El Cheikh v Hurstville City Council

[2003] NSWLEC 127

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Land and Environment Court

of New South Wales

CITATION:	El Cheikh v Hurstville City Council [2003] NSWLEC 127
PARTIES:	APPLICANT: Sam El Cheikh RESPONDENT: Hurstville City Council
FILE NUMBER(S):	10449 of 2000
CORAM:	Lloyd J
KEY ISSUES:	Costs :- in class 1 - application by unsuccessful party - no exceptional circumstances
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Pt 3, Pt 4, s 79C Hurstville Local Environmental Plan 1994 Amendments No. 35 Hurstville Local Environmental Plan 1994 Amendment No. 38 Land and Environment Court Act 1979 s 69(2) Land and Environment Court Practice Direction 1993 par 10 Land and Environment Court Rules 1996 Pt 13 r 14 State Environmental Planning Policy No. 1 - Development Standards State Environmental Planning Policy No. 65 - Design Quality of Residential Flat Development
CASES CITED:	Berk v Woollahra Municipal Council (1992) 78 LGERA 180; El Cheikh v Hurstville City Council (2001) 115 LGERA 425; El Cheikh v Hurstville City Council (2002) 121 LGERA 293; El Cheikh v Hurstville City Council, Commissioner Watts, NSWLEC, 15 November 2002; Maurici v Chief Commissioner of State Revenue (2001) 114 LGERA 376; McDonald Industries Pty Ltd v Sydney City Council (1980) 43 LGRA 428; Oshlack v Richmond River Council (1998) 193 CLR 72; Prince v North Sydney Council (2001) 115 LGERA 65; Wilson on behalf of Gurrungar Environment Group v Bourke Shire Council (2001) 116 LGERA 287
DATES OF HEARING:	11/04/2003
DATE OF JUDGMENT:	05/26/2003
LEGAL REPRESENTATIVES:	APPLICANT: Ms S A Duggan (barrister) SOLICITORS: Pike Pike & Fenwick RESPONDENT: Mr P R Rigg (solicitor) SOLICITORS: Deacons

JUDGMENT:

- 8 -

IN THE LAND AND

ENVIRONMENT COURT

OF NEW SOUTH WALES

10449 of 2000

Lloyd J

26 May 2003

SAM EL CHEIKH

Applicant
v

HURSTVILLE CITY COUNCIL

Respondent

JUDGMENT

Introduction

1 The applicant applies for the costs of an appeal heard by a commissioner, in which the commissioner dismissed the applicant’s appeal against the deemed refusal of a development application. It can immediately be seen that the application for costs is unusual: it is an application by the losing party for an order that the successful party pay its costs!

Background facts

2 The proceedings have had a long history. It is not necessary to recite all of it. It is sufficient to note the following. The development application was lodged with the respondent, Hurstville City Council (“the council”), as long ago as 2 November 1999. It sought development consent for a mixed commercial and residential building of five storeys above a parking level. On 12 April 2000 the council resolved to exhibit a draft amendment (“Amendment No. 23”) to Hurstville Local Environmental Plan 1994. The draft amendment applied to all land within zone No. 3(c) (Business Centre Zone), which applies to various business centres throughout the council’s area, so as to impose a height limit of two storeys. On 20 April 2000 the council publicly exhibited draft Amendment No. 23. On 24 May 2000 the applicant’s appeal against the council’s deemed refusal of the development application was filed. On 1 June 2000 the council re-advertised draft Amendment No. 23 to include additional changes. On 13 July 2000 the council filed its statement of issues in the appeal, including the issue of height and the proposed introduction of a two-storey limit. On 4 October 2000 and 5 October 2000 the appeal was heard by Commissioner Watts, who reserved his decision. Before the decision was published, however, on 13 October 2000 Amendment No. 23 imposing (inter alia) the two-storey height limit, was published in the New South Wales Government Gazette. On 14 December 2000 the hearing before Commissioner Watts was resumed and the parties made submissions in relation to an objection to the height control pursuant to State Environmental Planning Policy No. 1 – Development Standards (“SEPP No. 1”).

3 On 20 December 2000 the applicant commenced proceedings in Class 4 of the Court’s jurisdiction challenging the validity of Amendment No. 23. On 21 December 2000 Sheahan J granted an application by the applicant for an order staying the appeal before Commissioner Watts pending the determination of the Class 4 proceedings. The Class 4 proceedings were heard on 28 May 2001 and 29 May 2001. On 7 August 2001, in a reserved judgment, the applicant’s challenge to the validity of Amendment No. 23 was dismissed (El Cheikh v Hurstville City Council (2001) 115 LGERA 425). On 27 August 2001 the applicant filed a notice of appeal in the Court of Appeal. That appeal was heard on 7 June 2002. In a reserved judgment delivered on 17 June 2002 the Court of Appeal upheld the appeal and found that Amendment No. 23 was invalid and of no effect (El Cheikh v Hurstville City Council (2002) 121 LGERA 293).

