Ms Delia Cook of Maddock Lonie and Chisolm, Solicitors, appeared for the Responsible Authority.

1. This is an Application under Section 109(2) of the Victorian Civil and Administrative Act 1998 seeking an order against the Responsible Authority for costs incurred by the Applicants for Review/Objectors in Application for Review No 1999/024439.

2. The persons making this application for costs against Mitchell Shire Council, Mr Peter Mazorini, Ms Margaret Hatton and Mr Douglas Payne, were the Applicants for Review in a proceeding brought before us under Section 82 of the Planning and Environment Act 1987.

3. That Application sought the review of a decision by the Mitchell Shire Council to grant a permit for realignment of boundaries of three existing rural allotments at Lot 38 Lowdens Road Kilmore. The hearing of that Application for Review took place on 14 July and 24 August 1999.

4. By Order dated 26 October 1999, we allowed that Application for Review and no permit was granted. We reserved leave for the Applicants for Review to apply for costs.

5. So far as it is relevant here, Section 109 of the VCAT Act states:

(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 it is 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."

6. The basis of the costs claim against the Responsible Authority was stated by Ms Macindoe, on behalf of the Applicants for Review, as follows:

"..it is submitted that the Tribunal should make an order for costs against the Responsible Authority on the basis that it would be fair to do so as the Responsible Authority has persistently issued Notices of Decision to Grant Permits for resubdivision in circumstances where that conduct is clearly inconsistent with -

(a) the provisions of the relevant Planning Scheme; and

(b) recent decisions of the Tribunal concerning land in close proximity to the land that is the subject of the Application for Review."

7. The quantum of costs sought by the Applicants for Review is as follows:

Legal costs - Application for Review (including $170 application fee)

8. In making this Application for Costs, Ms Macindoe acknowledged the general rule that each party bear their own costs under Section 109(1) of the Victorian Civil and Administrative Tribunal Act 1998. However, she pointed out that the Tribunal has the power to order that a party pay all or a specified part of another party's costs pursuant to Section 109(2) of the VCAT Act, if the Tribunal is satisfied that it is fair to do so.

9. Ms Macindoe argued that the Tribunal has wide powers in relation to making an order for costs. In addition to the matters set out in Section 109(3)(a) to (d) of the VCAT Act, the Tribunal may have regard to "any other matter the Tribunal considers significant" under Section 109(3)(e), she said.

10. There are three previous decisions of the Tribunal relating to land in the vicinity of the subject land in Kilmore which were referenced by Ms Macindoe as supporting information for the application for costs. These are Carter & Ors v Shire of Kilmore & Street (Appeal No 1992/01090 - unreported), Carter & Ors v Shire of Kilmore & Goodman (Appeal No 1992/10237- unreported), and Payne v Mitchell Shire Council and T & C Hudson (Appeal No. 1998/2094 - unreported).

11. In the first two of these three cases, Mr Mazorini and Ms Hatton (and another) appealed against the Shire of Kilmore's Notice of Decision to allow for the realignment of boundaries of land in Kilmore zoned General Farming, under the Kilmore Planning Scheme. In the third case, Mr Payne appealed against the Shire of Mitchell's decision to issue a Notice of Decision to Grant a Permit allowing realignment of boundaries of land in Kilmore zoned General Farming, under the Shire of Mitchell Planning Scheme.

12. In all three cases, the Tribunal upheld the appeals and no permits were granted. The very similar nature of the three cases - all rural sites in close proximity to each other in an established farming area in Kilmore, with the same zoning (or the zoning as translated under the new format Mitchell Planning Scheme), and in each case with applications for boundary realignments to facilitate their development for rural living purposes - led the Tribunal to make reference to the preceding cases in each of its later decisions.

13. In the first case, Carter & Ors v Shire of Kilmore & Street, Mr Marsden of the Tribunal concluded that:

"In short, the Tribunal regards the Responsible Authority's decision as an aberration. It has no foundation whatsoever in logic or in sound town planning practice. Moreover, it runs counter to the provisions of the Responsible Authority's own Planning Scheme."

