthorised works) but are concerned with the more direct conduct of a party conducing the proceedings, such as effectively inviting the proceedings: Grant v Kiama at [15(d)]. Background 12In a letter of 16 May 2012 to Mr Ross, Council contended that he had carried out works to a dwelling house other than in accordance with an existing development consent. Council required his written undertaking within 24 hours to submit to Council within 14 days a modification application under s 96 of the Environmental Planning and Assessment Act 1979 (EPA Act) in respect of all the unauthorised works to the dwelling house, otherwise Council reserved the right to commence injunction proceedings against him. The letter listed the unauthorised works including, notably (for reasons which will become apparent), concrete awnings - which are substantial concrete structures extending from the slabs on two floors. In a letter to Mr Ross of 23 May 2012, Council (a) noted that in his letter of 17 May he had undertaken only to seek a building certificate (under s 149D of the EPA Act) whereas Council had requested a s 96 modification, (b) contended that the former was likely to be inadequate for proper assessment by Council, and (c) "urged" him to proceed by way of a s 96 application. 13Council then commenced Class 4 proceedings against Mr Ross in respect of the unauthorised works seeking declaratory and injunctive relief and a demolition order. In August 2012 Pepper J made declarations that alterations and additions to the dwelling house had been carried out not in conformity with the development consent and in breach of s 76A(1)(a) of the EPA Act, issued an injunction, and adjourned the remainder of the summons until (inter alia) Council had an opportunity to consider and assess Mr Ross' s 96 modification application lodged earlier that month since, as Council informed her Honour, it was possible that upon its assessment the need to pursue the rest of the summons might fall away: Lane Cove Council v Ross (No 4) [2012] NSWLEC 191 at [16], [17], [23]. 14Council refused Mr Ross' s 96 modification application in respect of the unauthorised works which he had lodged in August 2012 shortly prior to the hearing before Pepper J. He appealed to this Court against the refusal: they are the present proceedings. 15Inconsistently with the position Council had taken in its May 2012 letters to Mr Ross, Council filed a Statement of Facts and Contentions in the present proceedings in which it contended that the proposed development the subject of the modification application would not be "substantially the same" as that which was approved by Council. In other words, notwithstanding that Council had urged Mr Ross in May to commence s 96 proceedings and not to commence building certificate proceedings, it was now contending that s 96 was inapplicable. That is so because s 96 only permits a consent authority to modify a consent if "satisfied that the development to which the consent as modified relates is substantially the same development as the development for which consent was originally granted". 16A conciliation of the s 96 modification appeal before a Commissioner of the Court occurred on 18 December 2012. It did not resolve the application and the Commissioner proceeded to hear the application on 18 and 19 December 2012. 17Shortly prior to the December hearing, the parties' planning experts filed a joint report. They disagreed as to the merits of the concrete awnings. Their report said nothing about the application of s 96. 18During the December hearing comments by the Commissioner caused Mr Ross to become concerned that the Commissioner might accept Council's contention that his proposal was not substantially the same as the development originally approved. 19Consequently, he amended his s 96 application by deleting the concrete awnings. This was indicated in amended plans (Exhibit C) that he tendered which showed the concrete awnings coloured orange and notated: "Existing concrete awnings (marked orange) not part of this application". It was his intention at that time to lodge a separate building certificate application for the concrete awnings because they could then be considered on their merits and not be affected by the s 96 requirement that the modified development be substantially the same as what was originally approved. Even though he deleted the concrete awnings, Council continued to contend, unsuccessfully, that the residual development as proposed was not substantially the same and significant time was spent on this issue at the December hearing. 20The Commissioner delivered an ex tempore judgment on 19 December 2012: Ross v Lane Cove Council [2012] NSWLEC 1364. The Commissioner said: 8 While the conciliation process did not resolve the proceedings the process did result in an amendment of the plans (Exhibit C) that addressed many of the concerns raised by the residents. Essentially, the amended plans took up the recommendations detailed in the joint town planning report prepared by the parties' experts. The amended plans remove the concrete awnings on all facades except for the rear elevation where it was cut back to a width of 300mm. They enclose the undercroft area on the southern boundary (as requested by the adjoining neighbours) leaving a small maintenance door for access. While the plans keep open the undercroft area at the rear (on the northern elevation) the applicant agrees to accept a condition that the area not be used as a habitable space. The amended plans introduce a planter box not a room on the main bedroom level to be landscaped and accessed via a small maintenance door. The constructed flat roof (changed from hip roof) does not according to the expert opinion of town planners, Mr Nash for the Council and, Mr Torrisi for the applicant change the development's presentation to the street because the hip roof originally approved was not visible from the street. It is considered acceptable by the objectors who addressed the Court. ... 