C Fawler v Mornington Peninsula Shire Council [2001] VCAT 2001

Mr C Wren of Counsel instructed by Gadens, Lawyers, for the Respondents.

1. This matter is an application for costs by the Respondents, following the withdrawal of the application by the Applicants.

2. The substantive application was made by the Applicants against the Respondents for orders pursuant to Section 149B of the Planning and Environment Act 1987 in relation to Planning Permit 7334 dated 5 June 1991 issued by the Shire of Hastings as predecessor of the Council. The orders sought effectively were declarations that:

* The permit was not validly extended on 17 March 2000 when it was purported to be extended by the Council, if it was then still extent.

* At least one of the six purported extensions of the permit were not validly made and there was no valid permit capable of being extended on 17 March 2000.

* The Council or its delegate had no power or authority to extend the permit on 16 or 17 March 2000 or since.

* The Council's delegate failed to have regard to or take into account matters which he should have had regard to.

3. Each of the Applicants or their companies owns and lives on properties adjacent to the subject land.

4. The subject land at 746 Stumpy Gully Road, Hastings is owned by the Respondent, Hastings Poultry Pty Ltd, and the permit relates to that land.

5. The Respondent became registered as the land on 22 June 2000 having purchased the property from B & L Dobson who owned it from 26 October 1992 until then.

6. The permit was issued by the Shire of Hastings on 5 June 1991 and authorised "use and development of (the subject land) for the purpose of erecting two additional broiler sheds in accordance with the detail submitted with the application."

7. The permit required commencement of the development within 12 months and completion within 24 months of the date of the permit or any extension of such permit the Responsible Authority may allow in writing on an application made before or within 3 months after such expiry. There was an appeal against the decision of the Shire to grant the permit and the Administrative Appeals Tribunal directed the issue of the permit and there were six extensions of the permit the last being on 17 March 2000.

8. The particulars to the application for the orders alleged that

"in relation to the last "extension", no reasons were given by the Dobsons for the extension; no neighbours were consulted; no environmental risk assessment or master plan was asked for or considered; no insufficient regard was had to changes in the Scheme which had occurred with the introduction of the VPP Scheme in 1999 and particularly the introduction of Clause 22.15 of the Scheme. In addition the delegate ......."

failed to have regard to matters specified in the particulars.

9. None of the Applicants were aware of the extension to a purported extensions until works commenced on the site shortly prior to Christmas 2000. The works continuing without abatement notwithstanding the application.

10. The application was served on the Council and the Respondents. The Applicants requested an urgent hearing and a directions hearing to consider that that request was held on 29 March 2000 before myself.

11. Two further directions hearings were listed and adjourned at the request of the parties.

12. At a further directions hearing on 6 July 2001 orders were made that the application be listed for 5 days in September/early October before a Presidential Members and further orders were made for the exchange of expert reports.

13. On 30 July 2001, Russell Kennedy on behalf of the Applicants, sought the Tribunal's leave to withdraw the application pursuant to Section 74 of the Victorian Civil and Administrative Tribunal Act, and gave notice of their application to the other parties.

14. On 13 August 2001 the Tribunal gave leave to the Applicants to withdraw their application. Leave was granted to any other party to apply to the Tribunal for costs provided such application was made within 10 business days on service of this order upon them.

15. The Respondents Solicitors, Gaden Lawyers, by letter dated 6 August 2000 gave notice that the Respondents sought an order that the Applicants pay the Respondents costs of the application and requested a hearing date.

16. Prior to the listed date for the hearing of the application for costs, the Council advised the Tribunal that it was not pursuing an application for the recovery of costs and that the Council or its representative would not be attending the hearing unless specifically requested by the Tribunal. Council also consented to the application being withdrawn and on the basis that between the Applicants and the Council there be no order as to costs.

* a Contract of Sale dated 22 March 2000 for the purchase of the property by the Respondents from D & L Dobson for $10080.00. The Contract contained the usual condition that the purchaser buys subject to any restrictions imposed by and to the provisions of the Melbourne Metropolitan Region Planning Schemes and any other Planning Schemes or interim development orders.

* It was not conditional upon the validity of the planning permit being maintained, but was conditional upon the transfer of some broiler growing contracts. Settlement took place in May 2001.

