Land and Environment Court New South Wales Medium Neutral Citation: Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel (No 3) [2017] NSWLEC 146 Hearing dates: 19 October 2017 Date of orders: 31 October 2017 Decision date: 31 October 2017 Jurisdiction: Class 1 Before: Robson J Decision: See orders at [34] Catchwords: COSTS – orders sought in respect of the hearing on a notice of motion – presumptive rule against costs in Class 1 proceedings – whether the circumstances are such so as to overcome the presumptive rule Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Environmental Planning and Assessment Act 1979 (NSW), ss 98, 83 Land and Environment Court Act 1979 (NSW), s 17 Land and Environment Court Rules 2007, r 3.7 State Environmental Planning Policy (Infrastructure) 2007 (NSW) Cases Cited: Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel and others [2017] NSWLEC 51 Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel (No 2) [2017] NSWLEC 55 Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel [2017] NSWLEC 1278 BYT Nominees Pty Limited v North Sydney Council [2008] NSWLEC 294 Dunford v Gosford City Council (No 3) [2015] NSWLEC 96 Grant v Kiama Municipal Council [2006] NSWLEC 70 Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 Category: Costs Parties: Butler Street Community Network Incorporated (Applicant) Northern Region Joint Regional Planning Panel (First Respondent) GHD Pty Ltd (Second Respondent) Byron Shire Council (Third Respondent) Representation: Counsel: P Travis (Applicant) T Messenger, solicitor (Third Respondent) Solicitors: Department of Planning and Environment (First Respondent) HWL Ebsworth Lawyers (Second Respondent and Third Respondent) File Number(s): 2016/00227775 Judgment Background 1. Before the Court is a Notice of Motion ('Costs Motion') filed by Byron Shire Council ('Council') seeking an order that Butler Street Community Network Incorporated ('Butler Street') pay its costs of a Notice of Motion filed by Butler Street on 13 April 2017 ('Motion'). The Motion sought orders, inter alia, that the Class 1 proceedings brought by Butler Street be dismissed prior to hearing. 2. The factual background to the proceedings is detailed in two judgments I delivered on 5 May 2017, Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel and others [2017] NSWLEC 51 ('Butler Street (No 1)'), and Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel (No 2) [2017] NSWLEC 55 ('Butler Street (No 2)'). I adopt the abbreviations used in those decisions for the purpose of this decision, and summarise the factual background as follows: 1. On 20 July 2016, Butler Street brought Class 1 objector appeal proceedings against the Panel, GHD and Council pursuant to s 98 of the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act') appealing the grant of development consent by the Panel to Council on 22 June 2016 for the construction of a road and associated works referred to as the Byron Bay Bypass. 2. On 13 April 2017, prior to the hearing of the Class 1 appeal which had been set down for hearing on 15 to 17 May 2017, Butler Street filed a Motion seeking the following orders: 1. That the proceedings be dismissed as the Court has no jurisdiction to determine the development application that is before it. 2. That the dates for the hearing of these proceedings, being 15, 16 and 17 May 2017 be vacated. 3. That the Orders for "Case management" and the timetable made by Court on 30 March 2017 be vacated and no further orders for Case management be made until the determination of the issues raised in proposed Order 1 of this Motion. 4. That the Respondents pay the costs of the Applicant on the Motion. 5. That the Respondents pay the Applicant's costs of the proceedings. 1. The Motion was contested by Council and was heard before me on 28 April 2017. For reasons set out in Butler Street (No 1) and Butler Street (No 2), I was satisfied that the Court had jurisdiction to determine the appeal proceedings and accordingly refused both to dismiss the proceedings and to vacate the scheduled hearing date. I gave directions for further preparation and reserved costs. 2. The appeal proceedings were conducted before Commissioner O'Neill on 15 to 17 May 2017 with the Commissioner giving judgment on 2 June 2017, granting consent subject to conditions and dismissing Butler Street's appeal (Butler Street Community Network Incorporated v Northern Region Joint Regional Planning Panel [2017] NSWLEC 1278). 3. The hearing on the Costs Motion proceeded before me on 19 October 2017. Mr T Messenger, solicitor, appeared for Council; and Mr P Travis, of counsel, appeared for Butler Street. Principles 1. The power of the Court to order costs is contained in s 98 of the Civil Procedure Act 2005 (NSW) ('Procedure Act'), which provides: 98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. ... 1. Relevantly, r 3.7 of the Land and Environment Court Rules 2007 ('Court Rules'), provides: 3.7 Costs in certain proceedings (cf Land and Environment Court Rules 1996, Part 16, rule 4) (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act): (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: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, ... (d) that a party has acted unreasonably in the conduct of the proceedings; ... 1. These proceedings are within Class 1 of the Court's jurisdiction (see Land and Environment Court Act 1979 (NSW), s 17(d)), and accordingly the starting point is the presumptive rule, enshrined in r 3.7(3) of the Court Rules, that there be no order for costs. As stated in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 at [9]-[10] per Biscoe J: [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: 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]: ... [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. ... 