Amendments to the Planning and Environment Court's (Court) cost powers in Section 457 of the Sustainable Planning Act 2009 (SPA) commenced on 22 November 2012. Since their introduction, the Court has made some decisions in respect of Section 457 which illustrate the Court's new cost powers.
The previous cost power
Prior to the amendment of the cost powers in the SPA, parties in the Court generally bore their own costs which was, for many parties, one of the attractive features of litigating in the Court. For many local residents, community groups and environmental groups, this was a factor and an incentive to participate in the judicial process without fearing an adverse costs order as is the case in other courts where costs generally follow the event (e.g. the Supreme Court).
While the Court had the discretion to award costs, such as in relation to frivolous and vexatious litigants, the circumstances in which it could do so were considerably narrower than the cost powers now contained in Section 457 and, in practice, costs were rarely ordered against a party.
The new cost powers
The Explanatory Notes to the amendments to the SPA identified a number of "unsatisfactory outcomes" which included commercial competitors using the Court to delay development in the knowledge that they will not be penalised with costs yet achieve a desirable outcome, and third parties litigating on weak town planning grounds in relation to approved developments but which did not fall within the "frivolous or vexatious" category.
Under the new cost powers, the costs of a proceeding (or part of a proceeding or an application in a proceeding) are a discretionary matter for the Court and there is a range of matters to which the Court may have regard in making an order for costs. These matters now include, amongst others:
- The relative success of the parties.
- Commercial interests of the parties.
- Whether the proceeding was commenced or participated in for an improper purpose.
- Whether the proceeding was commenced or participated in without reasonable prospects of success.
- Where the Court decides that a decision in relation to a development application conflicts with a relevant instrument (e.g. a regional plan), whether the conflict rules have been satisfied (e.g. there are sufficient grounds to justify the decision despite the conflict).
- Certain changes to an application during an appeal by an appellant or submitter.
- Where the proceeding involves an issue that affects (or may affect) a matter of public interest.
- Whether a party has acted unreasonably leading up to a proceeding (e.g. not giving all the information reasonably requested by way of an information request before a decision of a development application was made).
- Certain unreasonable conduct in a proceeding (e.g. whether a party should have taken a more active part in a proceeding and did not do so).
Section 457 has also been amended so that subsection (4) provides, in summary, that despite the Court's power to award costs in Section 457(1), the parties bear their own costs of a proceeding (unless the Court orders otherwise) where parties participate early in a dispute resolution process under the Court rules' ADR provisions and the proceeding is resolved during that process or shortly after it has been finalised.
Recent cases on the new cost powers
Since the commencement of the amended cost powers in the SPA, there have been some cases which illustrate the application of the new terms of Section 457.
Cleveland Power Pty Ltd v Redlands City Council & Anor  QPEC 17
The Court's recent decision in Cleveland Power considered an application for cost orders against Birkdale Progress Association Inc (Association). Cleveland Power had obtained a development approval during an earlier appeal and then sought to make a permissible change to the approval. Even though the Association had not been a party to the earlier appeal, it sought to join the proceedings.
The Court noted that the Association's material indicated that it opposed the development approval and that its position was that the development should not have been approved. The Court dismissed the Association's application to join the permissible change proceedings.
The Court thought it significant that the rule in the Uniform Civil Procedure Rules 1999 that costs ordinarily follow the event was not adopted in Section 457 of the SPA "...notwithstanding the material widening of the discretion of this court to award costs...". It also noted that the purpose of costs orders is to compensate, not punish parties.
It was accepted by the Court that the Association had acted in the best interests of its members and probably others in the community, and had no commercial interest in the proceedings. However these matters were not determinative of the costs issue.
The Court found it clear that the Association's motive was to "...have the project derailed entirely..." rather than being concerned about the application to make permissible changes to the approval.
The Court concluded that the Association's application to be joined to the permissible change proceeding had no reasonable prospects of success and was for an improper purpose. The Association was ordered to pay Cleveland Power's costs of the application.