4 On 7 June 2002, Amendment No. 35 to the council’s local environmental plan was published in the New South Wales Government Gazette. It sought to ensure that non-residential uses in mixed developments are located on at least the ground floor level.

5 The council then acted to remedy the invalidity of Amendment No. 23. On 2 July 2002 it placed on public exhibition draft Amendment No. 38 to its local environmental plan, which was to a similar effect as Amendment No. 23. On 13 August 2002 the hearing of the appeal against the deemed refusal of the development application was resumed before Commissioner Watts, who again reserved his decision. On 30 August 2002 Amendment No. 38 was published in the New South Wales Government Gazette. It imposed a maximum height limit of two storeys to all land within 3(c) zones (inter alia). Amendment No. 38 did not contain any saving provision relating to a development application that had been made but not yet determined upon the commencement of that instrument. On 2 September 2002 there was a further hearing before Commissioner Watts, who raised for the first time the effect of State Environmental Planning Policy No. 65 – Design Quality of Residential Flat Development (“SEPP No. 65”), which had in the interim been published in the New South Wales Government Gazette on 26 July 2002. On 12 November 2002 the hearing before the commissioner was concluded. The commissioner delivered a reserved decision on 15 November 2002 in which he dismissed the appeal (El Cheikh v Hurstville City Council, Commissioner Watts, NSWLEC, 15 November 2002, unreported). The appeal failed because the proposed development did not comply with the maximum height limit of two storeys imposed by Amendment No. 38.

6 The summary of facts which I have described does not include details of appearances at mentions or call-overs or the various directions made thereat.

7 The present application for costs relates only to the proceedings before the commissioner. Costs orders were made in the proceedings in this Court and in the Court of Appeal relating to the validity of Amendment No. 23.

The submissions of the parties

8 Ms S A Duggan, appearing for the applicant, relies upon the following submissions:

(a) But for the council’s invalid administrative action in the making of Amendment No. 23, the applicant would not have incurred the costs it did in prosecuting the appeal. If Amendment No. 23 had been properly and validly made, then all subsequent costs would not have been incurred. Although the council was in so doing performing a function under Pt 3 (entitled “Environmental Planning Instruments” ) of the Environmental Planning and Assessment Act 1979 (“EP&A Act”) that function was also related to its function under Pt 4 (entitled “Development Assessment” ).
(b) The costs incurred in prosecuting the appeal were unreasonably incurred as a consequence of the council’s breach of Pt 13 r 14 of the Land and Environment Court Rules 1996, when it raised at the third hearing before the commissioner Amendment No. 35. Further, at the fourth hearing before the commissioner (on 2 September 2002) the council argued a fresh matter, namely whether there had been compliance with SEPP No. 65. As a consequence, the hearing was required to be further adjourned to 12 November 2002. Notwithstanding the fundamental difficulty faced by the applicant being the two-storey height control imposed by Amendment No. 38, the council required the attendance of the applicant’s architect for cross- examination on that occasion.
(c) The council adopted a course of conduct to frustrate the applicant’s development application, being its attempt to gazette a planning instrument which would have the consequence of thwarting the applicant’s development application. But for the fact that the council ultimately succeeded in doing so the Court would likely have consented to the development application, as appears from the commissioner’s reasons. The Court should draw the inference that the council’s conduct was designed at least in part to achieve the end of preventing the applicant’s development, based upon the fact ( inter alia ) that Amendment No. 38 was made without a saving provision.
(d) The circumstances were exceptional and beyond the control of the applicant, but were within the control of the council.

9 Mr P R Rigg, appearing for the respondent council, relies upon the following submissions.

(a) The council’s administrative statutory function under Pt 3 of the EP&A Act is distinct from its obligations of development assessment under Pt 4 of the Act. The council has nevertheless compensated the applicant in costs for its failure to comply with the Act in relation to Amendment No. 23.
(b) Section 79C of the EP&A Act requires the consent authority, which in the present case was the Court, to take into consideration the provisions of any relevant environmental planning instrument. SEPP No. 65 was clearly a relevant environmental planning instrument which had to be taken into account; similarly, Amendments No. 35 and No. 38 to the local environmental plan had to be taken into account.
(c) The changes affected by Amendments No. 35 and No. 38, including the new height control, applied throughout the whole of the council’s area and were not site specific to just the applicant’s land.

(d) The appeal failed because of the failure of the proposed development to comply with the two-storey height control in Amendment No. 38. The appeal was thus fatally flawed in the absence of any objection to that development standard pursuant to SEPP No. 1. If the applicant had disclosed its intention not to make such an objection, the appeal could have been dismissed, thereby avoiding the hearing on 12 November 2002.

