Conias Hotels Pty Ltd v Ross Neilson Properties Pty Ltd [2017] QPEC 65 (2018) QPELR 217

PLANNING AND ENVIRONMENT COURT OF QUEENSLAND CITATION: Conias Hotels Pty Ltd & Anor v Ross Neilson Properties Pty Ltd & Ors [2017] QPEC 65 PARTIES: CONIAS HOTELS PTY LTD (First Applicant) AND CITY COMMERCIAL HOLDINGS PTY LTD (Second Applicant) AND BRISBANE CITY COUNCIL (First Respondent) AND CHIEF EXECUTIVE ADMINISTERING THE SUSTAINABLE PLANNING ACT 2009 (Second Respondent) AND ROSS NEILSON PROPERTIES PTY LTD (Third Respondent) FILE NO/S: 884 of 2016 DIVISION: Planning and Environment Court PROCEEDING: Application for costs ORIGINATING COURT: Planning and Environment Court, Brisbane DELIVERED ON: 6 November 2017 DELIVERED AT: Brisbane HEARING DATE: Application on the papers JUDGE: R Jones DCJ ORDER: 1. Ross Neilson Properties Pty Ltd is to pay Conias Hotels Pty Ltd and City Commercial Holdings Pty Ltd costs of the proceeding from and including 19 May 2016 to 25 October 2016. CATCHWORDS: COSTS – where first and second applicants bought court proceedings challenging the validity of a development -- 1 of 10 -- 2 application lodged by the third respondent – where proceedings commenced on 3 March 2016 – where proceedings listed to commence 19 May 2016 – where hearing date adjourned to 28 November 2016 – where third respondent withdrew its development application – where as a consequence on 25 October 2016 the court gave leave for the appellants to discontinue their proceedings on the limited grounds that the development application had been withdrawn – whether first and second applicants entitled to favourable costs orders as a consequence COUNSEL: Mr C Hughes QC with Mr A Skoien for the first and second applicants Mr J Lyons for the respondent Mr D Gore QC with Mr M Williamson for the third respondent SOLICITORS: Thomson Geer for the first and second applicants Brisbane City Legal Practice for the respondent Council Connor O’Meara for the third respondent [1] This proceeding is concerned with an application for costs by the first applicant, Conias Hotels Pty Ltd (“Conias”) and the second applicant, City Commercial Holdings Pty Ltd (“City Commercial”) against the third respondent, Ross Neilson Properties Pty Ltd (“RNP”). For the reasons set out below, the orders of the court are: 1. Ross Neilson Properties Pty Ltd is to pay Conias Hotels Pty Ltd and City Commercial Holdings Pty Ltd costs of the proceeding from and including 19 May 2016 to 25 October 2016. Background [2] In or about May 2015, a development application (“DA”) was made to the Brisbane City Council on behalf of RNP for the redevelopment of land located at 500 George Street, Brisbane. The proposed development involved the retention of an existing building and the construction of a mixed use high rise development comprising residential apartments, short term accommodation units and limited miscellaneous commercial uses. In total some 56 storeys were proposed involving a total of 248 -- 2 of 10 -- 3 residential dwelling units, 144 serviced apartments, 334 m2 of commercial floor space and 133 car parks. [3] Due to the physical characteristics of the site and, in particular, its frontage to George Street near the intersection with Roma Street, the sole means of vehicle access was to be via a laneway encumbered by existing easements which would have provided ingress and egress to Herschel Street. These easements benefitted not only the subject site and another site (Lot 1), but also land accommodating commercial developments owned by Conias and City Commercial. The former is a hotel of traditional character and the latter currently incorporates various uses including backpacker accommodation and bar facilities. [4] The DA as originally made did not seek the consent of or otherwise include Conias or City Commercial. Both of those land owners were, unsurprisingly, concerned about the impact of the proposed use of the laneway. In particular they were concerned that the traffic generated by the proposed development would cause unworkable congestion and be likely to limit the right to develop over the easement at some time in the future. [5] Changes to the DA were made in March 2016. Those changes included making the laneway part of the DA, but still did not include the consent of Conias or City Commercial. They commenced proceedings in this court by way of Originating Application on 3 March 2016. At the heart of the dispute was the validity of the DA and, in particular, whether Conias and City Commercial were landowners who should always have been a part of the application process and who had been unlawfully excluded from that process. -- 3 of 10 -- 4 [6] The proceeding was listed for hearing to commence on 19 May 2016 but was adjourned because RNP sought to raise a jurisdictional issue and expand the relief it sought pursuant to s 440 of the Sustainable Planning Act 2009 (SPA). The matter was relisted for hearing to commence on 28 November 2016 but, on 25 October 2016 leave was granted to discontinue the proceedings on the limited grounds that the DA had been withdrawn by RNP. Relief now sought by Conias and City Commercial [7] Conias Hotels and City Commercial seek orders that: (i) RNP pay their costs of and incidental to the proceedings or, in the alternative; (ii) RNP pay their costs of and incidental to the proceedings from and including 20 May 2016 or, in the further alternative; (iii) pay their costs thrown away by the adjournment of the hearing on 19 May 2016.1 [8] It is not in dispute that the discretion to award costs in such proceedings is that provided for pursuant to s 457 of the SPA. That section relevantly provides: “(1) Costs of a proceeding or part of a proceeding… are in the discretion of the court. (2) In the making of an order for costs, the Court may have regard to the following matters...” Thereafter a number of matters including the relative success of the parties in the litigation, the overall conduct of the parties and public interest considerations etc. are set out. [9] RNP resist any adverse costs orders on various grounds which will be discussed in more detail below but which could be broadly summarized as follows:2 “Against the background of the above it is submitted that: (a) the Applicants have overstated the extent to which their case enjoyed good prospects of success – their case had to face up to a number of difficult points, including technical evidence (traffic) which was before the Council, and to be relied upon by the Third Respondent, that did not support its case; 1 See court document 28 and Applicants’ written submissions at para 1.5. 