14. In the subsequent two cases the Tribunal reinforced this finding, in upholding each of the appeals against the Responsible Authority's Notice of Decision to grant a planning permit. In the second case, Carter & Ors v Shire of Kilmore & Goodman, Mr Gibson of the Tribunal discussed the interpretation of the zone purposes at length:

"Notwithstanding the distinctions highlighted by the Applicant/Respondent the appeal P Carter & others v the Shire of Kilmore (1992/010190) in my opinion stands for the proposition that the purposes to a zone expressed in a Planning Scheme must be met by any application for permit. It was clear in that case that Mr Marsden was of the view that the realignment of boundary subdivision proposal was at odds with the purposes of the zone. He therefore rejected the subdivision. In this appeal a similar analytical approach determines in my opinion that the true effect of the subdivision is what is paramount in interpreting the Planning Scheme. Boundary realignment cannot be interpreted in a vacuum. There is only special power to subdivide below the minimum if the criteria of the scheme is met.

The general purposes of the scheme in my view are clear and unambiguous. Whilst the zone provides for further subdivision and the possibility of boundary realignment along with other possible use and development opportunities suitable in rural areas, this can be done only if commercial farming can be achieved...I am of the opinion that the meaning to be given to the words of the current Planning Scheme is to avoid further non commercial land fragmentation by subdivision...it is my interpretation that any exercise of discretion for subdivision of land in this zone is now dominated by the fact that the use must be for commercial farming purposes."

15. Ms Macindoe pointed out that the Officer's Report to Council in relation to the third application (Payne v Mitchell Shire Council and T & C Hudson) recommended that the Application for Permit be refused on the grounds that the proposal was inconsistent with the purposes of the General Farming Zone and "would contradict previous AAT decisions, and if challenged, could see Council liable for costs in failing to carefully administer the Planning Scheme". (A copy of the Officer's Report to Council was provided by Ms Macindoe.)

16. Subsequently, Mr Payne appealed the Council's decision to issue a Notice of Decision to grant a permit for the third application. The Tribunal allowed the appeal, and no permit was granted. Mr Barr of the Tribunal stated that:

"It seems to the Tribunal that what is proposed is not a subdivision which can be said to be in accordance with the purpose of the General Farming Zone. It is a subdivision which is being proposed for private economic reasons, not for a `public land use purpose' in furtherance of a rural commercial farming purpose... The Tribunal also does not consider the proposal for the small lot satisfies the relevant decision guidelines in Clause 35.01-6 of the proposed planning scheme."

17. In reaching our decision in the Application for Review in the present case, we referred to the three previous cases quoted above, stating that

"The Tribunal finds itself in agreement with the conclusions of the Applicants for Review, that the proposed re-subdivision of the subject land which would encourage rural residential development, and its effective removal from any sort of productive agriculture, is contrary to the policies relating to rural land and agriculture as expressed in the SPPF and LPPF of the Mitchell Planning Scheme, and does not meet the requirements of the Rural Zone objectives or decision guidelines. In this finding, the Tribunal also follows the previous three Tribunal decisions ...relating to subdivision of rural land in the Kilmore area."

18. Ms Macindoe further advised that in this case, the Officer's Report to Council again recommended that the Application for Permit be refused on the basis that "the subdivision does not comply with the purposes of the zoning". The Officer's Report also informed Council that the decision in Payne v Mitchell Shire Council and T & C Hudson should be taken into account.

19. In terms of the effect of the introduction of the new format Mitchell Planning Scheme, Ms Macindoe acknowledged that "it may be argued that the present Application for Review is distinguishable from previous decisions of the Tribunal on the basis that this decision was made subsequent to the gazettal of the new format Planning Scheme. However, the principles of the new format Mitchell Planning Scheme seek to achieve similar objectives." Ms Macindoe made reference to Clause 17.05 of the Planning Scheme, and the purposes of the Rural Zone, to support this argument.