* A summary of expenditure by the Respondents after the purchase of the property and before the making of the application stated that:

(a) $170,370 was expended as deposits on equipment,

(b) $109,500 was paid on deposits and installation of building materials,

(c) $100,000 was expended on earthworks, drainage, plumbing and road making, and

* The summary stated that prior to 16 February 2001 the Respondents had spent a total of $397,370 in preparation for the construction of the poultry sheds which was approximately 45% of the total estimated cost of construction of $850,000.

* Correspondence between the purchasers Solicitor, Mr K R Cameron and the Council on 16 and 17 March. Mr Cameron's letter of 16 March asked the Council to advise the latest date for completion of the development under the current permit. On 17 March the Council faxed a letter agreeing to a two year extension of time to the permit to 5 June 2002, and a file note of a conversation between the Solicitor and Mr Ca of the Shire on 17 March 2000 discussing the matter.

18. Kantor & Others v Murrindindi Shire Council & Others (Supreme Court of Victoria) (1997) 18 AATR 285.

Hobsons Bay City Council v K Haouli and Another (2001) 7 VPR 249 (VCAT decision).

Casey City Council v Cleeland and Calderwood (VCAT costs application) decision of Deputy President Bruce dated 31 May 2001.

Section 109 Victorian Civil and Administrative Tribunal Act

19. The provisions of the Victorian Civil and Administrative Tribunal Act relating to costs are contained principally in Section 109 which reads as follows:-

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under sub-section (2) only if satisfied that it is fair to do so, having regard to--

(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as--

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;

(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;

(iii) asking for an adjournment as a result of (i) or (ii);

(v) attempting to deceive another party or the Tribunal;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(e) any other matter the Tribunal considers relevant.

(4) If the Tribunal considers that the representative of a party, rather than the party, is responsible for conduct described in sub-section (3)(a) or (b), the Tribunal may order that the representative in his or her own capacity compensate another party for any costs incurred unnecessarily.

(5) Before making an order under sub-section (4), the Tribunal must give the representative a reasonable opportunity to be heard.

(6) If the Tribunal makes an order for costs before the end of a proceeding, the Tribunal may require that the order be complied with before it continues with the proceeding."

20. I accept Mr Wren's submission that the Respondents purchased the property in reliance on the validity of the permit and prior to exchange of contracts had made inquiries with the Council as to the completion dates for the works under the permit. This was appropriate due diligence. I do not accept that the Respondent's case is weakened by the Contract of Sale not providing for the contract to be conditional upon the continuing validity of the permit.

21. Further I accept that the application put the Respondents at considerable financial risk, given its expenditure on the purchase of the property and the further expenditure on plant, equipment and other works set out in the summary presented by Mr Wren. It is noted that the Applicants did not seek an order to stop development or an injunction against the works continuing and that the Respondents continued with the works pending the determination of the application. The Tribunal's view is that in any case whether or not the works continued, the risk incurred to the Respondent as a result of the Applicants' application was very high.

22. Mr Wren did not submit that the Applicant's case in terms of Section 109(3)(vi) was vexatious or that the proceedings had been conducted vexatiously, or that in terms of Section 109(3)(c) the Applicant's claim had no tenable basis in fact and law. The parties agreed the Applicants' case was arguable.

23. The Tribunal does not accept Mr Taylor's submission that the Tribunal should come to a conclusion on the basis of Kantor's case and the documents referred to in the lists of documents presented to the Tribunal that the Applicant's case was stronger than being simply arguable. Mr Taylor requested the Tribunal to consider in support of this proposition correspondence referred to in the Council's list of documents which indicated that various extensions of the permit had consisted merely of a letter of application and a speedy reply with no indication of grounds for the application being given or of consideration of relevant matters by the Council. On Mr Wren's objection, the Tribunal declined to receive this material, as it could not be evidence in the absence of evidence of the circumstances surrounding the correspondence, the knowledge held by the parties, the history of the various extension applications, whether any discussions or conversations took place between the parties or whether Council had made any inspections of the property. The Tribunal considered that the correspondence would not be prove anything without the evidence of the surrounding circumstances being available. Also there has not been a trial or hearing of this matter as the application has been withdrawn. The Tribunal is unable to come to a conclusion on the merits of the matter apart from accepting what is conceded by both parties that the Applicants case is arguable.

24. The Tribunal accepts that the statement of Deputy President Macnamara in Hobsons Bay v Haouli quoted below is applicable.

