Farrah v Brisbane City Council (No 2) [2016] QPEC 23 (2016) QPELR 530

PLANNING AND ENVIRONMENT COURT OF QUEENSLAND CITATION: Farrah v Brisbane City Council (No 2) [2016] QPEC 23 PARTIES: JEFFREY FARRAH (applicant/appellant) v BRISBANE CITY COUNCIL (respondent) FILE NO/S: 3627 of 2014 DIVISION: Planning and environment PROCEEDING: Application for costs ORIGINATING COURT: Planning & Environment Court of Queensland, Brisbane DELIVERED ON: 17 May 2016 DELIVERED AT: Brisbane HEARING DATE: Application determined on the papers: submissions closed 29 April 2016 JUDGE: RS Jones DCJ ORDER: 1. The application for costs is dismissed. CATCHWORDS: APPEAL AGAINST REFUSAL OF AN APPLICATION TO DEMOLISH TWO PRE-1911 HOUSES – where houses located in inner city suburb of West End – where houses located in a Demolition Control Precinct WHETHER THE HOUSES WERE REASONABLE AND CAPABLE OF BEING MADE STRUCTURALLY SOUND VALUATION EVIDENCE – where evidence of the value of the land and houses thereon of little assistance COSTS – where appellant/applicant succeeded in having the decision of the respondent overturned – where the costs ought be awarded to successful party – whether other circumstances warranted there being no orders as to costs Sustainable Planning Act 2009 Uniform Civil Procedure Rules 1999 Cox v Brisbane City Council (No 2) [2014] QPELR 92 Farrah v Brisbane City Council [2016] QPEC 19 -- 1 of 11 -- 2 Craig Securities (No 2) Pty Ltd v Brisbane City Council [2006] QPELR 601 Ken Ryan & Associates Pty Ltd v Brisbane City Council & Ors [2008] QPELR 147 Nadic Investments Pty Ltd v Townsville City Council & Anor [2015] QPEC 48 YFG Shopping Centres Pty Ltd v Brisbane City Council (No 2) [2015] QPELR 8 COUNSEL: Mr R Laidley for the applicant/appellant Mr M Williamson for the respondent SOLICITORS: McCarthy Durie Lawyers for the applicant/appellant Brisbane City Legal Practice for the respondent [1] This proceeding is concerned with an application for costs made on behalf of the successful appellant. For the reasons set out below the orders of the Court are: 1. The application for costs is dismissed. Background [2] The appellant is the owner of two houses located in Amersham Street in the inner city suburb of West End. It was not in dispute that both houses were in an extremely dilapidated condition and were not structurally sound. The land accommodating both houses comprised of two separate lots which were located in the Low-Medium Density Residential Area and within a Demolition Control Precinct under the respondent’s City Plan 2000 (CP2000) and City Plan 2014 (CP2014). The subject land was also located within the boundaries of the South Brisbane Riverside Neighbourhood Plan and within the Boundary and Vulture Street Precinct of the planning scheme. [3] On or about 19 June 2014, the appellant lodged a Development Application seeking, among other things, approval to demolish both houses. On 21 August 2014 the respondent issued a Decision Notice refusing the application. [4] As a consequence of that decision the appellant appealed to this Court, in effect, seeking to have the respondent’s decision overturned and be permitted to demolish the two houses. The appellant was successful and on 14 April 2016 I ordered that the -- 2 of 11 -- 3 appeal be allowed.1 Consequential orders were made concerning any applications for costs. [5] Both houses were subject to the operation of the Temporary Local Planning Instrument 01/14. Table 2 of that instrument identified that an “additional purpose” of the Demolition Code was to ensure the preservation of residential buildings constructed prior to 1911 and to only allow the demolition of such buildings in circumstances where they were incapable of being made structurally sound. The relevant Performance Criteria provided: “An engineering report prepared by a Registered Professional Engineer Queensland is submitted to Council which demonstrates to the reasonable satisfaction of Council, that the building is structurally unsound and not reasonably capable of being made structurally sound.” (emphasis added) [6] In determining the substantive appeal I found that the cost of bringing the two houses to a structurally sound condition would be in the order of $96,000 for 8 Amersham Street and $136,000 for 10 Amersham Street.2 The evidence of the appellant’s quantity surveyor was also that to bring the two houses to a habitable state would involve additional expenditure of in the order of $251,080 and $228,313 respectively.3 [7] In upholding the appeal I concluded:4 “[57] The evidence established first: to bring the houses to a structurally sound state will cost in the order of $96,000.00 and $136,000.00 respectively. Second: that while likely, there is still a risk that that expenditure would not be recovered if each of the houses were sold in