If it becomes law, the new default position for the Court when making a costs order under the proposed new Planning and Environment Court Bill 2015 (P&E Bill) will be that parties will have to pay their own costs whether they are bringing a challenge or defending one.

That contrasts with the current Sustainable Planning Act 2009 (SPA) where costs orders following a challenge to a development approval in the P&E Court are at the total discretion of the Court. When deciding on which party pays costs, the Court takes into account a number of factors, such as, the relative success of the parties and their commercial interests in the development. This gives the Court a very wide discretion to make costs orders against either party.

At first glance therefore the P&E Bill may seem to present a more favourable costs situation for commercial landowners wanting to challenge a development approval.

However there are a number of exceptions to the default position.  The main exception of concern for commercial landowners is the ‘improper purpose’ exception. It provides that the P&E Court can order a party challenging a development approval to pay the court costs of the other party if the Court believes the challenge was started for an ‘improper purpose’.

The legislation actually gives a specific example of what might be considered an ‘improper purpose’:

A party (the first party) with similar commercial interests to another party started a proceeding. The P&E Court considers the proceeding was started primarily to advance the first party’s commercial interests by delaying or obstructing the other party’s development approval from taking effect.

It seems somewhat incongruous to us that a Court set up to protect the integrity of the planning hierarchy - and even if faced with a challenge based on legitimate town planning grounds can still find a challenge to be for an “improper purpose” and so make costs orders against the challenger.

Our view is that if commercial landowners unsuccessfully challenge a development approval, and the P&E Court believes that the primary purpose of the challenge was to delay or stop a development with the goal of protecting their own commercial interests, then the Court is (just as under SPA) likely to find that the challenge was started for an ‘improper purpose’- and make consequential costs orders against the challenger.