Cutcliffe v Lithgow City Council

[2006] NSWLEC 463

Reported Decision: (2006) 147 LGERA 330

Land and Environment Court

of New South Wales

CITATION:

Cutcliffe v Lithgow City Council [2006] NSWLEC 463

PARTIES:

APPLICANTS:
Brian Edward Cutcliffe and
Jill Cutcliffe

FIRST RESPONDENT:
Lithgow City Council

SECOND RESPONDENTS:
Garry Allan Dukes and
Wendy Ann Dukes

FILE NUMBER(S):

40181 of 2005

CORAM:

Biscoe J

KEY ISSUES:

Costs :- where applicant has obtained declaration of invalidity of a council development consent - where applicant seeks and obtains costs only against submitting council and not against developer who defended – whether council entitled to contribution to those costs from developer – whether developer entitled to recover its costs from council -whether council’s submitting appearance and pleaded defence unreasonable – general costs guidelines.

LEGISLATION CITED:

Land and Environment Court Act 1979 (NSW) s 69
Land and Environment Court Rules 1996 Pt 6 r 1

CASES CITED:

Australian Securities and Investments Commission v Rich (2004) 50 ACSR 500;
Belongil Progress Association Inc v Byron Shire Council [2000] NSWLEC 118;
BMI Ltd v Federated Clerk’s Union of Australia (NSW) Branch (1983) 51 ALR 401;
Corporate Affairs Commission of NSW v Transphere Pty Ltd (1988) 15 NSWLR 596;
De Haas v Williams (2004) 132 LGERA 195;
Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47;
El Deeb v Magistrates Court of South Australia (1999) 72 SASR 596;
Emory University v Biochem Pharma Inc (1998) 86 FCR 1;
Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748;
Kiama Council v Grant (2006) 143 LGERA 441;
Kindimindi Investments Pty Ltd v Lane Cove Council (2006) 143 LGERA 268;
KJD York Management Services Pty Ltd v City of Sydney Council [2006] NSWLEC 218;
Kumar v Mitchell (1991) 32 FCR 190;
Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748;
Latoudis v Casey (1990) 170 CLR 534;
Metzger v Department of Health and Social Security [1977] 3 All ER 444;
Oshlack v Richmond River Council (1998) 193 CLR 72;
Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 3) (1987) 77 ALR 609;
Parkes Developments Pty Limited v Cambridge Credit Corporation Limited (1974) 33 LGRA 196 ;
Proprietors of SP 13318 and SP 13555 v Lavender View Regency Pty Ltd and North Sydney Council (unreported 6 June 1987, LEC/NSW);
R (Davies) v Birmingham Deputy Coroner [2004] 1 WLR 2739;
R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13;
Rushcutters Bay Smash Repairs v H McKenna Netmakers [2002] NSWSC 670;
Scott v Wollongong City Council (1992) 75 LGRA 112;
Sidney Harrison Pty Ltd v City of Tea Tree Gully (No 2) (2001) 112 LGERA 327;
Trust Co of Australia Ltd v Perpetual Trustees WA Ltd (1995) 36 NSWLR 654

DATES OF HEARING:

06/07/2006

 
DATE OF JUDGMENT: 

08/02/2006

LEGAL REPRESENTATIVES:

APPLICANT:
Mr P Clay, barrister
SOLICITORS
McIntosh McPhillamy & Co

FIRST RESPONDENT:
Mr A Hawkes, solicitor
SOLICITORS
Pike Pike and Fenwick

SECOND RESPONDENTS:
Mr D Wilson, barrister
SOLICITORS
Barry F Cosier & Associates

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

2 August 2006

40181 of 2005

B E CUTCLIFFE & ANOR v LITHGOW CITY COUNCIL AND ORS

JUDGMENT

HIS HONOUR:

INTRODUCTION

1 The issue that I am now dealing with is costs. In my judgment of 22 May 2006 in this matter, [2006] NSWLEC 317, I made a declaration that development consent 523/02 purportedly granted by the first respondent, Lithgow City Council (council), to the second respondents (developers) was void and of no effect, and I ordered that the developers be restrained from doing any act or thing in reliance upon it. This was by consent of the applicants and the developers and after an uncontested hearing in which the council did not participate because it had filed a submitting appearance, except as to costs, at a late stage of the proceedings.

2 The applicants seek their costs of the proceedings from the council but seek no costs order against the developers. If a costs order is made in favour of the applicants against the council, then the council seeks an order that the developers pay the council 50 percent of such costs. The developers seek an order that the council pay the developers’ costs of the proceedings.

3 In 2003 the council granted the developers development consent 519/02 (first development consent) and development consent 523/02 (second development consent).

4 On 8 March 2005 the applicants filed this Class 4 Application and Points of Claim challenging the validity of both development consents. It was appropriate, and I think necessary, that the council granting the development consents was joined as a respondent: Parkes Developments Pty Limited v Cambridge Credit Corporation Limited (1974) 33 LGRA 196 (CA) at 207, 217, 219. The respondents each filed Points of Defence. There was an unsuccessful attempted mediation.

