Via Sanantonio Pty Limited v Walker Corporation Pty Limited & Anor - [2009] NSWSC 1361 - NSWSC 2009 case summary — Zoe

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Via Sanantonio Pty Limited v Walker Corporation Pty Limited & Anor

[2009] NSWSC 1361

Supreme Court of NSW|2009-11-30|Before: Bergin CJ, McDougall J

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At a glance

AI case summary

Result

defendant. Plaintiff's Motion dismissed; Defendant's Motion granted; Report adopted.

Key principles

The appropriate test for determining whether costs were 'proper and reasonable' under the settlement agreement was whether the development application had 'so little prospects of...
The Referees did not err in rejecting the expert evidence of Mr Brannock where: (a) he was not provided with all relevant information available to the defendant at the time of...

Issues before the court

Whether the Referees applied an inappropriate legal test in determining whether costs were 'proper and reasonable' under the settlement agreement
Whether the Referees erred in rejecting the expert evidence of Mr Brannock

Cited legislation

4 cited instruments linked from this judgment.

Plain English Summary

This case concerned a dispute over whether development costs were 'proper and reasonable' under a settlement agreement. The court had to decide whether Referees used the correct legal test and whether they were right to reject expert evidence. The Referees correctly decided that costs were recoverable unless the development application had 'so little prospects of success' that it was not even 'fairly arguable' - a standard lower than 'more likely than not' but higher than 'doomed to fail'. They also correctly rejected the town planner's expert evidence because he didn't have all the information the developer had, relied on irrelevant later events, and wasn't qualified to speak as a developer would. The court adopted the Referees' report.

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Catchwords

[REFEREES] - Adoption of Report - Whether Referees' applied inappropriate test - Whether Referees' erred in rejecting expert evidence

Judgment (59 paragraphs)

[1]

[8]

50192 OF 2006 VIA SANANTONIO PTY LIMITED v WALKER CORPORATION PTY LIMITED & ANOR JUDGMENT 1 By proceedings commenced on 5 December 2006 the plaintiff, Via Sanantonio Pty Limited, claimed an interest in certain option deeds held by the first defendant, Walker Corporation Pty Limited (the defendant). The claims arose out of a proposed development of land at Coonarr Beach, Queensland (the Land). The principal of the first defendant was joined as second defendant but no orders were made against him in the proceedings. The proceedings were settled on 4 February 2008 when orders were made by consent which included a declaration that the defendant held the Land on constructive trust as to one half for the plaintiff. 2 The settlement regime included provision for the plaintiff to pay the defendant 50% of the proper and reasonable costs incurred, or to be incurred, in seeking or obtaining any development approvals and re-zoning with respect to the Land. The settlement regime also included provision that in default of agreement in relation to the amount of the proper and reasonable costs, there would be an inquiry held by an Associate Judge. 3 The parties were not able to reach agreement in respect of those costs and on 5 September 2008 the parties agreed to refer certain issues to two Referees rather than pursue the inquiry before the Associate Judge. The orders made by consent on 5 September 2008 referred the determination of the quantum of "all proper and reasonable costs incurred, or to be incurred, by the first defendant in respect of the said Option Deeds, and seeking or obtaining any development approvals and re-zoning with respect to the lots" to two Referees, Ms S Duggan and Mr C Catt (the Referees). 4 The Referees delivered their report to the Court on 27 April 2009 (the first report). On 19 June 2009 McDougall J heard competing Notices of Motion in which the plaintiff sought the rejection in whole, or in part, of the first report and the defendants sought the adoption of the first report. 5 McDougall J held that the Referees did not deal with the submission that the first development application submitted by the defendant was "doomed to fail". His Honour noted that the plaintiff wished to submit to the Referees that the costs incurred in respect of that first application could not be said to be proper and reasonable costs of seeking or obtaining development approval: Via Sanantonio v Walker Corporation [2009] NSWSC 679 at [4]-[5]. 6 On 19 June 2009 orders were made remitting the matter to the Referees to consider and report further upon the following questions:

