Australia: Planning and Environment Court in Queensland awards costs after relevant development application is withdrawn

In brief

The case of Conias Hotels Pty Ltd & Anor v Ross Neilson Properties Pty Ltd & Ors [2017] QPEC 65 concerned an application for costs to the Planning and Environment Court made by Conias Hotels Pty Ltd and City Commercial Holdings Pty Ltd (Applicants) against Ross Neilson Properties (Respondent).

The Respondent had lodged a development application for the retention of an existing building and the construction of a mixed use high rise development. The development application included 133 car parks with vehicle access via a laneway which was encumbered by existing easements. The easements not only benefitted the Respondent but also the Applicants. The Applicants were concerned over increased traffic and congestion due to the laneway. The Applicants were also concerned that the proposed development would limit their right to develop over the easement in the future and also that the development application did not include consent from all relevant land owners.

The Applicants' commenced a proceeding by way of an Originating Application in the Planning and Environment Court on 3 March 2016.

The hearing of the proceeding was to commence on 19 May 2016 but was adjourned after the Respondent sought to raise a jurisdictional issue. The hearing was re-listed for 28 November 2016 but the Respondent was granted leave on 25 October 2016 to discontinue the Applicant's proceeding on the basis that the Respondent's development application had been withdrawn. The Applicants sought payment of their costs of and incidental to the proceeding.

The Respondent contended that the Applicants had already enjoyed success because the development application had been withdrawn and therefore an award of costs was not necessary. The Respondent submitted that the decision to withdraw the development application was not a commercial decision and had no relation to the Applicants' proceeding. The Court found otherwise. The Court held that from the evidence given, it was clearly a commercial decision to withdraw the development application.

The Court ordered that the Respondent pay the Applicants' costs of the proceeding from 19 May 2016 to 25 October 2016.

Background

The development application was made by the Respondent to the Brisbane City Council in May 2015. The proposed development involved the redevelopment of land located at 500 George Street, as a mixed use high rise development

One of the significant issues about the development application was the proposed laneway vehicle access. The proposed vehicle access to the development via a laneway was encumbered by existing easements. The Court noted that these easements benefitted the subject site, another site (referred to as Lot 1) and also land owned by the Applicants. The Applicants had concerns about increased traffic in the laneway and argued that the proposed development would limit the right to develop over the easement in the future. Furthermore, the development application failed to include the consent of the Applicants.

On 3 March 2016, the Applicants commenced proceedings challenging the validity of the development application and whether they were landowners who should have consented to the development application. The proceeding was listed for hearing on 19 May 2016 but was adjourned as the Respondent raised a jurisdictional issue and expanded the relief it sought under section 440 of the now repealed Sustainable Planning Act 2009 (SPA). The hearing was re-listed to be heard on 28 November 2016 however leave was granted on 25 October 2016 to discontinue the proceeding at the request of the Respondent as the development application had been withdrawn by the Respondent.

Relief sought by the Applicants

The Applicants sought the following relief:

  • the Respondent pay the Applicant's costs of and incidental to the proceeding; or in the alternative
  • the Respondent pay the Applicant's costs of and incidental to the proceeding; from and including 20 May 2016, or in the further alternative
  • the Respondent pay the Applicant's costs thrown away by the adjournment of the hearing on 19 May 2016.

In brief, the Applicants submitted that the following elements of the development application supported an award of costs:

  • the development application did not include all of the relevant land;
  • the development application did not include consent to making the development application from all of the owners of the relevant land;
  • the development application was not properly made.

Specifically, the Applicants sought the following relief:

  • an order pursuant to section 456(7) of the SPA that the Council and the Chief Executive cease all steps to process, assess, decide the development application;
  • an order that the development application be returned to the application stage as it was not properly made; and
  • an order that the Council, the Chief Executive, and the Respondent pay the costs of the application.

The Court found that neither the Council nor the Chief Executive were required to be involved in the proceeding concerning costs.

Reasons mitigating against adverse cost orders

The Respondent resisted the application for the costs order. The Respondent submitted that the Applicants overstated the extent to which their case enjoyed good prospects of success for the following reasons:

  • the technical evidence regarding traffic did not support their case;
  • the Applicants down played the force of the Respondent's case before the court; and
  • it was wrong to suggest that the Respondent was unreasonable in its defense as the Respondent had "forceful points to agitate in its favour which cannot be said unarguable" (see [9]).

The Respondent submitted that each party should bear its own costs of the proceeding as the matter was fairly balanced, and the early ending of the proceeding did not reflect the merits of the Respondent's case.

The Court referred to an affidavit sworn by a general manager of the Respondent. The affidavit noted that the Respondent was given advice stating that the prospects of succeeding in the proceeding were good for the following reasons:

  • the overtures to the Applicants to resolve the matter were rejected;
  • the financial environment had changed substantially and due to this, Mr Ross Neilson (director of Ross Neilson Properties) thought it may not be possible for Northbridge MJN Pty Ltd to obtain finance to acquire Lot 1 and carry out development;
  • the market for multiple dwellings had substantially softened; and
  • commercial terms could not be agreed with the Feros parties for a further option extension.

The affidavit stated that due to the fact that Northbridge MJN Pty Ltd no longer had control of Lot 1, Mr Neilson instructed the general manager to withdraw the development application.

The Court's decision

The Court ordered that the Respondent pay the Applicants' costs of the proceeding from and including 19 May 2016 to 25 October 2016. Lot 1 was owned by the "Feros parties" who were not a party to the proceeding. The Court found that no meaningful enquiries had been made by the Respondent to ascertain the likelihood of financing the purchase of Lot 1. The Court noted that the Respondent had no adequate explanation regarding the finance of the Feros purchase and the affidavit of the Respondent's general manager provided no reasonable defense. The Court further established that the evidence given by the general manager concerning the "softening of the market" was less than persuasive.

The Respondent contended that the Applicants had enjoyed success by default due to an event which was not connected to the proceeding and therefore an order of costs was not justifiable. Furthermore, the Respondent stated that the development application was withdrawn due to the fact that the Respondent no longer controlled the land the subject of the development application and that the decision to withdraw was "unrelated to the merits of the Applicants' proceeding" (see [22]). The Court rejected this submission. The Court noted that the "event" that resulted in the development application being withdrawn was clearly showcased in the general manager's affidavit, being that the Respondent made a commercial decision to not continue with the proposed development. The Court found that the proceeding came to end due to a "self-interested commercial decision", and the Court could not see a reason to deny the Applicants' costs.

Conclusion

The Court stated that the discretion to award costs under section 457 of the SPA is "an open one and is not to be approached either on the basis that there is a presumption that costs follow the event or on the basis that there is some form of underlying presumption that each party should bear their own costs" (see [18]). The Court also referred to His Honour Justice McHugh's statement in Oshlack v Richmond River Council [1998] HCA 11 that "costs are not awarded to punish the unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party" (see [19]).

The Court could see no reason as to why the Applicants should be denied a favourable cost order. The Court ordered that the Respondent pay the Applicants' costs of the proceeding from and including 19 May 2016 to 25 October 2016.

Application to the Planning Act

The costs powers under section 457 of the SPA which were considered by the Court in this case were amended on 19 May 2017. These amended costs powers are now provided for under section 59 of the Planning and Environment Court Act 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Ian Wright
Ella Hooper
 
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