Lawlink NSW: 9.4 Costs orders

Land and Environment Court - Working Party

9.4 Costs orders

Section 69(2) of the Land and Environment Court Act 1979 provides that costs are in the discretion of the Court. The Court has issued Practice Direction 1993 which states that:

“The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional.”

Recently, the Court of Appeal determined the Practice Direction 1993 amounted to a fetter on the discretion of the Court and that there was no court rule as to costs. Accordingly, the Working Party recommends that the present practice be abandoned.

The old rule was, broadly, a recognition that with respect to minor developments (being a majority of development applications brought to the Court) an application (for example, for permission to add a room to a house) might result in the whole house being sold if the application were unsuccessful and an order for costs were made. On the other hand, it is also recognised that so far as major developments were concerned, for example shopping centres and the like, the obtaining of development consent from the Court was simply a part of the process which commenced with the concept and finished with the building of the shopping centre. Thus if the Minister called in the development and after an inquiry was held and the decision was made the beneficiary would not ordinarily expect an order for costs directed to the council which opposed it. Moreover, it was generally recognised that there were grey areas between major and minor development and also that in both categories parties were sometimes being put to unjustifiable expense.

A number of submissions have been made to the Working Party to the effect that the old practice (which in any event is unenforceable) should be widened and costs should be awarded when it is just and equitable for that to happen. Without raking over old decisions of the Court (which to the extent that they relied on the old “practice” would be less than helpful) the Working Party believes that the practice should become a rule and should be expressed as follows:

“Ordinarily in planning appeals each party will pay its own costs unless the judge is of the opinion that it is fair and reasonable for one party to pay all or some of the costs of another party.”

The Working Party does not make any recommendations concerning the circumstances in which costs orders should be made. However, it has had drawn to its attention certain instances where, it is suggested, costs orders should be made. These are referred to below. They are not intended to be exclusive nor are they intended to suggest an outcome in any particular case.

The Practice Direction referred to above was developed out of recognition that if the conventional ‘costs follows the event’ rule were applied with respect to minor developments (being a majority of development applications brought to the Court) most appellants would be deterred by a prospect that if they were unsuccessful they would have to pay crippling costs of the council. Councils objected to paying any other parties’ costs upon the basis that ratepayers’ money should not be used to pay the costs of any developer. The Court recognised that there were circumstances where it was just and equitable to make an order for costs and the Practice Direction was interpreted to identify occasions when a successful party should be indemnified for being put to unreasonable expense.

9.4.1 Circumstances where consideration should be given to awarding costs

The Working Party has received many submissions which have suggested matters that may be appropriately dealt with by way of a costs order. A number of these are outlined below.

Raising unmeritorious issues

It has been suggested that:

“as a means of encouraging issues to be carefully drafted and not varied, the Court should make it clear that its practice will be to award costs in relation to issues raised and not pressed at a hearing particularly where the issue would reasonably result in an applicant retaining experts to address the issues. The costs recoverable should include experts fees unnecessarily incurred.”

Failure to place relevant material before the council

It has been suggested that there are cases where the developer fails to provide sufficient information to the council resulting in a refusal or a deemed refusal. The developer then presents this information to the Court, which had it been given to council, would have resulted in the council approving the development. If this is something that does occur, then the Working Party is of the view that the developer should be required to pay any costs incurred by the council.

Failing to provide timely responses to integrated development applications

Earlier in this report, it was noted that appeals sometimes arise because approval bodies fail to provide councils with information necessary for the assessment of integrated development applications, within the prescribed period of time (see 4.3.3 Integrated development). One way to encourage timely responses from approval bodies would be for councils to exercise their power to join such bodies as respondents in appeals. For example, if an appeal is lodged as a result of an approval body failing to provide a council with information within the required time, that body may be joined by the council as a respondent, and will potentially be liable to an adverse costs order.

