Allen & Anor v Cairns Regional Council & Anor (No 3) [2016] QPEC 25 (2016) QPELR 564

PLANNING & ENVIRONMENT COURT OF QUEENSLAND CITATION: Allen & Anor v Cairns Regional Council & Anor No. 3 [2016] QPEC 25 PARTIES: BARRY GORDON ALLEN and EDGEWILL PTY LTD ACN 054 606 549 (Applicant) v CAIRNS REGIONAL COUNCIL (First Respondent) and ROSANN BARNES and DARRYL BARNES (Second Respondent) FILE NO/S: OA No 97 of 2014 DIVISION: Planning and Environment PROCEEDING: Originating Application ORIGINATING COURT: Cairns DELIVERED ON: 30 May 2016 DELIVERED AT: Brisbane HEARING DATE: Written submissions 8, 10, 20, 27 July, 3 and 4 August 2015 JUDGE: Andrews SC DCJ ORDER: No order as to costs CATCHWORDS: PLANNING AND ENVIRONMENT – COSTS – Where application for a declaration that an existing use was lawful – where Calderbank offer to respondent neighbour – where the applicant and council incurred costs after the Calderbank offer – where the applicant and Council would have incurred substantial costs if the respondent neighbour had withdrawn opposition - whether respondent neighbour should pay costs of obtaining the declaration Sustainable Planning Act 2009 section 457(2) and (3) Hydrox Nominees Pty Ltd v Noosa Shire Council (No.2) [2014] QPEC 60 distinguished COUNSEL: Fantin for the applicant -- 1 of 10 -- 2 Djohan for the second respondent SOLICITORS: Williams Graham Carman Lawyers for the applicant P&E Law for the first respondent Murray & Lyons Solicitors for the second respondent [1] The issue is limited to costs. On 3 and 27 July 2015 I published reasons for decision in this proceeding. On 3 July 2015 the applicants (the nursery) successfully obtained a declaration that an existing use was lawful and did not require a development approval and a further declaration that a development application lodged by the corporate applicant was not required. The first respondent Council (the Council) had supported the nursery. The second respondents (the neighbours) had opposed the declarations and were the only unsuccessful litigants. [2] On the issue of costs, the parties sent to me: 1. The nursery’s solicitors’ letter dated 8 July 2015 applying for an order that the neighbours pay the nursery’s costs of and incidental to the proceeding; 2. The Council’s solicitors’ letter dated 10 July 2015 seeking various costs orders; 3. The nursery’s outline of submissions dated 20 July 2015 regarding costs; 4. Affidavit Douglas Boyd McKinstry sworn 20 July 2015; 5. Submissions on behalf of the Council on costs dated 20 July 2015; 6. Draft affidavit of Kate Jean McLean; 7. The neighbours’ submissions dated 27 July 2015 in reply to nursery’s submissions 20 July 2015 and Council’s submissions 20 July 2015; 8. Affidavit Martin Kevin Treston sworn 27 July 2015; 9. Submissions in reply on costs dated 3 August 2015 on behalf of the Council; 10. Affidavit Kate Jean McLean affirmed 3 August 2015; 11. Nursery’s submissions regarding costs dated 4 August 2015 in reply to the neighbours’ submissions regarding costs dated 27 July 2015. [3] The nursery seeks an order that the neighbours pay the nursery’s costs of and incidental to the proceeding as agreed or as assessed. [4] The Council seeks orders that the neighbours pay the Council’s costs of: 1. and incidental to the original application between 10 and 13 June 2014 on the standard basis, fixed in the amount of $2,000; 2. and incidental to the original application from 13 June 2014 to the conclusion of the hearing on the indemnity basis, fixed in the amount of $57,700; 3. the costs application fixed in the amount of $3,000. In the alternative the Council’s costs of: 4. and incidental to the originating application on the standard basis, fixed in the amount of $40,500; and 5. the costs application fixed in the amount of $3,000.1 [5] The neighbours seek an order that each party bear its, his and her own costs.2 1 p&e Law letter 10.7.15. 2 Second respondents’ submissions in reply dated 27 July 2015 paragraph 6. -- 2 of 10 -- 3 Statutory guidelines relevant to the issue of costs [6] The parties accept that s 457 of the Sustainable Planning Act 2009 (SPA) is a source of matters relevant for consideration on the issue of cost. Between them, the parties relied upon most of its subsections. Section 457 of SPA, so far as is relevant to the submissions of the parties, provides: 457 Costs (1) Costs of a proceeding or part of a proceeding, including an application in a proceeding, are in the discretion of the court. (2) In making an order for costs, the court may have regard to the following matters- (a) the relative success of the parties in the proceeding; (b) the commercial interests of the parties in the proceeding; (c) whether a party commenced or participated in the proceeding for an improper purpose; (d) whether a party commenced or participated in the proceed without reasonable prospects of success; (e) … (f) … (g) whether the proceeding involves an issue that affects, or may affect, a matter of public interest, in addition to any personal right or interest of a party to the proceeding; (h) whether a party has acted