5 Clause 13(1) of the Lithgow City Local Environmental Plan 1994 (LEP) provided that the council could consent to a subdivision if it was satisfied that the land was not prime crop and pasture land. The applicants’ Points of Claim alleged that the land was prime crop and pasture land as defined in the LEP and that the development consents were invalid because the council, in breach of s 79C of the Environmental Planning and Assessment Act 1979, failed to take the LEP into consideration. The particulars included allegations that the council failed to take into account cl 13 and failed to satisfy itself in accordance with cl 13 that, inter alia, the land was not prime crop and pasture land.

6 The council’s Points of Defence admitted that the land was prime crop and pasture land as defined in the LEP, stated that the council had mistakenly assessed the development applications upon the basis that it was not, and raised discretionary defences.

7 The developers, in their Points of Defence, pleaded that they do not know and cannot admit that the land was prime crop and pasture land as defined in the LEP and that they do not admit that the council had failed to satisfy itself under cl 13(1). However, before me on this costs application the developers indicated that they took the position that the land was not prime crop and pasture land as defined in the LEP and that they took issue with the council over its pleading that it had made a mistake when assessing the application.

8 The proceedings were defended by the council until 8 May 2006, when it filed a submitting appearance except as to costs.

9 The trial commenced on 22 May 2006. The council was not represented. The applicants called upon a notice to the council to produce the relevant instrument of delegation. During the day, the proceedings settled as between the applicants and the developers. The applicants, with the consent of the developers, obtained leave to amend their Points of Claim to delete the claim in relation to the first development consent; to restrict the claim of invalidity to the second development consent; and to add as a second ground of invalidity that the council delegate did not have authority to grant the second development consent because the instrument of delegation only authorised him to do so if there was no objection to the development application, and there was such an objection. Notice of the proposed amendments was given to the council before leave to amend was granted. The applicants and the developers sought consent orders that the second development application was invalid and a consequential injunction. The applicants led uncontested evidence which satisfied me that both grounds of invalidity should be upheld in relation to the second development consent. I then delivered an ex tempore judgment in which I made a declaration of invalidity and granted an injunction.

10 The applicants submit that the council should pay the applicants’ costs because, in summary:

(a) the council filed a submitting appearance only at effectively “ the last minute ”, otherwise it was vigorously opposing the grant of any relief;
(b) the council opposed the grant of relief notwithstanding its acknowledgment by Mr Muir that it had erred in failing to properly apply clause 13 to the development application;
(c) the council, as a model litigant, should have alerted the parties to the fact that the grant of consent was beyond power in that the council’s delegate did not have the power to grant consent. This was a fact known to the council, and likely to be self-evident when the Bundle of Documents was prepared by the council and its solicitors;
(d). the council effectively surrendered;
(e) the applicants did succeed, and were almost certainly certain to have succeeded if the council remained contesting the matter, both on the matter which had been pleaded and the late amendment;
(f) that is, the applicants succeeded in large part in achieving what they set out to achieve;
(g) it was the failures of the council which led to the outcome achieved;
(h) the applicants acted reasonably in not challenging the consent which had been acted upon, and indeed carried out, where the second respondents had their strongest case on discretion;
(i) there is no disentitling conduct on the part of the applicants.

11 The council submits that no costs order should be made against it because, in summary:

(a) the applicants only commenced proceedings some sixteen months after they become aware of the development consents;
(b) the applicants raised no claim of invalidity prior to commencement of proceedings;
(c) the council immediately conceded it had made a mistake of fact in respect of clause 13 of the LEP;
(d) the council immediately put the applicants on notice of the registration of title in respect of the subdivision the subject of the first consent;
(e) the council provided the applicants with full copies of the development application files over a year prior to the hearing;
(f) it was only on the morning of the hearing that the applicants sought to amend their points of claim to include breach of delegation;
(g) the applicants ultimately succeeded in respect of only half their claim, and that in respect of the second consent where title to the subdivision had not been registered.

12 This Court has a broad discretion to award costs under s 69 of the Land and Environment Court Act 1979 (NSW). The Court has not yet adopted the Uniform Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 which have a more detailed costs regime and which apply to other NSW courts.

13 A successful litigant is usually entitled to an award of costs unless it has engaged in some sort of disentitling conduct relating or leading up to the litigation: Oshlack v Richmond River Council (1998) 193 CLR 72 at 96-98 [65-70] per McHugh J. The object of a costs order is to compensate the party in whose favour it is made against the expense to which it has been put by reason of the legal proceedings, not to punish the party against whom it is made: Latoudis v Casey (1990) 170 CLR 534 at 542-543, 547. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing or defending proceedings or has failed through no fault of its own: Latoudis at 567.

14 A costs order against two or more respondents is joint and several: Rushcutters Bay Smash Repairs v H McKenna Netmakers [2002] NSWSC 670 (Gzell J). Consequently, each respondent then has a right of equal contribution against the other. When making costs orders, the Court might determine that the contribution should not be equal. For example, in Belongil Progress Association Inc v Byron Shire Council [2000] NSWLEC 118, the court declared that provisions of a local environmental plan were invalid. The two respondents were ordered to pay the applicant’s costs. But as between the respondents, those costs were apportioned 70 percent to the respondent council and 30 percent to the other respondent.

