Mr Terry Montebello, Solicitor of the firm Maddock Lonie and Chisholm appeared for the Responsible Authority.

1. The person making this application for costs against the City of Bayside, Mr Can Nakkasoglu, was the applicant for review in a proceeding brought before the Tribunal under Section 87 of the Planning and Environment Act 1987.

2. That application was lodged with the Tribunal on the 19th of July 1999.

3. The application sought amendment of a planning permit which had been issued on the 10th of December 1998 by the Responsible Authority, following an earlier proceeding before the Tribunal, for a dual occupancy on land to the north of Mr Nakkasoglu's residential property.

4. Mr Nakkasoglu alleged that the amended plans which had been endorsed for the planning permit by the Responsible Authority wrongly showed an increase in floor level for the rear dwelling adjacent to his property, above that permitted by the Tribunal; an increase in the number of ground floor windows looking towards his property; and lowering of the highlight window sills on the upper floor level.

5. Mr Nakkasoglu's request was one of a number of such requests for amendment of that permit. Three other requests were by the owner/occupiers of other abutting properties, with the remaining request lodged by the Responsible Authority.

6. The Responsible Authority's request was lodged with the Tribunal on the 28th of September 1999, some months after Mr Nakkasoglu had made his application.

7. By the time of hearing of the applications, the parties in four of the proceedings had reached settlements, involving changes to the development. This included Mr Nakkasoglu's proceeding. The fifth request for amendment was later withdrawn.

8. At the hearing of the applications, on the 2nd of December 1999 following an explanation of the nature of the settlements, I indicated to the parties that I would make an order giving effect to their settlements under Section 93 of the Victorian Civil and Administrative Tribunal Act 1998.

9. That written order was made only on the 1st of February 2000, following the preparation of plans showing the revised form of development on the land, and an agreed set of conditions.

10. So far as Mr Nakkasoglu was concerned, his request was settled by the parties (including the Responsible Authority) agreeing that the applicant provide a new fence on the common boundary with a height of not less than 7 feet above ground level; and two trees, growing to a height of 6m at maturity, between the south facing highlight windows on the upper floor of Dwelling 2 and his property.

11. The general basis of the costs claim against the Responsible Authority by Mr Nakkasoglu is that the costs he incurred in the proceeding were a direct consequence of mistakes made by the Council, and their failure to take any action to rectify their mistakes before the matter was referred to VCAT.

12. Mr Nakkasoglu summarised the Council's mishandling of the matter in the following way:

"1. Council has admitted in its request that the endorsed plans "were not generally in accordance with" and "not in compliance with Condition 1 of the permit and were erroneously endorsed" when it approved amendments to the plans such as ceiling heights and window formations.

2. Council did not communicate the amendments to any of the affected parties. This made it impossible for anyone to warn the Council about the mistake they were making.

3. When I discovered the mistake in the framing stage of the development and approached Council for action, they tried to justify their position of approving amendments. This meant I had to institute my own proceedings to ensure that the impacts Council's error has had upon me did not remain uncorrected.

4. The Council conceded that they had made a mistake only after I had to lodge an appeal, and have taken the extraordinary step of trying to amend the permit despite the impacts upon me."

"Although the matter has been settled by negotiation, it has been mainly a compromise on my part to reduce my costs and it took place between me and the developers where the Council had no involvement. The settlement also reflects the reality that given the advanced stage of development it would have been difficult to achieve greater changes to the development to correct the impacts of Council's errors.

Given Council's mistake and their failure to address the impacts upon me caused by that mistake, and my inexperience with planning matters, I sought expert advice. That expert advice has assisted me to reach a settlement of the matter thus avoiding the costs of hearing. I was billed the amount of $2,367 for this expert advice. The other costs that I incurred are mainly in the form of loss of work and stationery costs during the preparation and lodgement of the appeal, which I have done myself. I seek an order to cover these costs."

14. Mr Nakkasoglu initially made this application for costs at the hearing before the Tribunal on the 2nd of December 1999.

15. Following his application, Ms Marshall of Maddock Lonie and Chisholm, Solicitors, who appeared for the Responsible Authority at the time, requested that I reserve my decision on this matter and ask Mr Nakkasoglu to confirm his application within 15 days, thus affording the opportunity for private discussions between the Responsible Authority and Mr Nakkasoglu concerning costs.

16. I agreed that this was an appropriate course.

17. Mr Nakkasoglu then wrote to the Registrar on the 23rd of December 1999 advising as follows:

"Today is the last day of the 15 working days period that Member Ms Moles gave me and the Bayside City Council to negotiate my costs claim and to inform VCAT of the outcome.