1. Despite the presumptive rule, r 3.7(3) of the Court Rules sets out certain circumstances in which the Court may find that it is "fair and reasonable" to award costs in Class 1 proceedings. The circumstances provided in r 3.7(3) of the Court Rules are similar to the indicative guidelines formulated under the earlier rule (Part 16, Rule 4 of the Land and Environment Court Rules 1996 (NSW)) in Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] and approved by the Court of Appeal in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 ('Sansom') at [56]. 2. The key principles relating to the award of costs in Class 1 proceedings were helpfully summarised by Sheahan J in Dunford v Gosford City Council (No 3) [2015] NSWLEC 96 ('Dunford v Gosford City Council') at [30] 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 r 3.7(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 r 3.7(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]. Evidence 1. Council relied upon two affidavits of Thomas Messenger sworn 30 June 2017 and 6 October 2017. Objection was taken to a number of the paragraphs in the affidavits (as well as the annexed correspondence between the parties relating to "Costs Negotiations" directed at settlement of the matter). I received the material subject to relevance and now record that I do not regard the correspondence between the parties in relation to costs of the Motion as relevant. 2. I do however find the evidence going to the material facts and correspondence between the parties prior to the Motion to be relevant, which is set out in Mr Messenger's affidavit sworn 30 June 2017 and its annexures. The relevant information can be briefly summarised as follows: 1. The appeal proceedings were commenced on 20 July 2016. On 2 September 2016 Butler Street filed a Statement of Facts and Contentions, and on 8 November 2016 Council filed a Statement of Facts and Contentions in Reply. Directions were given by the Court in December 2016 for hearing on 15 to 17 May 2017. 2. On 28 March 2017 Council's solicitors raised a matter which was said to be "a significant constraint in the Court's determination of the appeal". In summary, Council indicated their recent understanding that the development, except for the part passing through the SEPP 14 Wetlands, as a result of cl 94 of the SEPP (Infrastructure), did not in fact require development consent. In the circumstances, Council's solicitors noted that any order of the Court made in relation to the Class 1 appeal would therefore be limited to the SEPP 14 Wetlands portion of the project. 3. Further correspondence passed between the parties' solicitors generally to the effect that Butler Street accepted that consent was only required for the SEPP 14 Wetlands, but disagreed with Council's position on the ensuing implication – with Butler Street maintaining that there was a jurisdictional concern in relation to the whole of the appeal before the Court. This was made clear in Butler Street's letter of 31 March 2017, which stated that "the development application that is now, in effect, before the Court is so fundamentally different from the development application on which the proceedings are founded that it amounts to an original development application". Accordingly, Butler Street indicated an intention to bring an application before the Court that there was a legal issue that had emerged which was "determinative of the proceedings". Submissions Council's primary submissions 1. Apart from what it submits is the clear application of r 3.7(3)(a)(i) and (ii) of the Court Rules, Council submits that two further matters support the overcoming of the presumptive rule in this matter being, first, the framing of Butler Street's Motion and, second, the nature of the relief sought. 2. In relation to the first, the Motion sought an order that the proceedings be dismissed because the Court has "no jurisdiction". In effect, the Motion sought the dismissal of Butler Street's own appeal proceedings which is both unusual and, relevantly, contrary to the primary relief actually sought by Butler Street in the appeal proceedings – being the refusal of the development application. Thus, Council submits that even if Butler Street had been successful on the Motion, it would have not led to a resolution of Butler Street's real issues in the proceedings, because the effect of the making of an order for dismissal (for want of jurisdiction) would have been that the development consent would have again become operational by application of s 83(2)(b) of the EPA Act. 3. The second matter is that the "jurisdictional nature" of the issue raised supports the rebuttal of the presumptive rule because the rationale of the "no discouragement principle" (being that persons should not be discouraged from exercising their rights of appeal for fear of having to pay costs if the appeal is unsuccessful – Sansom at [23]) applying to r 3.7 would not apply in these circumstances. Council submits that given the costs sought relate to the separate legal question raised in the Motion, this would not have the effect of deterring or discouraging parties from commencing Class 1 proceedings generally. Council relies on the finding of Preston CJ in BYT Nominees Pty Limited v North Sydney Council [2008] NSWLEC 294 at [30] and submits that the rationale of the no discouragement principle does not apply in these circumstances, being the hearing of a separate legal question challenging the jurisdiction of the Court to entertain proceedings. 4. Council further submits that whilst it is true that the original formulation of the development application the subject of the proceedings went beyond that which the Panel was empowered to approve, this was not the subject of dispute (see Butler Street (No 1) at [10]). Instead, the Motion related to a separate discrete issue. That is, the contest at the hearing of the Motion did not relate to the power to grant consent only in relation to the SEPP 14 Wetlands (see Butler Street (No 1) at [11]), rather, the Motion dealt with the implications of that formulation on the proceedings and the jurisdiction of the Court to entertain the proceedings at all. Council noted that the Court rejected Butler Street's arguments on this discrete issue. 