Key Points:

In pursuing or resisting a proceeding, parties must carefully consider whether there are reasonable prospects of success.

It has now been over 12 months since the basis for awarding costs in the Queensland Planning and Environment Court (P&E Court) was fundamentally changed. Historically each party to P&E Court litigation generally bore its own costs, with costs orders only possible in narrow circumstances.

While each costs application will be decided on its particular facts, recent decisions of the P&E Court provide some guidance as to the factors the P&E Court may take into consideration when deciding a costs application. This is illustrated by the case of Hydrox Nominees Pty Ltd v Noosa Shire Council (No.2) [2014] QPEC 60, in which a Council was ordered to pay 85% of the developer's costs of the appeal.

The costs provisions in the Sustainable Planning Act

For proceedings commenced since the amendments came into force in November 2012, the costs of a proceeding, or part of a proceeding, are in the discretion of the P&E Court. To that end, section 457(2) of the Sustainable Planning Act 2009 sets out a non-exhaustive list of matters to which the P&E Court may have regard in making an order for costs.

The dispute in Hydrox

A developer appealed against the then Noosa Shire Council's decision to refuse a development application to facilitate the development of a Masters Home Improvement Centre and showroom on land within the Noosa Shire Business Centre. The developer was successful in the proceedings and sought its costs of the appeal.

The Council submitted that it acted reasonably in resisting the appeal and ran an appeal which was "arguable and for a legitimate planning issue of some public importance", being the protection of the centre's hierarchy and the planning for the Shire Business Centre.

How the P&E Court determined the question of costs

The P&E Court noted that the Council's submissions (if accepted) may be relevant to an application, but are not necessarily determinative matters.

In exercising its discretion the P&E Court took into account a number of other factors, including:

  • not only had the developer been successful in obtaining the approval which it sought, it had also been successful on all but one of the areas which had been in dispute;
  • both the economists for the Council and the developer agreed that the impact of the proposal would be a net benefit (although the economists had different views on the level of that benefit);
  • the Council's economist's view was that the impact on established traders was not of such an order as to justify refusal;
  • the Council had received legal advice that that the prospects in the matter were not strong; and
  • the Council had received opinions from Senior and Junior Counsel that that the "Council had reasonable but not good prospects that the Court will uphold its decision and refuse the proposed development".

Ultimately, the P&E Court ordered that the Council pay 85% of the developer's costs of the appeal.

Despite the order for costs against the Council, the P&E Court noted that there was no evidence to suggest that the Council had acted improperly in deciding to proceed to hearing. There was no suggestion that the Council's case was frivolous or vexatious.

Take-away points

Parties should remember that the discretion of the P&E Court to award costs is an open and unfettered one.

Matters which may limit a party's exposure to a costs order include:

  • prosecuting proceedings with regard to their realistic prospects of success;
  • pursuing proceedings with advice from appropriate experts; and
  • not pursuing issues which are not sustainable in fact or law.

In pursuing or resisting a proceeding, parties must carefully consider whether there are reasonable prospects of success.

A party is not obliged to abandon an arguable but weak case, but arguments should be based on sound planning grounds and be supported by suitably qualified experts.

Finally, risks associated with costs orders may be minimised by engaging in meaningful alternative dispute resolution process in an early stage in the proceedings. Where the parties to a proceeding participate in early dispute resolution processes, and this resolves the proceeding, section 457(4) of Sustainable Planning Act may operate so that the parties will each bear its own costs.