Walfertan Processors Pty Limited v Upper Hunter Shire Council (No 5)

[2010] NSWLEC 109

Land and Environment Court

of New South Wales

CITATION:	Walfertan Processors Pty Limited v Upper Hunter Shire Council & Ors (No 5) [2010] NSWLEC 109
PARTIES:	APPLICANT Walfertan Processors Pty Limited FIRST RESPONDENT Upper Hunter Shire Council SECOND RESPONDENTS Darley Australia Pty Ltd William John Bourke
FILE NUMBER(S):	11319 of 2008
CORAM:	Pain J
KEY ISSUES:	COSTS :- whether fair and reasonable to order costs be paid in class 1 proceedings in exercise of court's discretion - consideration of court rule on costs in class 1 proceedings - whether either party acted unreasonably - whether applicant failed to bring forward information necessary to enable consideration of its development application - need to consider overall circumstances of litigation in determining how discretion ought be exercised
LEGISLATION CITED:	Civil Procedure Act 2005 s98 Land and Environment Court Act 1979 s56A Land and Environment Court Rules 2007 r 3.7
CASES CITED:	Currency Corporation Pty Ltd v Wyong Shire Council [2007] NSWLEC 219 Millenium Projects Pty Ltd v Baulkham Hills Shire Council [2004] NSWLEC 761 Motorplex (Australia) Pty Ltd v Port Stephens Council [No 2] [2007] NSWLEC 770 Radray Constructions Pty Ltd v Hornsby Shire Council [2006] NSWLEC 155; (2006) 145 LGERA 292 Walfertan Processors Pty Limited v Upper Hunter Shire Council & Ors (No 3) [2010] NSWLEC 28 Walfertan Processors Pty Limited v Upper Hunter Shire Council [2009] NSWLEC 1134 Walfertan Processors Pty Limited v Upper Hunter Shire Council & Ors [2009] NSWLEC 1260 Zhang v Canterbury City Council [1999] NSWLEC 209; (1999) 105 LGERA 18
DATES OF HEARING:	4 May 2010 5 May 2010
DATE OF JUDGMENT:	31 August 2010
LEGAL REPRESENTATIVES:	APPLICANT Mr A Galasso SC SOLICITOR Wotton & Kearney FIRST RESPONDENT Mr P Jayne (solicitor) SOLICITOR Sparke Helmore Lawyers SECOND RESPONDENTS Mr P Larkin with Mr C Norton SOLICITORS Halletts Solicitors

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

31 August 2010

11319 of 2008 Walfertan Processors Pty Ltd v Upper Hunter Shire Council and Ors (No 5) - Costs

JUDGMENT

1 Her Honour: The Second Respondents, Darley Australia Pty Ltd and William John Bourke, seek an order that their costs of these Class 1 proceedings be paid by the Applicant in a Notice of Motion dated 28 August 2009. The Applicant, Walfertan Processors Pty Ltd, seeks an order that its costs of these Class 1 proceedings be paid by the Second Respondents in a Notice of Motion dated 25 September 2009. Senior Commissioner Moore and Commissioner Taylor granted development consent subject to conditions to the Applicant in Walfertan Processors Pty Limited v Upper Hunter Shire Council & Ors [2009] NSWLEC 1260 (Walfertan No 2). This judgment deals only with costs in the Class 1 proceedings.

2 It is appropriate that the costs orders sought in the summonses be heard together as the evidence is the same and the parties’ arguments overlap. The Upper Hunter Shire Council (the Council) also filed a Notice of Motion seeking costs and has settled with the Applicant so that it played no part in the hearing.

3 Section 98 of the Civil Procedure Act 2005 provides that the Court has broad discretion to award costs, subject to any court rules. The Land and Environment Court Rules 2007 (the Court Rules) contain cost rules which apply. Rule 3.7(2) of the Court Rules provide that the Court may award costs in Class 1 proceedings if it considers it fair and reasonable to do so. Rule 3.7(3) of the Court Rules identifies circumstances in which costs may be awarded in the exercise of the Court’s discretion:

(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.

Judgments of Commissioners - joinder/merit appeal

4 In Walfertan Processors Pty Limited v Upper Hunter Shire Council [2009] NSWLEC 1134 (Walfertan No 1)) the Senior Commissioner made an order for joinder of the Second Respondents as parties on 27 March 2009 very shortly before the merits hearing commenced on 31 March 2009. He gave the following reasons, inter alia:

3 I am satisfied, firstly, that the test in s 39A(a) has been satisfied because the issue, although it has been addressed by the experts (and there is no suggestion that the experts have not properly and diligently conducted their evidentiary review and joint conferencing to reach that conclusion), I have material in an affidavit of Mr Cole dated 26 March 2009 which attaches information from Mr Gary Graham of ERM Pty Limited and material from Mr Adam Bishop, also of ERM Pty Limited, in which each of them expresses explicit disagreement with the conclusions that have now been the subject of the agreement between experts.