the open market in a structurally sound condition. Third: at this state of repair, the houses are far from habitable and to bring them to a habitable state would require a considerable amount of further expenditure. It could not be said to be reasonable to require expenditure of the nature identified that would result in the situation where there would be two uninhabitable houses which, unless further significant funds were spent to make habitable, might be left to begin to deteriorate again. Conclusion [58] In my opinion the quantum involved results in the situation that neither house could be said to be reasonably capable of being made structurally sound. The extent of that 1 Farrah v Brisbane City Council [2016] QPEC 19. 2 Ibid para [57]. 3 Ibid para [37]. 4 Ibid paras [57]-[58]. -- 3 of 11 -- 4 unreasonableness is made more profound when viewed in the light of the owner having to make both houses structurally sound at a cost of in the order of $240,000.00.” The submissions on costs [8] The written submissions filed on behalf of the appellant focused on, in addition to being successful, three particular matters. First, the “commercial interests” of the appellant. Second, the issue of public interest and, third, what was described as the “conduct of the appeal”. In respect of the first of those topics it was, in part, submitted:5 “The appellant’s interest in the subject properties is a direct interest. In practical terms, the basis for his appeal was to contend that it was unreasonable to expect him or a subsequent purchaser to spend money to fix up the dilapidated properties. This is not, therefore, a situation where the appeal results in the appellant gaining a commercial advantage, but rather stopping the appellant from having to waste money fixing up the houses or having to sell the properties under their true value (being the value attributable to the properties with the houses being able to be removed).” [9] In respect of the public interest point it was submitted to the effect that when considering such interest (if any), consideration also had to be given to the costs incurred by the appellant in prosecuting his appeal.6 In respect of the “conduct of the appeal” point, a number of matters were addressed including:  The appellant’s reasonable conduct in the prosecution of the appeal;  That while not a determinative factor the fact that the appellant was successful was a material consideration;  The appellant conducted the litigation in an efficient and cost effective way, including using a “solicitor-advocate” up until the briefing of counsel and limiting legal representation at trial to that of only a junior counsel;  The evidence of the valuers was a consequence of the respondent applying for leave to nominate a valuer as an expert witness, that leave being granted over the objection of the appellant;  After the valuers had completed their reports the appellant sought a mediation in order to resolve or narrow the issues arising out of the valuation evidence. The respondent resisted that request in circumstances when there would be a “reasonable expectation of some utility”.7 5 Written submissions at para 10. 6 Ibid para 13. 7 Ibid para 18. -- 4 of 11 -- 5 [10] In conclusion it was submitted on behalf of the appellant that:8 “Given that the underlying basis for an award of costs is to indemnify the successful party in having to bring the proceeding and not some means to either punish or reward a party for bad or good behaviour, it is submitted that it is appropriate in this case for the Court to exercise its discretion to order that the respondent pay the appellant’s costs without set off. As submitted above, the appellant was successful on the only substantive issue in the case and there are no other substantive reasons why it its indemnification should be reduced.” [11] Turning then to the respondent’s submissions it was said that the appellant’s costs application was “advanced essentially on the basis that a costs order is appropriate in the circumstances of this case given [that] the appellant [was]… ‘successful on the only substantive issue in the case and there are no other substantive reasons why its indemnification should be reduced’”.9 [12] It was then submitted on behalf of the respondent that there were four reasons why the appropriate order would be that the application be dismissed. First, that notwithstanding the eventual success of the appellant that had to be viewed in the context where, broadly speaking, most of the respondent’s expert evidence was preferred to that of the appellant. Second, it was the appellant who introduced the issue of the costs involved in bringing the houses to a habitable state, notwithstanding that it had always been tolerably clear that the real issue was the cost of making the houses structurally