5. In these circumstances, Council submits that it is not fair and reasonable to refrain from making a costs order merely because the determinative jurisdictional matter, raised by Butler Street, had some nexus to the formulation of the development application at an earlier stage. 6. Further Council submits that its conduct was certainly not unreasonable, particularly noting that it had earlier raised the matter of the power of the Court to grant the development consent over land other than the SEPP 14 Wetlands. That is, it was Council who first raised the scope of the Court's power with both Butler Street (in its letter of 28 March 2017) and then the Court (at a directions hearing on 30 March 2017). Thus, Council's position, which was ultimately accepted by the Court, was made known to Butler Street well in advance of Butler Street filing the Motion. 7. Despite Butler Street indicating its intention to not raise any "public interest" argument, Council submits that there is in any event no public interest argument to refute the proposed costs order. This is because the Motion did not relate to any merit matters but rather a discrete legal issue going to jurisdiction of the Court to entertain the appeal proceedings, and even if merit considerations were considered to be relevant, any consideration of the public interest should have regard to the benefits of the construction of the bypass which was the subject of the proposal. Further, Council submits that the question considered was not of any wider significance so as to be considered a matter of public interest because the decision applied did not for example require resolution of the application of competing authorities. Council also submits that there is no publicly available list of the members of Butler Street, and accordingly there is no evidence to suggest that the challenge was brought by a wide group of the public. Butler Street's submissions 1. Butler Street submits that there is no reason in the present circumstances why there should be a departure from the presumptive rule against costs in Class 1 proceedings, and the circumstances in r 3.7(3) do not foreclose reasons for such a departure. 2. Butler Street submits that the Court should place weight on the fact that the Class 1 appeal was moving towards a final hearing, and prior to the hearing Council "changed its case so as to raise for the first time a preliminary and potential dispositive question of law". In those circumstances, Butler Street submits that while the question may have been resolved at the final hearing, there was a benefit in bringing a separate interlocutory motion, in that this would avoid the expense of preparing for a final hearing that may have been rendered unnecessary. Even though the interlocutory hearing on the Motion was not dispositive, Butler Street submits that there was still utility in allowing the Court the opportunity to fashion directions to take into account any matters arising from the change in Council's pleaded case. In the circumstances, Butler Street submits that there is no basis for suggesting that it tactically embedded a dispositive preliminary legal question in a Class 1 merit review, which it submits is the rationale behind r 3.7(3)(a) of the Court Rules. 3. Butler Street submits that the bringing of the legal issue which responded to Council's "change of its pleading" before the final hearing was also appropriate having regard to the overriding purpose of separate litigation – to achieve the just, quick and cheap resolution of the real issues in civil proceedings. Further, Butler Street submits that it may have been the subject of criticism if it waited to raise the new legal issue until the first day of the hearing. 4. Butler Street further submits that if applicants are discouraged by the threat of costs orders from bringing to the Court's attention a preliminary and potential dispositive legal issue that has arisen because of a party's change of position, then there would be a risk that parties will simply proceed to hearing and wait for the Court to identify and address the issue. 5. Butler Street submits that Council has, in its submissions, ignored the actual circumstances of the case and has not justified why it is "fair and reasonable" to depart from the presumptive rule. 6. Butler Street further submits that contrary to Council's submissions, there is nothing "unusual" in the relief sought in the Motion. The Court would accept that the Motion was framed to address the issues that arose from Council's amendments to its pleadings just weeks out from the hearing. 7. In summary, Butler Street submits that Council has failed to identify any basis for the Court to depart from the presumptive rule. Butler Street submits that the fact that the issue raised was preliminary to the hearing and was potentially dispositive of the proceedings – being the only argument that Council has raised – is not a sufficient basis for departing from the presumptive rule once the Court's attention has been directed to the surrounding circumstances. In any event, Council has not addressed what Butler Street says is the "obvious utility" in having the issue of jurisdiction, once identified, brought to the Court before the parties incur further costs in anticipation of a hearing and the Court allocates resources to a hearing that might not proceed for want of jurisdiction. Accordingly, taking into account all these considerations, Butler Street submits that the Court should not depart from the presumptive rule. Council's position in reply 1. In reply, Council reiterated that it had brought the issue regarding the scope of the consent to both Butler Street and the Court's attention as early as possible, and had clearly stated its position on the relevant implications to Butler Street. Council submits that Butler Street brought the Motion simply because it disagreed with Council's position, and notes that the Court in fact adopted its position. 