Land and Environment Court New South Wales Medium Neutral Citation: Dunford v Gosford City Council (No 3) [2015] NSWLEC 96 Hearing dates: 1 May 2015 Date of orders: 12 June 2015 Decision date: 12 June 2015 Jurisdiction: Class 1 Before: Sheahan J Decision: (1) The respondent is ordered to pay the applicant's costs of the Class 1 proceedings and of the applicant's Notice of Motion and hearing on costs, as agreed or assessed. (2) All exhibits and court books are returned, except those retained in the file by Brown C. Catchwords: COSTS – Successful applicant claiming costs of Class 1 proceedings – Council refused consent despite compliance with the applicable planning controls – the applicant had no alternative but to bring proceedings – whether the Council's conduct was so unreasonable that it displaces the presumptive rule that no order as to costs be made in Class 1 proceedings – costs of defended costs hearing. Legislation Cited: Environmental Planning and Assessment Act 1979 Land and Environment Court Act 1979 Land and Environment Court Rules 1996 Land and Environment Court Rules 2007 Local Government Act 1993 Cases Cited: ACM Landmark Pty Limited v Cessnock City Council [2006] NSWLEC 256 Agonic Holdings Pty Ltd v Lithgow City Council [2009] NSWLEC 34 Aldi Foods Pty Limited v Holroyd City Council [2005] NSWLEC 338; 142 LGERA 141 Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; 158 LGERA 224 Bailey v Oberon Shire Council [2007] NSWLEC 273 Charlie Lovett Pty Limited v Hurstville City Council (No 2) [2015] NSWLEC 87 Community Association DP270253 v Woollahra Municipal Council [2015] NSWCA 80; 207 LGERA 268 Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 Dunford v Gosford City Council (No 2) [2014] NSWLEC 1275 Dunford v Gosford City Council [2015] NSWLEC 1016 Gales-Kingscliff Pty Ltd v Tweed Shire Council (No 2) [2007] NSWLEC 817 Grant v Kiama Municipal Council [2006] NSWLEC 70 Hillsong Church Limited v Council of the City of Sydney (No. 2) [2012] NSWLEC 118 Latoudis v Casey [1990] HCA 59; 170 CLR 534 Mike George Planning Pty Ltd v Woollahra Municipal Council (No 4) [2014] NSWLEC 187 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Pepperwood Ridge Pty Ltd v Newcastle City Council [2008] NSWLEC 196; 160 LGERA 164 Pet Carriers International Pty Ltd v Botany Bay City Council (No 2) [2013] NSWLEC 150 Port Stephens Council v Sansom [2007] NSWCA 299; 156 LGERA 125 Stockland Development Pty Ltd v Manly Council [2004] NSWLEC 472; 136 LGERA 254 Terrace Tower Holdings Pty Ltd v Sutherland Shire Council [2003] NSWCA 289; 129 LGERA 195 Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; 71 NSWLR 230 Thomson v Mosman Council [1999] NSWLEC 86 Universal Childcare Pty Ltd v Leichhardt Municipal Council [2008] NSWLEC 277 Zhang v Canterbury City Council [2001] NSWCA 167; 51 NSWLR 589 Category: Costs Parties: Esther Dunford (Applicant) Gosford City Council (Respondent) Representation: Counsel: Mr P Tomasetti, SC with Ms A Hemmings, barrister (Applicant) Ms M Hamdan, barrister (Respondent) Solicitors: Hicksons (Applicant) Gosford City Council (Respondent) File Number(s): 10636 of 2014 Judgment Introduction 1. In these Class 1 proceedings Ms Dunford was successful before Brown C, and she now seeks a costs order in her favour and against the Council. 2. The development application ("DA" – 45125) she submitted to Council sought approval for the demolition of an existing dwelling and construction of a new one at Wamberal Beach. 3. Because of the location of the subject site, both Council, and later the Commissioner, had to consider some "coastal issues". 4. The Council refused the applicant's DA, and she sought a review under s 82A of the Environmental Planning and Assessment Act 1979. As noted in the hearing before me (Tp7, LL22 – 25): The council adhered to the decision to refuse the development application in a subsequent request under s 82(a) on 17 December. The council refused to grant consent, despite amendments being made to the plans as per council officer's requests. 1. Dunford then appealed to the Court, and, on 8 September 2014, her appeal was listed for hearing for three days, 9 – 11 December 2014. 2. The Council's contentions on the appeal were that the DA should be refused, because: (a) The construction of the new dwelling did not sufficiently avoid or minimize the potential risk of coastal erosion; and (b) The construction of the dwelling was not in the public interest, because it would be impacted by "coastal hazard processes, resulting in property damage and loss". 1. On 27 November 2014, the Council brought before the Court a Notice of Motion ("NOM") for leave to amend its contentions to add some new grounds for refusal, based on questions of the public interest. At the hearing of that Notice of Motion the applicant was represented by her junior counsel, Ms A Hemmings, and Council by Mr M Fraser of counsel. 2. Council's contentions in the Class 1 appeal may be summarized as follows: (1) while the house may be able to withstand wave impacts during storms, the erosion of sand beneath it would see the dwelling progressively move into the beach and surf zone, presenting a hazard to beach users; (2) the exposed pile foundations of the house would present unattractively to the beach, compromising beach amenity, and diminishing its natural scenic qualities. They would not serve to protect and improve public access to and along the foreshore in a manner compatible with the foreshore's natural attributes; (3) the knowledge of the community and the Council in regard to beach erosion at the subject land and Wamberal Beach had changed materially since Development Control Plan No 125 – Coastal Frontage ("DCP125") was drawn up, and the underpinning consideration which gave rise to the control, namely a "revetment wall" (or "Terminal Protective/Protection Structure" – "TPS") had not been built in the 20 years since it was proposed, and there were no plans to build it; and (4) further developments reliant upon DCP125 and the proposed wall are not in the public interest, pending new planning controls being developed; and (5) approval of this proposal would create an adverse precedent for coastal development. 1. Relying on the principles stated by the Chief Judge in Gales-Kingscliff Pty Ltd v Tweed Shire Council (No 2) ("Gales") [2007] NSWLEC 817, particularly those related to "lateness", and lack of any adequate explanation for it, Brown C, after a hearing on 3 December 2014, held that the concerns expressed by the proposed additional contentions had been properly addressed, at least in a preliminary way, by the experts in their written evidence, and could be further addressed during their oral evidence. 2. He dismissed the NOM, and reserved costs. His judgment on the NOM was later published as Dunford v Gosford City Council (No 2) [2014] NSWLEC 1275. 