4 I am therefore satisfied that on a critical issue that had been placed in contention by the council that there is no longer an effective contradictor. It is my view that, for this issue to be sufficiently addressed in the proceedings and to enable us to consider it, there would be appropriate utility in there being not merely the contradictory evidence but the ability of a person to test that contradiction by way of cross-examination - both from the point of view of those who are represented by experts who are in agreement and also to test it by participation of an advocate on behalf of the clients whose experts are in disagreement.

5 I am satisfied (and the applicant in the proceedings does not contest) that the application for joinder, although made late, has not been made with any sense of delay in that the application for joinder has been made, I am satisfied, sufficiently expeditiously after the applicants on the motions became aware of the agreement between the joint experts on this issue, so there is no reason on the basis of delay to do that.

6 There is also no reason, in my view, to conclude that the trial will be unnecessarily delayed or significantly extended as a consequence of this joinder, if it is to be granted as I propose. The process that I propose to follow at the conclusion of this decision is to take an adjournment and permit the parties to discuss timetabling, and then recommence at 12 o’clock if necessary to discuss any matters of disagreement. I am satisfied that, as discussed during the course of the submissions to me, the trial can be managed so as to conclude with full and appropriate participation by Mr Larkin’s clients but still conclude within the three day period, and indeed there will be appropriate directions to ensure that that occurs. Equally, I am satisfied that we can make arrangements by a slightly earlier start that the experts can confer without any additional significant [sic] to the parties after the site inspection has taken place.

5 As identified in the chronology below at par 12 the hearing was extended beyond the three days initially set down, occupying eight hearing days held intermittently over a period of three months.

6 In Walfertan No 2 the Commissioners granted conditional development consent to the Applicant. At [5]-[6] the Commissioners observed:

5 During the course of the hearing, although not necessarily requiring amendments on each occasion, the work of the joint expert conferences resulted in the nature of the proposal undergoing considerable change and refinement. Indeed, it is reasonable to say that the precise form of the proposal for which consent is now sought is both much more clearly defined and significantly more environmentally improved, The effects of these changes are that the proposed environmental outcomes (planning, monitoring, mitigation of current impacts) will, if approved, result in significant environmental benefits for the residents of Aberdeen.
6 During the course of the hearing of this appeal, the proposal has evolved in a number of important aspects. The consequence of this evolution is that, if the proposal in its final form were to be approved, it is expected that it will resolve a number of long-standing adverse impacts upon a number of residents of Aberdeen and nearby locations proximal to the tannery’s effluent disposal activities.

7 They identified four remaining issues in the proceedings which included relevantly for this costs judgment at [15], [16], [17] and [19]:

15 There are, essentially, four remaining matters that we need to determine in the proceedings. If all four of these are determined in favour of the applicant, there then remains a number of conditions of consent that are in contention (although most of the conditions of consent were settled between all three parties during the final phase of the hearings.

16 The first issue, pressed by the second respondents, is the question of whether or not, as a necessary statutory precursor to considering the merits of the application, there needs to be preparation and assessment of an environmental impact statement. The second respondents asserted that an environment impact statement is required and that, since one has not been prepared, the application must be refused. The council does not support this contention.

17 The second issue, also pressed by the second respondents, is their contention that we do not have sufficient information to make a decision on the merits of the proposal. The council, as we understood it, also does not now support this position.

…

19 The fourth issue, as we understand it, is that the second respondents also say that, even if were satisfied that we had sufficient information to make a decision, we ought not approve the application on its merits. This contention, as we understood it, is also not now supported by the council.

8 At [101]-[104] the Commissioners held:

101 Whilst, at the commencement of the proceedings, it was undoubtedly the position that the state of the technical information (available from the various expert reports and able to be understood during the course of the site inspection) was seriously deficient. Indeed, the then state of the technical information was sufficiently unsatisfactory and uncertain that it would not have permitted granting consent to the development.

102 However, we are satisfied that the extensive joint conferencing that has been undertaken on a multidisciplinary basis by a range of the experts and, separately, by the odour experts on matters arising within their discipline, has cured sufficiently the significant information deficiency and likely uncertainty of future environmental impacts.

