There can be serious cost consequences in Class 4 appeals to the Land and Environment Court.

The recent decision in Joseph v Kiama Municipal Council and Ors [2025] NSWLEC 7 sheds light on the principles governing cost orders in Class 4 proceedings that are discontinued.

Background of the Case

The proceedings arose from Mr Michael John Joseph’s long-standing objections to development applications by his neighbours, the Spencers. After an earlier Class 4 proceeding in 2021, which was settled by agreement, Mr Joseph commenced a new summons in 2023 against the Council, seeking declaratory and consequential relief in relation to the Council’s assessment of a further development application.

The Council filed a motion to have the summons struck out under Uniform Civil Procedure Rules 2005. In a judgment dated 22 December 2023 (Joseph v Kiama Municipal Council [2023] NSWLEC 148), the Court dismissed several of Joseph’s claims, allowing him to replead two discrete claims. However, after the Council refused the Spencers’ development application in early February 2024, Joseph discontinued the proceedings, leaving the issue of costs to be determined by the Court.

Key Legal Issues

The Court was required to determine:

1. Whether the Council was entitled to recover its costs from Mr Joseph following his discontinuance of proceedings.
2. Whether a gross sum costs order (that is, a lump sum costs order which is for a specified value) was appropriate, instead of the usual approach which requires a formal cost assessment.
3. The proportion of costs that should be awarded, given Mr Joseph’s argument that the Council’s conduct contributed to unnecessary costs.

The Court’s Decision

The Court reaffirmed the principle that “costs generally follow the event”, meaning the unsuccessful party typically has to pay the costs incurred by the successful party. Given that the Council was substantially successful in having the original summons struck out and that the proceedings were ultimately discontinued, the Court found that the Council was entitled to an award of costs.

Instead of requiring a formal cost assessment, the Court considered whether a gross sum costs order should be made under the Civil Procedure Act 2005. This approach is appropriate when:

1. An assessment would be time-consuming and costly.
2. The Court has sufficient evidence to make an informed decision on a reasonable lump sum figure.

The Court highlighted that a gross sum order is often preferable in cases involving prolonged litigation and significant cost disputes.

Arguments were put to the Court that a gross sum cost order would be inappropriate because:

1. The Council unnecessarily escalated costs by briefing multiple lawyers and external counsel.
2. The Council engaged in delay tactics, inviting litigation.
3. There was mixed success in the initial strikeout motion, justifying a discount in costs.
4. The Council failed to adhere to the Model Litigant Policy.

The Court rejected these arguments, finding that the Council’s legal costs were reasonably incurred given the serious nature of the allegations and the complexity of the proceedings. However, recognising that some aspects of the proceedings may have been disproportionate, the Court applied a discount to the total legal fees incurred.

Final Orders

The Court ordered that Joseph pay the Council a lump sum of $45,500, equating to 65% of the Council’s total legal costs, within two months of the judgment date.

Further reading

You can read the full judgment below.