Meriton Apartments Pty Ltd v Council of the City of Sydney (No 2)

[2010] NSWLEC 63

Reported Decision: 174 LGERA 178

Land and Environment Court

of New South Wales

CITATION:	Meriton Apartments Pty Ltd v Council of the City of Sydney (No 2) [2010] NSWLEC 63
PARTIES:	APPLICANT Meriton Apartments Pty Ltd RESPONDENT Council of the City of Sydney
FILE NUMBER(S):	10310 of 2009
CORAM:	Pain J
KEY ISSUES:	COSTS :- whether fair and reasonable to award costs to applicant in Class 1 appeal challenging a condition imposing a s 94 contribution
LEGISLATION CITED:	City of Sydney Development Contributions Plan 2006 Civil Procedure Act 2005 s 98(1) Environmental Planning and Assessment Act 1979 s 94 Land and Environment Court Rules 2007 r 3.7
CASES CITED:	Aldi Foods v Holroyd City Council (2005) 142 LGERA 141 Berk v Woollahra Municipal Council (No 2) (1993) 78 LGERA 180 Maygood v City of Sydney Council [2008] NSWLEC 1112 Meriton Apartments Pty Limited v South Sydney City Council, NSWLEC, Brown C, 12 September 2001 (unreported) Quota Corporation v Leichhardt Municipal Council [1981] 45 LGERA 319 Rose Consulting Group v Baulkham Hills Shire Council (2003) 58 NSWLR 159 Sansom v Port Stephens Council (2007) 156 LGERA 125 Segal v Waverley Council (2005) 64 NSWLR 177
DATES OF HEARING:	23 March 2010
DATE OF JUDGMENT:	30 April 2010
LEGAL REPRESENTATIVES:	APPLICANT Mr D Russell QC with Mr M Seymour SOLICITOR Meriton Group RESPONDENT Mr P McEwen SC with Ms L Byrne SOLICITOR City of Sydney

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

30 April 2010

10310 of 2009 Meriton Apartments Pty Ltd v Council of the City of Sydney (No 2) (Costs)

JUDGMENT

1 Her Honour: The Applicant filed a Notice of Motion on 13 November 2009 seeking its costs of these Class 1 proceedings before the Senior Commissioner under r 3.7 of the Land and Environment Court Rules 2007 (the Court Rules). The Senior Commissioner upheld the Applicant’s appeal against the amount of s 94 contribution levied by the Council under the City of Sydney Development Contributions Plan 2006 (the s 94 plan) in relation to the Applicant’s site and reduced the amount of contribution levied. The Senior Commissioner accepted the submissions of the Applicant on the calculation of credit based on a workforce population as a necessary adjustment of the contribution amount of $5,018,529,47 levied by the Council. He also concluded that the amount of credit should be reduced from the amount of $467,462.28 sought by the Applicant to $186,984.91 because no rates were paid on the property for a certain period. The Senior Commissioner had to determine if he would apply Section 2.15 of the Council’s s 94 plan in relation to a credit based on the calculation of past workforce numbers. That section of the s 94 plan provided a cut off time for the calculation of credits by defining a population for a site based on the 2001 Commonwealth census. He did not apply that cut-off provision but rather adopted the calculation contended for by the Applicant.

2 Rule 3.7 relevantly provides:

( 1) This rule applies to the following proceedings:
(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,
(b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents:
(i) that are required by law to be provided in relation to any application the subject of the proceedings, or
(ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application,
(c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings,
(d) that a party has acted unreasonably in the conduct of the proceedings,
(e) that a party has commenced or defended the proceedings for an improper purpose,
(f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where:
(i) the claim or defence (as appropriate) did not have reasonable prospects of success, or
(ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.
Applicant’s submissions