13 ...I accept Mr Torrisi's evidence that the modified development (in Exhibit C and subject to this judgment) is substantially the same as that originally approved. I agree that when viewed from the front alignment, that is Bayview Street, the development will appear substantially the same as that originally proposed given the setback of the top area. Accordingly, I believe I have jurisdiction to approve this development if I find it acceptable on its merits. Merit assessment 14 It is my opinion, based on the evidence of both experts that the removal of the awnings as proposed in the amended plans is necessary to ensure that the development is substantially the same as that originally approved. I do not grant consent in respect of that element as erected. 21The Commissioner proceeded to address the merits of the other amendments in the Exhibit C plans and indicated that she required changes to some of them: at [15] - [19]. She adjourned the proceedings for six weeks to allow preparation of plans to reflect her judgment and to permit registration of a transfer of the land to Mr Ross. 22The hearing resumed before the Commissioner on 29 January 2013. Mr Ross could not afford legal representation on this occasion and (unlike the December hearing) was self-represented. A transcript of the final stages of that hearing is available and records the following ("CD" refers to the Commissioner): RR: The matter of the awnings has not been determined CD: It has, I have determined they should be removed I just don't have the drawing reflecting it you were going to prepare one. RR: The awnings was not to be removed your honour the awnings were not to be part of this application as I understood. CD: Mr Ross I don't follow the drawing you handed to me as exhibit F you say reflects my judgment. RR: Yes your honour CD: Does it have the awnings there or not there? RR: The awnings are there with a notation "not part of this application" as per what the barrister said was his understanding that these awnings are not a part of this application. CD: Did you not just tell me, we are going around in circles and I'll get a transcript of the proceedings and I think you will appreciate why I believe that. Did you not tell me before morning tea that you gave instructions to Mr. O'Gorman Hughes to agree to the awnings being removed. RR: No your honour definitely not, I'm sorry there has been a misunderstanding there, the awning were not to be part of the application. CD: That is not the case Mr. Ross RR: That was also the understanding of Mr. Turrisi and the other expert in terms of drawing up drawings by hand and those notations were made on those drawings, that the awnings were "not part of the application". CD: They are part of the application and they are part of my judgment, I can't say it any more plainly, so Mr Ross as far as I understand it you don't intend to discontinue the proceedings, you would like me to make a decision. RR: No your Honour, if this is an issue it has to be addressed properly because my barrister has made notes on plans which were handed to Mr. Griffiths and Mr. Nash and they all agreed that that was what reflected the court's decision. CD: Thank you Mr Ross, Mr Griffiths do you understand what Mr Ross is saying? Mr. Griffith: No CD: Thank you RR: Your Honour, its written.. Mr O'Gorman Hughes prepared highlighted areas on the plans, he handed copies to the court... CD: Yes, that was the position before the determination of the court, the determination of the court based on your instructions to Mr O'Gorman Hughes irrespective to any plans prepared during the course ..., the final position, not the plans prepared highlighting the awnings which might have been your preferred position, but the final position was that the awnings was to be removed. Mr Ross you did understand that. RR: I'm sorry your honour that is not the case at all, I'm happy to bring Mr O'Gorman Hughes at any time, I'll ring him now your Honour, that was not the understanding and its written on my drawings given to me by him that "this is not part of this application". CD: It may have not been the original wish that you had to have the awning removed however as the proceedings moved to the final position the awnings were to be removed if in fact the issue of substantially the same was to go away and you agreed to that amendment RR: No your Honour, I'm sorry I can't agree to that CD: Well, you've clearly understood what I have said and I understand your answer to be no, fair enough your answer is at odds with what I recollect, but you've told me your answer. CD: So your application is that you need me to make a decision based on what I understand to be the evidence before the