Stanton Dahl Architects v Penrith City Council

[2010] NSWLEC 156

Land and Environment Court

of New South Wales

CITATION:	Stanton Dahl Architects v Penrith City Council [2010] NSWLEC 156 This decision has been amended. Please see the end of the judgment for a list of the amendments.
PARTIES:	APPLICANT: Stanton Dahl Architects RESPONDENT: Penrith City Council
FILE NUMBER(S):	10537 of 2008
CORAM:	Biscoe J
KEY ISSUES:	COSTS :- class 1 development appeal - whether applicant should pay respondent's costs of a hearing caused by amended plans responsive to commissioners' “amber light”.
LEGISLATION CITED:	Civil Procedure Act 2005, s 98 Environmental Planning and Assessment Act 1979, ss 79C, 97B Environmental Planning and Assessment Regulation 2000, Sch 7, cl 2 Land and Environment Court Rules 2007, r 3.7(2) Sydney Regional Environmental Plan No 13 – Mulgoa Valley, cl 20(3)(b)
CASES CITED:	Ali v Liverpool City Council [2009] NSWLEC 1327 Alnimat Pty Ltd v Sutherland Shire Council [2010] NSWLEC 1038 Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, 158 LGERA 224 George v Palerang Council [2010] NSWLEC 1189 Grant v Kiama Municipal Council [2006] NSWLEC 70 Hakim v Canada Bay City Council [2008] NSWLEC 118 Marinkovic v Rockdale City Council [2006] NSWLEC 601 Marinkovic v Rockdale City Council [2007] NSWLEC 71, 151 LGERA 385 Motorplex (Australia) Pty Ltd v Port Stephens Council (No 2) [2007] NSWLEC 770 Port Stephens Council v Sansom [2007] NSWCA 299, 156 LGERA 125 Stanton Dahl Architects v Penrith City Council [2009] NSWLEC 1204 The Benevolent Society v Waverley Council [2010] NSWLEC 1082
DATES OF HEARING:	6 August 2010
DATE OF JUDGMENT:	17 August 2010
LEGAL REPRESENTATIVES:	APPLICANT: Mr I Hemmings, barrister SOLICITORS Hunt & Hunt RESPONDENT: Mr J Robson SC SOLICITORS DLA Phillips Fox

JUDGMENT:

- 10 -

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

17 August 2010

10537 of 2008

STANTON DAHL ARCHITECTS V PENRITH CITY COUNCIL
JUDGMENT

INTRODUCTION
1 HIS HONOUR

: In this Class 1 appeal against refusal of a development application in relation to a school under s 97 of the Environmental Planning and Assessment Act 1979 the appeal was upheld and development consent granted. The respondent, Penrith City Council, now seeks an order for the costs of two hearing days, on 11 and 12 March 2009, caused by amendments to plans which addressed the two presiding commissioners’ concerns.

BACKGROUND

2 The proceedings were commenced in May 2008. The applicant filed amended plans in September and December 2008. There was a five day hearing in December 2008.

3 At the conclusion of this hearing the commissioners gave preliminary oral findings that the proposed development in its current form was not acceptable to the court but that it could be amended in ways that would largely overcome their concerns.

4 On 24 December 2008 the commissioners confirmed their preliminary oral findings by making formal directions for the filing of amended plans. The required amendments included a reduction in the size of all buildings, car parks, playing fields and hard surfaces and the deletion or moving and reduction in size of a large multi-purpose hall. Material design changes were required such as minimising cut and fill and the use of podiums and including more hipped roofs and breaks in the lengths of walls.

5 On 30 January 2009 the applicant filed further amended plans which responded to the commissioners’ directions. In response, the council undertook detailed assessment of those amended plans and prepared further expert evidence in relation to heritage, planning, ecology and acoustics as required by the directions.

6 The proceedings were fixed for further hearing on 11 and 12 March 2009. At the commencement of this hearing the applicant obtained leave to rely on the 2009 amended plans.

7 On 22 June 2009 the commissioners delivered a judgment in which they indicated that certain changes and conditions were required to address their findings: Stanton Dahl Architects v Penrith City Council [2009] NSWLEC 1204. It is relevant to the applicant’s submissions before me that the commissioners said in their judgment that (a) “in the form initially presented the development had the potential to adversely affect heritage values, especially through visual impact and effect upon aesthetic value. For this reason the Court directed that a number of changes to the proposal be undertaken”; and (b) the amended proposal “enhances the heritage significance of the item and meets the test in” cl 20(3)(b) of Sydney Regional Environmental Plan No 13 – Mulgoa Valley (SREP 13): at [127] and [137]. Clause 20(3)(b) provided that:

“The consent authority may grant consent to the use, for any purpose, of a building that is an item of environmental heritage, or of the land on which the building is erected, even though the use would otherwise be prohibited by this plan, if it is satisfied that:

…
(b) the proposed use would not adversely affect the heritage significance of the item of environmental heritage.”

