Ferral-Smith v Villanueva (No 2)

[2011] NSWLEC 206

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Ferral-Smith v Villanueva (No 2) [2011] NSWLEC 206
Hearing dates:	15 November 2011
Decision date:	15 November 2011
Jurisdiction:	Class 4
Before:	Biscoe J
Decision:	Declaration that development consent invalid. Order respondent council pay applicant's costs except for costs of unsuccessful notice of motion to amend.
Catchwords:	JUDICIAL REVIEW:- development consent - declaration by consent that development consent in breach of local environmental plan and invalid - consent valid until declared invalid - whether consent authority liable to pay applicant's costs - whether parties lodging development application liable to pay applicant's costs.
Legislation Cited:	Environmental Planning and Assessment Act 1979 ss 76A(1)(a) and (b), 106-109B, 122(b)(ii) Environmental Planning and Assessment Regulation 2000 cl 41 Hornsby Local Environmental Plan 1994 cll 4, 15 State Environmental Planning Policy No 1 Uniform Civil Procedure Rules 2005 r 42.1
Cases Cited:	Coalcliff Community Association Inc v Minister for Urban Affairs and Planning [1999] NSWCA 317, 106 LGERA 243 Cutcliffe v Lithgow City Council [2006] NSWLEC 463, 147 LGERA 330 Ferral-Smith v Villanueva [2011] NSWLEC 204 Iris Diversified Property Pty Ltd v Randwick City Council [2010] NSWLEC 58, 173 LGERA 240 Latoudis v Casey [1990] HCA 59, 170 CLR 534 Masterbuilt v Hornsby Shire Council [2005] NSWLEC 212
Category:	Principal judgment
Parties:	Rodney James Ferral-Smith (Applicant) Allan Miralles Villanueva (First Respondent) Aileen Lariza Villanueva (Second Respondent) Hornsby Shire Council (Third Respondent)
Representation:	COUNSEL: Ms L Byrne (Applicant) Mr P O'Brien, Solicitor (First and Second Respondents) Mr J Lazarus (Third Respondent) SOLICITORS: N/A (Applicant) Harris & Company (First and Second Respondents) Storey & Gough (Third Respondent)
File Number(s):	40881 of 2011

EX TEMPORE Judgment

1. In these judicial review proceedings the applicant claims the following declarations:

(1)   A declaration that the grant of development consent by the third respondent, Hornsby Shire Council, to DA/479/2011 in respect of land at No 6 Talbot Way, Berowa NSW, being Lot 35 in DP 270489, owned by the first and second respondents, was granted in breach of cl 15 of the Hornsby Local Environmental Plan 1994.

(2)   A declaration that the development consent granted by the third respondent to DA/479/2011 is invalid and of no effect.

1. The council, consents to that relief being granted. The other respondents, who lodged the development application, have filed submitting appearances save as to costs. They appear today only in relation to costs.

1. The land is Lot 35 in a community title subdivision DP 270489 known as the Illoura Estate. The land was previously part of La Mancha Caravan Park. Development applications in respect of the La Mancha land have been the subject of earlier proceedings in this Court: Masterbuilt v Hornsby Shire Council [2005] NSWLEC 212 (Pain J).

1. The land enjoyed existing use rights due to the previous caravan park use. On 19 October 2005 the council gave development consent to DA 957/2005 under s 108 of the Environmental Planning and Assessment Act 1979 affecting a change to a conforming use, being residential subdivision under community title legislation.

1. The applicant makes the following submissions, with which the council concurs:

(a)   The development consent to DA 479/2011 was unlawfully granted in the absence of an objection under State Environmental Planning Policy No 1 ( SEPP 1 ) to the breach of the floor space ratio ( FSR ) development standard in cl 15 of the Hornsby Local Environmental Plan 1994 ( LEP ): see cl 4(5).

(b) The land is zoned Residential AS (Low Density - Sensitive Lands). Dwelling-houses are permitted with consent in that zone and the nominated FSR is 0.4:1. The development the subject of the development consent would result in a building that exceeds the FSR standard. The assessment of that building is that it will have an FSR of 0.65:1. In the absence of a SEPP1 objection the council is not empowered to grant consent to a development application that would result in a breach of a development standard stipulated in an environmental planning instrument because to do so would result in a breach of the EPA Act ss 76A(1)(a) and (b) and 122(b)(ii).

(c) The council officer assessing the development application relied on existing use rights under Pt 4 Div 10 (ss 106 - 109B) of the EPA Act to dispense with the strict application of the requirements of the LEP. This is apparent from the council officer's assessment report. However, the provisions of the EPA Regulation 2000, which are referred to in s 108(3) of the EPA Act as the "incorporated provisions", were substantially amended in 2006 such that the council officer's reliance on existing use rights was erroneous. In Iris Diversified Property Pty Ltd v Randwick City Council [2010] NSWLEC 58, 173 LGERA 240 Pain J held that on the proper construction of s 108(3) and cl 41(1)(d) the provisions of an environmental planning instrument that impose a development standard necessary to be complied with before granting consent to a particular form of permissible development are not provisions that derogate from the incorporated provisions: at [50]. Her Honour observed that the provisions that imposed the development standard that must be complied with are amenable to an objection under SEPP1 but that a development application cannot be determined by a council in the absence of a SEPP1 objection: at [53].

1. I accept the submission and propose to make the declarations referred to at the commencement of this judgment.

COSTS

1. The applicant seeks a costs order against all the respondents on the basis of the general rule that costs follow the event in proceedings such as this under r 42.1 Uniform Civil Procedure Rules 2005, which provides:

"42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."