103 We should note that our examination of the various joint expert conference reports makes it clear that the experts undertook a progressive and positive evolutionary process on instructions from us covering a range of matters that needed to be considered by them. Indeed, although this process protracted the hearing, it should be evident from this decision, that conferencing has resulted in a significantly improved proposal compared to that for which approval was originally sought.

104 We should also note, in this regard, that the participation of the various experts retained by the second respondents, whilst initially resisted by the applicant, has led to those experts playing a significant and constructive role in this evolutionary process of expert opinion. What might be described as the initial agnosticism expressed by those advising the second respondents has resulted in a significant improvement of the quality of the expert material now available to us to inform our decision-making. We observe that this may not have been the resultant position had those experts are not taken part in the joint conferencing process.

Evidence

9 An affidavit of Mr Cole, the Second Respondents’ solicitor, dated 5 November 2009 sets out various steps taken in the proceedings.

10 An affidavit of Mr O’Neill, the Applicant’s solicitor, dated 15 January 2010 also sets out various steps taken in the proceedings. There is overlap between the two affidavits with differing emphasis on steps taken in the proceedings.

11 Exhibits tendered included the bundle of materials from the Class 1 appeal proceedings and the transcript of that hearing.

Chronology

12 A chronology based on one provided in the Second Respondents’ written submissions and the parties’ affidavit evidence follows.

28 August 2008 Development application submitted to Council.
23 December 2008 Class 1 application filed.
Feb-March 2009 Reports of Applicant’s experts Mr Sanders (town planner), Ms Money (effluent irrigation), Mr Baguley (agricultural), Mr Jamieson (engineer), Mr Proctor (water quality) filed. Reports of Council’s experts, Dr Taylor (water quality), Mr Casson (town planner) filed.
18 March 2009 Joint report of water quality experts (Dr Taylor, URS Australia Pty Ltd for the Council; Ms Money, Catherine Money Consulting and Mr Proctor, Umwelt Australia Pty Ltd for the Applicant) filed expressing general agreement that environmental impacts could be addressed by appropriate conditions.
19 March 2009 Joint report of planning experts (Mr Casson for Council, Mr Jamieson and Mr Sanders for the Applicant) filed.
27 March 2009 Second Respondents joined as parties pursuant to s 39A of the Land and Environment Court Act 1979. The Second Respondents rely on preliminary expert reports of Mr Graham and Mr Bishop (both from Environmental Resources Management Australia Pty Ltd) (ERM) in the joinder application.
31 March 2009 Hearing commences on-site, objector evidence taken. Applicant indicates intention to rely on Dr Holmes on air quality and odour issues.
1 April 2009 Day 2 of hearing in Sydney. Day mostly occupied by expert conferencing.

2 April 2009 Day 3 of hearing – order made that Dr Holmes (for the Applicant) provide additional information referred to in the air quality joint statement of herself and Mr Graham (for the Second Respondents). Order also made that the Applicant undertake soil testing and chemical analysis, retain an engineer to address hydraulic integrity and verify capacity of tailing dams and identify structural integrity/remedial action for Rouchel Road dams, and prepare an environmental management plan including a monitoring program and irrigation protocol. Applicant retains Mr Carr (geotechnical) and Mr Dasey (hydrologist).

21 April 2009 Second Respondents advise Applicant that have engaged Dr Hazelton (soil scientist), Dr Patterson (environmental engineer), Mr Jewell (groundwater).

30 April 2009 Applicant serves further report of Dr Holmes, Mr Jamieson on tailings dam capacity; Mr Baguley report (soils) served on 1 May 2009.
8 May 2009 All respondents write to the Applicant identifying 31 questions which Second Respondents’ two current (Mr Bishop, Mr Graham) and three new experts (Mr Jewell, Dr Hazelton, Mr Patterson) and Council’s expert (Ms Hird) say need to be provided to enable Court to have proper understanding of Applicant’s DA.
12 May 2009 Mention – joint expert conference of 12 experts directed to occur on 13 May 2009.
13 May 2009 Joint report prepared by Mr Jamieson, Ms Money, Mr Baguley, Mr Proctor, Mr Dasey, Mr Carr for Applicant, Dr Taylor, Ms Hird for the Council, Mr Bishop, Dr Patterson, Dr Hazelton, Mr Jewell for Second Respondents.
15 May 2009 Applicant advises Second Respondents that intending to rely on two further experts, Mr Lawrie and Dr Bacon.
19 May 2009 Day 4 of hearing – joint report of 13 May tendered. Two further expert reports relied on by Applicant. Court orders further conferencing of experts.
20 May 2009 Day 5 of hearing - further joint report of soil experts tendered.
21 May 2009 Day 6 of hearing - further evidence from odour experts.
25 May 2009 Odour experts agree on without prejudice conditions.
29 May 2009 Odour experts complete joint report of effluent comparison issue.
3 June 2009 Soil/water experts (except Ms Hird, Mr Lawrie and Dr Taylor) complete joint report comparing impacts of irrigating effluent waste and the waste the subject of this application.
4 June 2009 Second Respondents serve further report of Dr Bacon.
10 June 2009 Day 7 of hearing - concurrent evidence of Dr Bacon, Dr Patterson and Ms Hird.
17 June 2009 Day 8 of hearing.
16 July 2009 Parties submit joint conditions document setting out agreed conditions and areas of disagreement.
4 August 2009 Judgment delivered by Commissioners.