I provided the Council's solicitors with an itemised costs list as they required on the 9th of December (Attachment 2) and I wrote to them a second time on the 15th of December asking their position (Attachment 3).

I regret to inform you that there has been no response whatsoever from the other party.

This is not inconsistent with their previous disregard for procedures and conditions, the very behaviour that constituted the basis for my costs claim and I am left once again with no option but to make this application to the Tribunal to resolve the matter."

18. The hearing concerning the matter of the claim for costs then occurred on Thursday the 3rd of February 2000.

19. At that hearing, Mr Nakkasoglu reiterated his concerns and frustrations and perceived lack of co-operation in the matter. His further submissions included that, upon notifying the Responsible Authority in mid-1999 about the departure of the development occurring on the land, from the plans he believed should have been endorsed, he got a prompt reply from the Council, but no other action was taken until a further letter was sent on his behalf from Delta Design, a consulting firm.

20. He said that following the Delta Design letter, the Responsible Authority replied to him advising that in endorsing the amended plans for the development, "Council duly had regard for the provisions of the Planning and Environment Act as well as the impact on surrounding properties".

"In endorsing the plans, Council considered the following facts:

* The height of the dwellings to the top of the walls from the natural ground level was the same or lower in the endorsed plans as the plans presented to VCAT. The change in the plans relates to the height from the ground floor to the top of the wall. It should be noted that the method of construction changed from stumps in the plans before VCAT to a slab in the endorsed plans, resulting in a lower ground floor level. Consequently, what appears to be an increase in height to the top of the wall from natural ground level is not an increase at all, due to a change in the method of construction.

* In considering the changes to the ground floor windows, Council considered their effect on surrounding properties and decided that changes to the ground floor windows would not unreasonably cause an increase in overlooking. On this basis no notification was required."

22. It was only later, Mr Nakkasoglu said, that he discovered that there had been new endorsed plans to the permit.

23. He then lodged a Section 87 request on the 19th of July 1999, when he "realised [that the Council] wouldn't do anything".

24. The Responsible Authority then subsequently lodged its own application, "themselves admitting mistake". Mr Nakkasoglu described the Council's request as "a fix up of their position".

25. Further submissions at the hearing by Mr Nakkasoglu included:

"In my opinion, Condition 1 of this permit was perhaps the most important and fundamental condition to be observed when its implications are considered. Condition 1 was intended to direct developers to comply to a plan that itself was the outcome of negotiations in a VCAT appeal hearing.

I therefore have great difficulty understanding Condition 1 being overlooked by City Council planning professionals.

What is even more unacceptable for me is the Council's denial of my claim during the framing stages that there was a mistake being done. They chose to take no action to confront the mistakes they had made. Instead, they waited until after I lodged an appeal and engaged legal representation to protect my interests as I had warned them in my earlier letter of June 1999."

26. The quantum of costs claimed by Mr Nakkasoglu is a total of $4,612.70, comprising payments for legal advice to Minter Ellison Lawyers (of $3,099.70); loss of income on time spent preparing for the application for review and attending hearings etc; and application fees and fees for purchasing a copy of title (a total of $34.00).

27. Mr Nakkasoglu referred to the decision on costs in Appeal 1996/17815 City of Stonnington v E. & G. Dixon. That application again was an application for cancellation/amendment of a permit under Section 87 of the Planning and Environment Act, but brought only by the Responsible Authority. The representative of the respondent permit holders in that case sought an award of costs against the Responsible Authority "because there was no substance to the request, and that the Responsible Authority's conduct, that is its mistake, had put the parties to unnecessary expense."

28. Mr Dreyfus, the barrister appearing for the respondents in that case, submitted that an award of costs was particularly justified because the Responsible Authority should not have had to initiate the request, as, if it had properly assessed the application and made an appropriate decision, it would not have needed to make such a request.

29. Mr Liston, the Member who heard that application for review, determined that it was not appropriate to award costs. The following is part of his reasoning:

"In the Tribunal's mind the submission that the responsible authority should not have initiated the request raises an interesting issue. The responsible authority chose to initiate the request, because in their view the problem which had arisen for the parties was in substantial part a result of their error, the affected neighbour had not contributed to the problem, and that therefore it was just and appropriate for the responsible authority to take action which would permit the problem to be addressed and resolved. The Tribunal is of the view that it is appropriate for the responsible authority to take the action it did in this case, at least in some circumstances. Such a course may be less appropriate in the case where the permit had been issued for some time or had been acted upon.