court. RR: I don't know what my application ...In these circumstances where there is complete confusion as to what... CD: The confusion is your's Mr Ross, not mine, I'm clear what you told me, you told me now you want the awning to remain and that it was never part of your application and despite your agreement through Mr O'Gorman Hughes its not your application today. RR. Yes, I've explained myself, my understanding, I don't mean to mislead the court, I don't think I am totally stupid, to.. CD: I'm suggesting you are... RR: That my understanding was very clear and that...I think Mr O'Gorman Hughes made many submissions to the court in that suggesting that court had the discretion to, you might recall this your honour, to.. CD: condition it RR: Yes to divide these issues.., and address part of it CD: No No, he said that I could condition the application to make it substantially the same, you could chop off this window ee. RR: Yes and by that I understood, Mr O'Gorman Hughes understood... CD: And I declined to do that and in fact did not need to do that because there was agreement between the parties there would be a modification to remove certain elements, one of which was the awnings. RR: Right to remove from the application, not from the building.. and this is where the building certificate issue came in...Mr O'Gorman Hughes will come in today and say that on oath... CD: No I am not waiting for Mr O'Gorman Hughes to come back today, the matter is going to be resolved, you elected, I advised you to obtain legal advice and you had the opportunity over morning tea, no call was made, I understood you did not leave the room to the extent that I now wish to proceed to a judgement in this matter, based on your submissions you do not wish to remove the awnings do you wish me to proceed to determine the matter. RR: No your honour, I am happy to discontinue the proceedings in the circumstances CD: Alright, so you would like to discontinue the proceedings? RR: Yes your Honour CD: I am going to adjourn the matter for 5 minutes to allow you to go down to the registry to take that action 23The transcript suggests that the Commissioner and Mr Ross may have been at cross purposes as to whether the concrete awnings had been removed from the s 96 application, as I think they were by Exhibit C. Mr Ross' unchallenged evidence, which I accept, is that he understood (I interpolate, rightly or wrongly) from what the Commissioner said that rather than remove the concrete awnings from the application, he would be required to demolish the concrete awnings as a condition of any modified consent. He considered that this was a significant change of circumstances. Until then he had understood the merits of the awnings could be considered as part of the consideration of a building certificate application, and that no condition would be imposed requiring their removal. Instead he thought they would simply be removed from the s 96 application. He therefore discontinued the s 96 proceedings. 24He denies the evidence of a Council witness that he said words to the effect "I am not prepared to amend my plans so as to provide for a deletion of the awnings". This alleged statement is difficult to reconcile with the available transcript, and I am not satisfied that it was said. 25Meanwhile, in mid January 2013 a Ms Edilbi lodged a building certificate application with Council in Mr Ross' name, which I gather related to the concrete awnings. Mr Ross has described her as "one of the new owners and owner builder". On 30 January 2013 Council responded to the application by requesting certain information. None was produced. In March 2013 Council refused the building certificate application. In May 2013 Ms Edilbi appealed to this Court against the refusal. Those Class 1 proceedings are pending. 26In June 2013 Pepper J made an order in the Class 4 proceedings that within 90 days Mr Ross demolish or cause to be demolished the unauthorised works and rebuild or reinstate the property in accordance with the development consent: Lane Cove Council v Ross (No 14) [2013] NSWLEC 87. Submissions 27Council submits that discontinuance in the present circumstances was unreasonable in as much Mr Ross: (a)permitted the proceedings to go to hearing in December 2012 in circumstances where his expert had already in the joint experts' report recommending changes to the drawings and the imposition of ameliorative conditions; (b)permitted the proceedings to continue in December in circumstances where there was tendered in his own case Exhibit C which recommended amendments to the application; (c)permitted the proceedings to be adjourned in December 2012 to a date in January 2013 on the basis that amended drawings would be produced, survey and geotechnical material be provided, and ameliorative conditions imposed, (d)abandoned the above by discontinuing at the resumed hearing in January 2013. 28Council submits that (a) it was not unreasonable for Council in May 2012 to urge Mr Ross to take s 96 proceedings, (b) if it was reasonable for him to discontinue the proceedings, the discontinuance should have occurred after Council filed its Statement of Facts and Contentions before the December hearing, and (c) it was not reasonable for him to think at the January hearing that the Commissioner was referring to physical removal of the concrete awnings. Council submits that instead of discontinuing at the January hearing (a) Mr Ross should have argued against imposition of the contentious condition, or (b) appealed against its imposition under s 56A of the Land and Environment Court Act 1979, or (c) subsequently applied under s 96(8) of the EPA Act to modify the consent granted by the Commissioner to delete that condition. 