8 On 1 August 2009 the commissioners upheld the appeal and granted development consent.

9 The council’s unchallenged evidence is that it incurred costs of $133,616 relating to the detailed assessment of the 2009 amended plans, the preparation of evidence for the March 2009 hearing and legal representation at that hearing.

COSTS CONSIDERATIONS

10 Section 97B of the Environmental Planning and Assessment Act 1979 provides that in an appeal under s 97 “if the Court … allows the applicant to file an amended development application (other than to make a minor amendment) … the Court must make an order for the payment by the applicant of those costs of the consent authority that were incurred in respect of the assessment of, and proceedings relating to, the original development application the subject of the appeal”. However, s 97B does not apply in this case as the proceedings were commenced prior to the commencement of that section: Sch 7, cl 2 Environmental Planning and Assessment Regulation 2000.

11 The Court’s general power to award costs conferred by s 98 of the Civil Procedure Act 2005 is subject to rules of court: s 98(1). The applicable rule of court in proceedings such as these is r 3.7(2) of the Land and Environment Court Rules 2007 which is a presumptive rule that there will be no costs order:

“ 3.7 Costs in certain proceedings

…
(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 .”

(emphasis added)

12 Rule 3.7(3) provides that “circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following”. The list that follows is similar to the indicative guidelines formulated under the old rule (Part 16 r 4 of the Land and Environment Court Rules 1996) in Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] by Preston CJ, and approved by the Court of Appeal in Port Stephens Council v Sansom [2007] NSWCA 299, 156 LGERA 125 at [56]. The circumstances of the present case do not correspond with the circumstances in the list but that is not an end to the matter because the list is not exhaustive.

13 Rule 3.7 was discussed by myself in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, 158 LGERA 224 at [8] – [10]:

“[8] The new rule 3.7 replaces the former Part 16 r 4 of the Land and Environment Court Rules 1996 (NSW), which provided that in proceedings such as these ‘No order for the payment of costs will be made ... unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable’. The words ‘of the particular case’ do not appear in the new rule.
[9] In the context of the presumptive rule that there will be no order as to costs in planning appeals, the power to make a costs order is in the broadest of terms, that is, what is ‘fair and reasonable in the circumstances’. All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight. These principles were identified in the context of the former Part 16 r 4 by the Court of Appeal in Port Stephens Council v Sansom at [48], [53] and [54] and Thaina Town (On Goulburn) Pty Ltd v Sydney City Cou ncil (2007) 156 LGERA 150 at [33] and [35]. Those judgments were delivered on the same day by an identically constituted Bench of five judges. Spigelman CJ delivered the leading judgment in each case. The presence of the words ‘in the particular circumstances of the case’ in the old rule influenced his Honour to hold that a general characterisation of proceedings such as ‘merits review’ or ‘capacity’, cannot be determinative or, indeed, entitled to presumptive weight: Sansom at [60]. In the present case, there was no suggestion that the absence of these words from the new rule bears on the outcome.
[10] One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes: Sansom at [26]; Thaina at [65]. In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, that persons generally should not be discouraged from exercising their rights of appeal via the prospect of an adverse costs order: Sansom at [22]-[23]. This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation. Spigelman CJ explained this in Sansom at [71]-[74]:
71 …An appeal from a consent authority is similarly an element of the management of the scheme of the EPA Act by that authority. To treat such a review as equivalent to a lis between adversarial parties is, in most cases, a considerable oversimplification. In particular, it does not give weight to the public interest regulatory responsibilities of the consent authority, which should itself be anxious to ensure that it has made the correct decision. In such a context, characterisation of the proceedings either as merits review or as equivalent to adversarial litigation does not appear to me to be a particularly useful approach to the formulation of the judgment for which r 4(2) provides.
72 In my opinion, a significant purpose served by planning appeals is to improve the quality of the decision-making process. This is a purpose which any statutory consent authority should be presumed to be anxious to achieve as an incident of its exercise of the statutory powers which Parliament has reposed in it. Individuals and corporations who challenge such decisions do not have the same obligations. They do, however, have a legitimate expectation that the decision-making process will result in the correct or preferable decision.
73 One of the critical differences between ordinary civil litigation and planning appeals is the absence of a reciprocal relationship between the interests of the parties. They are not, or should not be, adversaries in the sense that can be said of the usual kind of civil litigation in courts.
74 Underlying Justice McClellan's approach [in Gee v Port Stephens Council (2003) 131 LGERA 325] is an assumption that each side in a planning appeal should be treated the same as a matter of fairness: whether the proceedings are classified as merits review or as raising an issue of capacity. In my opinion, a comparison of the interests to which I have referred at [71]-[73] of these reasons, suggest that an unsuccessful consent authority should be more likely to suffer an adverse costs order than an unsuccessful applicant.”