3. At the three day hearing of the substantive Class 1 appeal, in December 2014, Mr Tomasetti SC and Ms Hemmings appeared for the applicant, and Mr Fraser for the Council. 4. Brown C reserved judgment, but he decided to uphold the applicant's appeal, and grant approval on conditions. He published extensive reasons on 14 January 2015: Dunford v Gosford City Council [2015] NSWLEC 1016. 5. The applicant's costs NOM of 10 February 2015 sought, in the alternative, an order that Council pay (1) the applicant's costs of and incidental to the whole proceedings, or, at least, (2) the applicant's costs of and incidental to the "Leave to Amend" NOM (November/December 2014). In addition, the applicant sought (3) an order for her costs on this costs NOM. 6. Again, before me, she was represented by Mr Tomasetti and Ms Hemmings, but Council changed its counsel from Mr Fraser to Ms M Hamdan. 7. Dunford's total costs, as at the commencement of these costs proceedings, stood at $151,123.70 (Moore affidavit 10 February 2015, par 7), but no estimate was given of how much of those total costs was involved in her opposition to the "Leave to Amend" NOM. 8. The applicant filed written submissions in support of costs orders (1) and (2), but, early in the costs hearing before me, the Council conceded, for the first time, through Ms Hamdan, that it should pay Ms Dunford's costs on the "leave" NOM (order (2)). 9. This judgment will, therefore, deal with her claims for order (1), now being the balance of her costs on the substantive proceedings, and for order (3), namely her costs on this costs NOM. 10. Because of the way in which counsel of the Council ran its case on costs, it is necessary to set out, at length, some paragraphs from each of Brown C's two judgments, as well as some transcript of the substantive hearing. The Commissioner's first judgment 1. In his judgment refusing leave to amend the Council's contentions, the learned Commissioner said ([2014] NSWLEC 1275, at [6] – [11]): 6 In balancing the competing submissions, I propose to draw heavily on the judgment of the Chief Judge in Gales ... The matters that are set out in that judgment for altering a statement of facts and contentions are, in my view, relevant to the subject notice of motion. The Chief Judge in this judgment sets out a number of reasons why leave was not granted to raise new contentions in that case. Not all are relevant in this case, but a number of them are relevant. These are (at [50], [51] and [54]): [50] First, I accept the council failed to raise the issue as it should have done if it wanted to raise it in its statement of facts and contentions. [51] Secondly, no adequate explanation has been provided to the Court as to why the issue was not raised in the council's statement of facts and contentions. [54] Fourthly, the council raises the issue late in the proceedings. 7 While the lateness, in this case, is not as late as in Gales ..., but certainly late, being after all the reports, the individual reports and joint reports had been prepared. 8 I also accept that additional evidence would be required if the additional contentions sought by Mr Fraser are addressed in full. I note that proposed contention (1), titled, "Beach Amenity and Access" is addressed in some detail, but not to the extent required by the proposed contention in the expert evidence. 9 I also note that DCP 125 is addressed by the experts in their evidence, and, again, not necessarily to the extent set out in the proposed contention. 10 The contention relating to precedent, is a matter that I am satisfied can be adequately addressed by the experts in their oral evidence on site, and given the positions taken by the planning experts, it could reasonably be anticipated what their evidence would be. 11 Finally, and in support of Ms Hemmings submissions, I quote the Chief Judge in Gales ... (at [65]) where he states: The Court has an overriding obligation under pt 1, r 5A of the Land and Environment Court Rules 1996 to ensure that just, quick and cheap resolution of the real issues in the proceedings. Some Evidence at the Substantive Hearing 1. During the substantive hearing, the following evidence was given by the expert witnesses Alex Nielsen (for the applicant) and Douglas Lord (for Council), under questioning by the Commissioner (T10.12.14, p81. L30 – p92, L24): COMMISSIONER: The question I'd like answered by Mr Lord and Mr Nielsen is does this house satisfy those requirements in the DCP absent the revetment. I'm sure it's not a difficult question. Did you hear the question, Mr Nielsen? WITNESS NIELSEN: Yes. COMMISSIONER: What would your answer be to that? WITNESS NIELSEN: The proposal complies with the DCP. COMMISSIONER: Thank you. Mr Lord? WITNESS LORD: Yes, but with the proviso that the DCP was drawn up on the basis that the seawall would be built as a priority back in 1995. COMMISSIONER: But if there was no seawall, the DCP provides the opportunity to build a house if there is no seawall or no revetment. WITNESS LORD: It provides the opportunity to build a house until the seawall is constructed. So conditions are put on it. COMMISSIONER: Yes, I understand that. WITNESS LORD: And it was understood that the seawall would be built straightaway, not 20 years later or 30 years later. COMMISSIONER: I'm not sure that answers my question. WITNESS LORD: The problem is that these zones move landward over time. COMMISSIONER: I understand that. I've got to make my decision based on the documents that apply at the time or what weight I give to future documents. Mr Tomasetti's case, and tell me if I'm wrong, Mr Tomasetti, is that the DC provides the opportunity to construct a revetment wall, but in the interim if there's no revetment wall, there are requirements that allows the construction of a dwelling? TOMASETTI: Correct. COMMISSIONER: Does this dwelling satisfy those requirements? WITNESS LORD: It satisfies the interim requirements as set out in the DCP, yes. COMMISSIONER: That's all I need to know. Mr Fraser will, no doubt, take me to other matters that would sort of diminish that suggestion. 