3 The Applicant argues that the Council proceeded with its opposition in the appeal before the Senior Commissioner when it had no reasonable prospects of success (r 3.17(3)(f)(i)) and acted unreasonably (r 3.17(3)(f)(ii)). The outcome of the proceedings whereby the Senior Commissioner adopted the Applicant’s workforce population numbers at [58] in Meriton Apartments Pty Limited v Council of the City of Sydney [2009] NSWLEC 1336 (Meriton No 1) and did not apply the arbitrary cut-off date in the s 94 plan based on Section 2.15 (which refers to 2001 census data) follows similar findings in Meriton Apartments Pty Limited v South Sydney City Council, NSWLEC, Brown C, 12 September 2001 (unreported) (Meriton v South Sydney) and Maygood v City of Sydney Council [2008] NSWLEC 1112 at [82]. The Court in those matters had determined that Section 2.15 of the s 94 plan would produce unreasonable results.

(2005) 64 NSWLR 177 at [56] states that consistency in administrative decision-making is a desirable feature of the planning system in NSW. While the Court could have taken a different view to that in Maygood the statements of Santow JA in Rose Consulting Group v Baulkham Hills Shire Council (2003) 58 NSWLR 159 at [37] apply:

It does not follow that where a contributions plan mandates an unreasonable result in terms of conditions, the effect of a court amending or disallowing a condition is to amend the contributions plan itself. That is not the result at all. What it does mean is that until the contributions plan is amended, anyone who challenges such a condition is likely to succeed. It is of course open to a council to avoid that result by adopting a new and sensible contributions plan provided it follows the mandated process including public participation; see Pearlman J in Stockland (Constructors) Pty Limited v Baulkham Hills Shire Council [1996] NSWLEC 185.

5 The Council has not amended the s 94 plan and has continued to apply a benchmark in Section 2.15 which this Court has found is not appropriate in two prior proceedings and again in this case. Continued reliance on the same benchmarking provisions in the s 94 plan is unfair on the Applicant and is unreasonable behaviour by the Council. The Applicant is in the position of having to educate the Council about the essential principles underpinning s 94 of the Environmental Planning and Assessment Act 1979 (the EP&A Act), see Spigelman CJ in Sansom v Port Stephens Council (2007) 156 LGERA 125 at [72] concerning the purpose of planning appeals being the improvement of the quality of decision-making.

6 The Council’s statutory obligation to only impose a condition in accordance with the s 94 plan ended when the Applicant’s appeal was instituted. The Council was then under an obligation to assist the Court in determining the correct decision on the material available yet it persisted in its claim that the arbitrary cut off date in the s 94 plan was reasonable. It ignored earlier decisions of the Court in doing so. These circumstances justify an award of costs in the Applicant’s favour.

Council’s submissions

7 The Council argued that it did not act unreasonably and its case did not lack reasonable prospects of success. The factual circumstances of both Meriton v South Sydney and Maygood are different to this case and the outcome in those matters has no precedence for this case. It was unnecessary to refer to Maygood in any event as that largely adopted the approach of Brown C in Meriton v South Sydney.

8 The Council was bound to apply the s 94 plan by s 94B(1) of the EP&A Act. Only the Court can vary a condition as provided for under s 94B(3). The Council’s case was arguable and supported by the expert opinion of Mr Hewetson, the Council’s town planner (bundle p 797, 831-835). There were legitimate issues of merit which were properly arguable, see for example Quota Corporation v Leichhardt Municipal Council [1981] 45 LGERA 319 at 325, Aldi Foods v Holroyd City Council (2005) 142 LGERA 141, and Berk v Woollahra Municipal Council (No 2) (1993) 78 LGERA 180 at 184.

9 Rose Consulting which the Applicant relies on was an appeal from a challenge to the contents of a s 94 plan. Santow JA was addressing the circumstance that if there was a challenge to a plan on the basis of a similar challenge in the past that subsequent challenge would be likely to succeed. This case does not concern a challenge to the contents of a s 94 plan but was a merit assessment of a condition of development consent which concerned a s 94 contribution.