Second Respondents’ submissions

13 The majority (90 per cent) of the Second Respondents’ claim for costs is based on r 3.7(3)(b)(ii), 5 per cent on r 3.7(3)(b)(i) and 5 per cent on r 3.7(3)(f) of the Court Rules.

14 Rule 3.7(3)(b)(ii) (failure to provide information necessary to enable proper understanding and consideration of application) applies as the Applicant brought a defective application to Court meaning one that was not capable of being approved. This is confirmed at [101]-[104] in Walfertan No 2 (par 8 above), which finding of fact is binding on me for the purposes of this costs application. The essential basis for the Second Respondents’ costs application is that in circumstances where the Court has found that the initial application to the Court was “seriously deficient” and was incapable of approval, it is not fair and reasonable for third parties such as the Second Respondents to bear any part of the costs associated with rectifying a deficient application and bringing it up to a standard where the Court is inclined to consent to it. Rather, bearing in mind in particular the compensatory nature of costs orders, it is fair and reasonable that the Applicant who presented the “seriously deficient” proposal be required to pay the third parties’ costs of the proceedings, given that those costs were incurred in the process of obtaining an outcome of benefit to the Applicant that would not have enured had the third parties’ experts not been involved.

15 As identified in Zhang v Canterbury City Council [1999] NSWLEC 209; (1999) 105 LGERA 18 at [37], the Applicant had the onus of proving that it should obtain development consent. That means it should produce the necessary information to support its application and it failed to do so. The Applicant obtained the benefit of the work done by the Second Respondents’ experts and this should be paid by it because it was otherwise work which the Applicant ought to have carried out to support its application. This work was performed at considerable cost to the Second Respondents.

16 The Second Respondents referred to a submission by ERM dated 9 February 2009 raising deficiencies in the development application (the DA) and submitted on its behalf as part of the development assessment process. This was submitted to give notice to the Applicant of these deficiencies prior to their joinder as a party.

17 Examples of the failure to provide adequate information were detailed in the Second Respondents’ written submissions at length. Failure to provide adequate information on odour modelling which should have been part of the application before the Court was addressed at par 17-23 of the Second Respondents’ written submissions. The Applicant’s acceptance of the deficiencies was demonstrated by the odour modelling undertaken by Dr Holmes between 31 March and 21 May 2009, according to the Second Respondents.

18 There were deficiencies in information relating to the impact on soils to be assessed pursuant to the relevant Department of Environment and Climate Change (DECC) guidelines and in addressing water contamination issues. The Applicant’s written submissions at par 26 – 42 set out in detail the work carried out by the Applicant’s experts which is said by the Second Respondents to support a conclusion that there was insufficient baseline information provided. The Second Respondents’ experts provided essential information which resulted in significant changes to the proposed development, particularly by identifying limiting parameters on the proposal and establishing a detailed test regime both prior to and during irrigation. For example, the Applicant’s initial proposal involved grazing of the irrigation area (see exhibit 1, tab 11, p 2.13, par 2), however, Dr Bacon’s report of 18 May 2009 recommended that grazing not occur on the site (exhibit F, tab 5, p 7, final paragraph), a recommendation that was adopted in the final conditions. Likewise, whilst it was initially contemplated that the Manton’s irrigation area would continue to be used for irrigation of effluent (see in particular exhibit 33, par 8), the Applicant ultimately indicated on 21 May 2009, the sixth hearing day, through its senior counsel that it would accept a condition that irrigation on this area would cease once irrigation on the eastern irrigation area commenced.

19 As reflected in the statements of the Commissioners in the judgment, the effect of participation of the Second Respondents’ experts was to transform the proposal from one which, in the view of the Court, was not capable of approval as at the first day of the hearing, to one which the Commissioners approved subject to conditions. It is clear from their various remarks from the bench that the Commissioners did not consider they had before them a proposal capable of approval until very late in the proceedings.