1. The Council's approach to Dunford's and other Wamberal projects was closely interrogated by Brown C during oral submissions on 11 December 2014 (Tpp121 – 147). It emerged clearly that (1) there was "no doubt about the fact of [the applicant's] compliance [with] the technical parts of the DCP" and other Council directions and requirements; (2) the proposed revetment wall had been discussed for 25 years, but Mr Fraser conceded it was "all talk and no action" (Tp137, L16); (3) much of Council's argument was admitted by its counsel to be "spin" (Tp142, c.f. p119), and (4) Council had not stopped granting all Wamberal approvals, only the making of them by delegates of the Council (Tpp119 and 147). The Primary Judgment 1. In his detailed reasons for upholding Dunford's Class 1 appeal, Brown C said ([2015] NSWLEC 1016, at [38] to [54] – some emphasis added): 36 The significant difference between Mr Lord and Mr Nielsen was whether there was a need for the revetment wall (or Terminal Protection Structure (TPS) as described in the draft [Coastal Zone Management Study] (CZMS)). Essentially, Mr Lord maintained that there should be no development, such as that proposed, until the revetment wall was constructed whereas Mr Nielsen maintained that a dwelling could be constructed, with an appropriate design that would sufficiently minimise the potential risk from coastal erosion, without the revetment wall. In his opinion, the proposed development satisfies this test. 37 In balancing the different approaches, I agree with Mr Nielsen for a number of reasons. First, the relevant planning documents support the approval of the dwelling. A dwelling house is permissible under both LEP 2014 and the Ordinance. More importantly, DCP 125 and DCP 2013 contain detailed requirements for the development of the coastal area and support the approval of the application. While Mr Lord maintained that there should be no approval until the revetment wall is constructed, this is not an approach adopted by DCP 125 or DCP 2013. These documents explicitly allow development prior to the revetment wall, subject to the satisfaction of certain matters (see cll 8.1.4 and 8.1.7 of DCP 125 and cl 6.2.5.1(d),(h),(i),(k) and (l) of DCP 2013). There was no disagreement from either Mr Lord or Mr Nielsen that the proposed development satisfied those matters identified by DCP 125 or DCP 2013 as allowing development prior to the construction of the revetment wall. 38 It is trite, but necessary to say that the consideration of relevant DCP's is a mandatory consideration under s79C(1)(a)(iii) of the Environmental Planning and Assessment Act 1979 (the EPA Act). Also of importance is that DCP 2013 became operational on 11 February 2014 and the latest amendment was on 29 October 2014 so the contents of cl 6.2.5.1 clearly represent the council's most recent approach to the erection of a dwelling at Wamberal Beach. 39 Mr Lord states that while the dwelling as proposed conforms to the recommendations of the the 1995 Management Plan, it does not satisfy the intent of that plan. It is unclear how the proposed development does not satisfy the intent of the 1995 Management Plan. I note that cl 3 of DCP 125 under the heading of Purpose of Plan, acknowledges that DCP 125 has been prepared to take into account the "Coastal Management Studies and Coastal Process Investigations that were carried out by Council between 1993 and 1999". It must be accepted that the council's approach (whether or not strictly in accordance with the 1995 Management Plan) is best reflected in the provisions of DCP 125, that includes the ability to be able to construct a dwelling in the absence of the revetment wall. This approach was confirmed with the coming into effect of DCP 2013 and has remained unchanged at the time of the hearing. 40 The general public should be able to rely on the adopted policies of the council, which are reflected in LEP's and DCP's. The integrity and consistency in policy-making is addressed by Brennan J in Re Drake v Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634 at 640 where His Honour states: Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish inconsistencies which might otherwise appeared in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrator process. 41 Second, I do not accept the submission of Mr Fraser that the imminent exhibition of the draft CZMS should somehow create a barrier or a moratorium to the consideration of the development application. The EPA Act, the Ordinance, LEP 2013, DCP 125, DCP 2013, the 1995 Management Plan and SEPP 71 provide a more than suitable framework for the consideration of the application without the finalisation of the draft CZMS. 42 I am not satisfied that the council resolution of 25 March 2014 helps in determining the development application. The council resolution sought to "formalise Council's decision making to provide guidance to staff" for development applications at Wamberal Beach (Exhibit 3, Tab 11, p1) to provide an interim solution until the draft CZMS is adopted. The report to the council on 25 March 2014 noted that at the Strategy/Policy workshop on 18 February 2014, the following direction was agreed to (at p3): A. Maintain the current policy framework and require development specific and current advice from an independent coastal engineer for properties on the Wamberal Beach coastal frontage on the basis of lack of certainty on the construction of the Terminal Protective Structure. B. Meet with and request applicants of the identified Development Applications in Oceanview Drive, Wamberal, seeking their agreement to withdraw the applications until the Coastal Zone Management Plan for Gosford's Beaches is adopted in June 2014. 43 The council on 25 March 2014 adopted the following recommendation: A. Council note the meeting outcome of the 6 March 2014 between the General Manager, Director Environment & Planning and applicants, indicating their reluctance to withdraw the development applications. B. All developments with frontage to the Wamberal Beach foreshore be referred to Council for determination until Council adopts new planning guidelines for the guidance of staff. 44 Given recommendation B of the council, it was not clear from the documentation whether direction A from the Strategy/Policy workshop on 18 February 2014 was also adopted. In any event, it is not a matter of great importance. If recommendation B of the Strategy/Policy workshop was adopted, in that the approach to development applications was to "maintain the current policy framework and require development specific and current advice from an independent coastal engineer for properties on the Wamberal Beach coastal frontage"; then this reflects the requirements of DCP 125 and DCP 2013 (being the "current policy framework"). If recommendation B was not adopted, then DCP 125 (in this case) or DCP 2013 still applies. There is nothing within Strategy/Policy workshop on 18 February 2014 or the council meeting of 25 March 2014 that purports to amend DCP 2013 so it must remain as a "fundamental element in, or a focal point to", the decision-making process (Zhang v Canterbury City Council [("Zhang")] (2001) 115 LGERA 373 (at [75]). 