Mistakes in the procedures surrounding planning permit applications are inevitable. The Tribunal is confident that if an appropriate statistical analysis was done one could reasonably and confidently calculate the probability of an error occurring in any application. Therefore any rational approval system must have procedures for dealing both with the conventional application, and the procedural mistakes that can occur in the processing of applications. Prior to the introduction of Section 87 the only recourse, for third parties at least, was to seek declaratory relief from the Supreme Court when mistakes were made in the processing of applications, the result of this was that the solution was often more costly and damaging than the original problem. The Section 87 procedures and more particularly the Section 89 procedures are an imperfect solution to this.

It seems to the Tribunal that mistakes in the processing of planning permit applications create an unresolved conflict. The aim of the planning system and more particularly responsible bodies such as responsible authorities should be to find a mechanism which leads to the resolution of the conflict as quickly as possible and at least cost to the parties as possible. Tools to achieve this end can be negotiation, a request under Section 87, a declaration application under Section 14, or a combination of all three.

Because mistakes are inevitable, and because it is desirable that mistakes are confronted and dealt with rather than left to fester away. The [sic] Tribunal does not consider [it] appropriate to punish the responsible authority by an award of costs merely on the basis that it decided to actively confront the problem rather than leave it to some other party to work towards a solution. In all problems of this type, time is of the essence, if the issue is confronted quickly damage and delay can be minimised. It is in the public interest that responsible authorities take a lead in resolving procedural disputes. It is important that responsible authorities not ordinarily be exposed to punitive costs for taking action to resolve a procedural mistake, they may be exposed to both costs and damages if the procedural mistake is of their making [sic?].

30. Referring to these reasons, Mr Nakkasoglu said that in the present proceeding, the mistake was of the Council's making and they took no timely or proper action to rectify it despite plenty of warning.

31. Mr Montebello replied for the Responsible Authority at the costs hearing.

32. He first noted that the general rule under Section 109(1) of the VCAT Act is that parties to a proceeding bears their own costs. He went on to say that sub-section (3) of Section 109 which describes the circumstances in which the Tribunal may make an order of costs against a party includes a list of "pretty serious matters". They include causing adjournments, acting vexatiously or without bona fides. The matters listed therein generally describe a party acting recklessly or negligently or unreasonably, Mr Montebello said.

33. He went on to say that, therefore, the reference in sub-paragraph (3)(e) to: "any other matter the Tribunal considers relevant", should be taken to be a reference to another type of relatively serious matter.

34. Mr Montebello went on to describe the nature of the conceded Council mistake. It arose, he said, because the Council could not call on Section 73 of the Planning and Environment Act as a legal basis upon which to make the additional amendments to the endorsed plans which had occurred. This was because they could not have reasonably concluded that the amendments would "not cause an increase in detriment to any person". This is a requirement of Section 73(c) of the Planning and Environment Act. He said that while the Responsible Authority had considered the effects of the additional windows at ground floor level, and had concluded that "they would not unreasonably cause an increase in overlooking", this assessment was wrong.

35. Mr Montebello argued that this Council conduct, however, had not been such that an award of costs was justified. He said that it was "a very technical breach" of Section 73(c) - not one that was malicious or rash.

36. It was noted also at the hearing, however, that the request lodged by the Responsible Authority in September 1999 for amendment of the permit, in describing the material mistake made in relation to the grant of the permit, included the following:

"Permit 98/3435 was issued at the direction of the Tribunal. These directions were made as part of the determination of Application 1998/038273. The plans before the Tribunal at the time of the application showed windows in a particular formation as part of south elevation plan for House 2. The plans submitted to Council for endorsement showed a different window formation and therefore were not in compliance with Condition 1 of the permit_. These plans were erroneously endorsed and now form part of the issued permit."_ (my emphasis)

Thus by implication a further breach of the provisions of Section 73 of the Act, this time of sub-section (a), was acknowledged. That breach was explicitly recognised at the directions hearing for the current proceeding and two of the other Section 87 requests held before Mr Byard.

37. Section 73(a) of the Planning and Environment Act provides:

"The Responsible Authority may amend the permit if it is satisfied that the amendment-

(a) Does not change the effect of any condition required by the Tribunal ..."

38. Mr Byard noted in his written remarks concerning the directions hearing:

"The difficulty that has arisen is that the plans submitted to, approved by and subsequently endorsed by the Responsible Authority do not comply with the requirements of Condition 1, at least in some respects.

The Responsible Authority admits that this amounts to a material mistake in relation to the grant of a permit. It recognises that it has endorsed plans that do not conform with Condition 1. It regarded the variation as minor ones which it could have been allowed (sic) pursuant to Section 72 and 73 PE Act_, if it had not been for the fact that the condition was imposed by the Tribunal. The Responsible Authority cannot vary a permit, even in ways which do not increase detriment to any person, where the condition concerned has been imposed by the Tribunal. I assume that the Responsible Authority took the view that the variations did not increase detriment to anybody because Section 73(c) ... would have prevented the amendment in any event."_ (my emphasis)

39. Thus it seems there are two "mistakes" which can be identified in relation to the endorsement of new plans by the Responsible Authority.