unreasonably leading up to the proceeding, including, for example, if the proceeding is an appeal against a decision on a development application, the party did not, in responding to an information request, give all the information reasonably requested before the decision was made; (i) whether a party has acted unreasonably in the conduct of the proceeding, including, for example— (i) by not giving another party reasonable notice of the party’s intention to apply for an adjournment of the proceeding; or (ii) by causing an adjournment of the proceeding because of the conduct of the party; (j) whether a party has incurred costs because another party has introduced, or sought to introduce, new material; (k) whether a party has incurred costs because another party has not complied with, or has not fully complied with, a provision of this Act or another Act relating to a matter the subject of the proceeding; (l) whether a party has incurred costs because another party has defaulted in the court’s procedural requirements; (m) whether a party should have taken a more active part in a proceeding and did not do so. (3) Subsection (2) does not limit the matters to which the court may have regard in making an order as to costs. … [7] Section 457 of SPA does not create a general rule that costs follow the event. It can be distinguished from the Uniform Civil Procedural Rules 1999 at r 681(1). That distinction is consistent with decisions of this court.3 The relative success of a party in a proceeding is only one relevant consideration. [8] The list of relevant matters in s 457(2) of SPA is not exhaustive. Subsection 457(3) makes this clear. For example, the Council urged that the neighbours’ rejection of Council’s Calderbank offer was relevant. I accept that it is a relevant matter which may be considered. 3 Coxs v Brisbane City Council [2013] QPEC 78 at [2] and YFG Shopping Centres P/L v Brisbane City Council (No2) [2014] QPEC 43 at [17]. -- 3 of 10 -- 4 The history of the proceeding [9] On 23 May 2013 the Council advised Mr Allen that it reasonably believed that he was committing a development offence, that after its investigation of the history and correspondence over the site the use for a wholesale nursery was unlawful, that a relevant application had lapsed in 2007 and the Council invited Mr Allen to show cause why an enforcement notice should not be issued. [10] On 23 July 2013, Edgewill Pty Ltd applied for a development permit for a material change of use. Edgewill’s development application was approved by the Council by a negotiated decision notice on 13 February 2014. The neighbours appealed against that decision. That appeal is appeal number 30 of 2014 which was instituted on 7 March 2014. [11] On 25 March 2014, the Council, with the benefit of legal advice, formed the opinion that the nursery, by reason of its long history on the premises had acquired the status of pre-existing lawful use. If the Council’s opinion was correct, it would mean that Edgewill Pty Ltd would not need the development permit for a material change of use. The Council by its solicitors wrote advising that the Council had now formed the view that existing lawful use rights existed. [12] Between 25 March 2014 and 10 June 2014 there was much negotiation before the nursery filed their originating application seeking declarations in this proceeding. Significantly, the neighbours were provided with an unsworn version of an affidavit of Mr Allen, one of the applicants. It was in a form otherwise identical with the first of the affidavits sworn by him in this proceeding. [13] On 13 June 2014 the Council wrote to the parties offering a resolution of both this proceeding and the appeal instituted by the neighbours. The offer expired at 10:00am on 16 June 2014. The neighbours did not accept. It was an offer consistent with the outcome of this proceeding. It is from this date that the Council seeks its costs on an indemnity basis. [14] On 16 June 2014 directions orders were made to progress the originating application including orders for the filing of affidavits and outlines before the hearing. [15] On 30 June 2014 the Council filed its statement of facts and matters and contentions and provided the parties with a series of aerial photos of the site spanning the relevant decades. [16] On 8 August 2014 the nursery filed affidavits of Petersen and Poppett and the second affidavit of Mr Allen. Those affidavits tended to corroborate Mr Allen’s first affidavit. [17] On 28 August 2014, the solicitors for the Council sent a letter requesting the neighbours to withdraw contentions regarding commencement and abandonment of the use, based on an email received from one of the neighbours on 15 July 2013. [18] On 29 August 2014 the neighbours filed 8 affidavits including expert evidence of Mr Feros and Mr Bullen. [19] On 10 September 2014 the nursery filed affidavits in reply by Smith and Bennett and a third affidavit of Mr Allen. -- 4 of 10 -- 5 [20] On 3 October 2014 the neighbours withdrew allegations in relation to abandonment of use in 2013. [21] The hearing