MC Property Investments Pty Ltd v Sunshine Coast Regional Council  QPEC 39
In this case, the Council sought costs on the basis that an application about whether a plan was "generally in accordance with" earlier plans and a pre-existing lawful use had failed completely, had no reasonable prospects of success and was to benefit commercial interests.
The Court noted that Section 457 of the SPA shifts responsibility for costs from the previous situation where each party bore their own costs, towards the civil rules that costs ordinarily follow the event. It was noted that the new cost powers have been described as a "middle ground" between the former SPA and the civil rules.
It was argued that the application was made to avoid significant costs associated with obtaining a fresh development approval, which was to benefit commercial interests. The Court noted that the Explanatory Notes indicate that the commercial interests of the parties is "most likely" intended to target commercial competitors of a developer who has been granted a permit. However, the Court declined to finally conclude this point.
The earlier judgment of the Court had concluded that the application for declarations had no reasonable prospects of success and was wholly unsuccessful. It was noted that the applicant had failed to establish any pre-existing lawful use rights and failed completely in an argument about whether a plan was "generally in accordance" with earlier plans. The Court noted that the application was "wholly unsuccessful" and that, for reasons set out in the Court's earlier judgment, the application had no reasonable prospects of success.
The applicant was therefore ordered to pay the Council's costs of and incidental to the proceeding, including the costs application.
Hoffie v Brisbane City Council & Anor  QPEC 41
This decision concerns a submitter appeal against a decision by Council to approve a development for certain material changes of use and reconfiguration of a lot.
During the proceeding, the Court had ordered the parties to attend a mediation which resulted in the parties reaching an agreement that the appeal be allowed on the basis that the co-respondent would provide amended plans to the Council in order to finalise the conditions package. The co-respondent did not provide any amended plans and subsequently advised that it did not wish to proceed with the development application. The appellants sought costs on the basis that the co-respondent had acted unreasonably in its conduct of the proceeding.
In respect of the relative success of the appeal, the Court noted that the appellant's appeal would be allowed so they "...essentially got what they set out to obtain". The Court rejected an argument by the co-respondent that the Court had not determined the merits of the appeal as the merits were determined by a mediation agreement and that:
Alternatively, the Court considered the co-respondent's decision to not proceed with the development application was "surrender" to the appellants.
In considering Section 457(4) of the SPA, the Court noted that the section refers to an agreement which remains on foot and continues or determines a development application. It found that Section 457(4) did not apply as the co-respondent had abandoned the mediation agreement and the appeal was resolved in a way not contemplated by the mediation agreement.
The final ground on which the appellants sought costs was the co-respondent's unreasonable conduct. The Court referred to the Court rules which express "...the overriding obligation of parties and the Court in facilitating resolution of proceedings". It was noted that the co-respondent did not comply with the mediation agreement and did not advise of its position until subsequent Court reviews. The appellants had participated in the mediation in good faith and had incurred costs, including those of an expert.
The Court inferred from the co-respondent's correspondence that it had not participated in the mediation in good faith and found that it had acted unreasonably. It stated that:
Given the chronology of events and their effect on the proceedings, the Court awarded costs in favour of the appellants and noted that costs of only the latter part of the proceeding would not be just or appropriate.
Points for parties litigating in the Court
Parties who litigate in the Court need to be aware that the general rule is no longer that parties bear their own costs. It is apparent from the recent cases that:
- The Court will closely examine the conduct of parties during a proceeding;
- A proceeding in the Court must have real prospects of success and not be for an improper purpose;
- Parties must ensure that they are satisfied with a mediation agreement before signing it, as an attempt to resile from such an agreement may have cost consequences (in addition to other possible enforcement options);
- Parties must not act unreasonably during proceedings; and
- Once proceedings have been commenced, parties should participate early in mediation under the Court rules and do so in good faith and on proper authority (which is already a matter prescribed by the Court rules).
We will follow with interest the Court's decisions in relation to the new cost powers as there are still many judicially unexamined aspects of Section 457.
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