[10]

Expert evidence 8 During the reference hearing the plaintiff sought to read an affidavit of John Brannock, a town planner and a director of Brannock & Associates Pty Limited, Planning and Environment Consultants. Mr Brannock's experience included working as a City Planner for the Ipswich City Council from July 1977 to February 1988 where he established Queensland's largest provincial planning team in a Council. From February 1988 to the present time Mr Brannock has worked as a planning and environment consultant. 9 The plaintiff retained Mr Brannock by letter dated 9 July 2009 with a request to: (1) confirm that he had been provided with a copy of the expert code of conduct and that he had read it and agreed to be bound by it; (2) give his opinion on whether the first development application for approximately 2,500 dwellings had "any prospect of being approved with the then existing zoning of the optioned land"; and (3) give his opinion on what the reasonable costs would be in preparing the first development application. 10 Mr Brannock provided his report on 30 July 2009 (the report). The Introduction of the report recorded that it addresses planning considerations relating to two questions being: (1) the type of development that could have been undertaken in terms of the existing zoning of the optioned land; and (2) whether the application for Preliminary Approval to Override the Planning Scheme, pursuant to Section 3.1.6 of the Integrated Planning Act 1997 (Qld), submitted to the Burnett Shire Council in September 2006 on behalf of Walker Corporation, had prospects of success: [1.3]. The report outlined the background to the Application including correspondence from the defendant to the relevant Department in September 2005 requesting that the subject land be designated as "Future Urban" in the new Draft Planning Scheme. At that stage the land was designated "Rural Protected" and "Environmental Protection" under the relevant Council's 1997 Land Use Strategic Plan. 11 The report also included the Department's response to the defendant on 11 October 2005 which included the following:

[47]

As previously indicated, counsel for VSA accepted that the "state of mind" was that of Walker as to its prospects and it was argued that this state of mind should be tested at the time immediately before Walker lodged the application on 29 September 2006. No compelling basis was put as to why the enquiry should be so narrowly confined. We note that the information available to an applicant will accrue over the time leading up to the lodgement of an application and it would be inappropriate to require the sole analysis of the reasonableness of pursuing an application being a single point on a single day of that process. The unreasonableness of this position is illustrated by the fact that by the date on which VSA asks us to determine the reasonableness of Walker's position Walker would have incurred most of the external and internal costs that form the subject matter of the second question referred to us. At that time, and after that expenditure, it would have been uncommercial and perplexing if Walker did not proceed with lodging its application - and the question before us should instead be whether the response of BSC et al warranted Walker incurring further costs in replying to the Request for Further Information. Accordingly, we have formed the view that the inquiry should be of Walker's state of mind throughout the period to 29 September 2006, and whether Walker's belief was objectively justified based upon facts, materials and law then existing. 26 After setting out the salient features of the history in respect of the Application the Referees concluded as follows: 102. Looking at the totality of the evidence and the information available to Walker when it lodged the application, we find that Walker had material before it which objectively justified proceeding with lodging the application. We consider that Walker held an objective belief, on the basis of the provable facts and a reasonably arguable view of the law, that its application would be considered on its merits and that the prospects of obtaining the development approval from the assessment manager were "fairly arguable". We consider that this was a reasonable belief for Walker to hold because it fell within the range of views which could reasonably be entertained.

[54]

