Rajendran & Anor v Tonkin [2004] VSCA 43

7. For the reasons given by Morris, A.J.A., I agree that the appeal should be allowed against the order made by the learned trial judge on 17 May 2002 that the appellants pay the respondent's costs on an indemnity basis. That order should be set aside and in lieu therefor there should be an order that the appellants pay the respondent's costs, including reserved costs, on a party and party basis.

10. For the reasons given by Morris, A.J.A., the appeal against the orders made by the learned trial judge on 16 May 2002 should be dismissed.

16. On 16 May 2002 a judge in the trial division has made orders, pursuant to s. 168 of the Heritage Act 1995 ("the Act"), that the appellants perform certain works to a dwelling located in Riversdale Road, Camberwell. On 17 May 2002 the judge further ordered that the appellants pay the respondent's costs on an indemnity basis. The works that the appellants were ordered to perform involve the construction of a roof over part of the dwelling, the construction of internal partitions, the installation of a ceiling and associated matters. The purpose of the works is to remedy a contravention of the Act which occurred when part of the roof of the dwelling was removed by the appellants in 1999. The appellants now submit that the trial judge made a number of errors in making the orders and, in particular, failed to take into account certain considerations which are said to be relevant. Before considering these alleged errors it is desirable to set out some background matters and the nature of the powers given by s. 168 of the Act.

20. The principal purpose of the Act is to provide for the protection and conservation of places and objects of cultural heritage significance and the registration of such places and objects.[1] To achieve this purpose the Act establishes a Victorian Heritage Register, which is a list of places and objects which are given protection by the Act. Various means are used to provide this protection. For example, s. 64(1) of the Act provides that a person must not demolish, damage or alter all or any part of a registered place. There is a substantial penalty for breach of this provision, including, in serious cases, imprisonment. Further, s. 160 of the Act provides that the owner of a registered place must not allow that place to fall into disrepair. There are also provisions, such as s. 168 of the Act, which are directed at remedying any contravention.

23. One of the places on the Victorian Heritage Register is the dwelling the subject of this case, which is known as "the former Robin Boyd house". Robin Boyd, who was a leading Australian architect in the mid-20th century, designed and built the house for himself in 1947; and extended the house in 1952, which extension was described in the proceedings below as "the 1952 extension". In October 1991 the dwelling was placed on the register.[2] The statement of the significance of the building, which is recorded in the register, notes that the dwelling has historical and architectural significance, essentially by reason of its association with Boyd and because the building can be regarded as a prototype of the post-war modern Victorian house, and demonstrates innovative design with regard to response to site, informality in planning, flowing spatial arrangements, innovative use of materials and incorporation of building features.

26. The appellants have owned the dwelling since January 1973. Hence the registration of the dwelling would, without doubt, have imposed a substantial burden upon them without compensation. The appellants did not find the burden of registration an easy one. The trial judge found that it was not in issue that the roof of the 1952 extension, as well as the internal partition, were removed on 4 May 1999 on the instructions, and under the supervision, of the second appellant. This was done without a permit under the Act. The trial judge was satisfied that the removal of the roof and the internal partition constituted contraventions of s. 64 of the Act.

29. Following this contravention there were numerous steps taken by both the appellants, and the respondent, the Executive Director of Heritage Victoria with the power to manage the enforcement of the Act, to deal with the circumstances which had been created. For example, the appellants applied for a permit pursuant to s. 67 of the Act to carry out works, which effectively would involve the demolition of the 1952 extension and the construction of a much larger building in its place. The respondent sought to address the matter by serving a show cause notice pursuant to s. 161 of the Act.[3] This was subsequently followed by a repair order under s. 162 of the Act. Later still the respondent commissioned the preparation of a Conservation Management Plan; and there were further applications for a permit, some of which involve the demolition of the 1952 extension.

32. Eventually a point was reached when the respondent brought proceedings in this Court pursuant to Division 3 of Part 8 of the Act. After a hearing lasting nine days the trial judge found that the Act had been contravened and made an order to remedy the contravention, being the order which effectively required the appellants to construct a roof, and install internal partitions, to the 1952 extension.