20 The Applicant has thus profited significantly from the participation of the Second Respondents. Indeed, the Commissioners went so far as to say at [104] that a different result might have eventuated had not the Second Respondents’ experts been involved in the process. A redesign of the development has resulted in a significant benefit to the Applicant. Its proposal was amended from one which the Court would not have approved in its initial form to one which was approved.

21 Rule 3.7(3)(f)(i) of the Court Rules is relevant as the appeal was commenced when it did not have reasonable prospects of success. The Court has found that the development as initially presented to the Court was incapable of being approved, [101] Walfertan No 2:

101 Whilst, at the commencement of the proceedings, it was undoubtedly the position that the state of the technical information (available from the various expert reports and able to be understood during the course of the site inspection) was seriously deficient. Indeed, the then state of the technical information was sufficiently unsatisfactory and uncertain that it would not have permitted granting consent to the development.

22 A reason for the Second Respondents’ joinder was to allow the deficiencies in the application to be highlighted. The effect of the finding of the Court at [101] is to vindicate the position of the Second Respondents at the time of their joinder.

23 If the case had proceeded by a conventional adversarial route, it is clear that the opinion of the Commissioners was that the proposal was so deficient that it was incapable of approval and the appeal would have been dismissed. What happened instead was that once these deficiencies became apparent, the Court, exercising its broad powers in respect of Class 1 proceedings, tasked the experts of all parties (including the Second Respondents) with redesigning and refining the development to make it capable of approval.

24 Although the Applicant was, on one view, ultimately “successful” in that the appeal was upheld and it obtained a development consent, it was not a consent for the development which it originally submitted to the Council, and which was the initial subject of the appeal to the Court on the first day of the hearing. Rather, it succeeded in gaining approval for a significantly different, amended project designed with the assistance of the Respondents’ experts. The claim commenced did not in fact succeed. What succeeded was an amended proposal that was the subject of significant amounts of further evidence provided well after the hearing had commenced to rectify deficiencies identified in the Council’s Statement of Contentions, and in the ERM submission.

25 It is clear from the transcript of proceedings on 1 and 2 April 2009 that the Commissioners considered there was insufficient data provided such as baseline information to enable an assessment of impacts. This was also the view of the experts at that stage as can be seen in the experts’ reports exhibit 31 and exhibit A (in exhibit 2.2). The Commissioners discussed the need for a workplan with the parties. Whether or not these circumstances fit precisely within the ambit of r 3.7(3)(f)(i) (no reasonable prospects of success), the factual circumstance are such that it is fair and reasonable that a costs order be made.

26 Rule 3.7(3)(b)(i) (failure to provide documents required by law) applies in relation to the deficiencies in the odour evidence relied on by the Applicant. This evidence failed to comply with cl 35 Sch 3 of the Regulation (whether a proposal to amend a development is designated) and cl 2(4) Sch 1 (concerning the mandatory matters to be included in a statement of environmental effects).

27 Where a development application is amended during the course of proceedings, the Court has on occasion found that it is fair and reasonable for the amending applicant to pay the costs thrown away as a result of the amendment. See for example Millenium Projects Pty Ltd v Baulkham Hills Shire Council [2004] NSWLEC 761; Currency Corporation Pty Ltd v Wyong Shire Council [2007] NSWLEC 219; Radray Constructions Pty Ltd v Hornsby Shire Council [2006] NSWLEC 155; (2006) 145 LGERA 292; Motorplex (Australia) Pty Ltd v Port Stephens Council [No 2] [2007] NSWLEC 770. The Applicant amended its application on numerous occasions in the course of the hearing.

Applicant’s submissions

28 The Applicant should not pay the Second Respondents’ costs. It is not accurate to characterise the Applicant’s DA as defective and nor is the Court bound in this costs application by any observations of the Commissioners at [101]-[104] of Walfertan No 2. At the time of joinder of the Second Respondents just prior to the hearing there was agreement of the Council’s and Applicant’s experts on all substantive issues, evidenced in the joint report of the planners filed 19 March 2009 (Mr Casson for the Council; Messrs Sanders and Jamieson for the Applicant). The joint report of the water experts filed 18 March 2009 (Dr Taylor for the Council; Ms Money and Mr Proctor for the Applicant) also suggested general agreement about matters. That was the reason the Second Respondents were joined as a party by the Senior Commissioner on 27 March 2009 as he found there was otherwise no contradictor on the water issues, [3]-[4] Walfertan No 1.

29 The Applicant does not accept that it was necessary for additional odour modelling by Dr Holmes or that what was initially provided was not adequate. This was provided simply to respond to the issues as raised by the Second Respondents’ expert witnesses.