proceeded on 8, 9 and 10 October 2014 and included an inspection on the site and evidence from seven witnesses. SPA s 457(2)(a) and the relative success of the parties [22] The nursery and the Council pointed to their complete success relative to the neighbours. The nursery, supported by the Council, obtained both declarations. They won the intermediate issues upon which the declarations depended: about whether land use had commenced before 29 November 1996; whether the use was “Agriculture” or “Rural Industry”; whether the use had been abandoned on two separate occasions; whether the use had materially intensified after 30 March 1998 and whether the declarations should be refused as a matter of public policy. Considering s 457(2)(a) of SPA, the relative success of the nursery as against the neighbour was complete and the same may be said for the Council. The success of the nursery was in part based upon oral evidence of Mr Allen which was unlikely to have been led if it had not been for the role of the neighbours as respondents. SPA s 457(2)(b) and the commercial interests of the parties in the proceeding [23] SPA s 457(2)(b) draws attention to the commercial interests of the parties in the proceeding. The nursery had a commercial interest in obtaining the declarations to maintain the lawfulness of the nursery and avoid the costs and risks of the appeal instituted by the neighbours. [24] The nursery had a commercial incentive to obtain declarations. The declarations could not be obtained without satisfying the court on the balance of probability of the facts of the matter and a matter of mixed fact and law, namely whether the use was “Agriculture” or “Rural Industry”. [25] The neighbours, in taking upon themselves the role of contradictors had no commercial incentive. No party submitted that the Council had a commercial incentive. I infer that it was appearing in the proceeding to assist the court in performance of its duty and would have offered no less assistance if the neighbours had withdrawn their opposition to the declarations. [26] Whether the neighbours had appeared or not, the declarations sought were not capable of being obtained by a consent order between the Council and the nursery and filed in the court’s registry. [27] For these declarations the nursery needed to persuade the court that declarations were necessary and appropriate. The declarations affected more than the parties in the sense that they did not affect only the nursery and the Council and the second respondents. The declarations would allow the nursery to use its land inconsistently with the relevant planning scheme and potentially to the detriment of persons other than the neighbours. To obtain these declarations the nursery had an onus to satisfy the court of all the factual and legal issues which were appropriate bases for the declarations. The nursery was obliged to satisfy a court of matters of fact and law. [28] The nursery had the only relevant commercial interest in obtaining the declarations. The nursery elected to institute the proceeding to protect its commercial interests. -- 5 of 10 -- 6 That was going to involve it in incurring substantial legal costs, with or without the neighbours as respondents. [29] The Council, with a duty to enforce planning scheme provisions and aware that the nursery was seeking declarations so as to circumvent planning scheme provisions, had a duty to see that the nursery did adequately address all necessary factual and legal issues when applying for the declarations. That was going to involve the Council in incurring substantial legal costs, with or without the neighbours as respondents. SPA s 457(2) clauses (c), (d) and (h) and the conduct of the neighbours prior to the proceeding [30] SPA s 457(2) clauses (c), (d) and (h) draw attention to the conduct of parties leading up to the institution of proceedings and the election to participate in the proceeding. [31] A second costs argument for the successful parties focused on the negotiation phase between 25 March 2014 and the date of the commencement of the proceeding for declarations on 10 June 2014. In the two months before the originating application was filed, the nursery and the Council advised the neighbours that they contended that the wholesale nursery was an existing lawful use which did not require development approval and that the development application lodged by Edgewill Pty Ltd was not required. On 28 March 2014 the parties had a without prejudice conference. On 1 May 2014 there was another. On 29 May 2014 the nursery’s solicitors advised the neighbours’ solicitors that they had taken detailed instructions which confirmed, in effect, that the nursery would win on every relevant issue of law and fact. They advised that the application for declarations “was likely to be successful”. They advised that if it was successful the development application subject of an appeal would be withdrawn and the appeal would come to an end and that if the neighbours withdrew the appeal the nursery would not make an application for declaratory relief. The