45 Third, the revetment wall has been a consistent and on-going solution in the documents that seek the protection of Wamberal Beach from erosion. It is identified as a potential solution to erosion problems at Wamberal Beach in the 1995 Management Plan, DCP 125, DCP 2013 and the draft CZMS. The council has a design for the revetment wall and as recently as March 2014, sought funding to review the design, impacts and costs. The draft CZMS describes the Wamberal Beach TPS as "currently the Council's preferred protective strategy for Wamberal Beach" (p269). 46 The draft CZMS, at cl 8.10, has a recommended management option for Terrigal - Wamberal Beach as "Reviewing the design and environmental assessment for the Wamberal Terminal Protection Structure, and securing funding for its construction". I note that the draft CZMS has been reviewed and amended by the council's Coast and Catchment Committee and the Coastal sub-committee prior to advertising. 47 Fourth, the evidence indicates the on-going search for funding for the revetment wall by the council (Exhibit 11) however I do not accept that the lack of funding, at present, is a sufficient reason to adopt the approach suggested by Mr Fraser of refusing the application because of the uncertainty of funding. It would seem that the council currently (and at the time of the hearing) addresses this issue by providing the option in DCP 125 and DCP 2013 of allowing the construction of a dwelling, without the revetment wall, but subject to other requirements. Clearly, the funding and apportionment of costs for the revetment wall is a difficult task however in all the documentation and reports over the last 20 years, there does not appear to be any other practical way of dealing with the long-term issue of beach erosion at Wamberal Beach. The option in the draft CZMS of property acquisition is an alternate option to the revetment wall but based on the costings in the draft CZMS, this option is significantly more expensive than the construction of a revetment wall. I also note that the 1995 Management Plant (at Table 4.7) provides the option for the construction of the revetment wall in stages. 48 Fifth, I am satisfied that the matters in cl 8 of SEPP 71 have been properly taken into account in determining that development consent can be granted, particularly (a) the aims of this Policy set out in clause 2, (specifically, cl 2.1(f) to protect and preserve beach environments and beach amenity, and cl 2.1(l) to encourage a strategic approach to coastal management.) ... (d) the suitability of development given its type, location and design and its relationship with the surrounding area, (j) the likely impact of coastal processes and coastal hazards on development and any likely impacts of development on coastal processes and coastal hazards, 49 Given that there was no dispute that the proposed development satisfies the requirements in DCP 125 and DCP 2013 for the construction of a dwelling without a revetment wall, it cannot be reasonably argued that the development does not properly address" the likely impact of coastal processes and coastal hazards on development". For reasons set out later in the judgment "the suitability of development given its type, location and design and its relationship with the surrounding area" was not in dispute. Similarly, there was no issue with "beach environments and beach amenity", except in times of high erosion (see par 55). 50 Sixth, I am satisfied that the CP Act has only a minor role, at best in the determination of the application. The CP Act is a broad strategic planning document and its principal role in the proceedings was to provide information on the ongoing requirements for a coastal zone management plans at Part 4A where s 55B provides requirement for coastal zone management plans, s 55C provides matters to be dealt with in coastal zone management plans and s 55E provides requirements for public consultation. I did not understand there to be any submissions to suggest that the CP Act had any specific role in the determination of a development application. 51 Seventh, and while Contention 1(b) states that the development is "contrary to the aims and objectives of the Gosford Planning Scheme Ordinance", the contention does not specify why the development is in conflict. I take it that the reference to "the aims and objectives of the Gosford Planning Scheme Ordinance" is a reference to the 2(f) zone objective as the Ordinance appears not to have overall aims and objectives. 52 In any event, sub cll 10(3) and (4) place an obligation on the Court to make a positive finding that firstly, "it has taken into consideration the objectives of the zone and the consistency of that development within those objectives as well as the objectives of the Local Government Act 1993 relating to ecologically sustainable development and secondly, "it has taken into consideration the character of the development site and the surrounding area". A negative finding, on either matter must see the development application refused. 53 The objective of the 2(f) zone is: The objective of Zone No. 2(f) is to ensure that low scale development on land situated in proximity to public areas or identified as being subject to hazard from coastal erosion and storms (or both) is located and constructed so as to avoid or minimise the potential hazard and minimise visual impact. 54 While the council maintained that the proposed development did not "avoid or minimise the potential hazard", compliance with DCP 125 and DCP 2013 is a clear indicator, in my view, that the development will "minimise the potential hazard", particularly given that the purpose of DCP 125, in part, states (at cl 3): The purpose of this plan is to provide more detailed guidelines for the development of the land having regard to minimizing the risks associated with building on land which has frontage to a coastal beach or cliff. The relevant principles regarding costs in Class 1 1. Costs are compensatory and not punitive, and the Court's broad discretion in deciding costs must be exercised judicially: Latoudis v Casey [1990] HCA 59; 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72. 2. Costs in Class 1 were formerly regulated by Rule 4(2) of the Court's 1996 Rules, in respect of which the leading authority was the Chief Judge's decision in Grant v Kiama Municipal Council ("Grant") [2006] NSWLEC 70, especially at [15]. 3. In Mike George Planning Pty Ltd v Woollahra Municipal Council (No 4) [2014] NSWLEC 187, Pepper J confirmed (at [25]) that the Grant principles governing the question "fair and reasonable to order" apply equally to the new Rule. 4. Not long after Grant, Preston J decided costs in ACM Landmark Pty Ltd v Cessnock City Council ("ACM") [2006] NSWLEC 256, and said (at [90] – [94]): 90 Having regard to the findings of Commissioner Watts on the evidence, which findings, having looked at the evidence, were really the only ones which were reasonably available, there was only one result which could have occurred in this case and that was that the modification application be approved. Having regard to the cases to which I referred in [Grant] (22 February 2006) at paragraph 15, I am of the opinion that in the circumstances of this case it is fair and reasonable that there be an order for costs, namely that the Council pay the applicant's costs of these proceedings. 