40. Concerning the quantum of costs claimed by Mr Nakkasoglu, Mr Montebello pointed out that the loss of wages or income was not part of any costs normally awarded by the Tribunal. He also pointed out that only rarely was the full amount of the costs claimed awarded. More usually party to party costs at County Court Scale B were awarded, he said.

41. Mr Nakkasoglu replied on all this by saying that Mr Montebello was trying to make the Council's mistake look less serious than it was. He said that he had warned the Council about the mistake in mid-year and provided them with measurements and details of the breach; and while the matter of the height of the building had never been finally resolved, it represented a major change to the form of development. He also said that while the Council eventually took action, it came very late only after the other requests were lodged. Mr Nakkasoglu further said that while Mr Montebello had noted that the permit contained no condition about the required form of the windows and there therefore was no departure from such a condition - but merely from the form of development shown on the endorsed plans - the endorsed plans requirement on a permit was, Mr Nakkasoglu said, a sufficient method of describing the form that the development was required to take. He said that it would be impossible, even if one wanted to, to describe by the conditions of a permit every individual aspect of a development being approved. He reiterated his frustration over the attempted negotiations with Maddock Lonie and Chisholm between the final day of hearing and the end of the 15 day potential settlement period for the costs claim, and the only "eleventh hour" offer of settlement by Maddock Lonie and Chisholm (on the day prior to the costs hearing).

42. I have considered the submissions made on this matter and have determined that it is appropriate that the Responsible Authority pay Mr Nakkasoglu's legal and incidental costs in this matter.

43. I reject Mr Montebello's argument that the Council's mistaken actions needed to be, and were not, serious enough to justify an award of costs. It is my assessment that Section 109(3) of the VCAT Act lists not merely "very serious" matters or deliberate actions which justify costs, but refers to a range of ways in which parties may cause unnecessary disadvantage to others. There is no requirement that the action be deliberate or malicious. Nor is there a requirement that the actions be very serious. While I agree some of the matters listed are of that kind, Section 109(3)(a), relates to actions which are not necessarily very serious: it simply refers to conducting the proceeding "in a way that unnecessarily disadvantages another party". It seems to me that a Responsible Authority by not performing its statutory duty, could well find itself unnecessarily disadvantaging some persons.

44. I am of the view that the Responsible Authority by failing to take prompt action in relation to the departure of the development on the subject land from the plans directed to be endorsed by the Tribunal, caused Mr Nakkasoglu to have to take action himself (in making a Section 87 request), when it might reasonably have been expected that the Responsible Authority would have taken the corrective action.

45. Further, while the Responsible Authority did later seek a Section 87 amendment, it was intended, somewhat curiously, that the amendment would have brought the permit into compliance with the development which had been constructed on the land - in accordance with plans wrongly endorsed. In this respect it is to be noted that the Council's own request for the Section 87 amendment sought:

"... amendment of Condition 1 of the permit that the Tribunal directed to be issued at the conclusion of hearing 1998/038273. The applicant wishes to alter the condition to allow the presently endorsed plans to form part of the permit not withstanding the fact that they were not generally in accordance with the plans submitted to VCAT."

46. I am also of the view the behaviour on the part of the Responsible Authority was more serious than making an inevitable processing slip as referred to by Mr Liston in the E and G Dixon case. The Responsible Authority's actions were twice in breach of the requirements of Section 73 of the Planning and Environment Act. The Council firstly endorsed plans which depicted the development not in the form directed by the Tribunal (thus in breach of Section 73(a) of the Act), but also endorsed revised plans which contained changes to the development which caused an increase in detriment to other persons, (in breach of Section 73(c)).

47. Furthermore, while in E. & G. Dixon, the Tribunal recognised that mistakes in the processing of planning permit applications are perhaps inevitable, it was also held that actively confronting such problems quickly - in order that damage and delay is minimised - is vital. It is in the public interest that responsible authorities take a lead in resolving procedural disputes, the Tribunal said.

48. In the current proceeding the City of Bayside showed no inclination to take a lead, and put others to the expense of bringing proceedings which, if the Council had been acting responsibly, in prompt fashion, would not have been necessary.

49. I propose to make an order for costs against the Responsible Authority. The quantum extends to the costs charged to Mr Nakkasoglu by Minter Ellison Lawyers, ($3099.70), and the application and copying fees ($34). I see no reason to reduce these amounts. I have not allowed the loss of income claim as this is not normally viewed as a cost.