nursery put the neighbours on notice that if the appeal was not withdrawn, the applicant would apply to the court for the relevant declarations and an order that the neighbours pay the nursery’s costs. On 2 June 2014 the nursery reaffirmed the offer. [32] The nursery submits that it was because the neighbours declined to concede that they had an existing lawful use and declined to resolve the appeal that the nursery parties were obliged to file their application for declaratory relief. I do not accept that. It was in the nursery’s interests to circumvent the neighbours’ appeal by obtaining declarations with the Council’s support. The neighbours had a statutory liberty to appeal Council’s decision as a result of the process begun by Edgewill Pty Ltd applying for a material change of use and continued by Council in approving the application. It was not submitted to me that the neighbours behaved unreasonably when instituting their appeal. The appeal would have involved different issues from the issues in this proceeding. The nursery, not the neighbours, elected to institute this proceeding. [33] The nursery did not relate their second argument to any particular part of s 457(2) of SPA. The argument seems to fairly raise s 457(2) clauses (c), (d) and (h). [34] The neighbours did not institute the originating application. The nursery did and did so to protect the commercial interests of Edgewill Pty Ltd. -- 6 of 10 -- 7 [35] Did the neighbours join issue for an improper purpose? I am not satisfied that they did. The fact that the nursery and the Council by their solicitors assured the solicitors for the neighbour about their genuine view as to the prospects does not persuade me that the neighbours participated in the proceeding either for an improper purpose or without reasonable prospects of success. The assurances of the solicitors for the Council and the nursery were partly based upon their acceptance of the untested instructions of Mr Allen about a variety of historical factual matters which were hard to confirm. SPA s 457(2)(i) and whether the neighbours acted unreasonably in their conduct of the proceeding [36] The successful parties attacked the neighbours conduct on the basis that the neighbours defended this application without reasonable prospects of success. I accept that that would be a relevant consideration. I note that it does not fall nicely into SPA s 457(2)(i). A party which knows or ought to know that it lacks reasonable prospects of success risks acting unreasonably if it causes the other parties to incur unnecessary cost. [37] I reject the submissions for the successful parties that it ought to have been clear to the neighbours before the application was filed or after it was filed that the neighbours did not have reasonable prospects of success. [38] On the issue of the characterisation of the use, whether it was lawful “Agriculture” or unlawful “Rural Industry”, the neighbours proceeded with the benefit of the opinion of Mr Bullen, an experienced agricultural scientist who assessed the operations and provided his opinion that it was unlawful “Rural Industry”. The Council submitted that the neighbours’ characterisation argument depended upon a strained interpretation of the planning scheme definitions that went directly against established authority on the point. I reject both aspects of that submission. The case was not decided on the basis of established authority. The characterisation was not strained. The successful parties won on this issue because of oral evidence without which the affidavit evidence was insufficient. The material fact which emerged in oral evidence was that a major component of the process of producing the crop of potted plants was the slow growing of the cut canes in pots. Mr Bullen’s arguments were based upon a premise that growing occurred primarily in the ground and that what occurred after the canes were cut, was primarily processing. I found otherwise, with the benefit of oral evidence about the time for growing and the time devoted to processing. After the canes were cut from the in-ground mother stock and then potted, substantial growing was required. It was only in oral evidence that it emerged how disproportionate was the time and effort devoted to growing compared with the time and effort devoted to processing canes; that the potted canes themselves were required to be kept shaded, sprinkled and growing for periods from six to eight weeks as a minimum with some for up to two years while the processing component involved mere minutes. Those facts revealed the disproportion between the time and effort for growing and the time and effort for processing. Mr Bullen’s conclusion was plausible, based as it was upon a different factual hypothesis. This crucial evidence was not obvious from the affidavit material or expert reports. [39] I have been referred to Hydrox Nominees Pty Ltd v Noosa Shire Council (No.2) [2014] QPEC 60. There, a party had chosen not to accept a settlement proposal recommended by its own representative at a mediation. The court held that the losing -- 