15 Another way in which a court may exercise its discretion in where both respondents have actively and unsuccessfully defended, is to order each respondent to pay, in equal shares, the applicant’s costs. Such an order was made in Sidney Harrison Pty Ltd v City of Tea Tree Gully (No 2) (2001) 112 LGERA 327 (SC/SA, Debelle J). There the plaintiff brought proceedings against a council and the holder of a development approval and obtained declaratory relief. Some of the issues arose from the fact that the council had not proceeded according to law when dealing with the development application. The council defended those issues but the holder of the development approval was prepared to abide the orders of the court and did not prolong the hearing in relation to those issues. The council was ordered to pay the applicant’s costs of those issues. Both defendants opposed other issues and they were ordered to pay, in equal shares, the plaintiff’s costs.

16 In Kiama Council v Grant (2006) 143 LGERA 441 at [80], Preston CJ held:

The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits:

(a) where one party effectively surrenders to the other party by:
(i) discontinuing without the consent of the other party; or
(ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party;
the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and
(b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless:
(i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or
(ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.

17 Although not squarely applicable, principle (a)(ii) is closely analogous in relation to the second development consent claim where there was an uncontested hearing on the merits and the respondents ultimately surrendered to the applicants. The same principle is also closely analogous in relation to the first development consent claim where the applicants ultimately surrendered at trial to the respondents by abandoning that claim.

18 The surrender by the respondents in relation to the second development consent did not dispose of the matter in favour of the applicants. It was still necessary for the applicants to satisfy the Court, by evidence and argument, that their complaints should be upheld and declaratory relief granted. “The court does not make declarations just because the parties to litigation have chosen to admit something. The court declares what it has found to be the law after proper argument, not merely after admissions by the parties. There are no declarations without argument: that is quite plain”:Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451 per Megary VC. However, if the matter is merely one of private rights between particular parties, for example as to their rights under a contract, it may be appropriate for a court to make a declaration by consent: BMILtd v Federated Clerk’s Union of Australia (NSW) Branch (1983) 51 ALR 401 at 413 - 414. In Australian Securities and Investments Commission v Rich (2004) 50 ACSR 500 at [10] White J held:

As a general principle a court does not make declarations on matters relating to public rights, or rights analogous thereto, by consent or on admissions, but only if it is satisfied by evidence: Williams v Powell [1894] WN 141; Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221 at 225-7; Termijtelen v Van Arkel [1974] 1 NSWLR 525; Wallersteiner v Moir [1974] 3 All ER 217; Metzger v Department of Health and Social Security [1977] 3 All ER 444 at 451; BMI Ltd v Federated Clerk’s Union of Australia (NSW) Branch (1983) 51 ALR 401; P W Young, Declaratory Orders, second ed, Butterworths Sydney 1984 para 601.

19 These principles have been applied in this Court in Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47 at [50] –[51] by Bignold J and in KJD York Management Services Pty Ltd v City of Sydney Council [2006] NSWLEC 218 by Lloyd J. In both cases the court also referred to an established practice of equity not to grant declarations without a proper contradictor. In KJD the issue was the construction of the terms of a development consent granted by a Council, the respondent presented no argument and neither opposed nor consented to the applicant’s claim for a declaration, and Lloyd J declined to grant declaratory relief giving as one of his reasons the absence of a contradictor. In KJD Lloyd J cited Develtor as authority for this proposition. In Develtor Bignold J cited as an authority for this proposition the dictum of Young J in Trust Co of Australia Ltd v Perpetural Trustees Trustees WA Ltd (1995) 36 NSWLR 654 that “equity does not make declarations without a proper contradictor. However this is a discretionary rule as is made clear by Territory Insurance Office v Kerin (1986) 42 NTR; 89 FLR 257”. The Territory Insurance Office case does not appear to have been concerned with declaratory relief or contradictors but with an unrelated issue. Young J in fact granted declaratory relief notwithstanding that the plaintiff had settled with all defendants except one defendant who submitted. The detailed analysis by Young J in Corporate Affairs Commission of NSW v Transphere Pty Ltd (1988) 15 NSWLR 596 at 605-606 indicates that the absence of contrary evidence or argument by a defendant is only a discretionary consideration. There, his Honour referred to authority where a declaration had been granted although the respondent had submitted.

20 In my view, in cases involving development consents, generally it would be unjust to an applicant to deny declaratory relief merely because the respondents elect not to oppose it, regardless of the merit of the applicant’s case. As Zamir and Woolf, The Declaratory Judgment (3rd ed, 2002) at 129 point out,

…there is nothing particular about the nature or consequences of declaratory relief which calls for extraordinary caution. On the contrary, not being coercive relief, it is less harmful, potentially, than other remedies, notably injunctions and specific performance. Extreme caution is both unnecessary and undesirable. On the other hand, care is needed, not only to avoid indiscriminate and unjustified use of the declaratory power, but also to prevent declaratory actions from being dismissed and the scope of the remedy being unduly restricted out of extreme caution .