34 The Referees were asked to consider the hypothetical developer who would have had the advice and material available to it as was provided to the defendant prior to the submission of the Application. If the test to be applied to the hypothetical developer's conduct was that it had to be satisfied that it was more likely than not that the application would be approved, then the parties and the Court would have utilised that expression in the questions posed for the Referees. The parties obviously had some debate about the test to be applied to this question. The Short Minutes originally provided for the question to be answered on the basis that the application had "no prospects of success". That was then changed to the test whether the application had "no reasonable prospects of success". The final version was whether the first application had "so little prospects of success". A judgment had to be made by the Referees as to whether the prospects of success of this application were "so little" that any of the costs incurred in preparing it and lodging it would not be recoverable, that is, "not proper and reasonable" to impose on the plaintiff. 35 The Referees were of the view that the test "so little prospects of success" was very similar to the test "without reasonable prospects of success". I am satisfied that this comparison was appropriate and the adoption of the test "so lacking in merit or substance as to be not fairly arguable" is appropriate when applying the test of "so little prospects of success" in the context of the question. The insertion of the word "so" before the word "little" was to emphasise that the prospects of obtaining approval were not merely little but "so little", that the costs would not be reasonably or properly incurred. The Referees concluded that the defendant was justified in proceedings with lodging the Application because it had material before it on which it was entitled to conclude that that the prospects of obtaining the development approval were "fairly arguable". Thus the prospects were not so little as to make the costs unreasonable or improper. 36 I am not satisfied that the plaintiff has established that the Referees fell into error in relation to the applicable test.

[57]

REFEREE CATT: Don't you therefore need an expert developer to say, "based on all this information I would have given up on the project"? MR ARNOTT: No, because an expert developer would rely on the planning consultants which they all retain. In this case it was Place, and Place was providing that advice. We heard yesterday that that advice was ignored on occasions and that was their role, to assess whether this development application was one which should go forward. Place said no, that that is the role that the developer has for a planning consultant. That is why they have planning consultants, in order to frame development applications which are likely to succeed. 39 The Referees noted that Mr Brannock had no experience as a developer. 40 At the time the plaintiff filed its present Notice of Motion it also wrote to the Referees requesting more detailed reasons in relation to the rejection of Mr Brannock's evidence. Of course this was after the conclusion of the reference and after the Referees had complied with their obligations and produced their Report to the Court. The defendants wrote to the Referees suggesting that they could not see any proper basis for the plaintiff's request for additional reasons at this late stage. At the time of the hearing of these applications no further reasons have been produced. The plaintiff did not seek an order that the Referees provide additional reasons, nor did it seek an adjournment of these applications to explore the prospect of obtaining additional reasons. 41 One ground upon which the Referees rejected Mr Brannock's evidence was that he was not provided with all relevant information to form a relevant opinion that would assist the Referees. It is not in issue that Mr Brannock was not provided with all the information that was available to the defendant at the time that it lodged the Application. It would have been necessary for any expert (even if appropriately qualified) to assess what was available to the developer to be in a position to form an expert opinion of the developer's assessment of the prospects of success of the Application. 42 Another ground upon which the Referees rejected Mr Brannock's evidence was that he had been provided with information that was irrelevant to the determination of the questions before them. That irrelevant information was the subsequent communications to the Council by the various agencies suggesting refusal of the Application. It is quite clear that Mr Brannock took these irrelevant matters into account in reaching his opinion. The Referees also expressed the view that they were unable to properly understand what matters Mr Brannock had taken into account in reaching his conclusion. The Referees' reasons indicate that they were of the view that it would not be possible to excise the irrelevant information or to work out what weight was given to that irrelevant information in any reasonable fashion to assist them in their duty to answer the questions referred to them. 43 It was accepted by the plaintiff in submissions to the Referees that the question was "from the point of view of someone submitting the Development Application" (tr 562). In those circumstances the Referees were entitled to form the view that Mr Brannock's lack of experience as a developer was a matter to be taken into account. 44 Finally the Referees concluded that the report would be of "so little weight" in determining the relevant questions as to be of no probative value. 45 The reasons given by the Referees were adequate to understand the basis of their rejection of the expert's report. It is clear that the expert was swayed in his opinion by irrelevant material. It is also clear that he did not have all the relevant material necessary to reach an appropriately informed opinion to assist the Referees. I am not satisfied that the Referees fell into error in rejecting the expert evidence.

Via Sanantonio Pty Limited v Walker Corporation Pty Limited & Anor

At a glance

Result

Key principles

Issues before the court

Cited legislation

Plain English Summary

Catchwords

Judgment (59 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (10)

AI Analysis