sound. And:10 “In circumstances where the ‘habitable point’ was in issue on the pleadings and in the costing experts’ joint report, and given the point had the potential to affect the future operation of the Council’s planning documents which seek to protect Traditional Building Character, it was not only reasonable for the Council to resist the appeal, but it was also in the public interest to do so. The Council’s resistance on this aspect of the appeal was well-founded (as is confirmed by the reasons of judgment).” [13] The third matter identified by the respondent was that the case presented in the substantive appeal differed from the appellant’s “pleaded case”.11 The fourth matter was that there could be no sensible suggestion that the respondent had acted unreasonably in the conduct of the appeal. In this context it was said that the 8 At paras 23 and 24. 9 Respondent’s submissions, para 2. 10 Respondent’s written submissions, para 10. 11 Appellant’s reply, para 4(a). -- 5 of 11 -- 6 respondent ran a “compact case” which was supported by expert evidence largely accepted by the Court. And, in any event, the judgment at the end of the day was concerned with an objective test about which reasonable minds can differ. [14] Although not expressly identified as a separate matter it is clear that the respondent saw the case as one involving a matter of significant public interest, namely the preservation of a reducing stock of pre-1911 houses within the Brisbane local government area. [15] As to the asserted criticism that the respondent had acted unreasonably in rejecting mediation, it was submitted that mediation offered little prospect of meaningful success in circumstances where there was little (if any) room for compromise. That is, the respondent wanted to protect both houses and the appellant wanted to demolish them. [16] In his reply the appellant focused on two particular aspects of the submissions made on behalf of the respondent. First, the issues associated with the costs of making the houses habitable as opposed to structurally sound and, second, the respondent’s failure to agree to mediation. In respect of the former, it was submitted:12 “Given the parties agreement at the beginning of the hearing about the issue being litigated, it could not be said that time was spent at the hearing in determining whether the test related to to (sic) the housing being made habitable. The only reliance on habitable costs was for comparative valuation purposes. The appellant submitted that the use of the word ‘habitable’ by his Honour Wilson SC DCJ (as he then was) in the Ken Ryan case appeared to be connoting that a person could enter and walk through the house in relative safety rather than could occupy it on a permanent basis. Accordingly, there is no reason to discount any costs order in favour of the appellant for the hearing itself based on the ‘habitable’ submissions of the respondent. In terms of preparation, it could not be said that the ‘habitable’ issue removed the need to prepare for all of the other issues that were accepted as needing to be determined by the Court. At best, the respondent’s ‘habitable’ submissions could only support some proportional reduction in a favourable costs order for the appellant based on what the Court considers might have been required in preparing for an argument that the primary test was what was required to put the houses in a habitable condition. Further, given that substantially similar considerations were required for comparative valuations purposes, it is likely that little, if any, extra costs could be said to be expended on this basis.” 12 Appellant’s reply, paras 4 and 5. -- 6 of 11 -- 7 [17] As to the mediation issue, the appellant did not take issue with the respondent’s description of it being an “all or nothing” case but, as I understand it, contended that the mediation process might well have led to a narrowing of some of the issues in dispute, particularly insofar as it was concerned with the comparable sales evidence of the valuers. Discussion and consideration [18] Section 457 of the Sustainable Planning Act 2009 (SPA) 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 any of the following matters— …” [19] Subsection (2) of s 457 then goes on to identify a number of matters that the Court may consider relevant in the circumstances of the case. The list is not meant to be an exhaustive one but the stated matters include:  The relative success of the parties;  The commercial interests, if any, of the parties in the proceeding;  Whether the proceeding was commenced for an improper purpose; and  Whether a party commenced or participated in proceedings without reasonable prospects of success. [20] Not surprisingly, given the nature of the jurisdiction involved in this Court, it is also identified