21 Ordinarily in a case of the present type, where an applicant has succeeded against a council and a developer who have both actively defended proceedings, the applicant would seek and obtain a costs order against both. For example, in Proprietors of SP 13318 and SP 13555 v Lavender View Regency Pty Ltd and North Sydney Council (unreported, 6 June 1997, LEC/NSW, Talbot J) the applicant succeeded in obtaining a declaration that a development consent was void. The first respondent was a developer who held the development consent. The second respondent was the council who granted it. Both respondents actively defended the proceedings. Talbot J ordered that both respondents pay the applicant’s costs. His Honour did not accept the developer’s argument that only the council should pay those costs because the invalidity was wholly attributed to the council. His Honour held:

The rationale of a costs order is that it is just and reasonable that the party who has caused to the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. As I have said, it’s function is compensatory (Latoudis v Casey (1990) 170 CLR 534 at 567). It was in the interest of the first respondent that the validity of the development consent be defended and the first respondent elected to meet that challenge. It is reasonable therefore that the first respondent, as an active participant in the proceedings who raised a real case in defence to the applicants’ but who was ultimately unsuccessful, should be the subject of a costs order. Accordingly, I am not prepared to discriminate between the respondents in relation to costs .

22 As the council and the developer ordinarily would be liable to pay the applicants’ costs in a case of this type, I think it usually would be unjust to impose the entire costs burden on the council merely because the applicant elected to seek costs only against the council. The Court should endeavour to mould costs orders accordingly. That could be achieved by ordering the developer to pay an appropriate portion of any costs that the council is liable to pay the applicants, unless the council has engaged in disentitling conduct.

23 In my opinion, in the present case there should be a costs order in favour of the applicants against the council, subject to a discount for costs relating solely to the challenge to the validity of the first development consent which the applicants abandoned at the hearing . The main factors leading to this conclusion are that the applicants were successful in relation to the second development consent because of the council’s errors and the council actively defended the proceedings until a late stage when it submitted except as to costs. The matters submitted by the council referred to in paragraph 11 above are of insufficient weight, in my view, to displace this conclusion.

24 The council submitted that, using a broad approach, I should assess the said discount at 15 percent, rather than put the parties to the further expense of an assessment of costs, with potential for disputation, on this point. Such an approach is within the Court’s discretion. For example, in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748, although the applicant had failed in the majority of the causes of action pleaded, Toohey J awarded him 75 percent of his costs on the basis that the applicant had “succeeded in his primary aim”, and that it had “failed on some issues in circumstances where, not only should he not have the costs of those issues, but there should be some compensation for the respondents for the time taken in meeting those issues both prior to and at the hearing” (at 48,137). In Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 at [148], Weinberg J determined that the applicant should only have 20 percent of its costs paid. The applicant in that case had been successful only on a very narrow claim, which required little evidence and was raised only shortly prior to the commencement of the trial, in the context of a sizeable commercial dispute which required eight days of hearing. I accept in principle the council’s submission that I should attribute a percentage to the discount. Doing the best I can on the material before me, I also accept 15 percent as an appropriate discount.

25 Should a costs order against the council be limited to costs incurred by the applicants before the council filed and served its submitting appearance? I consider that there should be no such limitation for the following reasons.

26 Any respondent is entitled to file a submitting appearance. Pt 6 r 1 of the Land and Environment Court Rules 1996 provides for submitting appearances in Class 4 proceedings such as these by incorporating by reference Pt 11 of the old Supreme Court Rules 1970 (prior to their abrogation and replacement by the Uniform Civil Procedure Rules 2005). Pt 11 r 4(3) of the old Supreme Court Rules relevantly provides:

(a) include in the defendant’s appearance a statement that the defendant submits to the making of all orders sought and the giving or entry of judgment in respect of all claims made, and

save as to costs’.

Subrule (4) makes clear that a defendant who has filed a submitting appearance shall not, without the leave of the Court, file a defence or affidavit or take any other step in the proceedings.

27 The council’s submitting appearance was, I think, consistent with views expressed in the joint judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 77-78 and in the judgment of Cowdroy J in this Court in Kindimindi Investments Pty Ltd v Lane Cove Council(2006) 143 LGERA 268 at 275 [35]. In Oshlack the applicant brought proceedings against a council and a developer in respect of a consent granted by the Council to a development application by the developer. One of the applicant’s allegations was that the council had failed to discharge its statutory obligation to consider certain matters. Gaudron and Gummow held at 77-78:

The appellant sought declaratory and injunctive relief to restrain the developer proceeding without a valid development consent. The Council is the authority which had granted the consent upon which the developer relied. In those circumstances, and also having regard to the earlier litigation, it might have been expected that the Council would submit to such order as the Court might make and that it would not become a protagonist, lest by doing so it endanger the impartiality it would be expected to maintain upon any subsequent applications to it which might ensue were relief granted to the appellant.

Their Honours added at 90:
In a significant number of such litigious disputes, it will, in accordance with the reasoning in R v Australian Broadcasting Tribunal; Ex parte Hardiman [(1980) 144 CLR 13], be entirely appropriate for, if not incumbent upon, the local government body not to assume the position of a protagonist and to avoid incurring substantial costs. The position of protagonist will be filled by the party against which injunctive relief is sought and which is the real contradictor in respect of the application for declaratory relief.