20. Ms Macindoe pointed out that the new format Mitchell Planning Scheme is strategically based, and provides the Responsible Authority (and the Tribunal) with more flexibility and discretion than did the former schemes, as the majority of uses, including innominate uses, are Section 2 or discretionary uses. In exercising this discretion, the Responsible Authority must have regard to Clause 65 which states that "because a permit can be granted does not imply that it should or will be granted".

21. Ms Macindoe submitted that "the only way to ensure that the Responsible Authority has regard to decisions of the Tribunal and administers the Planning Scheme responsibly is to make an order for costs in favour of the Applicants for Review." Ms Macindoe concluded that:

* "The present Application for Review represents that fourth occasion that one of more of the Applicants for Review have found it necessary, at considerable personal costs, to apply to the Tribunal for a review of irresponsible decision making by the Responsible Authority.

* The Responsible Authority has been put on notice, by its own Officer Reports and decisions of the Tribunal, that rural land must not be fragmented unless it can be shown to achieve the purposes of the Zone."

22. In response, Ms Cook for the Responsible Authority conceded that the Tribunal was emphatic in its comments in the four cases. She advised that the Responsible Authority accepted the Tribunal's decision, and while conceding that the Responsible Authority's case "was not rigorous in terms of planning policy", there is no suggestion that the Council's process was flawed. Further, the decision "was not made by the Responsible Authority in bad faith", and should be distinguished from the actions of the Responsible Authority in the case of Lowther Hall v City of Moonee Valley [1999] VCAT PL141.

23. Ms Cook considered that there were no matters listed in Section 109(2) of the VCAT Act that could be applied to the present case. She submitted that it was only in exceptional cases that costs should be awarded. However, she argued that if costs were awarded against the Responsible Authority, these should not include the cost of the land management and agricultural capability evidence, as the Responsible Authority was not contesting the land capability findings submitted by the Applicants for Review at the earlier appeals.

24. The question which arises in this costs application is whether or not the Responsible Authority has acted responsibly in relation to this permit application, and if it has not acted responsibly, is its behaviour such that an award of costs is justified.

25. In terms of making a decision on an application, Section 61(1)(c) of the P & E Act provides that a responsible authority "may decide:

(c) to refuse a permit on any ground it thinks fit".

26. However, decisions on applications must be made responsibly and in the context of Section 14 of the Planning and Environment Act which sets out the duties of a Responsible Authority as follows:

(a) to administer and enforce the planning scheme; and

(aa)to enforce any enforcement order or interim enforcement order relating to land covered by a planning scheme for which it is the responsible authority; and

(b) to implement the objectives of the planning scheme; and

(c) to comply with this Act and the planning scheme; and

(d) to provide information and reports as required by the regulations."

27. We are of the view that in this case, the duty of the implementation of the objectives of the Mitchell Planning Scheme specified under Section 14(b) of the P & E Act has not been properly undertaken by the Responsible Authority when making its decision to grant a permit for the proposed resubdivision. Specifically, we consider that the Responsible Authority has demonstrated a continued failure to implement these objectives, particularly in relation to the purposes of the Rural Zone and the policies at Clause 17.05, despite the advice of its own planning officers and the findings of the Tribunal in the earlier three cases.

28. Furthermore, the Responsible Authority was made aware by its planning officers of the possibility of costs being awarded against it if it persisted in ignoring the implications of the Rural Zone objectives and the State and local agricultural land policy statements contained in the Mitchell Planning Scheme.

29. In considering the issues of costs put before us in this case, we have examined a number of recent Tribunal decisions relating to the awarding of costs that are of relevance. The case of Lowther Hall v City of Moonee Valley was raised by Ms Cook, and while we agree with her submission that in this case the decision by the Responsible Authority was not necessarily made "in bad faith", nevertheless Ms Monk's conclusions in Lowther Hall v City of Moonee Valley are relevant here:

"I find that in the subject instance that it would be fair to award costs where the responsible authority's decision is motivated by reasons other than those which it is properly required to have regard to. It is fair also to have regard to the resultant cost implications for the preparation and presentation of the permit applicant's case in the light of such a wrongly motivated refusal, compared with a decision to grant a permit."