30 The Second Respondents should pay the Applicant’s costs. The Applicant relies on the Court Rules r 3.7(3)(a) (failure on question that was determinative of proceedings), r 3.7(3)(d) (party acted unreasonably), r 3.7(3)(e) (improper purpose) and r 3.7(3)(f) (maintenance of defence of claim that was unreasonable) as supportive of its costs application.

31 As a result of the joinder of the Second Respondents the issues in the appeal were essentially revisited afresh and greatly expanded despite the earlier agreement of the Applicant’s and the Council’s experts immediately prior to the joinder of the Second Respondents. The matter was set down for three days of hearing and at the time of joinder it was anticipated that would be sufficient time. Following that three days of hearing the matter was adjourned to 19 May 2009. Without leave, the Second Respondents’ solicitor (together with the Council) advised by letter dated 8 May 2009 that it had briefed three additional experts and posed numerous questions to the Applicant when the curricula vitae or the opinions of the new experts had not been provided to the Applicant. This was unreasonable behaviour which resulted in substantial additional costs to the Applicant which the Second Respondents ought to pay. It had to commission substantially more expert reports than was necessary in order to respond to the Second Respondents’ experts.

32 Further, the Second Respondents raised additional arguments not pursued by the Council in relation to which they were unsuccessful. The first issue was whether the proposed development was for designated development and therefore required an environmental impact statement (EIS) to be prepared before development consent could be granted. The second issue was that the Court lacked sufficient information to assess the merits of the proposals. Thirdly, they continued to oppose the grant of development consent on the merits. Substantial additional cost was incurred as a result of the need to consider these issues.

33 The Second Respondents should pay the Applicant’s costs because of their unreasonable behaviour in particular from the 8 May 2009 letter which set out a range of questions from various experts, some new, which it was expected the Applicant’s experts should answer. As a result the Applicant had to expend considerable amounts in expert fees unnecessarily and far in excess of what was originally expected at the outset of the hearing.

Finding

34 Beyond what is set out in the chronology in par 12, it is not necessary to go into further detail of the parties’ arguments and evidence of which expert did what and when in order to resolve the costs issues before me.

Should Applicant pay Second Respondents’ costs?

35 The Second Respondents submit that for various reasons the Applicant should pay all of their substantial costs in participating in this Class 1 merit appeal. The relevant cost rule, r 3.7(2) in the Court Rules is identified above in par 3. The usual rule in Class 1 proceedings is that each party should pay its own costs unless the Court considers it is fair and reasonable to order otherwise. The circumstances where the Court may consider making a costs order under r 3.7(3) of the Court Rules are not exhaustive or prescriptive. The Court must ultimately determine what is the appropriate costs order in the circumstances of each matter in the exercise of its discretion.

36 The parties’ arguments need to be assessed in the context of the proceedings as a whole. The circumstances of these proceedings which render it unlike a number of cases is that the conduct of the hearing was altered substantially by the very late joinder of the Second Respondents. The Senior Commissioner considered that joinder would not lengthen the proceedings, at that stage set down for three days (see [6] in Walfertan No 1. Ultimately the hearing was much lengthier taking 8 days heard intermittently from March to June 2009 with substantial work undertaken in between hearing dates by numerous experts in conference.

37 A number of merit matters arose for the first time in the course of the hearing as a result of the deliberation of experts including those of the Second Respondents. They only became involved as a party immediately prior to the hearing and therefore effectively at the hearing for the first time. Usually the identification of relevant issues and their discussion by experts as part of a joint conferencing process would take place as part of the preparation for a merits hearing. That process occurred before the hearing between the Council’s and the Applicant’s planning and water experts in relation to the Council’s statement of facts and contentions. This resulted in two joint reports of the planners and the water experts which considered and largely determined all the matters raised in the Council’s statement of contentions. There were no major outstanding issues as a result of that consultation process and that was the position of those parties immediately prior to the joinder of the Second Respondents. It appears therefore that the Council was generally satisfied with the application before it in light of the experts’ views expressed in the joint reports. The DA was supported by a number of documents, most relevantly a statement of environmental effects so that it is not fair to characterise the application as poorly as the Second Respondents have done.

38 The chronology in par 12 identifies in broad outline the steps taken by the parties such as the engagement of experts and when this occurred. At the first period of hearing of three days (31 March, 1-2 April 2009), two experts of the Second Respondents participated, being Mr Graham and Mr Bishop. The opinion of these two experts were relied on by the Second Respondents in the joinder application, referred to by the Senior Commissioner in Walfertan No 1 at [3]. In the course of that hearing deficiencies in the DA were identified and a workplan agreed for the future conduct of the proceedings, as encapsulated in the Court orders made on 2 April 2009. The Commissioners determined from 2 April 2009 to embark on a course of supervised consultation of experts over a lengthy period presumably instead of refusing the Applicant’s DA.