The scope and purpose of s. 168

37. Division 3 of Part 8 of the Act provides:

"166 Interpretation In this Division - (a) a reference to a contravention of this Act includes a threatened or an apprehended contravention. (b) a reference to this Act includes a reference to a permit, consent or exemption under this Act or the conditions of a permit, consent or exemption under this Act. 167 Remedy or restraint of contraventions of this Act The Heritage Council, the Executive Director, the Director of Public Prosecutions or any other person may bring proceedings in the Supreme Court for an order to remedy or restrain a contravention of this Act. 168 Order of the Supreme Court (1) If the Supreme Court is satisfied that - (a) this Act has been contravened; or (b) this Act will be contravened unless restrained by order of the Court - the Court may make any order it thinks fit to remedy or restrain the contravention. (2) Without limiting the powers of the Supreme Court under sub-section (1), an order made under that sub-section may - (a) if the contravention of this Act comprises the construction of a building or the carrying out of works, require the demolition or removal of the building or works; or (b) if the contravention of this Act has the effect of altering the appearance or physical nature of a place or the state of land on which there is a registered place or registered object, require the restoration or reinstatement, so far as is possible, of the place or object to the condition it was in immediately before the contravention. (3) An order made under sub-section (1) has effect and may be enforced as if it were an order or judgment made by the Supreme Court under the Supreme Court Act 1986."

41. Before turning to the grounds of appeal, it is desirable to make certain observations about the nature of the power in s. 168 of the Act. Section 168(1) essentially has two components. First, the court must be satisfied that the Act has been contravened or, unless restrained by order of the court, will be contravened. Second, assuming that the court is so satisfied, the court is then vested with a discretion to make any order it thinks fit to remedy or restrain the contravention.

44. In the present case the first issue was apparent. Although the second appellant gave evidence before the trial judge disputing there had been a contravention of the Act, the appellants' counsel did not attempt to argue otherwise. Before this Court, the appellants' counsel conceded that there had been a contravention. The real issue that needs to be addressed is the nature of the discretion vested in the court when it is satisfied that the Act has been contravened.

47. As the trial judge observed, the court's discretion is confined to the making of an order "to remedy or restrain the contravention". Thus the power of the court under s. 168(1)(a) is limited to the making of an order to remedy a contravention of the Act, as to the existence of which the court is satisfied, and s. 168(2) does not extend the limits of that power. In fact the trial judge did not make all the orders sought by the respondent as she considered that some of these were not works to remedy the contravention which had occurred when the roof of the 1952 extension had been removed. The appellants in this Court did not challenge the orders made by the trial judge on the basis that they were not works to remedy the contravention she found to have occurred.

50. Subject to the limitation discussed above, the discretion given to the court by s. 168(1) of the Act is a wide one. The Act does not set out matters which must be taken into account in the exercise of the discretion; indeed, it does not even set out considerations which may be taken into account. As the trial judge observed, the exercise of a wide discretion of this kind was considered by Dixon CJ in Klein v Domus who said:

"This Court has in many and diverse connexions dealt with discretions which are given by legislation to bodies, sometimes judicial, sometimes administrative, without defining the grounds on which the discretion is to be exercised and in a sense this is one such case. We have invariably said that wherever the legislature has given a discretion of that kind you must look at the scope and purpose of the provision and at what is its real object. If it appears that the dominating, actuating reason for the decision is outside the scope of the purpose of the enactment, that vitiates the supposed exercise of the discretion. But within that very general statement of the purpose of the enactment, the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case." [4]

54. As has been noted, the principal purpose of the Act is to provide for the protection and conservation of places of cultural heritage significance. The purpose of s. 168 is clearly to advance this purpose. However it might be thought to do this in two ways. First, it enables the court to order works designed to restore the cultural heritage significance of a place in respect of which a contravention has occurred. But, second, the purpose of the Act may also be achieved by requiring the reinstatement of a place to the condition it was in immediately before a contravention even if this might not restore the cultural heritage significance of the place. The latter object warrants further explanation.

57. The protection and conservation of heritage places needs to be understood in the context of land economics. The Valuation of Land Act 1960 envisages that the improved value of land upon which a heritage building exists may sometimes be lower than the value the land would have if it were vacant.[5] In these circumstances there may be a substantial pecuniary incentive for a landowner to demolish all or part of the heritage building so as to facilitate the development of the land. The scheme of the Heritage Act is to regulate this process, principally by means of a requirement to obtain a permit to demolish or alter a heritage place and to obtain such a permit before any works are carried out, in order to ensure that non-pecuniary values are also considered. To ensure compliance with this legislative scheme, heavy penalties are provided for breach of the Act. However, because the Parliament was no doubt concerned that some landowners would simply accept a penalty, if you like, as part of the cost of the development, it provided further means to discourage deliberate, unlawful conduct. One of these means was the power given to the court by s. 168 of the Act. Another means, which was only introduced on 21 October 2003, is to enable any court to make a similar order in proceedings for an offence under the Act where a person is found guilty or convicted of that offence.[6] A further mechanism is given by s. 182 of the Act, which applies if the owner of a registered place has been convicted of an offence against s. 64 or s. 164 of the Act. This provision enables the Governor in Council to declare that the place to which the offence related must not be developed or used for a period of up to ten years. This provision is perhaps the most draconian of the suite of disincentives provided in the Act to discourage deliberate unlawful acts in relation to heritage places and objects.