14 In Marinkovic v Rockdale City Council [2006] NSWLEC 601 there had been multiple amendments to development application plans prior to 19 September 2006. Preston CJ granted leave to rely on amended plans served on 18 September 2006 after the applicant assured the Court that they reflected the development proposed, and directed that no further amendments would be allowed without leave of a judge of the Court. His Honour determined that the applicant’s conduct had been unreasonable and had caused the council to incur a wholly unreasonable degree of costs and, accordingly, that the applicant should pay the council’s costs up to and including 19 September 2006.

15 The saga in those proceedings continued in the leading case of Marinkovicv Rockdale City Council [2007] NSWLEC 71, 151 LGERA 385. At the conclusion of the development appeal hearing the commissioner gave an interim oral judgment in which she indicated that she had certain concerns as to the development proposed in the plans then before her and that certain identified amendments should be made to address those concerns. Subsequently, two notices of motion were heard by Preston CJ: the applicant’s notice of motion for leave to serve amended plans corresponding with the matters identified by the commissioner, and the respondent’s notice of motion that the applicant pay its costs of the further hearing arising out of granting leave to amend the plans. His Honour gave leave to the applicant to amend the plans, declined to make an order for costs against the applicant, and ordered each party to pay their own costs of both notices of motion. His Honour held that amendments in direct response to a commissioner’s indication that specific amendments would address the commissioner’s concerns should be seen as part of the usual process of conducting a class 1 planning appeal: at [22]. Leave to make such amendments generally should be granted: at [14].

16 In recent years commissioners in class 1 planning appeals have consistently adopted the “amber light” approach – as it has come to be called - approved in Marinkovic 2007 of specifying amendments that would meet their concerns, thus contributing to a better community outcome: for example, George v Palerang Council [2010] NSWLEC 1189 at [16]; The Benevolent Society v Waverley Council [2010] NSWLEC 1082 at [66], [219]; Alnimat Pty Ltd v Sutherland Shire Council [2010] NSWLEC 1038 at [1]; Ali v Liverpool City Council [2009] NSWLEC 1327 at [122] (all decisions of Moore SC). The amber light approach is facilitative, providing guidance to the parties.

17 As regards costs of amber light amendments, in Marinkovic 2007 Preston CJ noted that the generation of amended plans as a consequence of an evolutionary approach involving management techniques adopted by the Court is not necessarily of itself a matter for adverse comment in respect of reasonableness in the context of a costs application: at [21]. His Honour continued at [22] – [26]:

“[22] There should be a capacity for an applicant in class 1 proceedings before the Court to amend its application to respond to evidence, including evidence of a court appointed expert, and to address concerns of the court that is hearing the appeal. A respondent council should expect that an applicant might need to respond in this way. That is to say, such amendments should be seen to be part of the usual process of conducting a class 1 appeal in this Court. The mere making of an amendment is not by itself a circumstance that always makes it fair and reasonable to make an order for costs.
[23] Of course, there must be some limit placed upon this capacity to respond to evidence and to the Court's concerns by means of an amendment. This case is a good illustration. The multiple amendments that were made by the applicant prior to 19 September 2006 is an illustration of where an applicant has stepped outside what can be reasonably expected in the usual conduct of a class 1 appeal.
[24] In Millenium Projects Pty Ltd v Baulkham Hills Shire Council [2004] NSWLEC 761 (1 December 2004), McClellan J said that amendments to plans in class 1 proceedings is an appropriate course to take where such amendments are responsive to the evidence including the evidence of court appointed experts: at [7] and [8]. McClellan J went on to say that when amended plans are allowed to be filed, councils may suffer by reason of a need to assess the amended application, with the costs which had already been incurred in assessing the original application being lost. These costs may extend to the costs of its lawyers, some of the costs of experts and also the costs of advertising the application. McClellan J said (at [9]):
... the price which an applicant can expect to pay, in circumstances where it seeks to lodge an amended application, will be an order for the costs thrown away by reason of the amendment.

[25] McClellan J determined in that case that the applicant should pay the council's costs thrown away. Those costs included half of the costs of a court appointed expert who had originally assessed the plans, which costs would be thrown away by that person having to make a new assessment of the amended plans. The costs also included a proportion of the solicitor's costs which had been incurred on the application to amend. McClellan J made an estimate of what those costs were.
[26] I do not interpret the decision of McClellan J in MilleniumProjects to lay down an inviolate rule that an order for costs should always be made whenever there is an application to amend. I do not disagree with the general statement that McClellan J has said in Millenium Projects , however, as I have said earlier in my reasons, there must be some capacity for an applicant to respond to the evidence and the concerns of the Court. This should be seen as part of the usual conduct of proceedings. Where making that amendment does lead to costs thrown away, then there may be some justification for making an order as McClellan J stated .”