39 The Applicant prepared additional reports as required in Court orders which involved briefing two additional experts Mr Carr (geotechnical engineer) and Mr Dasey (hydrologist). The Second Respondents advised the Applicant that they intended to rely on three further experts, Dr Hazelton, Dr Patterson and Mr Jewell, by letter dated 21 April 2009.

40 Further reports were provided to the Respondents by the Applicant. These included an odour impact assessment prepared by Dr Holmes dated 30 April 2009 and a civil engineering report on the verification of trailing dam capacity prepared by Mr Jamieson dated 30 April 2009. The Applicant contests the necessity for the additional odour modelling or that there was any failure on its part to comply with relevant legislation, contrary to the Second Respondents’ submissions relying on r 3.7(3)(b)(i) of the Court Rules.

41 By letter dated 8 May 2009 a series of 31 questions was asked by the Second Respondents’ solicitors on behalf of all Respondents based on the advice of old and new experts retained by them. By letter of the same day the solicitors wrote stating that this information was necessary to enable an assessment of the proposal and referred to r 3.7(3)(b)(ii) of the Court Rules. As detailed in the chronology set out in par 12 further conferencing and preparation of expert reports took place thereafter. Twelve experts prepared a joint report on 13 May 2009. The Applicant engaged two new experts Dr Bruce and Mr Lawrie on 15 May 2009. A further five hearing days interspersed with expert conferencing took place from 19 May to 17 June 2009 as identified in par 12.

42 While the Commissioners’ judgment suggests major deficiencies in the DA in [101] these statements do not appear to be made in the context of considering the position of the Council’s and the Applicant’s expert witnesses at the time of the joinder hearing immediately before the substantive hearing was to commence. These experts essentially agreed that all issues could be addressed through development consent conditions. That is the point at which it is necessary to assess the Second Respondents’ arguments that necessary information to allow development consent to be granted was not provided by the Applicant. It is likely in the absence of the Second Respondents that the parties would have presented consent orders to the Court. The Court is not bound to approve these but I am able to infer the nature of the hearing would have been quite different in the absence of the Second Respondents’ experts given the joint reports prepared by the Council’s and the Applicant’s expert witnesses before the hearing.

43 The Second Respondents submitted that as the Applicant had benefited from their experts’ contributions and stood to gain nothing from the approval of the development they should not have to pay the cost of their involvement in the proceedings. The tenor of the submissions appeared to be that they performed a function which is usually the role of the consent authority, here the Council, to undertake. These submissions fail to acknowledge the fundamental fact that the Second Respondents chose to seek joinder as a party and thereby incur the costs of doing so when their application for joinder was successful. They did not have to do so and had no statutory function which required them to do so, unlike the Council. Contrary to the submissions of the Second Respondents that they were joined to address deficiencies in the application, the basis for joinder according to the Senior Commissioner’s judgment was that he considered it was appropriate to have a contravener in the case, see [4] in par 4.

44 There is no doubt the Second Respondents’ participation resulted in changes to the Applicant’s proposal and the Second Respondents and the Applicant must have both incurred substantial expert costs given the lengthy hearing process and conferencing of experts which took place. Joint conferencing of experts was undertaken as a result of the decision of the Commissioners to embark on that course, responding no doubt to the issues and the submissions of the parties before them. That lengthy process has resulted in a conditional grant of development consent to the Applicant. It does not follow that it is fair and reasonable that the Applicant pay the Second Respondents’ costs when the Second Respondents chose to participate fully in an extensive merit appeal process.

45 Because of the late joinder of the Second Respondents, the circumstances of the case are also different from cases referred to by the Second Respondents such as Millenium (and others referred to in par 27) where there have been amendments to a development application in the course of proceedings leading to orders for costs thrown away as a result of the amended application being awarded against an applicant. There was no formal process of amendment of the DA before the Commissioners that I have been directed to. As can occur in the course of Class 1 proceedings the proposal evolved in several respects as additional expert evidence of the Second Respondents in particular was provided. As already noted at par 37 above the process giving rise to such amendment would generally occur before a hearing commenced when parties’ experts confer.

46 Three of the four issues (issues 1, 2 and 4) which the Commissioners identified at [15]-[19] in Walfertan No 2 were matters which the Second Respondents continued to pursue, not the Council. The Second Respondents were unsuccessful before the Commissioners in relation to all three issues.