29Mr Ross submits that the discontinuance in this case does not make it fair and reasonable that the applicant pay the Council's costs because when he took the s 96 proceedings at Council's urging, Council contended before the Court that the case fell outside s 96, and because there was a change of circumstance at the January hearing, namely, his understanding from what the Commissioner said, that he would be required to physically remove (ie demolish) the awnings as a condition of any modified consent. Mr Ross submits: (a)s 96 only permitted a modification if a consent as modified was substantially the same development as the development for which the consent was originally granted; (b)the concrete awnings constructed around the dwelling were removed from the modification application to deal with Council's contention that the modified consent would not be "substantially the same". The Commissioner found that that removal of the awnings was necessary to ensure the development was substantially the same as that originally approved: at [14]; (c)his intention was to delete the awnings so they could be the subject of a separate building certificate application, which would not be subject to the "substantially the same" requirement. It was not his intention to be left with a condition of consent requiring their demolition. An order for demolition was the subject of the separate Class 4 proceedings; (d)in January 2009 he was unable to afford legal representation and understood from what he was told by the Commissioner that, rather than removing the awnings from the application, he would be required to demolish them as a condition of any modified consent. 30Mr Ross also submits that the Council's conduct was unreasonable because it did not accede to his counsel's suggestion shortly before the December hearing that, in order to save time and costs, a further development application to use the existing structure and complete construction of the balance of the proposed development could be lodged, refused and any appeal against refusal be heard at the same time as the s 96 application. He argues that this would have minimised costs. I am not persuaded that these circumstances constitute unreasonable conduct or that it is significant on the present motion. Consideration 31In my opinion, the following circumstances weigh against a finding that it is fair and reasonable to award costs against Mr Ross. 32First, the Council in its May 2012 letters urged him to commence s 96 proceedings and not his proposed building certificate proceedings, yet when he accordingly commenced s 96 proceedings Council contended that they were not within the ambit of s 96. Even after he deleted the concrete awnings from the s 96 application at the December hearing, Council continued unsuccessfully to press that contention at the December hearing in relation to the balance of the amendments. Council must bear a measure of responsibility for inviting Mr Ross to take s 96 proceedings and then, when he did so, repudiating the invitation. It is a reasonable inference that otherwise he would have commenced building certificate proceedings which would have avoided the problem that arose and this costs application. 33Secondly, at the January hearing Mr Ross understood, rightly or wrongly but not unreasonably from what the Commissioner said, that rather than remove the concrete awnings from the s 96 application, he would be required to physically remove (ie demolish) the concrete awnings as a condition of any s 96 approval that might be granted and that this would prejudice a building certificate application in respect of the concrete awnings. 34Thirdly, with the deletion of the concrete awnings from the application in December, Mr Ross substantially succeeded in the proceedings. Council concedes if he had pressed the s 96 application and obtained the consent the Commissioner had indicated in December she would grant, then Council would have no claim for costs. It does not seem reasonable that he should be ordered to pay Council's costs of proceedings in which Council had substantially failed and which it had invited merely because Mr Ross discontinued the proceedings because of the understanding he acquired at the January hearing. 35Finally, in my view, the existence of other possible courses of action to discontinuance, as submitted by Council, does not in my view make the course which he took unreasonable. 36On balance, I am not satisfied that it is fair and reasonable in the circumstances to order Mr Ross to pay Council's costs. 37Nor, in the circumstances, including the fact that Council had a reasonable albeit unsuccessful argument in support of its costs motion, am I satisfied that it would be fair and reasonable to make a costs order in relation to Council's notice of motion. Orders 38Council's notice of motion filed on 26 February 2013 is dismissed. The exhibit may 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. Decision last updated: 19 July 2013