The Planning and Environment Court’s expanded costs power was introduced in November 2012. Since that time, we have released three alerts (22 November 2012, 16 September 2013, and 24 January 2014) examining decisions made under the costs provision in section 457 of the Sustainable Planning Act 2009 (SPA).
In the latest decision on costs, YFG Shopping Centres Pty Ltd v Brisbane City Council & Ors (No 2)  QPEC 43, the Planning and Environment Court awarded costs to a developer who successfully defended an appeal instituted by a commercial competitor.
In this alert, Partner David Nicholls and Senior Associate Gemma Chadwick outline important aspects of the YFG decision.
- The broad costs discretion enables the Planning and Environment Court to make robust and practical decisions about costs, weighing up concepts such as the “relative success of the parties” as well as their “commercial interests”.
- The concept of “relative success of the parties” does not equate to the general rule in civil litigation that “costs follow the event”, however, in proceedings involving commercial competitors it is likely to be a significant factor weighing in the Court’s ultimate discretion to awards costs.
- It will be difficult for commercial competitors to draw parallels between their interest in a proceeding (even where involving legitimate interests rather than purely economic ones) and members of a community who raise genuine concerns about negative impacts on amenity. As a consequence, commercial competitors and submitters are likely to be treated differently from a costs perspective;
- Even when a party succeeds in establishing conflict with the scheme, this will not automatically militate against a costs order. The degree of success will be viewed in the context of sufficient grounds and, if there is evidence of a clear need, that will be particularly relevant.
The Brisbane City Council had issued a Negotiated Decision Notice to the developer, Fabcot, for a mixed use development, incorporating a significant Woolworths supermarket with associated specialty shops, a Masters hardware store and medium density residential development in Everton Park.
Council’s approval was challenged in the Planning and Environment Court by YFG, the owner of two significant shopping centres in the general vicinity of the land. YFG, the only party to the appeal who opposed the proposed development, raised issues encompassing:
- conflict with Council’s planning scheme, City Plan 2000;
- out of centre development;
- urban design and visual amenity;
- stormwater flooding and drainage;
- traffic; and
- a lack of sufficient grounds to justify approval despite the conflict and, in particular, a lack of need for the proposed Masters development.
The Planning and Environment Court delivered a judgment in October 2013, disposing of YFG’s appeal. Fabcot then applied to the Court for an order that YFG pay its costs of and incidental to the appeal, to be assessed on the standard basis. In the alternative, Fabcot sought its costs associated with the issues in dispute concerning out of centre development, urban design and visual amenity, stormwater flooding and drainage, traffic and sufficient grounds.
YFG cross applied, seeking an order that Fabcot pay its cost of an incidental to the appeal or, in the alternative, limited costs associated with disputed traffic issues. YFG also sought its costs “thrown away” in respect of a number of court appearances subsequent to the handing down of the substantive judgment.
The philosophy of costs
The Court made some interesting observations on the notion of “the relative success of the parties” as distinct from the idea of “costs following the event”. The general rule in civil proceedings, found in rule 681 of the Uniform Civil Procedure Rules 1999, is that costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise. That general rule does not apply in the Planning and Environment Court, where the discretion is an open one, with the Court empowered to have regard to a range of matters including “the relative success of the parties” and “the commercial interests of the parties”.
In discussing the general philosophy of costs in the Planning and Environment Court, His Honour Judge Jones referred to comments in Cox & Ors v Brisbane City Council & Anor (No 2)  QPELR 92, where Rackemann DCJ had noted that the discretion in the Planning and Environment Court was not to be approached on the presumption that costs follow the event, or that there is a qualified protection against an adverse costs order, as was previously the case in SPA. Instead, the discretion was an open one. Jones DCJ agreed with those observations, noting that there was no presumption that costs follow the event or notion that the relative success of the parties should be determinative of costs issues. However Jones DCJ made it plain that the success of the parties was a relevant consideration. In fact, Jones DCJ considered it to be “a significant consideration” in light of “litigation of the type involved here” (which, when considered against the balance of his Honour’s reasons, seems to be a reference to litigation between commercial competitors).