28 In Kindimindi (above) at 275 [35] Cowdroy J said:

The Court notes that the active role of the Council in defending its decision has significance to access to this Court. In proceedings challenging a development consent in this Court, it is almost always necessary to join two parties, namely the consent authority and the party having the benefit of the consent. Obviously where both parties take an active role, the costs involved may be more than double those involved in proceedings against a single party. Such costs would represent a formidable disincentive to the institution of proceedings, especially public interest litigation, in this Court, and would act as a severe limitation upon the access to the Court. As the High Court found in Oshlack , the Parliament of New South Wales has seen fit to broaden public access to this Court. The Court considers that for this reason a consent authority should in most circumstances submit to the orders of the Court in proceedings of this nature.

29 Oshlack and Kindimindi tell councils that it is usually inappropriate to actively defend their decisions where another active respondent is doing so, such as the holder of a challenged development consent. It would still be appropriate, I think, for a council to actively defend where there is a possibility of conflict between the respondents: Scott v Wollongong City Council (1992) 75 LGRA 112 at 126. The principle in Oshlack and Kindimindi must prevail, in my view, over any argument that where an issue is whether a council failed to give mandatory consideration to prescribed matters (such as under s 79C of the Environmental Planning and Assessment Act 1979), the disappearance of the submitting council from the forensic contest may diminish the illumination of the issue, since the council is in the best position to call evidence on that issue if it chooses to do so. .

30 Oshlack and Kindimindi do not address the costs consequences where a council files a submitting appearance except as to costs in accordance with the restraint that they identify. The filing of a submitting appearance, except as to costs, or an equivalent step, can, at least in many cases, achieve a measure of protection against costs. Thus in Emory University v Biochem Pharma Inc (1998) 86 FCR 1 at [15], Lindgren J said: “Although the [Federal Court] rules do not provide for ‘submitting appearances’ a proper party who consented to, or did not oppose, the making of an order… could protect its position as to costs by clearly so informing the applicant… at the earliest stage that it wishes to take no active part in the present proceeding and that it will submit to an order… but not to any order as to costs”. In Sidney Harrison Pty Ltd v City of Tea Tree Gully (No 2) (2001) 112 LGERA 327 at 332 [18] Debelle J said: “There are steps by which a planning authority is able to minimise costs of any proceedings seeking to set aside the development consent. It may indicate to a plaintiff that it recognises that there are defects in the manner in which it has handled an application and might even be able to assist a court in framing appropriate orders with, of course, proper notice to the person who has the benefit of the development consent”.

31 In Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47 the applicant had obtained declaratory relief in relation to a building approval in proceedings against the respondent council which filed a submitting appearance. There was no other respondent. Bignold J held at [42] that “the effect of the Respondent’s submitting appearance in the present case, where that appearance has not been challenged or impugned, is that the submitting party is generally to be regarded as immune from any liability for costs incurred in the proceedings after the filing of the submitting appearance save as to costs (although conformably to principle and case law, the submitting party will be liable for costs incurred by the plaintiff up to the date of the filing of the submitting appearance)”. With respect, in my opinion a successful applicant in declaratory proceedings should have all its costs reasonably incurred in obtaining declaratory relief, which include the costs of a hearing. That is because the applicant is not entitled to such relief merely because the respondents have submitted but must satisfy the court, by evidence and argument, that a declaration should be made (see the cases reviewed in paragraphs 18 and 19 above).

32 The passage quoted above from Develtor was quoted by this Court in De Haas v Williams (2004) 132 LGERA 195 at 211 [71] by Cowdroy J who had held that the conduct of a council resulted in development consents being invalid. The council and the beneficiary of the development consents were the respondents. The council filed no evidence, took no active part in the proceedings and on the first day of the hearing filed a notice of submitting appearance. It did not notify the applicants that it would take that course until the preceding day. By that time the applicants’ costs had already been incurred for the hearing. Cowdroy J ordered both respondents to pay the applicants’ costs.

33 It has been said that where judicial review proceedings are directed to an inferior court or tribunal and that court or tribunal enters a submitting appearance, costs will not usually be awarded in favour of the successful applicant: El Deeb v Magistrates Court of South Australia (1999) 72 SASR 596 (FC) at 598. More recently in that context a greater inclination to award costs to a successful applicant was expressed in R (Davies) v Birmingham Deputy Coroner [2004] 1 WLR 2739 at 2754 [47] by Brooke LJ, with whom Longmore LJ and Sir Martin Nourse agreed:

(1) the established practice of the courts was to make no order for costs against an inferior court or tribunal which did not appear before it except when there was a flagrant instance of improper behaviour or when the inferior court or tribunal unreasonably declined or neglected to sign a consent order disposing of the proceedings; (2) the established practice of the courts was to treat an inferior court or tribunal which resisted an application actively by way of argument in such a way that it made itself an active party to the litigation, as if it was such a party, so that in the normal course of things costs would follow the event; (3) if, however, an inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction, procedure, specialist case law and such like, the established practice of the courts was to treat it as a neutral party, so that it would not make an order for costs in its favour or an order for costs against it whatever the outcome of the application; (4) there are, however, a number of important considerations which might tend to make the courts exercise their discretion in a different way today in cases in category (3) above, so that a successful applicant, like Mr Touche, who has to finance his own litigation without external funding, may be fairly compensated out of a source of public funds and not be put to irrecoverable expense in asserting his rights after a coroner, or other inferior tribunal, has gone wrong in law, and [where] there is no other very obvious candidate available to pay his costs.