"I should also say that the structure of Section 109 does, despite Mr Peake's submission to the contrary, create a presumption that costs lie where they fall. So far as I am aware this is the light in which Section 109(1) has been seen in this and all other Lists of the Tribunal. Nevertheless, Section 109(3)(d) provides in itself a justification for departing from the general rule. Ordinary permit review proceedings might be regarded as legitimate differences of opinion between parties as to the proper exercise of administrative discretion. No party contends for a particular view of fact or law to be found by the Tribunal. Therefore, despite the outcome, in most cases nobody can be said to be "right" or "wrong" in an ordinary permit review proceeding. An enforcement proceeding however, stands in a very different character. Just as in ordinary court proceedings, one party alleges and another party denies a particular state of fact and to apply the law to the facts which it finds, in the same way as a court does. Hence the circumstances surrounding the matter are required to be proven by proper evidence which is taken on oath, in contradistinction to the manner in which ordinary permit review applications are conducted with matters being simply asserted in the course of submission. See for instance Svanosia v Shire of Strathfieldsaye (1989) 2 AATR 26. Nevertheless as Mrs Komesaroff observed in Bayside City Council v T A Campbell (1999) 3 VPR 79, 82 at [17] "there is no general rule [that costs follow the event in enforcement orders] and each case must be judged on its merits.".

Whilst I have rejected the various attacks upon the conduct of the Council, I am persuaded nevertheless that this is a proper case for a costs order to be made. The respondents were faced with the loss of a substantial investment which they had made:

If its use as a petrol station was prohibited, an alternative use was not obvious and the buildings and installations might have to be demolished. Mr Peake was correct in characterizing the potential effects of the success of the enforcement proceedings upon the respondents as "devastating". In the event they had to defend the proceedings and call a substantial number of witnesses and do a substantial amount of work to establish with precision what the circumstances were over the years and precisely what had and had not been done on the site. Resistance to the proceedings was a matter of commercial necessity for the respondents. They were in my view, in many respects, in a similar situation to unwilling defendants in commercial litigation. That litigation was of some complexity and was therefore demanding to defend.

Even although Mr Montebello observed that Mr Peake placed no reliance on Section 109(3)(d) of the Victorian Civil and Administrative Tribunal Act the special approach taken to enforcement proceedings was implicit in the entire case made by Mr Peake and was conceded by Mr Montebello.

In my view, the circumstances described justify a departure from the general rule and an award of costs in favour of the successful respondents."

25. The Tribunal considers that this application should be regarded in the same light and that the fact that the application is withdrawn rather than determined at a hearing does not affect the costs outcome. The Respondent was put to the same risks as ordinary litigation as opposed to the determination of a review of an administrative decision and it is appropriate in this case that consideration be given to an order for costs.

26. The Tribunal does not accept that the Supreme Court Scale should apply, as requested by Mr Wren, but considers the appropriate scale as referred to in Mr Macnamara's decision is the County Court Scale "D".

27. Section 109(3)(d) is applicable in these circumstances. The nature of these proceedings is serious in that an attack is made on the validity of a permit which authorised the construction of a substantial commercial development. The proceedings were complex in that their preparation and trial involved a consideration of the validity of the numerous extensions of the permit over a period of ten years. A reading of Kantor's case is sufficient to illustrate this point. The complexity of the proceedings and the commercial impact on the Respondent of the nature of the proceeding would in the Tribunal's view require the Respondent to give the proceedings very serious attention and thorough preparation from the commencement of the application.

28. The Tribunal also considers that it is fair and just that the order for costs being made and relies on Mr Macnamara's decision in Hobsons Bay and Haouli and on the circumstances of this case mentioned above.

29. The Tribunal notes that it will be a question for the Registrar in taxing the bill to determine whether the preparation of any expert report was justified, relevant or necessary to the proceedings, and the Tribunal makes no finding on that issue.

30. The question arose as to whether the Council should be involved in this costs application or in the event an order for costs being made, whether the Applicant should itself apply for an order for costs against the Council. The Tribunal can only deal with the application before it at the present time, namely, an application by the Respondent against the Applicant for costs. The Respondent did not apply against the Council for any costs and no cross application has been made by the Applicants to pass on the burden of any order made against them.

31. Given the seriousness of the proceedings commenced by the Applicant and their complexity the Tribunal does not accept the Applicants submission that the Applicant's only be required to pay part of the costs. No good reason for this proposition was presented.