that a relevant matter might be whether the litigation involved an issue or issues that affect or may affect a matter of public interest in addition to any personal right or interest of a party to the proceeding. [21] It is now well settled that the discretion provided for pursuant to s 457 is a broad one to be exercised judicially but without any presumption that costs ought follow the event or otherwise on the basis that there is some qualified protection against an adverse costs order. In exercising its jurisdiction under s 457 of the SPA the Court has to do so in a way that ensures, as far as can be, that while costs orders are made in appropriate cases it does not create a perceived established attitude as to costs that -- 7 of 11 -- 8 might act as a disincentive to citizens (individual and corporate) and relevant statutory authorities who either have meritorious cases to litigate or reasonable administrative decisions to defend. While the success of a party is not a determinative factor it is clearly a relevant one and, in some cases, might be a significant consideration.13 [22] I will now turn to the substantive matters raised by the parties but not necessarily in the order addressed by them. On balance, I do not consider that anything turns on the respondent’s failure to participate in the mediation process. There was little prospect of either of the parties resiling from their respective positions. Having regard to the way the litigation was conducted there was clearly little scope for any meaningful compromise. [23] As to the contention that mediation might have helped narrow the issues I again consider that it was unlikely that any material narrowing of the issues would have occurred. The appellant placed considerable emphasis on the valuation evidence in this regard. However, the cross-examination of Mr Crawford, the appellant’s valuer, was very short. It is difficult to imagine how any narrowing of the issues might have truncated that cross-examination further. Mr Laidley, on the other hand, cross- examined the respondent’s valuer for a considerable amount of time. That is not meant to be a criticism but simply an observation as to how tactical decisions by counsel may have a material impact on the length of the litigation. [24] It also needs to be borne in mind that mediation, involving as it often does, not only lawyers but also expert witnesses, can have material cost ramifications for the parties, particularly in circumstances where no material benefit is gained. As Mr Laidley acknowledged:14 “With respect, and of course with the benefit of hindsight, it may well have been the case that having the Valuers attend at some form of mediation or preparing a joint report prior to the hearing may have been the more efficient course. Equally though, it could have ended up with the Valuers conducting a lengthy and expensive joint meeting process with little or no difference to the reporting they had already committed to.” 13 Cox v Brisbane City Council (No 2) [2014] QPELR 92 at [2]-[3]; YFG Shopping Centres Pty Ltd v Brisbane City Council (No 2) [2015] QPELR 8 at [17] and Nadic Investments Pty Ltd v Townsville City Council & Anor [2015] QPEC 48 at [6]. 14 Written submissions at para [20]. -- 8 of 11 -- 9 [25] In the circumstances of this case I do not consider the respondent’s rejection of mediation to be unreasonable. [26] As to the success of the parties, it cannot be denied that the appellant was wholly successful. That said, as both counsel acknowledged, the wording of s 457 is such that it could not be sensibly stated that a starting point or presumption was that costs should follow the event. In that regard s 457 of the SPA can be contrasted with r 681 of the Uniform Civil Procedure Rules 1999 (UCPR). It is also relevant that the respondent here was not concerned with achieving or maintaining any commercial advantage, or indeed any other materialistic advantage, over the appellant. I am satisfied that at all relevant times the respondent’s involvement in this litigation arose out of its concern to preserve residential buildings constructed prior to 1911. That is, in my view, this case involved a matter of genuine public interest. That could be said to be particularly so in respect of the older inner city suburb of West End. [27] I immediately accept that achieving or preserving what is seen to be in the public interest might well result in significant limitations on the ability of a property owner to achieve his highest and best use (and therefore price) of his land; and that if he contests the decision of the respondent, the costs of litigation might be significant. Indeed, I have little doubt that the appellant in this case has expended considerable funds in the subject litigation. [28] At the end of the day it comes down to a