The judge noted:
“On any objective view of it, Fabcot had successfully defended itself against YFG’s appeal. It is true that Fabcot may have lost some of the battles along the way but that does not detract from the overall success of Fabcot in my view, at least not to the extent of denying it any favourable costs orders.”
His Honour then went on to deal with submissions about the commercial interests of the parties. The judge noted:
- It was clear, even on YFG’s case, that it had a commercial interest in the outcome of the proceeding, even if (as was suggested in YFG’s submissions) that interest was to ensure a more efficient road network to facilitate access to facilities and services offered at YFG’s shopping centres.
- Section 457(2)(b) of SPA does not require that there be an identifiable untoward commercial motive, rather what is relevant (if the court considers it so) is the fact that a party has a commercial interest in the outcome of the proceeding.
- A number of the issues raised by YFG were legitimate issues supported by appropriate expert evidence.
Expanding on the final point, Jones DCJ considered the case of Cox could be distinguished, even though two of the parties to that proceeding had some commercial interest in the proceeding. The relevant factor was that, in Cox, the issues centred on the character and amenity of the area which involved matters of judgment where “reasonable minds can differ”. His Honour concluded:
“… This was not such a case. While I accept that YFG might have had legitimate interests, other than purely economic ones, in seeing the subject site appropriately developed it was, at the end of the day, a significant commercial entity with commercial interests in the general area that made a commercial decision to attempt to prevent the Masters development proceeding. Unlike the situation in Cox, this was not a case involving a member or members of a community having genuine concerns about negative impacts on amenity.
…[I]t is my firm view that the only inference reasonably open was that YFG instituted its appeal intending, at least in part, to protect its undisclosed commercial interests. I was not taken to any material to indicate that YFG was acting in the public interest. In regard to s 457(2)(b) of the SPA there was no material which would indicate that YFG’s motive was to merely delay the proposed development. Its obvious intention was to stop the proposed Masters development which, I suppose, is the ultimate form of delay. Given YFG’s approach to the litigation I am unable to draw any other conclusion. In this context I consider the distinction between a “commercial competitor” and a “submitter with a commercial interest in the locality” to be, in the circumstances of these proceedings, one of little, if any, significance.”
YFG argued that it was entitled to its costs, or at the least Fabcot should be denied a favourable costs order, because:
- it successfully established there was conflict with the planning scheme, despite Fabcot’s and Council’s denial that there was any conflict; and
- it achieved, through the appeal, a number of improvements that were of public benefit including a better hydraulic outcome and a significantly improved design outcome of Everton Avenue (the proposed road adjoining the residential component of the development).
The judge concluded that these assertions had to be seen in context. In particular, while YFG established conflict with the scheme, it was “abundantly clear, when seen in the light of all the evidence” that there was sufficient need to justify the approval despite the conflict. In that context, it was significant that the economic evidence of the experts called by Council and Fabcot was not seriously challenged by YFG’s expert. In addition, the judge categorised the hydraulic issue as a “side issue” and considered that urban design and visual amenity issues were “of little consequence in the overall context of the appeal.” Finally, it weighed against YFG that it maintained a traffic issue when it was clear on the evidence it could be dealt with through conditions and was not sustainable as a reason for refusal.
The costs orders
Against that background, the judge considered that it may have been open to require YFG to pay all of Fabcot’s costs associated with the appeal. In balancing the moderate success of YFG on the “conflict” issue, the judge ultimately concluded that YFG should pay two thirds of Fabcot’s costs of the appeal.
YFG failed to establish a basis to support an order for its costs in the appeal. The judge noted that the discount applied to the orders made in favour of Fabcot recognised any success YFG had. YFG had some limited success in respect of its application for “costs thrown away”, with the judge ultimately ordering that it incurred costs on two days (following delivery of judgment in the substantive appeal) due to Fabcot’s failure to provide material, including plans to the parties.
The broad costs discretion enables the Planning and Environment Court to make robust and practical decisions about costs, weighing up concepts such as the “relative success of the parties” as well as their “commercial interests”.