7 of 10 -- 8 party had put the appellant to the expense of vindicating its strong position by a hearing. I regard the position of the neighbours as distinguishable. It is not suggested that they ignored legal advice to resolve the matter. Further, I reject the inference that the case for the nursery was so strong that it was unreasonable for the neighbours to respond to the proceeding. [40] On the issues of when the use commenced and whether there was a material increase in its intensity and scale the neighbours relied on the expert planning evidence of Mr Feros. Mr Feros formed his opinion based on publicly available aerial photographs. Regrettable, then nursery disclosed to the neighbours some aerial photographs of particular relevance on only the day before the hearing. Whether they would have caused Mr Feros to express a different opinion if he had received them earlier is unknown. In any event, I do not regard the neighbours as having been unreasonable for relying upon the conclusions which Mr Feros had drawn and which were unfavourable to the nursery. SPA s 457(2)(g) and whether the proceeding involved an issue that may have affected a matter of public interest [41] Does the proceeding involve an issue that may have affected a matter of public interest? This proceeding does not. The appeal would have. The issues in this proceeding were different from the issues in the appeal. This proceeding was not concerned with impacts on the neighbours or amenity other than in an oblique way. Intensification of the use might have been proved by the same kind of evidence that could be led in an appeal to prove that impacts on amenity. If the nursery and the Council had lost this proceeding, they would have been respondents in the appeal, but on different issues. An issue which particularly concerned the neighbours was chemical spray drift from the nursery’s premises. That issue was one which could have been sensibly pursued in the appeal. If a danger from the use of chemicals had been proved it might have been relevant to the prospects of success of the appeal or to conditions of approval of a material change of use. The neighbours had a genuine belief that the nursery had been and would continue using chemical spray which drifted off the nursery’s premises. The neighbours had a genuine concern that the spray may have been dangerous to human and animal health. That was a matter of public interest. When considering the reasonableness of the conduct of the neighbours when they received the Council’s offer on 13 June 2014 to resolve both this proceeding and the appeal, it is important to recall that the neighbours’ appeal was motivated partly by their concern for this issue. The resolution of that issue in the appeal would have been in the public interest. As it happens, evidence on the issue was led in this proceeding, but was relevant only on the issue of intensification of the nursery use. Mr Allen gave evidence to the effect that his use of herbicide for boundary weed control was very infrequent and had not intensified and that the frequent sprinkler spray whose drift may have concerned the neighbours was a spray of unadulterated water. The neighbours’ concern about this issue in the appeal was reasonable. The Calderbank offer [42] The offer appears as Ex DBM – 5 to the affidavit of Mr Mckinstry. It was a typical Calderbank offer to resolve this proceeding on a basis with a warning that the council would seek indemnity costs if the offer was rejected and the council achieved in the litigation a result which was as successful as the offer or better. The Council offered -- 8 of 10 -- 9 that all parties agree to declarations by consent in the terms sought by the nursey and to resolve the appeal by consent on the basis that the appeal be allowed and the development application be refused on the basis that the nursey’s application was not required. [43] It was technically incorrect for the Council to offer that the declarations be made by consent. That is because the court does not make declarations by consent in the way a court gives judgment by consent. Where declarations are sought about matters which could affect more persons than the parties to a proceeding, the court will generally require satisfaction that it is appropriate to make the declarations. The court would generally consider whether there was sufficient evidence and that the declarations would accord with the law. I infer that the Council’s offer was intended to be understood as an offer for the neighbours to indicate that they did not oppose the declarations sought by the nursery and that the Council was implying that at the eventual hearing it would advise the court that it supported the nursery’s application. [44] It follows that in a proceeding such as this, if the neighbours had accepted the Council’s proposal for compromise, the neighbours would have been at liberty to withdraw as respondents but the nursey thereafter would have been obliged to call sufficient evidence to satisfy its onus of proof of the facts and onus of persuasion of the matters of law