balancing exercise. The weight to be given to the public interest component when compared to the success and the cost of that success to the other party. [29] In my view, this is a fairly finely balanced case. However, I have concluded that the public interest component is a particularly significant consideration in this case. The demolition of pre-1911 houses, particularly in suburbs such as West End, has the potential to greatly affect the character and built environment of the suburb. Further, this was not a case where it could be said that the respondent had taken an unreasonable stance. It was made abundantly clear during the course of the evidence that the houses could be made structurally sound by application of not overly complex building techniques. [30] In this particular case I concluded that the costs involved were such that it could not be said that either house could be reasonably capable of being made structurally -- 9 of 11 -- 10 sound. However, as Mr Williamson pointed out, this was a case where reasonable minds might differ about the end result. In Craig Securities (No 2) Pty Ltd v Brisbane City Council,15 the range of costs to make the house structurally sound, between $32,000 and $53,000 was considered to be “relatively modest” and the house was preserved. However, in Ken Ryan & Associates Pty Ltd v Brisbane City Council & Ors16 the range of between $70,000 to $100,000 costs was considered to be such as to render the house incapable of being reasonably made structurally sound. A reading of those decisions does not reveal in any meaningful way why one cost was considered to be reasonable and the other not. That is not to suggest any defect in the reasoning (which there clearly was not) but it highlights how litigation such as this depends very much on matters of judgement based on the circumstances of each particular case. [31] Before leaving this issue it was submitted on behalf of the appellant that his success in the litigation saved him “wasting money” on making the houses structurally sound and that he did not gain any commercial advantage from the outcome.17 [32] Two observations need to be made in respect of those submissions. First, it was far from certain that the costs of rendering the houses structurally sound would have been a waste of money.18 Second, the appellant has probably secured a commercial advantage from the litigation even if that was not the intended purpose. In the substantive proceedings the valuation evidence tended to show that if the appellant repaired the houses to a habitable state he would likely recoup those costs on sale. About $1,317,000 for number 8 and $1,283,000 for number 10.19 On the other hand, with only the cost of demolition involved, the two lots could be sold as a development site for in the order of $2,500,000.20 [33] I do not consider these submissions to be persuasive for those reasons. [34] As to the general conduct of the parties in the litigation, both conducted their respective cases in a manner that did not unduly waste time or add unnecessary expense. That is particularly so in respect of the respondent in my view. Also in this 15 [2006] QPELR 601. 16 [2008] QPELR 147. 17 See at para [9] herein and appellant’s submission at paras 9 and 10. 18 Farrah (No 1) at [40], [48] to [51] and [57]. 19 Ibid at [41]. 20 Ibid at [47]. -- 10 of 11 -- 11 context it would be wrong to criticise the respondent for seeking to introduce valuation evidence. The introduction of that evidence was sanctioned by the Court. And, as already alluded to, the evidence in chief of the respondent’s valuer and cross- examination of the appellant’s valuer was, relatively speaking, brief. Further, while I found the valuation evidence to be of only limited assistance it is clear that it was of some assistance in determining the final outcome.21 [35] Finally on this topic, I also consider it would be wrong to penalise in some way the appellant for introducing the so called “habitable point” for at least two reasons. First, in the substantive proceedings I clearly found it to be not an irrelevant consideration. Second, insofar as there was any departure from his “pleaded” case on the part of the appellant, it did not materially affect the conduct of the proceeding. [36] I have concluded that the two most critical matters that need to be considered are the success of the appellant on the one hand and the public interest issue on the other. And, on balance, I have concluded that the public interest aspect of the case in the light of the other matters I have addressed herein warrants the making of no orders as to costs. [37] For the reasons given I have concluded that while finely balanced, the most appropriate outcome would be for each party to bear their own costs. 21 Ibid at paras [47], [51] and [57]. -- 11 of 11 --