60. Having regard to the scope and purpose of s. 168, and its real object, it must be accepted that the Parliament intended to leave a very wide discretion to the judicial officer exercising the power to give effect to his or her view of the justice of the case. Hence any contention that the trial judge was bound to consider a particular matter immediately faces a very significant hurdle.

63. One consideration which will ordinarily be relevant to the exercise of the discretion is the nature and circumstances of the contravention which the court is satisfied has occurred. Indeed, in some cases the court may take the view that the contravention was so serious, or so blatant, that this is sufficient to order the reinstatement of the place or object to the condition it was in immediately before the contravention, even if this might ultimately be wasteful having regard to the development prospects of the land. This is because one object underlying s. 168 of the Act is to provide a disincentive to deliberate unlawful conduct.

66. In most cases there will be other considerations which are also relevant to the exercise of the discretion to make an order to remedy a contravention of the Act. The field of potentially relevant considerations is extremely wide, and may include the actual significance of the building, whether the works would promote the cultural heritage significance of the building, whether steps were being taken to obtain a permit for the building to be altered (or remain as altered), and the personal circumstances of the parties. But because the court exercising the discretion under s. 168 must seek to achieve a just outcome, it is not desirable to set out a complete list of potentially relevant factors. Indeed this would not be possible.

69. Where there are a wide range of considerations which may be relevant, in the sense that a decision maker is entitled to take them into account, it does not follow that the decision maker errs in law if he or she does not take a particular consideration into account. In many fields of administrative and judicial decision making the range of considerations which are potentially relevant is so broad that decision making would be impossible if every possible factor, which might bear upon the question, was required to be considered as if completing some gigantic check list.[7] In Minister for Aboriginal Affairs v Peko-Wallsend Limited[8] Mason, J. set out some general principles in relation to judicial review of administrative action based upon a failure to have regard to a relevant consideration, including the following:

* the ground of failure to take into account a relevant consideration can only be made out if a decision maker fails to take into account a consideration which he or she is bound to take into account in making that decision;

* what factors a decision maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion; and

* not every consideration that a decision maker is bound to take into account, but fails to take into account, will justify the court in setting aside the impugned decision and ordering that the decision be re-exercised according to law.

75. In relation to the second of these principles, Mason, J. said:[9]

"... where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject-matter, scope and purpose of the Act."

79. In Peko-Wallsend Mason, J. also observed that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker to determine the appropriate weight to be given to the matters required to be taken into account in exercising a statutory power. He added:

"I say 'generally' because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no real importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is 'manifestly unreasonable'."[10]

83. Although there may be some differences between a judicial and an administrative discretion, all these principles are equally applicable to the discretion contained in s. 168 of the Act.

86. For the reasons set out above, I conclude that once the court is vested with a discretion to make an order under s. 168 of the Act, then, provided that the order is of a character which remedies or restrains the contravention which the court has found has occurred (or will occur unless restrained by order of the court), there is no particular consideration which the court is bound to take into account. This is because no such implication is to be found in the subject-matter, scope and purpose of the Act. Rather the intent of s. 168 of the Act is to give the court a broad discretion, which will not only entitle the court to decide which of the potentially relevant considerations it should take into account, but also to decide the weight to be placed upon those considerations. It is true that the exercise of the discretion may be set aside if it is manifestly unreasonable, in the sense described by Mason, J., but this would only be made out if it were shown that the decision was so unreasonable that no reasonable person could have come to it.[11]

90. Many of the grounds of appeal really amounted to the assertion that the trial judge should have taken certain matters into account and did not do so. For example, it was said that her Honour should have taken into account a large number of matters pertaining to the history of the dealings between the parties (ground 8). It was also said that her Honour should have taken into account matters concerning an imminent hearing of an appeal to the Heritage Council as to whether the 1952 extension could be demolished (as well as related issues) (ground 9). But, in the light of the analysis set out above, none of these grounds can succeed. Put simply, s. 168 of the Act did not require the trial judge to take any particular matter into account. That said, I am not persuaded that the trial judge did not take into account the history of the matter, which was the main issue focused upon by the appellants. Rather the position is that the trial judge did not give aspects of this history, such as the appellants' attempts to obtain a permit under the Act in the face of resistance from the respondent, the weight that the appellants thought appropriate. But this cannot found an appeal to this Court, unless the decision was manifestly unreasonable.