34 Similarly, an inclination to award costs to the innocent victim of government error in judicial review proceedings was expressed in Kumar v Mitchell (1991) 32 FCR 190. There, the applicant had been detained by order of a magistrate pursuant to the Migration Act 1958 (Cth). In judicial review proceedings brought by the applicant against the magistrate and prosecutor, it was found that the magistrate had made an error of law. In the judicial review proceedings it seems that the magistrate did not appear but that the prosecutor (the second respondent) appeared and defended the proceedings. Spender J said at 193-194:

While I proceed on the basis that the second respondent was not a party to the error into which the learned stipendiary magistrate fell, the question is whether an innocent applicant, who has been the victim of an erroneous decision, should be left without an order for costs…

Where there are two innocent parties the matter is not free from difficulty, but I think that in all the circumstances the proper order to make as to costs is that the second respondent pay the applicant's costs, to be taxed if not agreed. This order implies no fault or blame on the part of the representatives of the second respondent, but, where there are competing considerations between a citizen seeking redress for an error affecting the liberty of that person, proceedings being necessary to vindicate that person's rights, and an organ of government which initiated proceedings affected by error, the fact that that organ of the government has not been a party to the error does not mean that that party should be relieved of the obligation to pay costs.

As between the parties, clearly the applicant is without fault and is entitled to a remedy and considerations of justice dictate that the second respondent should pay the costs of the applicant.

35 Where the Australian Broadcasting Tribunal submits, as mandated by the High Court in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 35-36, it has been said that costs should not usually be awarded against the Tribunal where it is found to have fallen into error: Our Town FM Pty Ltd v Australian Broadcasting Tribunal(No 3) (1987) 77 ALR 609. There Wilcox J said at 611-612:

At one time it was considered to be a proper course for the [Australian Broadcasting] tribunal actively to participate in the argument upon judicial review of its rulings and decisions. However, in R v Australian Broadcasting Tribunal ; Ex parte Hardiman (1980) 144 CLR 13 at 35–6; 29 ALR 289, the High Court of Australia stated, in emphatic terms, that it would not normally be a proper course for the tribunal to enter the lists as a protagonist in defence of a decision which it had made upon a licence application. Since that date, so far as I am aware, the tribunal has consistently followed the practice of confining itself, upon such occasions, to putting such factual material before the court as has been thought necessary to enable the court to understand what had occurred, and to assisting the court by submissions — for example, as to the relevant provisions of the Act — but without taking an adversarial position. In other words, in compliance with the precept laid down in the High Court, the tribunal has desisted from putting active argument to support its decisions under challenge. In some respects the tribunal's position, when judicial review occurs, is not unlike that of a court whose decision is attacked upon appeal. In such a case, of course, the court takes no part in the appeal, the course of which, in terms of argument, depends upon the participation of the parties who have a personal interest in the result.

Although there is no question that the court has power, notwithstanding the matters to which I have referred, in disposing of an application under the Administrative Decisions (Judicial Review) Act 1977 to order the tribunal to pay costs, I think that the circumscribed role of the tribunal is a matter to be taken into account in exercising the discretion as to costs. It seems to me somewhat hard for the courts at the one time to tell the tribunal that it should not actively intervene to defend its decisions and, at the same time, to order the tribunal to pay costs if, without its having had an opportunity of defending a decision, the decision is held to be bad in law. I would not wish to prescribe any categorical rule, but I indicate my opinion that only in an unusual case should the court order that the tribunal pay costs, where there are contending applicants for a licence who have been the parties actively debating the matter before the court. I say this, of course, notwithstanding the fact that, in the particular case, the court might hold that the tribunal fell into error and thus, like an inferior court whose decision is reversed on appeal, that it was, in one sense, the cause of the litigation occurring.

36 In my view, the functions of inferior courts and tribunals are distinguishable from the functions of local councils in granting development consents. Consequently, there is not the same inhibition in ordering costs against a submitting local council whose error has occasioned successful litigation resulting in a declaration of invalidity of a development consent.

37 In the present case the council actively defended the proceedings and submitted earlier than the eve of the trial, but late; and the applicants seek no costs order against the developers. It may well be that most, perhaps all, of the applicants’ costs were incurred prior to the council’s submitting appearance. Be that as it may, a hearing was necessary in order for the applicants to obtain declaratory and injunctive relief. The hearing finished in a day due, probably, to the surrender of both respondents. This roughly corresponds with the day in court that the applicants had to have even if both respondents had submitted early. I therefore consider that the applicants should have an order for their costs of the proceedings against the council subject to the discount to which I have referred earlier. This is on the basis, addressed below, that the council should have an order for an appropriate proportion of those costs against the second respondent unless the council has engaged in disentitling conduct.