2. Finally, Council disputes Butler Street's submission that it had a "change of position" and/or brought about "amendments" to the application, rather submitting that it adopted the appropriate course of action given the factual circumstances. Council further notes that its correspondence (of 28 March 2017) was not, as Butler Street submits, at the "doorstep of trial", but rather, Council's initial letter notifying Butler Street of the issue was dated some six weeks prior to the hearing date. Consideration 1. The application of the principles in relation to the award of costs in Class 1 proceedings is not without difficulty in the present matter. It is clear that the facts fit within circumstances provided in r 3.7(3)(a)(i)-(ii), in that the Motion was certainly potentially determinative of the proceedings and was preliminary to an evaluation of the merits in the substantive hearing. The Motion sought an order that involved a question of law that, if granted, would have the effect of dismissing the proceedings. Further, as Council submits, it is unusual that an applicant, having commenced a Class 1 objector appeal, would thereafter seek an order that the proceedings be dismissed on the basis that the Court had no jurisdiction to determine the appeal. While these considerations by themselves may suggest that it is fair and reasonable to order costs of the Motion, for the reasons below, I do not consider that it is fair and reasonable for Council to be reimbursed for its costs, but rather consider that the presumptive rule enshrined in r 3.7(2) should prevail. 2. I consider it relevant that Council, a sophisticated local government authority, was the applicant for the purposes of the development application, and through what I accept to be an honest error, applied for development consent in respect of the entire development. The Panel, also a sophisticated entity, also approached the development application as it was prepared on the basis that the whole of the development required consent. 3. Once consent was granted to the proposal, Butler Street, acting on the basis of the factual situation as it, and indeed all parties, understood, applied for review of the Panel's decision. When the error regarding the application of the relevant planning principles was discovered three months after the appeal was filed, and some six weeks before the hearing was due to commence, this clearly resulted in a significant upset in Butler Street's case, which I accept was commenced in good faith and for proper reasons. I accept and take note of the fact that Butler Street was unaware, up until that time, of the so-called "significant constraint in the Court's determination of the appeal". 4. In these circumstances, while the form of order sought by Butler Street in the Motion was unusual (given that it sought dismissal of proceedings which it itself had instituted), considering the circumstances raised by Butler Street and given the timing within which it was informed of what may have been a jurisdictional or procedural inadequacy in the conduct of the Panel, Butler Street's conduct and response was not unreasonable. Rather, in the face of Council's discovery, I accept that Butler Street filed the Motion so as to clarify the scope of the proceedings. Relevantly, I find that Butler Street's Motion, though unsuccessful in its claim, ultimately was geared towards facilitating the just, quick and cheap determination of the proceedings by narrowing the issues in dispute, thereby resulting in a costs and time saving for both the parties and the Court. To allow the issue to remain unventilated would have resulted in the undesirable outcome of the matter proceeding to hearing, and evidence being prepared, on the basis that the whole of the development needed consent. 5. While I note Council's submission that Council's position on the issue was in fact adopted by the Court, I consider this goes to the unusual, and perhaps unfortunate framing of Butler Street's Motion. It is clear that Council's discovery as to the scope of the consent required for the development raised an important legal question, and I accept that Butler Street, acting properly, sought to have the Court decide the relevant implications. I do not consider that Butler Street acted improperly or unreasonably in doing so – it was not incumbent on Butler Street simply to accept Council's position once notified. 6. In the circumstances, I find that the circumstances of the proceedings are such that there are not sufficient reasons to depart from the presumptive rule against costs in Class 1 proceedings. The burden falls on Council to demonstrate that it is fair and reasonable to depart from the presumptive rule, rather than to indicate that Council acted fairly and reasonably, and in the circumstances I do not consider this burden to be satisfied. Conclusion 1. Overall, I accept Butler Street's submission that, properly understood, the concern as to the breadth of the appeal and jurisdiction was raised well after the proceedings had commenced and before hearing, was of some concern to both parties and quite likely to the Court, and that, ultimately, the determination of the Motion, to some extent, facilitated the subsequent hearing of the appeal. 2. In the light of my determination, it is appropriate that the Costs Motion be dismissed and that there be no order for costs. Orders 1. The orders of the Court are: 1. The Notice of Motion filed 30 June 2017 by Byron Shire Council is dismissed. ********** 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: 01 November 2017