91 Issues 1 and 2 were issues which related to the power of the Court to grant the approval. Having regard to the evidence, there was not a reasonable argument contrary to the proposition that the development was substantially the same development and had only minimal environmental impact. 92 The evidence that the Council had in its possession at the time of refusing the modification application and that was subsequently provided to it, was all one way and that was in favour of the modification application. That had been the advice that had been given to it by its Director. It was also the advice given to it by its independent expert, Mr Court. Subsequent experts, including court appointed experts, all came to the same conclusion. The fact that there was some fine-tuning of conditions does not take away from the central proposition that at no time had any expert recommended against granting the modification. 93 Accordingly, the Council acted unreasonably in the face of this evidence in favour of the modification application in persisting with defending the appeal. 94 Certainly, the Council acted unreasonably in raising over 20 issues, many of which had no evidentiary foundation and many of which were ill conceived. The Council acted unreasonably in raising these issues without reasonable grounds. At no time did the Council seek leave to amend those issues or to articulate those issues as only going to matters of conditions. 1. The Grant principles were not contentious in the present matter, and need not be repeated here in full. They have never been claimed to "exhaust the circumstances", and completely eliminate discretion or flexibility, and, while they are a highly useful guide, each case turns on its own facts and merits. 2. The present parties took the Court to many cases, which have resulted in costs decisions going either way, and those examples are also very instructive on the exercise of the costs discretion. 3. The question of costs in substantive Class 1 proceedings is now governed by Rule 3.7 of this Court's 2007 Rules, which provides, relevantly to the applicant's case on costs (subs 5 and 6): (1) This rule applies to ... : (a) all proceedings in Class 1 of the Court's jurisdiction, ... (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. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: ... (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, ... (f) that a party has ... maintained a defence to the proceedings, where: (i) the ... defence ... did not have reasonable prospects of success, or (ii) to ... maintain the defence, was otherwise unreasonable. 1. I accept the applicant's summary of the key principles to be applied (see her counsel's written subs, par 8), as follows: a. Rule 3.7(2) creates a basic rule where there is a presumption against the making of an order for costs [Port Stephens Council v Sansom ("Sansom") [2007] NSWCA 299; (2007) 156 LGERA 125 at [48]]. b. The effect of the basic rule in r3.7(2) is that, in the ordinary course, costs will lie where they fall [Agonic Holdings Pty Ltd v Lithgow City Council [2009] NSWLEC 34 at [5] per Biscoe J]. c. The question then is whether, despite the basic rule, it is "fair and reasonable" that a party should be reimbursed for the costs it incurred [Sansom at [50]]. d. The formulation -"fair and reasonable" - calls for a judgment to be made, rather than as a discretion to be exercised, but in any event the evaluative process can be accurately described as conferring a wide discretion [Sansom at [51]]. e. Rule 3.7(3) identifies, without limitation, some circumstances in which the Court might consider the making of a costs order to be fair and reasonable [Pet Carriers International Pty Ltd v Botany Bay [City] Council (No. 2) [2013] NSWLEC 150 at [4] per Preston CJ]. f. The circumstances identified in r3.7(3) may rebut the presumption in r3.7(2) and may inform the Court's discretion but are neither prescriptive nor exhaustive [Pepperwood Ridge Pty Ltd v Newcastle City Council [2008] NSWLEC 196; 160 LGERA 164 at [73] per Biscoe J; Hillsong Church Limited v Council of the City of Sydney (No. 2) [2012] NSWLEC 118 at [55] per Pepper J]. 1. In Bailey v Oberon Shire Council ("Bailey") [2007] NSWLEC 273, Pain J said (at [51] – [53] – emphasis mine): 51 A council is not always bound to follow previous planning decisions and can act in a way that may appear inconsistent. For example, it may become aware of additional information/data or adopt new policies which means it is a responsible decision to change the exercise of its planning discretion. Inconsistency alone does not suggest unreasonable behaviour by the Council unless there is no clear policy reason, supported if necessary by data/information, to confirm and justify that change. In this case that date/information was lacking. ... Inconsistency is a matter to consider in the overall context of these proceedings. ... 53 In conclusion, I must consider whether the usual rule that each party pay its own costs be varied in this matter. I have broad discretion, to be exercised judicially, to determine if and how costs ought be paid. The findings of Moore C suggest that the Council's case had poor prospects of success in the absence of any independent data and analysis about noise and dust impacts undertaken on behalf of the Council or the OTC. In light of those findings I consider the circumstances of inconsistency of decision-making and the conclusion of the court appointed expert justify the Council paying some costs, but not all the costs of the proceedings, and that such an order is fair and reasonable in the circumstances of this case. ... the Council has not acted irrationally or in dereliction of its statutory duty, but [I] consider it should have done more to validate the OTC businesses' claims ... . 1. In Universal Childcare Pty Ltd v Leichhardt Municipal Council ("Universal") [2008] NSWLEC 277, I said (at [41] – emphasis added): Mr Ayling went on to quote the example that it would not be reasonable for Councils to be allowed to compel applicants to spend massively in respect of simple appeals where approval should be a foregone conclusion. Nor is it reasonable for Councils to force applicants to pursue a court case so that the court can bear the odium of the decision. ... 