30. In the case Watertide Pty Ltd v Bayside City Council (Appeal Nos. 1998/47743, 1998/47751, 1998/48308 - unreported), the Tribunal ordered that the Respondent pay the reasonable costs of the Responsible Authority in the proceedings. Messrs Mitchell and Gilfillan found that:

"In this case we consider that the circumstances warrant an award of costs in favour of the Responsible Authority. Responsibility for the deficiencies on the plans that led to the institution of these proceedings lies squarely with the Respondent. The Respondent has conceded that construction work proceeded without consent. We think that the Responsible Authority is entitled to be compensated."

31. A recent assessment of the circumstances under which costs may be awarded pursuant to Section 109(3) where a Responsible Authority has been at fault is contained in Nakkasoglu v City of Bayside & Woodhams (Appeal No 1999/055403- unreported). In this decision Ms Moles of the Tribunal referred to an earlier case_, E & G Dixon v City of Stonnington (Appeal No 1996/17815 - unreported)_, in which Mr Liston, the member who heard that Application for Review, determined that it was not appropriate to award costs against that Responsible Authority despite acknowledged processing inequities. In brief, Mr Liston concluded that:

"Mistakes in the procedures surrounding planning permit applications are inevitable ...It is important that responsible authorities not ordinarily be exposed to punitive costs for taking action to resolve a procedural mistake..."

32. However, in Nakkasoglu v City of Bayside & Woodhams, in deciding to award costs against the Responsible Authority, Ms Moles found that

"...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...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."

33. In relation to what actions by a Responsible Authority were serious enough to justify an award of costs, in Nakkasoglu v City of Bayside & Woodhams Ms Moles found that:

"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."

34. We believe that these cases illustrate the Tribunal's acknowledgment of the appropriateness of an award of costs against a Responsible Authority where it has been found to have not properly carried out its functions under the P & E Act.

35. In the present case, the Responsible Authority has repeatedly failed to implement the objectives of the Planning Scheme, through its continued erroneous interpretation of the zone purposes and State and local planning policy as it applies to proposals for resubdivision of rural land in the Kilmore area.

36. The actions of the Responsible Authority in perversely persisting in its decision against the advice of its own town planners and the findings of the Tribunal has put the respondent objectors to repeated expense to defend good planning for their area. This has resulted in a significant and unnecessary financial burden for the Applicants for Review.

37. We say that the Responsible Authority has been perverse in persisting with decisions to grant permits for subdivisions of this kind, because it has ignored the clear guidance provided on the assessment of such applications by the Tribunal. While there is nothing in law that requires a Responsible Authority to take into account the Tribunal's previous decisions, it is a necessary principle of the appellate legal structure that operates in Victoria, that subordinate authorities take notice of the decisions of the review body.

38. We have concluded that it is justified that costs be awarded against the Responsible Authority. The Applicants for Review would not have incurred the costs of bringing the application if the Responsible Authority had properly applied the legislative provisions to the application in the manner indicated by the previous Tribunal decisions.

39. The quantum of costs sought has been disputed by the Responsible Authority, who argued that evidence provided by the Applicants for Review in relation to land capability and agricultural productivity was not required, as the Responsible Authority did not dispute these findings. However, we consider that the provision of such evidence in relation to each individual rural site was an essential part of the case of the Applicants for Review. We would observe here that if the Responsible Authority does indeed accept these findings of land capability and agricultural productivity over the Kilmore area as a whole, then this further highlights the failure of the Responsible Authority to properly assess the resubdivision proposals against the zone objectives and the policy requirements of the Planning Scheme.

40. The quantum of the costs we propose to order extends to the individual items claimed by the Applicants for Review as detailed in paragraph 6 above (viz costs associated with the preparation of town planning and agricultural and land management evidence, and legal costs for the Application for Review No. 1999/024439 including this application for costs). The costs are to be assessed however as party/party costs in accordance with County Court Scale "B", by the Principal Registrar of the Victorian Civil and Administrative Tribunal. We propose to order that the assessed costs are to be paid within one month of the assessment date.