38 It was not submitted, nor am I satisfied, that the council’s costs liability to the applicants should be reduced because additional costs were incurred by the applicants by reason of the developers unsuccessfully raising defences which the council did not raise. In such a case, depending on the circumstances, a council might not have to bear such additional costs.

39 The council seeks an order that the developers pay the council half of any costs that the council is ordered to pay the applicants for the following reasons:

(a) the developers never admitted the correct agricultural classification of the land, even despite clear evidence to the contrary by the council;
(b) the developers pleaded a formal s 101 defence and never in terms resiled from this formal position;
(c) much of the developers’ evidence went to the alleged lack of impact arising from the development, yet ultimately such evidence was never given, as is noted in the earlier judgment;
(d) the developers did not plead registration of title or in any way refer to it either in their points of defence or written submissions, yet it is this consent in respect of which the applicants ultimately dropped their claim for invalidity.

40 The developers resist the council’s application that they should contribute to any costs which the council is adjudged liable to pay the applicants, and claim that the council should pay the developers’ costs on the ground, in effect, that the council has misconducted itself in relation to the litigation in the following respects.

41 First, the developers submit that the council should at an early stage have investigated, ascertained and volunteered that the delegate was acting without power. I do not consider that the council had an obligation to investigate, to decide whether there were any additional grounds for alleging invalidity, and to inform the applicants of any such ground.

42 Secondly, the developers submit that the council misconducted itself in relation to its conduct of the defence of the cl 13 ground and by its late submitting appearance. There are two points here but they are related. The misconduct in relation to cl 13 is said to be that the council failed to defend its decisions in respect of the development consents on grounds that were clearly open to it; and that the council admitted without reasonable basis in its points of defence that the land was prime crop and pasture land and that it had mistakenly assessed it as not being prime crop and pasture land. The developers submit that the council should have continued to defend the proceedings and should have called witnesses at the hearing so that the developers could cross-examine them in relation to the cl 13 issue. They submit that there was a divergence between the defences of the council and the developers, particularly in relation to whether the council made a mistake when assessing the development application, such that it was unreasonable for the council to have submitted. The developers say they wanted to dispute that there was a mistake.

43 As considered earlier, the rules of Court permit a respondent to file a submitting appearances and the judgments of Gaudron and Gummow JJ in Oshlack and of Cowdroy J in Kindimindi suggest that it was not inappropriate for the council to submit in the present case. I disagree that any divergences between the defences of the council and the developers made it unreasonable or improper for the council to submit, or that it had an obligation to defend and call witnesses so that the developers could cross-examine them. The council, by submitting, effectively left it to the developers to conduct such defences as they thought fit. To the extent that the second respondents contend that the council unreasonably pleaded, it is difficult to see why the council should be mulcted in costs for submitting when to do so was, in effect, to abandon that plea.

44 I am not satisfied that the admissions in the council’s Points of Defence relating to the cl 13 issue had no reasonable basis. In my earlier judgment I held, on the uncontested evidence then before me, that no consideration was given by the council or its delegate to the matters in respect of which the council or its delegate were required to be satisfied under cl 13, in particular to the question of whether the land was or was not prime crop and pasture land. A council development assessment report dated 12 August 2003, now in evidence before me, stated that “The land is not deemed as prime crop or pasture land…” The LEP’s definition of “prime crop and pasture land” in cl 6 said that it “means land within an area identified, on a map prepared by or on behalf of the Director-General of the Department of Agriculture deposited in the office of the Council, as Class 1, Class 2 or Class 3….”. That map shows the number “4” (Class 4) to the east of an oval shaped area which is itself to the east of the subject lands, and the number “3” (Class 3) to the south. There was an issue as to whether the number “4” was referable to the subject land or only to the oval shaped land. If “4” was referable to the subject land, then it was contended that this meant that the subject land was not prime crop and pasture land. If “4” was referable only to the oval shaped land, then it was contended that “3” was referable to the subject land in which case it was prime crop and pasture land. In my view, looking at the map, it was not unreasonable for the council to plead that it was prime crop and pasture land and that it was mistaken in assessing it as not prime crop and pasture land. There is also support for that view in the evidence of Andrew Muir (the council’s Manager of Environmental and Planning Services), Wayne McDonald (a town planner) and Robert Craze (an agronomist). Mr Muir deposed:

The Agricultural Land Capability map is produced at a scale of 1:100,000, which makes it difficult to accurately use. Annexed hereto and marked ‘ F ’ is an enlarged photocopy of an extract to the Capability Map of the Marrangaroo area which shows the subject premises marked ‘ development site ’. There is no line linking the numeral ‘ 4 ’ with the oval shaped area to the east of the development site. Notwithstanding these difficulties, I concede that a mistake of fact was made in allowing development consent to be issued over the lands under clause 13(1) due to the classification of lands as Class 3, and by comparison with the rest of the Capability Map, I interpret the ‘ 4 ’ to refer only to the oval shaped area to the east of the Development Site.