1. The Court of Appeal recently reviewed the costs principles applicable to Class 1 matters, in an appeal against another decision made at first instance by Pain J: Community Association DP270253 v Woollahra Municipal Council ("Community") [2015] NSWCA 80; 207 LGERA 268. 2. In delivering the principal judgment in the Court of Appeal (7 April 2015), Barrett JA, with whom Emmett and Leeming JJA agreed, said (at [19] – [21]): 19 In her judgment of 7 February 2014, the primary judge set out the parties' submissions on the matter of costs and referred to the rule 3.7(2) "presumption that there will be no order as to costs (so that effectively each party will pay its own costs) unless it is fair and reasonable to make an order." Her Honour then observed that success alone did not justify a costs order in the Association's favour. After noting that rule 3.7(3) referred to matters that might be taken into account and that the Association relied on several such matters, the judge said that, in light of the decision in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; 158 LGERA 224 ("Arden"), the broad discretion arising under rule 3.7(2) required attention to all considerations relevant to a determination of the costs question. It was also noted that Arden "identifies at [10] the no discouragement principle which underpins the no costs rule in planning appeals, referring to the discussion of that in the Court of Appeal in Port Stephens Council v Sansom [2007] NSWCA 299; 156 LGERA 125 at [22] – [23]". The primary judge continued: "In Thaina Town (a decision of the Court of Appeal handed down the same day as Sansom) Spigelman CJ at [75]-[76] considered there was a difference between an order imposing liability on a person by requiring conduct to occur and expense incurred under the threat of criminal sanction, such as that issued under s 121B of the EPA Act, and a merits appeal in relation to a development application or consent pursued within the regulatory planning framework in the context of exercising the costs discretion under s 69 of the Court Act then in force. Rule 3.7 was not then in force." 20 The reference here to "Thaina Town" is a reference to the decision of this Court in Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; 156 LGERA 150 ("Thaina Town"). 21 ... The principal issues were identified as "issues of mixed fact and law as to whether the conditions in question complied with the Newbury tests as a collateral attack upon the relevant conditions raised by the Community Association's grounds of appeal". Having referred to her findings and conclusions on those issues, the judge made the following points: 1. The principal issues before the court required consideration of the "underlying legality" of the development consent conditions that the Council sought to enforce. 2. Such issues would more usually be challenged in either an appeal under s 97 of the Environmental Planning and Assessment Act or review proceedings in Class 4 of the court's jurisdiction. Her Honour made "no criticism of any party that this was not done" but the particular factor "informs my consideration of this matter for costs purposes". 3. There was no merits assessment by her Honour of the terms of the Council's order. 4. The distinction drawn in Thaina Town between appeals against orders and development appeals referred to in the passage set out above was "of course to be recognised" but "each case must be considered on its own facts and that requires consideration of what was involved in this complex appeal". 1. His Honour went on to quote, with approval (at [34]), the following remarks made by Biscoe J in Arden (at [9] – [10]): 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 [Sansom] at [48], [53] and [54] and Thaina Town ... 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 [Town] 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]: ... 74 ... an unsuccessful consent authority should be more likely to suffer an adverse costs order than an unsuccessful applicant. 1. In coming to his decision to dismiss the costs appeal, Barrett JA said (at [53] – [55]): 53 ... The unreasonableness with which rule 3.7 is concerned – particularly in rules 3.7(3)(c) and 3.7(3)(d) – is unreasonableness of conduct related to the particular proceedings. Unreasonableness affecting the decision challenged in the proceedings is a quite different thing. 54 Before commencing proceedings, the Association put to the Council the proposition that that the s 121B order was "invalid" because there was "no obligation to complete the pedestrian stairway" in accordance with the order; and that the order was, for reasons not stated, "unreasonable". Nothing was said about the matters concerning the Stairway Conditions that ultimately found favour with the primary judge. The case was accordingly distinguishable from one in which a party proposing to take proceedings puts to the prospective defendant a clearly articulated and reasoned basis for the view that any defence is doomed to fail and the prospective defendant, having had the untenable nature of all defences pointed out to it, nevertheless refuses to accede to the particular demand and thereby compels the prospective plaintiff to pursue the foreshadowed proceedings. 55 The Association chose to bring Class 1 proceedings and thereby to enter an arena to which rule 3.7 applied. That being so, it could not (and did not seek to) argue simply that costs should follow the event. It was required to establish that some aspect of the conduct of the Council as a litigant in the Class 1 proceedings made it fair and reasonable that the judge should cause the prima facie position prescribed by rule 3.7(2) to be replaced by a situation in which the Council was required to pay the Association's costs. The Association has, in my opinion, failed to establish this. More particularly, it has failed to demonstrate error in the primary judge's costs judgment on any question of law. 1. Agreeing with Barrett JA, Emmett JA said (at [62]): No attempt was made in the application for costs to establish the circumstances that led up to the commencement of the proceedings. The imposition of conditions 14 years beforehand could not constitute such circumstances. Had the Association advanced submissions to the Council prior to the commencement of the proceedings that outlined to the Council arguments that were ultimately accepted by the Court and were able to demonstrate that there was no rational answer to those submissions, and that the Council nevertheless maintained its intention to enforce the order, there may have been a case for making an order for costs. However, no such contentions were advanced and no evidence as to such matters was adduced. The Applicant's Case 1. In the present costs matter, Dunford argued that she had contended, throughout the DA and Class 1 processes, that her proposal was "fully compliant" with Council's instruments and controls, but the Council resisted the grant of consent at every stage. 