47 In light of these circumstances, particularly given the position of the Council based on its experts at the joinder application that there was no major outstanding issue with the Applicant’s application, I agree with the Applicant that there is no basis for the Second Respondents to argue that at the outset of the hearing the Applicant had failed to provide necessary information to enable development consent to be granted, a submission relying broadly on r 3.7(3)(f)(i) which refers to commencing proceedings without reasonable prospects of success. I am not bound because of the Commissioners’ statements at [101]-[104] to award costs in favour of the Second Respondents, contrary to their submissions. I must consider the circumstances of the litigation as a whole given that the Second Respondents seek all their costs of the Class 1 proceedings.

48 The Second Respondents relied largely on r 3.7(3)(b)(ii) of the Court Rules to argue that the Applicant failed to provide or unreasonably delayed in providing information necessary for a proper understanding of the DA. The circumstances outlined above do not justify an award of costs based on that sub-rule either. With the late joinder of the Second Respondent and the evidence of their experts provided for the first time to the Applicant effectively at the hearing the necessary conferencing and refinement of issues and hence amendment of aspects of the proposal took place in the course of the hearing to a far greater extent than usual. Usually that would occur before the hearing. The extensive preparation of expert reports and conferencing arose in large part because of the perceived need on the Applicant’s part to respond to the issues raised by the Second Respondents’ experts rather than in response to issues raised by the Council and its experts. While the Council’s experts had some involvement in the proceedings the majority of expert material referred to in the chronology in par 12 is that produced by the Applicant and the Second Respondents’ numerous experts.

49 In relation to r 3.7(3)(b)(i) concerning the evidence of odour impacts, there is dispute between the parties as to what was required and whether the modelling undertaken by Dr Kerry Holmes on behalf of the Applicant was necessary in order to comply with legislative requirements the Second Respondents submitted had not been complied with. In the overall context of the large volume of expert material prepared for the proceedings this is not a matter it is appropriate to single out as justifying a costs order against the Applicant, assuming that it was necessary in order to comply with the legislative requirements as submitted by the Second Respondent.

50 Taking into account all the circumstances of the proceedings, I do not consider it is fair and reasonable to order the Applicant to pay the costs of the Class 1 proceedings of the Second Respondents. The Second Respondents’ Notice of Motion should be dismissed.

Should Second Respondents pay Applicant’s costs?

51 The Applicant submitted that the Second Respondents (and the Council) acted unreasonably in asking the 31 questions in the letter dated 8 May 2009 and in the conduct of the proceedings thereafter and should pay the Applicant’s costs from that date. The involvement of the Second Respondents’ experts required substantially more work to be done by the Applicant and its experts.

52 While the last statement is correct that submission also needs to be considered in light of the overall history of the proceedings. While the process adopted by the Commissioners was longer and more expensive as a result of the input of the Second Respondents’ experts, that process has resulted in the Applicant successfully obtaining conditional development consent. Apart from noting that there was a very comprehensive process of analysis undertaken by the parties’ experts as a result of the Second Respondents’ intervention and the Applicant’s response to that, there is nothing to suggest that the steps taken by the Second Respondents suggests the joinder were so unreasonable, applying r 3.7(3)(d) and r 3.7(3)(f) of the Court Rules, that a costs order in favour of the Applicants ought be made.

53 A further reason that the Applicant should not have its costs paid by the Second Respondents are the statements of the Commissioners at [101]-[104]. These were made with knowledge of how the proceedings progressed before the Commissioners and are highly relevant to consider in relation to the Applicant’s claim for costs.

54 The claim under r 3.7(3)(e) of the Court Rules of improper purpose was based on the role of the Second Respondents and their experts in maintaining opposition to the proposal. That submission was supported by the observations of the Commissioners at [104] that the Second Respondents’ expert displayed a certain agnosticism. The history of the matter and that statement in the judgment does not disclose any improper purpose.

55 In relation to r 3.7(3)(a) of the Court Rules, the failure of the Second Respondents to succeed on issue 1 concerning whether the DA was for designated development does not justify a costs award in favour of the Applicant given the overall context of the proceedings and the observations of the Commissioners in the judgment at [101]-[104]. I do not consider it is fair and reasonable that the Second Respondents pay the Applicant’s costs of the Class 1 proceedings and the Applicant’s Notice of Motion should be dismissed.

Order

56 The Court makes the following orders:

1. The Applicant’s Notice of Motion dated 25 September 2009 seeking costs of the Class 1 proceedings is dismissed.
2. The Second Respondents’ Notice of Motion dated 28 August 2009 seeking costs of the Class 1 proceedings is dismissed.
3. The Applicant and Second Respondents are each to pay their own costs of these proceedings on costs.