Costs: Further evidence that the rules do not require change

In the two recent cases of Allen & Anor v Cairns Regional Council & Anor No. 3¹ and Ferreyra & Ors v Brisbane City Council², the Planning and Environment Court has demonstrated a reluctance to order costs in the context of declaratory proceedings against parties with non-commercial interests in the result.

The decisions show that, while the Court does have the discretion to make orders for costs³, it will not ordinarily do so unless it is satisfied that a party has acted unreasonably or for an improper purpose.

Power to award costs

The power to award costs is found in section 457(1) of the Sustainable Planning Act 2009. Section 457(2) contains a non-exhaustive list of factors the Court may consider in deciding whether or not to exercise the discretion.

Allen & Anor v Cairns Regional Council & Anor

The Applicant (Allen) operated a wholesale nursery and, in response to a show cause notice issued by the Council, filed an Originating Application seeking declarations that the existing use was lawful and that the development application for material change of use was not required.

In the proceedings, Allen successfully made out a pre-existing lawful use, and the declarations were granted. The Council supported the application in Court. The Council’s support was based on investigations carried out after the show cause notice was served. Allen and the Council sought costs against the Second Respondents (the Neighbours) who had opposed the declarations on the basis that the Neighbours unnecessarily prolonged the proceedings.

In refusing to order costs against the Neighbours, His Honour Judge Rackemann noted:

• The fact that the Neighbours were the only unsuccessful litigants was relevant, but not the most important consideration.
• The rejection of a Calderbank⁴ offer was relevant, but not fatal to the Neighbours.
• The Neighbours had no commercial interests in the proceedings, unlike Allen who sought the declarations in relation to a business operated from the premises.
• Even if the Neighbours had not contested the declarations, the declarations could not be obtained without satisfying the Court that they were necessary and appropriate.
• His Honour was not convinced that the Neighbours had acted unreasonably, either leading up to or during the proceedings.
• His Honour was not convinced that the Neighbours had no reasonable prospect of success.

Ferreyra & Ors v Brisbane City Council

This case concerned Council’s decision to approve a permissible change to the second respondent’s development approval, namely, the construction of an acoustic wall at the Fringe Bar in Brisbane City. The Applicants owned residential units across from the bar and commenced declaratory proceedings challenging the Council’s decision.

The Second Respondent was wholly successful in resisting the application, and brought a counter-claim for costs against the Applicants.

In refusing to order costs against the Applicants, Her Honour Judge Bowskill noted:

• In some cases the success of the parties will be a significant consideration, and this is particularly so in cases involving commercial competitors.
• The Applicants were motivated by concerns about the amenity of their residential units, whereas the Second Respondent, as the operator of the bar, had a commercial interest in the proceedings.
• The Applicants rejected an offer to compromise, however Her Honour was not convinced that the Applicants acted unreasonably in rejecting the offer (which involved including some glass windows in the acoustic wall).
• Although the Applicants were unsuccessful, it was not unreasonable for them to have brought the application.

Analysis

In both cases, the party seeking an order for costs relied heavily upon its complete success in the proceedings, and in both cases the Court noted that this was a relevant consideration, but not a determinative one.

Given the non-commercial nature of the interests of the challenging parties, the Court needed to be satisfied that the behaviour of the parties warranted a costs order being made against them. Such conduct was not found in either case, despite the fact that offers to settle or compromise had been rejected.

It is noted that the incoming Planning and Environment Court Act 2016 reinstates the general position that each party to a proceeding in the Planning and Environment Court must bear their own costs, unless particular circumstances apply.

Circumstances where the Court will have discretion to make an order for costs include where the Court considers the proceeding was started, or conducted by a party to the proceeding, primarily for an improper purpose, or where the Court considers a party has brought a frivolous or vexatious proceeding. The Act also identifies other exceptions to the general costs rule that deal with specific situations, such as:

• proceedings for enforcement orders (where the Court may award costs against the person to whom the order is directed); or
• if the Court declares that an owner wrongly sought the cancellation of a development approval in contravention of the owner’s consent requirement (where the Court must award costs against the owner); or
• if the Court allows an assessment manager to withdraw from an appeal (where the Court must not award costs against the assessment manager).

For more information or discussion, please contact our Planning team.

<sup>1. [2016] QPEC 25
2. [2016] QPEC 13
3. s457(1) Sustainable Planning Act 2009
4. [1975] 3 All ER 333</sup>