2. Her costs claim is that (subs par 23): ... she has sustained significant costs in pursuing this appeal for development which at all times was fully compliant with the Council's controls and not otherwise contrary to the public interest. In all the circumstances, it is fair and reasonable that the Council pay the Applicant's costs of the class 1 proceedings in accordance with Order 1 of the Costs NOM. ... 1. In his oral submissions on her behalf, Mr Tomasetti said (Tp16, LL18 – 21, and p16, L50 – p17, L6): ... integrity of the planning process must be protected, and it is perverse almost, if not perverse, that Mrs Dunford has to spend $150,000 to get the Court to approve something which at all times was fully compliant. ... ... if it's incumbent upon an applicant for development consent to comply with the statutory requirements, it must be a concomitant obligation on counsel (sic) to recognise that the focal point of the decision-making process is through it's (sic) own planning instruments, and if there is compliance with an application, it can't come to Court and say, "Look, we want a moratorium on development on Wamberal Beach for the time being." 1. The applicant claims that it was "neither fair nor reasonable" conduct on Council's part to argue against its own instruments, which "must form the focal point of decision-making", and to adopt instead an arbitrary alternative approach (see subs pars 11 – 14, and cases therein cited, notably Stockland Development Pty Ltd v Manly Council ("Stockland") [2004] NSWLEC 472; 136 LGERA 254, and Drake v Minister for Immigration and Ethnic Affairs (No 2) ("Drake") (1979) 2 ALD 634). 2. In terms of the key sub-paragraphs of Rule 3.7(3) (quoted at [29] above), the applicant submits (pars 16 and 17) that: 1. Council acted unreasonably in the circumstances leading up to the commencement of proceedings. The applicant had sought approval since May 2012, and it had been consistently refused, despite her amending her plans as Council requested, in a way later upheld by the Court as compliant. Also, Council would appear to have amended, or at least purported to amend, controls relevant to her application, while it was being considered; 2. Council acted unreasonably in its conduct of the proceedings by maintaining its defence when its own expert witness (Coastal engineer Lord) accepted that the DA was compliant, and not otherwise contrary to the public interest, provided adaption measures were put in place. There was no clear evidentiary basis justifying Council's departure from its adopted policies (see Bailey at [51]), with the result that Council lacked reasonable prospects of success in the proceedings, and the Commissioner rejected Lord's approach and was satisfied that appropriate "adaption measures", like the proposed revetment wall, were being actively pursued by Council itself; and 3. These submissions are reinforced by the fact that the applicant's solicitor put Council on notice, by letter dated 27 November 2014 (Moore affidavit, 10 March 2015, par 15, and annexure F, at pp30 – 31), that its conduct in continuing to oppose the appeal, and seeking to amend its contentions in response to it appeared to expose it to a costs order. The letter relevantly included the following: The Council's latest actions are surprising. The Applicant's development application is fully compliant with the Council's published planning controls and yet her development application has been refused. Furthermore during the course of the proceedings, that is since the Class 1 Application was filed, the Council's position appears to have changed. In the first instance, it contended that the application should be refused because the proposed dwelling house development would be subject to damage from coastal erosion processes (see contention 1 and 2). Now it seems the Council accepts that the dwelling house will be able to withstand any wave impacts during storms but that the structure will "progressively move into the beach and surf zone". (See amended Contention (1) a)). The applicant has made clear that there will be replenishment of any sand lost from her land by reason of coastal erosion processes and accordingly piled foundations will not be exposed as the Council contends. Moreover, the Council's latest stated public position with respect to development on Wamberal Beach is found in its recently adopted Gosford DCP 2013 which only recently came into effect on 11 February 2014 and is that buildings will be permitted seaward of the 2045 erosion line but landward of the proposed revetment wall subject to the matters in clause 6.2.5.1 (d)(i)-(v). The applicant's development is compliant with the Council's DCP 125 and the recently adopted DCP and the Council's evidence does not suggest otherwise. In all the foregoing circumstances your client's conduct, including your client's attempted belated change to the contentions and the Council's continued opposition to the development notwithstanding that it complies with the Council's adopted DCP, is conduct within LECR 3.7 justifying an order that the Council pay the applicant's costs of the proceedings. Our client does not consent to the amendment of the contentions. She will resist any action on the part of the Council to amend the contentions at this stage and will seek an order that the Council pay any costs thrown away should the contentions be amended and in the event that the application is approved by the court will seek an order that the Council pay the applicant's costs of the proceedings. The Council's Case 1. In her written submissions, filed on 30 April 2015, counsel for the Council said (at pars 1c and 2e): 1.c. The primary basis for bringing the Motion in respect of costs for the proceedings is that the Judgment found that the absence of a revetment wall was not a bar to allowing the applicant's development, based on the relevant Development Control Plan (DCP) 125 and later DCP 2013. Based on this, the applicant appears to be suggesting that maintaining opposition to the relevant Development Applicant (the DA) was without basis. ... 2.e. Council submits that its opposition to the DA lodged by the applicant and its maintenance of a defence in opposition to it was not unreasonable, as it was based on genuine concerns which existed for the relevant coastal hazard which existed on Wamberal Beach. This objection was not made in a vacuum and was not maintained without a rational basis [ACM ... at [73]]. It is submitted that this would need to be the case, in order for the conduct of Council to amount to conduct which would make the order of a costs order against it both just and equitable [Aldi Foods Pty Limited v Holroyd City Council ("Aldi Foods") [2005] NSWLEC 338; 142 LGERA 141, per Talbot J at [5]]. Council submits that its election to maintain its defence against the applicant fell well short of the circumstances required to overcome the presumptive rule against costs [Arden ... at [5]]. 