Inappropriate political decision-making by councils

The practice of some councils to avoid politically sensitive decisions by leaving them for the Court to decide, is highly undesirable. This was a matter frequently raised in submissions and it has been suggested that:

“A large part of the Court’s work is a result of either politically based decisions by council or vexatious appeals by councils, developers or third party groups.

This work load could be substantially reduced by the Court more freely awarding costs. We too often see where councils use the court as a means of escaping their responsibility to make sound planning but politically difficult development decisions. Due to the costs involved many proponents who have a legitimate objection against a council decision do not have the financial ability to appeal the decision to the Court even though there may be substantial merit in their case. If costs were awarded against unsuccessful litigants in more cases the courts would not be used as a de facto consent authority and councils might take a more responsible attitude to development decisions.”

In order to eliminate this practice, the Working Party recommends that the Court award costs against a council where it becomes apparent that the council should have approved the matter and failed to do so because of inappropriate political reasons. As discussed earlier in this report (see 4.2 “Inappropriate political decision-making”) a useful indicator of an inappropriate political decision is where a council fails to take into account all relevant considerations, or takes into account irrelevant considerations.

Unmeritorious SEPP 1 applications

Where, under SEPP 1. a developer seeks dispensation from a standard and the Court considers the application to be completely without merit, then the Working Party recommends that the Court should consider awarding costs to the council. It is thought that this may help to discourage the worst abuses of SEPP 1.

Councils seeking in bad faith to have matters returned under section 82A

In some cases a council may seek to have a matter returned to the council from the Court under section 82A so that it can reconsider its decision. In situations where it is clear that the council has no intention of changing its view and merely seeks the recall as a means to delay the development, the Working Party considers that the Court should contemplate awarding costs against the council.

Repeated appeals to the Court

It has been suggested that certain developers will keep resubmitting a substantially similar development application to a council, and will appeal to the Court each time, in the hope that the development application will eventually be approved.

One suggestion to address this problem was that:

“there should be a limit to the number of DAs re-presented in Court where the DA is for the same land and essentially the same development”

There are difficulties identifying in advance what amounts to “a substantially similar development application” and whether, if it is, it should necessarily be rejected.

The Working Party is of the view that if excessive applications are unjustifiably made, it is a matter which will best be addressed by use of costs orders against the developer.

Recommendation 35: Costs orders

In planning appeals, the Court should generally make no order as to costs unless it considers that the making of such an order is fair and reasonable in all the circumstances.

Other matters

Recommendations of Independent Hearing and Assessment Panels

It has been suggested that the Court should be able to have regard to the recommendations of an Independent Hearing and Assessment Panel (‘IHAP’) in relation to the question of costs. For example, if a council has ignored an IHAP recommendation and refuses consent and later the Court grants it, the council should pay the costs. Similarly, if the recommendation of an IHAP was to refuse consent and this is accepted by the council, but the developer appeals (unsuccessfully), the developer should pay the costs.

The Working Party is concerned that this would change the nature of an IHAP, making its decisions far more binding on the council. This, in turn, could discourage councils from voluntarily setting up IHAPs. There is also a danger that increasing the power of the decision of an IHAP may make it more vulnerable to corruption, especially as IHAPs are not subject to the same degree of scrutiny as councillors. The Working Party is therefore of the view that failure to follow an IHAP recommendation should not form the basis of a costs order. It may, however, be evidence that the council made a political rather than a planning decision, or that a developer is seeking an unmeritorious application of SEPP 1.

Defending conditions

A further matter raised by Tenterfield Shire Council was that:

“in many cases, because the council as the consent authority, has given development consent subject to the proponent obtaining any necessary permits, licences, etc, it is the council that is forced to become a party to proceedings when these subsequent entitlements are challenged and as a result incur considerable costs in relation to a decision making process in which it had no direct participation.”

The Working Party notes that a council is not obliged to defend such a condition if it does not wish to, as it always has the option of joining the regulatory authority as a respondent and then filing a “submitting appearance”. It would appear that not all councils are aware of this and so the Working Party thought it may be helpful to include this advice in its report.

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most recently updated 19 September 2001