45 Mr McDonald gave evidence that it appeared, according to the map, that the subject land potentially comprised a mixture of both Class 3 and Class 4 lands, but that the map was ambiguous. Mr Craze gave evidence that the map did not clearly identify the classification of the subject land. If the map was ambiguous or unclear, I do not think it was unreasonable for the council to have interpreted it in one way, to later decide that its interpretation was a mistake and that it should have been interpreted in another way, and to plead accordingly. I do not think that either interpretation had no reasonable basis.

46 Points (b), (c) and (d) of the council’s submissions noted in paragraph 39 above also tend, I think, to weigh against the developers on the costs issue.

47 The council also submitted that a factor in its favour on its motion for costs against the developers was that the developers could and should have made a further development application in relation to the subject of the second development consent, thereby avoiding the litigation or its continuance. I reject that submission. There was no obligation, in my view, on the developers to take that speculative course. It was not unreasonable of them to take the course that they did. This conclusion means that it is unnecessary to resolve the disputed content of a conversation which took place between Mr Muir and Mr Dukes, one of the second respondents, in April 2005. In an affidavit sworn only a few working days before the costs hearing, Mr Muir deposed that during the course of that conversation he invited Mr Dukes to consider lodging a fresh development application with the council. Mr Dukes swore an affidavit in reply on the day of the costs hearing, in which he contended that the invitation was to lodge a new application if the developers were to fail in court. It was said that because of the lateness of Mr Muir’s affidavit, Mr Dukes was unavailable for cross-examination, as required by the council. If this dispute had to be resolved, a further hearing date would have to be appointed in order that Mr Dukes could be cross-examined. That is unnecessary because the council’s submission has been rejected.

48 In the result, I propose to order the developers to pay the council 50 percent of the costs for which the council is liable to the applicants.

THE COSTS OF THE COSTS MOTIONS

49 As regards the costs of the parties’ respective notices of motion for costs, I consider that the council should pay 85 percent of the applicants’ costs of the applicants’ substantially successful motion against the council. The discount reflects the fact that the applicants have succeeded in obtaining an order for 85 percent of their costs of the proceedings rather than 100 percent as sought in their motion. The developers should pay the council’s costs of the council’s successful motion against the second respondents. There should be no order for costs in relation to the developers’ unsuccessful motion against the council because the issues it raised substantially overlapped with the issues on the council’s motion.

GENERAL GUIDELINES

50 The following general guidelines may be formulated, based on the cases and principles reviewed in this judgment, for the exercise of the Court’s discretion to order costs where

· an applicant successfully brings proceedings that are necessary to have declared invalid or set aside a development consent or decision of a consent authority;

· the consent authority and the beneficiary of the development consent or decision are necessary or proper parties; and

· the cause of the invalidity is an error of or attributable to the consent authority and not to the beneficiary:

(a) the applicant will ordinarily be entitled to be compensated by an award in its favour of the costs of the proceedings unless it has engaged in disentitling conduct.

(b) where the beneficiary does not defend the proceedings, the applicant’s costs will ordinarily be awarded against the consent authority, whether or not the latter enters a submitting appearance. This is because the cause of the litigation is the error of the consent authority and not of the applicant or the beneficiary. The consent authority cannot immunise itself from costs consequences of its own error by entering a submitting appearance because then a successful applicant cannot be properly compensated in costs. It is not sufficient that a consent authority should bear the applicant’s costs only up to the time of the consent authority’s submitting appearance because the applicant must continue to incur costs thereafter in order to establish, by evidence and argument at a hearing, that it is entitled to declaratory and injunctive relief.

(c) where the beneficiary does defend the proceedings, albeit unsuccessfully, the applicant’s costs will ordinarily be awarded against both the beneficiary and the consent authority, whether or not the latter enters a submitting appearance. The award of costs against the consent authority is because its error is the cause of the litigation. It cannot immunise itself from costs by entering a submitting appearance for the reason given in (b) above. The award of costs against the beneficiary is because it chose to defend the proceedings. A qualification is that the beneficiary alone may be required to bear the applicant’s costs to the extent that they exceed the costs that the applicant would have incurred if both respondents had submitted, being costs attributable to defences that the beneficiary has unsuccessfully raised and the consent authority has not raised. An example may be a defence by the beneficiary that, notwithstanding an invalidating error by the consent authority, the court, for discretionary reasons, ought not to grant any relief.

(d) where the consent authority has submitted and the beneficiary has defended but settles with the applicant who then seeks costs only against the consent authority, the applicant’s costs will ordinarily be awarded against the consent authority and the latter will ordinarily be entitled to an indemnity for an appropriate proportion of those costs from the beneficiary, subject to the qualification referred to in (c) above. This situation may be unusual but it reflects the present case.

51 I make the following orders:

1. Order that the first respondent pay 85 percent of the applicants’ costs of the proceedings, including the applicant’s costs of its notice of motion for costs filed on 5 June 2006.
2. Order that the second respondents pay the first respondent 50 percent of the costs for which the first respondent is liable under Order 1.
3. Order that the second respondents pay the first respondent’s costs of the latter’s notice of motion for costs against the second respondents filed on 14 June 2006.
4. Order that the second respondents’ notice of motion for costs against the first respondent filed on 2 June 2006 be dismissed, with no order as to costs.
5. The exhibits may be returned.