10 The Council also relied on an affidavit of Mr Hawkes, solicitor, which sets out correspondence between the parties, including offers of settlement. As I do not consider this material is particularly relevant to the question of costs I will not detail this further. The focus of my analysis is the conduct of the parties in the contested proceedings before the Court.

Finding

11 Section 98(1) of the Civil Procedure Act 2005 (the CP Act), which concerns costs, is applied subject to the Court Rules, including r 3.7. Costs in Class 1 proceedings are usually approached on the basis that each party pays its own costs. As stated in r 3.7(2) the Court can award costs if it considers it is fair and reasonable to do so. Rule 3.7(3) sets out circumstances where the Court may consider awarding costs in favour of a party. The Applicant relies particularly on r 3.7(3)(f)(i) and (ii) that the Council proceeded with its opposition in the appeal without any reasonable prospect of success and acted unreasonably in doing so.

12 Generally the decisions of commissioners in merit matters, which include challenges to the calculation of s 94 contributions under a s 94 plan, are not binding on other commissioners. The Senior Commissioner was not bound by the earlier decisions in Meriton v South Sydney and Maygood. He referred to both these decisions at [25] – [29] of Meriton No 1 and noted that were he not to follow the reasoning in them he is obliged to provide cogent reasons for not doing so. He determined that he would not apply the arbitrary cut-off in Section 2.15 based on there being no population on the site at the date of the 2001 census at [45]-[49]. He referred to the approach in Meriton v South Sydney where Section 2.15 of the s 94 plan was not applied in this regard. He accepted at [55] that it was possible in future proceedings it would be appropriate to consider whether an absolute cut-off should be applied but that would depend on the facts and circumstances applying to a particular site.

13 There is nothing in the Senior Commissioner’s judgment which suggests there was any unreasonable behaviour by the Council in the proceedings and the Applicant’s submissions do not raise any unreasonable behaviour beyond the fact that the Council continues to press its view about the calculation of workforce numbers based on the relevant section of its s 94 plan. That view was not accepted by the Senior Commissioner as he is entitled to do.

14 Segal was relied on to support a submission that consistency in decision making is desirable, as it is, but that decision was considering the duty of commissioners to give reasons. That is not the issue that arises in this application for costs.

15 Rose Consulting, relied on by the Applicant, was an appeal to the Court of Appeal from a decision of Talbot J on a question of law determined in a s 56A appeal from a commissioner considering whether conditions were reasonable under s 94(12) (predecessor to s 94B(3)). The passage relied on by the Applicant is not authority that the Council acted unreasonably because it failed to amend the s 94 plan after Maygood and Meriton v South Sydney and continued to apply the approach in Section 2.15 of the s 94 plan in these proceedings.

16 The cases referred to by the Council (par 8 above) consider costs in the context of merit assessments in Class 1 proceedings under earlier, but now repealed, applicable costs provisions such as s 69 of the Court Act and Part 16 r 4 of the Court Rules. They are examples of circumstances where the Court has on occasion ordered or refused to order costs in Class 1 proceedings and do not have any direct application to this matter. The relevant costs rule is now as set out in Rule 3.7. As submitted by the Council provided that issues of merit that are arguable are raised the Court will be unlikely to award costs against an unsuccessful party. Ultimately each case must depend on its own facts. I consider that this is such a case in relation to the Council’s approach, which was supported by evidence and was clearly arguable.

17 The Applicant has not established that the circumstances referred to in r 3.7(3)(f)(i) or (ii) apply to the conduct of the Council in these Class 1 proceedings. I do not consider that it is fair and reasonable that I award costs in the Applicant’s favour. Accordingly, I consider each party should pay its costs of the Class 1 proceedings before the Senior Commissioner. The Applicant is unsuccessful on its Notice of Motion seeking costs.

Order

18 The Court makes the following orders:

1. The Applicant’s Notice of Motion filed 13 November 2009 is dismissed.
2. Costs of the Notice of Motion are reserved.