upon which its declarations depended. I infer that if the neighbours had withdrawn their opposition to the declarations, the Council would have appeared at the hearing to offer necessary assistance to the court. [45] Whether the proceeding had been contested or uncontested by the neighbours, the nursery would have incurred significant unavoidable legal costs after the date of the Council’s Calderbank offer and so would the Council. Evidence was required. Legal submissions were required. [46] The necessary costs for the Council of this proceeding for declarations are distinguishable from the costs incurred by a plaintiff or applicant in more conventional litigation. In conventional proceeding in courts other than the Planning and Environment Court, a plaintiff or applicant seeks judgment for a money sum or an order which affects only the defendant or respondent but does not affect persons who are not parties. In such cases the defendant or respondent is generally presumed to be capable of protecting its, her or his own interests. A consent order in such cases generally requires no findings by the court. A Calderbank offer in such cases is a rational offer to spare the parties unnecessary expense involved in the plaintiff or applicant satisfying an onus of proof of matters of fact and satisfying an onus to persuade on contested matters of law. A proceeding for a declaration about the lawfulness of an existing is different. It may concern persons who are not parties to the proceeding. A courts willingness to make orders by consent is different. [47] If the neighbours had withdrawn as respondents and if the nursery had persisted with its application for declarations with the Council’s support a hearing was required. Ordinarily one would expect an uncontested hearing to be run more quickly than a contested hearing. It is plausible that the inspection and uncontested hearing would have required less hearing time or less preparation if the neighbours had withdrawn opposition. It is plausible that the nursery would have closed its case without leading evidence from Mr Allen about the substantial time spent growing potted canes and the relatively insubstantial time spent processing canes. There would have been time saved on various contested issues. However, it is plausible that I would have felt -- 9 of 10 -- 10 obliged to reserve the legal question of whether it was lawful “Agriculture” or unlawful “Rural Industry”. Without the benefit of oral evidence from Mr Allen called because of the contest with the neighbours, it is strongly arguable that the nursery and the Council would have failed to satisfy me that the operation was “Agriculture”. [48] I reject the submissions to the effect that, but for the conduct of the neighbours in rejecting offers to consent to declarations, the nursey would have obtained its declarations at little or no cost to the nursery or the Council from 13 June 2014. [49] I do not regard the neighbours as having been unreasonable for having rejected the Council’s Calderbank offer. If my view of that is wrong, it is necessary to consider whether it is appropriate that the neighbours pay costs from that date. [50] The successful parties have not applied for some portion of their costs of the proceeding. Their individual applications are each for the costs of the whole proceeding. Their applications proceed on the flawed hypothesis that if the neighbours had withdrawn from this proceeding the nursery and the Council would have obtained an unopposed declaration at no expense. [51] It would not be fair to treat the costs of the nursey or of the Council incurred after 13 June 2014 as having been incurred because of the unreasonableness of the neighbours. Most of those costs would have been incurred in any event. If the neighbours had interpreted the offer as I did, had accepted it and withdrawn their opposition to this proceeding, the nursery and the Council would have proceeded to a hearing of sufficient duration to satisfy the court of all matters of fact and law necessary for the making of the declarations. There was no exploration as to how long that would have taken, whether it would have saved a proportion of the costs. There was no submission that it was appropriate to allow the successful parties some portion of the proceeding’s costs. Conclusion [52] I reject the nursery’s application for an order that the neighbours pay its costs of this proceeding. [53] I reject the Council’s application that the neighbours pay its costs of this proceeding. [54] With respect to the costs of this application for costs, the Council applied for its costs as a separate item. I note that the Council and the nursey have each been unsuccessful with respect to their applications for costs and that the neighbours have been successful. That result can be added to the mixture of factors relevant to the proper order for costs of this proceeding. [55] It is appropriate that for the costs of this proceeding for declarations, including this application for costs, that each party bear its, her and his own costs. -- 10 of 10 --