(e) The fact that the Minister for Planning in making Amendment No. 38 did not include a savings provision is not an exceptional circumstance justifying an order for costs against the council
Conclusions

10 Section 69(2) of the Land and Environment Court Act 1979 states:

(2) Subject to the rules and subject to any other Act -
(a) costs are the discretion of the Court;
(b) the Court may determine by whom, and to what extent costs are to be paid;
…

11 In Oshlack v Richmond River Council (1998) 193 CLR 72 at 81, 96 LGERA 173 at 180, Gaudron and Gummow JJ said:

The terms of s 69(2) [of the Land and Environment Court Act] contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent.

12 It has long been the practice of the court and its predecessors, the Local Government Appeals Tribunal and the Land and Valuation Court, to make no order for costs in planning and building appeals unless the circumstances are exceptional. Paragraph 10 of the Land and Environment Court Practice Direction 1993 states: “[t]he practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional”. The validity of such a practice direction is questionable (Maurici v Chief Commissioner of State Revenue (2001) 114 LGERA 376). Nevertheless, par 10 of the Practice Direction is merely declaratory of the long standing practice of the Court (McDonald Industries Pty Ltd v Sydney City Council (1980) 43 LGRA 428 at 445, Berk v Woollahra Municipal Council (1992) 78 LGERA 180, Prince v North Sydney Council (2001) 115 LGERA 65, Wilson on behalf of Gurrungar Environment Group v Bourke Shire Council (2001) 116 LGERA 287). The reason for the practice is explained in Berk (at 184): “[i]t was brought in to force to formulate a long-standing policy of the court, based on a philosophy of encouraging parties to seek review rather than discouraging them by burdening them with the risk of an award of costs against them.” Accordingly, in exercising power of the Court judicially, it is appropriate to apply the practice explained and adopted in the above-mentioned cases.

13 Although this case has had an unusually long and tortuous history, there is nothing to justify a departure from the ordinary practice of making no order as to costs. The council has already had to pay the costs of the challenge to the validity of Amendment No. 23. There is nothing, however, to suggest that the council’s attempts, ultimately successful, to introduce a height limit throughout 3(c) zones were done with the intention of frustrating the applicant’s development application. The amendment to the local environmental plan limiting the height of buildings in such zones applies generally throughout the council’s area. If, however, the amendment had been site specific than there may have been some support for Ms Duggan’s submission.

14 I also accept Mr Rigg’s submission, since it is self-evident, that the council’s statutory administrative function of plan making under Pt 3 of the EP&A Act is distinct from its function of development assessment under Pt 4 of the Act. The council should not be again penalised in costs in these proceedings because of some error or omission in the performance of its functions under Pt 3 of the Act and for which it has already been ordered to pay costs.

15 It is a notorious fact that planning instruments are made from time to time which affect appeals that are pending in the Court. It is not an exceptional circumstance when that occurs. Neither does it seem to me that the absence of a savings clause is an exceptional circumstance: I take judicial notice of the fact that many planning instruments are made which have the consequence of affecting current development applications awaiting determination and which do not contain any savings clause.

16 Neither does it seem to me that the raising by the council, at a late stage of the hearing, of Amendments No. 35 and No. 38 and SEPP No. 65 is an exceptional circumstance which would justify the making of an order for costs. Pursuant to s 79C of the EP&A Act, all relevant planning instruments must be taken into consideration. In particular, Amendment No. 35 commenced on 7 June 2002 and SEPP No. 65 commenced on 26 July 2002. I have been informed that Commissioner Watts himself expressly raised the application of SEPP No. 65 and invited the parties to consider its application to the proposed development. As noted above, it is not at all uncommon for planning instruments, which affect a development, to be made during the appeal process; and when that happens they must be taken into consideration.

17 Moreover, it was not unreasonable, in my opinion, for the council to require the attendance of the applicant’s architect for cross-examination on the final day of the hearing. It was open to the applicant to make an objection to the height control pursuant to SEPP No. 1 at any time until the conclusion of the hearing; and if it had done so then the evidence of the architect would have been relevant.

18 I find, therefore, that there are no exceptional circumstances in the present case which would justify a departure from the ordinary practice of the Court in making no order for costs in planning appeals. The applicant’s motion for costs should be dismissed with costs.

19 The council has itself applied for the costs of the hearing of the final day, 12 November 2002. The reason advanced in support of this application is that there was no need for that hearing: the application was bound to fail in the absence of any objection under SEPP No. 1. I have observed, however, that it was open to the applicant to make such an objection at any time until the hearing was concluded. I am inclined to the view that this does not amount to an exceptional circumstance justifying an order for costs. The submissions on the council’s application for costs, however, occupied an insignificant amount of hearing time. It is thus appropriate that there should be no order for costs on the council’s application.

Orders

20 The formal orders are as follows:

(1) The applicant’s notice of motion for costs dated 27 November 2002 is dismissed.

(2) The respondent’s notice of motion for costs dated 4 February 2003 is dismissed.

(3) The applicant must pay the respondent’s costs of the notice of motion for costs dated 27 November 2002.

I hereby certify that the preceding 20 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd.

Associate

Dated: 26 May 2003
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