2 Written submissions of RNP at paras 56 to 58. -- 4 of 10 -- 5 (b) the Applicants, in turn, down play the force of the Third Respondent’s case – a case which was fair and reasonable and supported by expert opinion; and (c) it is wrong to suggest that the Third Respondent was unreasonable in its defence of the proceeding – it had genuine and forceful points to agitate in its favour which cannot be said to be unarguable. Moreover, the prospects of success for each party were not that different. In an objective sense, the matter was fairly balanced. This is a compelling reason as to why each party ought bear their own costs of the proceeding. The early ending of the proceeding was simply no reflection on the relative merits of its party’s case.” [10] It was also contended that at all material time RNP acted reasonably and by way of conclusion:3 “The application for the cost of the proceeding is one based upon submissions which overstate the Applicants’ position. The submissions fail to come to grips with the obvious – the Applicants’ case faced a number of points against it that were of significant force, supported by authority and expert evidence. It was saved the need to have to litigate its case by an event which was not connected with the subject proceeding. The Applicants have therefore enjoyed, by default, success but not for any reason connected with the merits of its proceeding.” Mr Green’s reasons for not continuing the litigation [11] The relief originally sought by Conias and City Commercial was for declaratory and other relief. In particular, a declaration pursuant to s 456 of the SPA that the DA: (i) did not include all of the land that is the subject of the development application; and (ii) does not include the consent to making of the development application of all the owners of land the subject of that application; (iii) a further declaration that the development application had not been properly made under the SPA; (iv) an order pursuant to s 456(7) of the SPA that the Brisbane City Council and the Chief Executive cease all steps to process, assess and/or decide the development application; (v) an order that the development application be returned to the application stage as an application that had not been properly made; 3 Ibid, para 71. -- 5 of 10 -- 6 (vi) an order that the Brisbane City Council and/or the Chief Executive pay the costs of the application. [12] At the time of filing the Originating Application seeking the above relief, RNP was not a party. Pursuant to an order made by Judge Rackemann on 18 March 2016, RNP was served with the relevant material. Following RNP becoming a party to the proceeding, the application was relevantly amended to require the costs of the proceeding to be paid by the Brisbane City Council and/or RNP. [13] On 8 June 2016 RNP’s solicitors wrote to the solicitors acting for Conias and City Commercial setting out a number of matters in the form of a “defence”. In that document a number of allegations or assertions were made including: 4 1. This court did not have the power to grant the relief sought. 2. There was, as a matter of fact and/or law, no non-compliance with the relevant provisions of the SPA. Or, alternatively, in the event that the court was to find that the development application was not properly made on the basis of there being non-compliance that could be remedied and excused pursuant to s 440 of the SPA. [14] An affidavit was sworn by a Mr Peter Green who was the general manager/development of RNP. In his affidavit it was stated: 5 “On or about 3 October 2016, Mr Ross Neilson, a director of the Third Respondent and Northbridge MJN Pty Ltd advised me that notwithstanding the advice that the Third Respondent had received that its prospects in the proceedings were good: (a) given that the overtures to the First and Second applicants to resolve the matter had been rejected; (b) the financial environment (which had changed substantially since the earlier part of the year) was such that Mr Neilson considered that it may not be possible for Northbridge MJN Pty Ltd to obtain finance to acquire Lot 1 and carry out the development on terms suitable to Mr Neilson; (c) the market for multiple dwellings had substantially softened since earlier in the year; (d) satisfactory commercial terms could not be agreed with the Feros parties for a further option extension and Mr Neilson had made the decision that it would not be prudent or appropriate to proceed with the development application. 4 Court document 28. 5 At paras 12-14. -- 6 of 10 -- 7 Thereafter given that Northbridge MJN Pty Ltd no longer had control of Lot 1, Mr Neilson instructed me to take the necessary steps to withdraw the development application forthwith. It was not until Wednesday, 5 October 2016 that I was able to communicate that instruction to Connor O’Mara, given that Michael Connor was absent from the office on a short period of annual leave…” (Emphasis added). [15] The reference to Lot 1 is relevant in this context. It was owned by the so called “Feros parties” who were not parties to the proceeding but whose land was required to facilitate the construction of the proposed development as intended. The first emphasised part of Mr Green’s assertions suggests that no meaningful enquiries had been made to ascertain the true or likely situation concerning financing the purchase of Lot 1. Discussion and conclusions [16] Neither the Brisbane City Council nor the Chief Executive are involved in any proceedings concerning costs. [17] As was recognised by Rackemann DCJ in Queensland Nickel Sales Pty Ltd v Chief Executive of Environment and Heritage Protection & Ors6 and somewhat begrudgingly, by RNP, both Conias and City Commercial have been in a very real sense successful litigants.7 [18] Of course being a successful litigant does not mean that costs must necessarily follow the event. The discretion to award costs under s 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 its own costs. 