93. Another ground which was pursued (ground 1) was that the trial judge wrongly found, and then took into account, that items of the work relating to the restoration of the roof and the partition to the 1952 extension would preserve its status as part of a heritage place. An architectural historian, Mr Neil Clerehan, had given evidence before the trial judge that he had advised upon the nature of the works that should be carried out to restore the roof and partition. Mr Porter, who appeared for the appellants, placed particular emphasis upon the following passage of Her Honour's judgment, especially on the words "I must assume":

"However, s. 15(b) of the Act provides that it is a function of the plaintiff to make recommendations to the Heritage Council for the registration of places. The plaintiff seeks the performance of the works set out in items in the draft order. I must assume, from the listing of those items by the plaintiff, on the advice of Mr Clerehan who has a long familiarity with the building ..., that in so far as they relate to the roof and partition, being the only matters with which the court is concerned, those items in his view constitute a sufficient restoration of the 1952 extension to preserve its status as part of the heritage place. That being so, I am not concerned to go behind that view and enquire into the details of the previous state of the 1952 extension or as to which of its components were significant in the decision to include it on the Register, and whether the carrying out of the works sought will restore that significance. Accordingly, I am satisfied that the purpose of the Act will be advanced by the making of an order for the carrying out of the works listed ... above."

But I take, by the words "I must assume", that her Honour is making an inference from certain evidence, including the evidence given by Mr Clerehan, that the proposed works will constitute a sufficient restoration of the 1952 extension to preserve its status as part of the heritage place. That inference was open on the evidence. Further, although that finding of fact was clearly a relevant matter which her Honour was entitled to take into account in the exercise of her discretion, it was not necessary that her Honour drew that inference in order to make the order. Thus whether her Honour found this, or not, does not matter. The purpose of making an order pursuant to s. 168 of the Act extends beyond orders which will preserve or restore a place to a place having cultural heritage significance.

98. There were a number of other grounds raised in the notice of appeal but, having regard to the analysis set out above, none of these can succeed. These grounds (grounds 2 to 7) allege that in the exercise of her discretion the trial judge wrongly confined her considerations to certain questions and wrongly decided certain matters. Insofar as it is alleged that certain matters were not considered, Mr Porter has not been able to demonstrate that these matters were bound to be considered. Insofar as it is alleged that certain matters were wrongly decided (ground 7(a) to 7(e)), he has not demonstrated any error; nor has he demonstrated that there has been an error which would vitiate the decision.

101. It is possible to have some sympathy with the appellants. The building in question was their home of many years. It was not unreasonable that they wished to modernise the home to make it better suited to their needs and to modern conditions. This was especially so in the light of the poor structural performance of the 1952 extension. The appellants had made numerous attempts to obtain a permit to develop the site by demolishing the 1952 extension; and had even obtained a permit which involved building around, and largely obscuring, the 1952 extension. The fact that the right to appeal from the refusal of a permit under the Act was to the Heritage Council, rather than a body quite separate from the respondent, may have caused the appellants some frustration. Indeed another trial judge may have possibly exercised the discretion differently. But, that said, the appellants' case does not approach, let alone clear, the high hurdle that is necessary to show that the decision of the trial judge was manifestly unreasonable.

105. Following the delivery of her judgment, the trial judge heard an application for costs and subsequently ordered that the appellants pay the respondent's costs of the proceeding on an indemnity basis. In her judgment on this question the trial judge observed that both counsel were in agreement that the law on the question of indemnity costs was set out in her judgment in Sholl Nicholson v Chapman (No 2).[12] The principal submission of Mr Dreyfus, Q.C., on behalf of the respondent, to the trial judge was that the appellants had persisted in what should on proper consideration be seen to be a hopeless case. The trial judge observed in paragraph [6]:

"The power of the Court under s. 168 is a power to "make any order it thinks fit to remedy or restrain the contravention" of the Act which it is satisfied has occurred. Although Mrs Rajendran in evidence disputed that there had been a contravention of the Act, Mr Porter did not submit that there had been no such contravention. It was never seriously in issue that there had been a contravention, constituted by Mrs Rajendran's removal of the roof and the internal partition, thus enlivening the power of the Court under s. 168. Nevertheless, it could be said that the Court might have decided to make no order under that section."

"However, given that the defendants were represented by experienced counsel, I can only conclude, from the failure to make any submission of the kind to which I have referred in [6] above, that the defendants were aware that there would have been no substance in any such submission; and thus that they were aware that the case in respect of the roof and the partition was hopeless. Yet they nevertheless continued the defence of the proceeding."