(emphasis added)

18 In terms of the applicable costs rule (now r 3.7 of the Land and Environment Court Rules 2007), the following principles relating to costs of amber light amendments may be distilled from Marinkovic 2007, subject to the circumstances:

(a) where the development application did not propose an unreasonable development, the fact that a commissioner determined that, without specified amendments, the commissioner would not be minded to approve the development, does not of itself make it unreasonable for the applicant to have sought consent for the development that it did: at [18];
(b) the mere making of amber light amendments is not by itself a circumstance that always makes it fair and reasonable to make an order for costs: at [22];
(c) where amber light amendments lead to costs thrown away, then there may be some justification for making an order that the applicant pay costs thrown away by reason of the amendment: at [26];
(d) the making of amber light amendments by itself does not justify an order that the applicant pay the costs of the further hearing: at [29].

19 There have been cases where the Court has ordered the applicant to pay costs caused by amendments where the circumstances were outside what could be reasonably expected in the usual conduct of a class 1 appeal, in contrast to the circumstances of Marinkovic 2007: for example, see the Marinkovic 2006 decision and Hakim v Canada Bay City Council [2008] NSWLEC 118. In the latter case Pain J considered that the observations in Millenium (cited in Marinkovic 2007 at [24]) that costs thrown away when plans are amended are generally payable, continues to be an appropriate approach where the particular circumstances of the case warrant it.

20 In Motorplex (Australia) Pty Ltd v Port Stephens Council (No 2) [2007] NSWLEC 770 the applicant sought leave to amend its development application and class 1 application to relocate its development outside the area where a previous determination of a separate question had concluded that endangered ecological communities existed. Preston CJ granted leave to amend and ordered the applicant to pay the respondent council’s costs of the application for leave to amend and the costs of and occasioned by the amendment. It is apparent from his Honour’s reasons that he intended this order to cover costs thrown away (rather than future hearings). In that regard, his Honour found that (a) the costs of determination of the separate question had been thrown away because if the amended development had been originally proposed, there would have been no need to determine the separate question; and (b) it was likely that part of the council’s earlier costs of preparation and evidence were thrown away by reason of the amendment. He concluded that it was fair and reasonable that the council be compensated for the costs of the hearing and determination of the separate question and any other costs thrown away, the latter being a matter for assessment by a costs assessor: at [36] – [37].

21 The respondent submits that Marinkovic 2007 is distinguishable because (a) in that case the commissioner gave a preliminary judgment whereas in this case the commissioners expressed preliminary thoughts; and (b) the significant changes directed by the commissioners went to whether the jurisdiction of the Court was triggered under cl 20(3)(b) of SREP 13 set out at [7] above. I do not think that the first point is significant particularly as the commissioners made formal directions as to the amendments. As to the second point, it seems correct that the jurisdictional fact of the state of satisfaction under cl 20(3)(b) was potentially affected by the changes. However, that is insufficient in my view to distinguish Marinkovic 2007 such as to lead to an order that the applicant pay the costs of the March 2009 hearing. In that respect, I do not think it generally matters whether the dissatisfaction with the proposal which causes a commissioner to hold up an amber light arises from consideration of such a provision in a planning instrument or from mandatory considerations under s 79C of the Environmental Planning and Assessment Act or from any other relevant considerations.

22 In class 1 appeals the authorities to which I have referred draw a distinction between future costs of hearing amended development applications and costs thrown away by reason of the amendments. In the present case the applicant submits that if the respondent is entitled to any costs order (which is disputed) it is only to costs thrown away. It is possible but unclear whether any costs have in fact been thrown away by reason of the 2009 amendments. However, an order in the form that the applicant pay any costs thrown away as a result of the 2009 amendments contains its own safeguard against the applicant being liable to pay costs unless they have actually been thrown away. In the absence of agreement that would be a matter for determination and quantification by a costs assessor.

23 I am not persuaded that it is fair and reasonable in the circumstances to order the applicant to pay the respondent the costs of the March 2009 hearing. However, I am persuaded that it is fair and reasonable in the circumstances to order the applicant to pay the respondent any costs thrown away occasioned by the 2009 amendments. I would have been minded to make no order as to the costs of the respondent’s notice of motion. However, I will accede to the parties’ request that I reserve the costs of that motion because of Calderbank offers.

24 For these reasons, the orders of the Court are as follows:

1. The applicant is to pay the respondent any costs thrown away by reason of the applicant’s 2009 amendments to its development application plans.
2. The costs of the respondent’s notice of motion filed on 14 May 2010 are reserved. Any application for costs must be made within five working days by letter to the Registrar otherwise there will be no costs order.
3. The exhibits may be returned.

20/08/2010 - Juxtaposition correction "applicant" and "respondent" - Paragraph(s) 22