6 [2017] QPEC 55. 7 Respondent’s written submissions at para 71. -- 7 of 10 -- 8 [19] Another important consideration in deciding whether or not to make costs orders is that, generally speaking, costs are not awarded to punish, but to compensate. In Oshlack v Richmond River Council8 McHugh J relevantly said: “… costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.” [20] It was said on the part of RNP that this was not a case, as it was in Queensland Nickel Sales Pty Ltd, of it discontinuing any proceeding. In my view, nothing really turns on the distinction between a party that discontinues its proceedings (be it by way of discontinuing an application or a defence) and the withdrawal of a DA which was the substantive and underlying cause of the proceedings. In every practical sense, the end result was the same for the applicants. [21] As was identified above, it was contended on behalf of RNP that; “… (the applicants were) saved the need to have to litigate its case by an event which was not connected with the subject proceeding. The applicants have therefore enjoyed, by default, success but not for any reason connected with the merits of its proceeding.”9 [22] I cannot accept the thrust of that submission. The so-called “event” that led to RNP withdrawing its DA are those evidenced in the affidavit of Mr Green. Leaving aside any valid objections to his affidavit and taking it at face value, it still provides RNP with no reasonable defence. Even accepting the hearsay evidence, on any view of it, while it is not necessary to finally determine the matter, it would be to overstate things to say that RNP had “good” prospects. Relying on the evidence provided by Mr Green, it was also submitted on behalf of RNP that:10 8 [1998] HCA 11 at [67]. 9 Written submissions at para 71. 10 Written submissions at paras 35 and 36. -- 8 of 10 -- 9 “To say the Applicants have enjoyed success in this proceeding needs to be approached with caution. It is submitted that the so-called success falls well short of justifying an order as to costs. The Applicants’ case was never tested and did not have the support of the assessment manager, Brisbane City Council. This proceeding was discontinued because the development application the focus of the issues in dispute was withdrawn. Mr Green of Ross Neilson Properties explains this in clear terms in his affidavit sworn 10 November 2016. The simple point is that the third Respondent no longer controls part of the land that was the subject of the development application. This is why the application was withdrawn. The withdrawal of the application had nothing to do with the merits or otherwise of the Applicants’ case. The decision to withdraw the development application was based on considerations unrelated to the merits of the Applicants’ proceeding.” (Emphasis added). [23] To put it somewhat crudely, the evidence establishes that RNP made a commercial decision not to continue with the proposed development. [24] The fact that RNP no longer “controls part of the land that was the subject of the development application”, that is Lot 1, was but another consequence of RNP’s decision not to proceed with the development. I can see no good reason to deny the applicants favourable cost orders because the proceedings came to an end based on a self-interested commercial decision made on the part of RNP. In this context, as was the case concerning the potential to finance the Feros purchase, without further explanation and there was none, I found the evidence of Mr Green concerning the substantial softening of the market “since earlier in the year” less than persuasive. That evidence does not sit comfortably with RNP still maintaining a robust opposition to the relief sought by Conias and City Commercial as late as 8 June 2016.11 [25] The affidavit of Mr Green refers to an offer being made by RNP to Conias and Commercial Hotels to “settle the proceedings”.12 Usually an offer to settle would be a material consideration in determining whether or not to make cost orders. However, 11 Refer to para 13 herein. 12 At para 11. -- 9 of 10 -- 10 I was not taken to any material identifying the terms of any offer and, of particular significance, no reliance was placed on such an offer in RNP’s written submissions concerning costs.13 Accordingly, in my view, it is not necessary to consider this matter further. [26] I am prepared to approach this proceeding on the basis that RNP had at least an arguable case concerning the construction of the easement and the traffic congestion issues. However, RNP’s actions not only required the adjournment on 19 May 2016, but also introduced new issues of some complexity which then had to be addressed by the applicants. [27] There is no evidence that either Conias or City Commercial have behaved unreasonably in the proceeding, a matter acknowledged by RNP (save for asking for their costs). On balance, I can see no good reason to deny either Conias or City Commercial favourable cost orders. Accordingly, the orders of the court are: 1. Ross Neilson Properties Pty Ltd is to pay Conias Hotels Pty Ltd and City Commercial Holdings Pty Ltd costs of the proceeding from and including 19 May 2016 to 25 October 2016. 13 This matter was to be decided on the papers. -- 10 of 10 --