111. The conclusion reached by her Honour that the appellants were aware that the case in respect of the roof and the partition was hopeless, does not follow from the failure of Mr Porter, for the appellants, to submit that there had been no contravention of the Act. As explained above, s. 168 of the Act has two elements. First, the court must be satisfied that the Act has been contravened or will be contravened unless restrained by order of the court. The appellants' case in relation to this aspect might reasonably have been described as hopeless. However, even if the court was satisfied that the Act had been contravened, it still must be persuaded to make an order to remedy the contravention. All sorts of matters might be advanced in that regard, including the contention which was advanced that the making of an order requiring the restoration of the roof would be futile having regard to the uncertain future of the concrete slab upon which the 1952 extension was erected. Reference to the principal judgment of the trial judge illustrates that the appellants' case could not be described as hopeless. For example, the way in which her Honour dealt with the evidence concerning the concrete slab, concluding that the future of the slab is difficult to predict, and expressly refusing to make a finding that the reinstatement of the roof would be futile only on the balance of probabilities, illustrates that there was a genuine issue to be tried. The appellants also had substantial issues to raise concerning their efforts to obtain a permit as part of an overall development strategy: which was also relevant to the exercise of the discretion.

114. Accordingly, the discretion of the trial judge in relation to costs miscarried and, to that extent, the appeal should be upheld.

117. Counsel for both parties before this Court agreed that if this aspect of the appeal was upheld this Court should re-exercise the discretion in relation to costs. Mr Dreyfus furnished a written submission in which he contended that the appellants should pay the respondent's costs on an indemnity basis.

120. It will be a rare case where it is appropriate to award indemnity costs against a defendant where the plaintiff seeks an order from the court which is discretionary in nature. In such circumstances it is incumbent upon the plaintiff to persuade the court that such an order is appropriate; it is not for the defendant to persuade the court that the discretionary order is inappropriate.

123. In this case it is significant that the respondent did not succeed in obtaining all the orders it sought, either in its originating motion or in its opening before the trial judge. At the very least, the appellants were required to incur costs to ensure that the orders made were confined to remedying the contravention that was found to have occurred.

126. It is true that the appellants failed to resist the making of an order in relation to the reinstatement of the roof, which was the principal issue before the trial judge, but much more is needed in order to justify costs on an indemnity basis. That additional component is simply not present. Mr Dreyfus persisted in contending that the respondent's case was hopeless, but I cannot agree with this submission for the reasons advanced above. In particular, I cannot agree that the appellants' case concerning the manner in which the discretion should be exercised was hopeless; and it was this issue, especially the aspect concerning the futility of restoration works, that occupied most of the time during the trial before the trial judge.

130. In my opinion, the appeal against the orders made by the trial judge on 16 May 2002 should be dismissed. However I propose that the costs order made by the trial judge on 17 May 2002 be set aside and in lieu thereof there should be an order that the appellants pay the respondent's costs, including reserved costs, on a party and party basis.

[1] Section 1(a) of the Act.

[2] The building was actually placed upon the register under the Historic Buildings Act 1981. The Heritage Act 1995 replaced the 1981 Act; and it provides that the Executive Director of Heritage Victoria must record in the current register all places registered on the Register of Historic Buildings under the 1981 Act as immediately before the commencement of the 1995 Act.

[3] A notice pursuant to s. 161 of the Act may be served if the Executive Director believes that a person has allowed a registered place to fall into disrepair. The notice may require the owner to show cause why an order should not be made requiring the owner to carry out specified works. A notice under s. 161 can only specify works which, in the Executive Director's opinion, are necessary to prevent further deterioration in the condition of the registered place. Thus s. 161 cannot be used to require the owner to execute works to remedy a breach of the Act, in the sense of restoring or reinstating a building to the condition it was in immediately before a contravention.

[4] [1963] HCA 54; (1963) 109 CLR 467 at 473.

[5] See s. 2(8) and (9) of the Valuation of Land Act 1960 which are designed to ameliorate the impact of rates and land tax in respect of land upon which there exists a heritage building the subject of heritage or planning controls.

[7] Town planning decisions are a good example. See Sweetvale Pty Ltd v Denton Corker Marshall Pty Ltd [2004] VCAT 38 at [40] and Hunnam v Evans [2003] VSC 284 at [22].

[8] [1986] HCA 40; (1986) 162 CLR 24 at 39-41.

[9] [1986] HCA 40; (1986) 162 CLR 24 at 40.

[10] [1986] HCA 40; (1986) 162 CLR 24 at 41.

[11] [1986] HCA 40; (1986) 162 CLR 24 at 41.

[12] [2001] VSC 462.