Australia: 49/14 Hydrox Nominees Pty Ltd v Noosa Shire Council [2014] QPEC 60

P&E Court Updates – October 2014

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(Rackemann DCJ - 22 October 2014)
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Planning and environment -costs – whether the respondent/council should pay the costs of the successful applicant/appellant - whether the respondent/council resisted the appeal for an ulterior purpose – whether the respondent/council had reasonable prospects of success and acted reasonably – where the respondent/council received advices and warnings as to the weakness of its case - where respondent/council refused a settlement offer contrary to advice – whether a costs order in favour of the successful applicant/appellant should be moderated

Facts: This was an Application for costs by Hydrox consequent upon its success in an appeal against Council's refusal of its development application.

The decision to refuse the development application had been made contrary to the advice of Council's Planning Officer, and also advice from an independent economist who concluded that on balance, there were net community benefits likely to accrue from the proposal which would outweigh any conflicts which may exist with the Planning Scheme.

Council's reasons for refusal had included that the proposal had the potential to adversely impact upon the economic viability of numerous existing businesses. The Council obtained subsequent advice from another economic consultant that any such impact would be at the level of private economics, and would not adversely impact upon the hierarchy of centres. That advice had been taken into account by Council in providing the reasons for refusal upon which it relied at the hearing. Those issues maintained an allegation of unplanned and unacceptable economic impacts, but deleted reference to the viability of existing businesses.

In the course of preparation for the appeal, preliminary opinions obtained from experts engaged by the Council did not suggest a strong case. Prior to the hearing, Counsel engaged by the Council provided an opinion that it had reasonable, but not good, prospects.

In their joint expert report, the parties' economic experts agreed that the proposal would positively contribute to the centre hierarchy for a range of reasons.

Mediation had been conducted. An agreement was reached whereby the Council's representative would recommend to the Council to resolve to support approval subject to the deletion of a proposed showroom component (which was ultimately an uncontroversial component). The Council did not do so.

At the hearing, the issues had involved questions of conflict with the Planning Scheme; need and benefit; economic impact; and sufficiency of grounds to warrant approval. The Court had found that there was a level of conflict; that there was a need for the proposal and its provision would be beneficial for the community; the proposal would, on balance, lead to a significant improvement in the extent and adequacy of services, even if its economic impact were to result in some store closures; and that there were sufficient grounds to approve the proposal notwithstanding conflict.

Some four months after the delivery of reasons for refusal in the proceedings, Council notified that it would contend that even if there was a need for the proposal, it was insufficient to justify approval despite conflicts, "particularly the conflict occasioned by the loss of industrial land". At the hearing though, the experts agreed that the potential loss of industrial land was inconsequential.

The economic consultant called by the Council had given evidence that it was his understanding that the Council had refused the Application on behalf of small traders within the region, and that that continued to be the real basis for Council's opposition. Hydrox submitted that this pointed to the appeal being pursued for an ulterior purpose.

Council submitted that it had acted reasonably in running what was at least a fairly arguable, rather than a hopeless, case on a legitimate planning issue of some importance.

Decision: The Court held, that the Council was to pay 85% of Hydrox's costs of the appeal, and that:

  1. The Court's discretion was open. It was to be exercised judicially, but without any presumption one way or the other. In particular, while the relative success of the parties was a relevant factor, and might, in a particular case, prove decisive, there was no presumption that costs should ordinarily follow the event.
  2. The Court was left short of being persuaded that the Council was secretly maintaining its case on the basis of a concern for which it had an insufficient evidentiary foundation, and which it had formally dropped as an issue.
  3. It was difficult to see how the economic impact issue, even in its amended form, could have justified a refusal of the application or even been a significant supporting consideration to buttress a refusal.
  4. The issues raised by the Council were, if accepted, relevant matters but were not necessarily determinative.
  5. Whilst the legitimate planning concern was said to be planning for the centre hierarchy, and while some conflict was identified, the economists had agreed that the proposal would positively contribute to the centre hierarchy.
  6. There were aspects of the appeal, or issues in it, which were either never likely to justify refusal or which were unsupported or unsupportable.
  7. The Council's case, whilst perhaps fairly arguable, was undeniably weak. Whilst there was an element of conflict with some provisions of the Planning Scheme, the case for approval notwithstanding conflict was always strong.
  8. The circumstance that the Council's prospects might be described as reasonable is relevant for the purposes of s.457(2)(d), but it neither provides an immunity from an adverse costs order nor does it render irrelevant a consideration of the relative strengths of the cases.
  9. The fact that the Applicant had a strong case for approval must have been obvious to the Council.
  10. The Court gave weight to the nature of the Council's interest in the proceeding; the issues litigated by it were bona fide matters of town planning relevance and public interest; it supported its case by evidence from independent professional expert witnesses; it had a case which was within the bounds of arguability; and its case was generally conducted in a reasonable manner.
  11. The Court also had regard to other matters, particularly Hydrox's success; the strength of its case; the circumstance that was readily apparent in the context of the advices and warnings the Councils received, not just when the development application was refused contrary to advice, but including the time it chose not to accept a settlement proposal which had been recommended by its own representative following mediation, and at all material times thereafter.
  12. On balance, the decision by the Council to put Hydrox to the expense of vindicating its strong position by a hearing justified, as a matter of fairness in the particular circumstances of this case, an order that the Council pay Hydrox's costs.
  13. The fact that the Council had been successful in demonstrating that there was some conflict with the Planning Scheme did not mean that the Council was successful, in any measure, in the appeal.
  14. The Court considered that it would be an appropriate course to moderate the costs order to some degree to take account of the fact that some time and expense was involved in Hydrox's unsuccessful attempt to deny a level of conflict.

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