1. In all its submissions on costs, both written and oral (Tpp20 – 31), Council repeated much of what it had placed before the Commissioner, and had seen him specifically reject in his comprehensive judgment on the merits. 2. It is important to note here that Council did not bring any appeal against the Commissioner's two judgments, but before me it criticised, and "respectfully disagreed" with, the learned Commissioner's reasoning, both on the "Leave to Amend" NOM, and on the Class 1 appeal itself, as though arguing a s 56A appeal against his decisions, rather than arguing that an order against it for costs, in all the circumstances, would not be "just and reasonable". 3. Inter alia, Council argued (Tpp20 – 31) that consent to Dunford's DA was not "a foregone conclusion" ([32] above), was "not made easily", was not opposed "without a rational basis" or "in bad faith", and was "very difficult ... to determine". "Council ... did their (sic) best in ... a difficult circumstance", and/or in an "evolving situation that was constantly in flux". Council needs to monitor and refine its knowledge and understanding of coastal processes and the hazards they present, and it "reasonably" raised on appeal a number of "triable" issues, which "remained in contest", but not all were "traversed" by the learned Commissioner in his judgment. Council alleged a specific error made by the Commissioner in placing greater weight on the DCP than on the zone objectives. 4. Most of Council's submissions were, I respectfully suggest, largely misplaced for a costs argument. 5. However, its counsel did include a few submissions which I take to be in response to those of the applicant, on the question of costs. For example, subs pars 4e, 4j, and 4o say: 4e. ... that, notwithstanding the guidance which the case of [Zhang ... at [75]] provides in respect to the significance of DCP's, Council is not confined to considering those matters appearing in published environmental planning instruments and may consider a range of material when considering the public interest [Terrace Tower Holdings Pty Ltd v Sutherland Shire Council [[2003] NSWCA 289]; 129 LGERA 195, per Mason P at [81]]. ... 4j. Council submits that its deferral to and consideration of other policies which represented fundamental objectives for Council, beyond the DCP was appropriate and consistent with the approach anticipated by McClennan J (sic) in the case of [Stockland] at [88]: "... there remain, many cases where a council adopts statements of policy for its area, or part of it, which are not included in development control plans. They relate to many matters and may include master plans for sites or parts of a council area. They may be adopted after considerable public participation, detailed research and describe fundamental expectations of the relevant council. When there is a relevant policy which is not a development control plan, the question arises as to the approach to that policy and the weight to be given to it in the decision of the relevant council and in an appeal, if any, to this Court". ... 4o. In response to the Motion, Council, maintains that it was reasonable for its defence to be maintained against the applicant for reasons which include the following: i. Council's case raised a number of triable issues that went beyond the issue of reliance on, or compliance with the applicable DCP. This is best illustrated in Council's statement of facts and contentions (Exhibit 6) and in the statement of experts. ii. Council's contentions were not without a rational basis, as they were founded on advice provided by experts who differed on a number of points with the experts relied on by the applicant. A number of these issues remained in issue after the preparation of joint reports. iii. Council's process in affording significant weight to environmental planning instruments and Council's policies which went beyond the relevant DCP, although not the approach adopted by Commissioner Brown, was a reasonable approach and one which has been endorsed in a number of earlier cases cited herein. iv. A number of the matters raised by Council's experts, including non-compliance with clause 14 of SEPP 71 and the disagreement between Mr Lord and Mr Nielsen as to the intent of 'community expectations' in the relevant DCP, were not specifically addressed by the commissioner and his reasons for adopting a view inconsistent with Council, was not articulated. v. It follows that the defence maintained by Council was not so hopeless as to have little prospects of success and the circumstances are not sufficient to warrant the award of costs to the applicant. 1. I have carefully considered those submissions. 2. Other submissions made in par 4, however, reverted to (1) a "fine tooth comb" review of the Commissioner's judgment, an approach often held to be out-of-place in a s 56A appeal, and certainly out-of-place in a costs argument, and (2) to the Council's fulsome expression of its disagreement with Brown C's reasoning (see, e.g., par 4g). Consideration 1. I am entirely satisfied that the applicant's submissions are clearly to be preferred, and that the principles laid down, affirmed, and refined over the years, in the most relevant authorities to which I have referred – Grant, ACM, Bailey, Community, Stockland, and the cases upon which they rely – lead inexorably to the conclusion that, in all the circumstances of the case, the Council's conduct throughout the DA process and the Class 1 appeal (Rules 3.7(3)(c), (d), and (f)) was unreasonable. 2. As is seen far too often, the Council left the applicant with no alternative but to bring her complaints to the Court: see Thomson v Mosman Council [1999] NSWLEC 86, at [55] – [62], cited by me recently in Charlie Lovett Pty Limited v Hurstville City Council (No 2) [2015] NSWLEC 87, at [65] – [67] and [172]. 3. Accordingly, this Court should, and will, make a "compensatory" costs order in the applicant's favour, including for her costs of this costs hearing. Orders 1. The Orders of the Court are: 1. The respondent is ordered to pay the applicant's costs of the Class 1 proceedings and of the applicant's Notice of Motion and hearing on costs, as agreed or assessed. 2. All exhibits and court books are returned, except those retained in the file by Brown C. ********** 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: 12 June 2015