1. It was necessary for the applicant to bring these proceedings because a development consent remains valid until a Court declares it to be invalid: Coalcliff Community Association Inc v Minister for Urban Affairs and Planning [1999] NSWCA 317, 106 LGERA 243 at [83].

1. I turn first to the application for costs against the first and second respondents, who lodged the development application.

1. On 5 September 2011, prior to the commencement of the proceedings, the applicant wrote to the first respondent indicating that legal advice had been received to the effect that there may have been some irregularities in the process leading to approval granted by the council, and that if those irregularities were established then they may render the consent void and of no effect. A written undertaking was sought not to commence excavation or building work until after the expiration of four days from receipt of a written notification of intention to build. Written communications between the applicant and those respondents followed. However, at no stage prior to commencement of the proceedings on 27 September 2011 was a ground of invalidity identified to any of the respondents.

1. The case is concerned with an error by the council. The first and second respondents filed a submitting appearance at an early stage and have not taken an active part in the proceedings. In my opinion, no order for costs should be made against them.

1. I turn to the application for costs against the council.

1. The council makes the following submissions.

1. First, the proceedings having been commenced on 27 September 2011, the council on 30 September 2011 indicated to the applicant that it might concede that the consent was invalid. On 27 October 2011 council notified the applicant that it would make that concession. The council submits that, in those circumstances, there should be a substantial discount on the costs that the council would otherwise be ordered to pay. The council draws an analogy with the discount on sentence in criminal proceedings where there has been an early plea of guilty. The applicant suggests that the discount, in the circumstances of this case, should be 50 per cent.

1. I reject the submission. In my view, the criminal sentencing analogy is inapt. Criminal sentencing is concerned with punishment. Costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Latoudis v Casey [1990] HCA 59, 170 CLR 534.

1. The consequence of accepting the council's submission would be that an applicant who is obliged to come to the Court for declaratory relief to have a development consent declared invalid, would be substantially out of pocket for its costs because the council conceded at a relatively early point that it had made an error. In principle, such a result is unacceptable. The council draws attention to my judgment in Cutcliffe v Lithgow City Council [2006] NSWLEC 463, 147 LGERA 330: nothing there is contrary to what I have just written.

1. Secondly , the council submits that there should be taken into account the fact that the applicant did not specifically identify a ground of challenge to validity prior to commencing the proceedings. That seems to have been at least in part because of circumstances which arose whereby the applicant had to come to Court to seek an urgent interlocutory injunction to restrain the carrying out of development on the land. There also has to be taken into account that the applicant in any event had to come to Court in order to have the consent declared invalid. In the circumstances, I do not think that the consideration to which the council refers is sufficient to qualify the general rule that costs follow the events.

1. Finally, the council submits that it should have its costs of a motion by the applicant to amend its summons, which I heard and dismissed last Friday. On that occasion the applicant moved to amend the summons by adding:

(a)   as an additional ground of challenge to validity that the development consent was by a council officer without delegated power to grant such a consent;

(b)   a prayer for a declaration that a council resolution of November 2005 is valid. That resolution is to the effect that all development applications to dwelling-houses and the subject community title subdivision be referred to council for determination;

(c)   a prayer for an order restraining the council for deciding any development applications on lots created by a 2005 subdivision development approval in respect of certain land at Berowra otherwise than in accordance with that resolution.

1. The amendment motion was unsuccessful for the reasons given in the judgment I delivered on that day: Ferral-Smith v Villanueva [2011] NSWLEC 204. As explained in that judgment, the attempt to add an additional ground of challenge to the validity of the subject development consent was defused by the council's submission that it was futile to add the delegation point as a further ground because the parties had agreed that it was invalid on the existing ground, and by the council's acknowledgment that if the Court were not satisfied as to invalidity at the hearing today then the council would not stand in the way of the applicant amending to add the delegation point as a second ground of challenge to validity. The applicant perceived that the delegation point was relevant to a new development application by the second and third respondents which was now supported by a SEPP1 objection. However, that was countered by an affidavit of the council's solicitor served on the applicant on the preceding evening in which he advised that this new development application would in fact be determined at a full council meeting.

1. On the evidence now before me, there appears to have been some change of position by the council in communications between the lawyers on the afternoon or evening of Thursday 10 November. As at 5.21 pm the council was proposing by email orders for an amended defence and evidence on the assumption that the applicant would be granted leave to amend and that the hearing date today would be vacated. However, shortly thereafter the applicant was informed that the council opposed the amendment. The council had earlier suggested that any application to amend be made at the hearing today. The reason that the applicant listed the amendment application for hearing last Friday was to minimise or avoid the cost of the adjournment. If it had been left until today, then it may have been difficult to say that it would have added significantly to costs.

1. Nevertheless, the applicant was unsuccessful on the amendment application.

1. In my judgment, in the circumstances, it is appropriate to order that the council pay the applicant's costs of the proceedings with the exception of the applicant's notice of motion to amend the summons.

ORDERS

1. The orders of the Court are as follows:

1. Declaration that the grant of development consent by the third respondent, Hornsby Shire Council, to DA/479/2011 in respect of land at No 6 Talbot Way, Berowa NSW, being Lot 35 in DP 270489 owned by the first and second respondents, was in breach of cl 15 of the Hornsby Local Environmental Plan 1994.

2. Declaration that the development consent granted by the third respondent to DA/479/2011 is invalid and of no effect.

3. No order for costs against the first and second respondents.

4. Order that the third respondent pay the applicant's costs of the proceedings with the exception of the applicant's notice of motion filed on 11 November 2011 to amend the summons.

5. The exhibits at the hearings on 11 and 15 November 2011 may be returned.

Amendments

09 February 2012 - Jurisdiction field omitted

Amended paragraphs: Cover

Decision last updated: 09 February 2012