The Queensland Government proposes to fundamentally shift the costs provisions in the State’s Planning & Environment Court. Under the reforms, losing parties in an appeal will pay both their own costs and those of the winners. This fundamental departure from the Court’s traditional approach, where each party to an appeal pays their own costs, makes sense for some circumstances, however the real losers may be local governments and community groups.
The change is part of the Government’s reforms to the Sustainable Planning Act 2009 contained in the Sustainable Planning and Other Legislation Amendment (SPOLA) Bill.
Essentially, the provisions would bring the P&E Court in line with the usual rule in civil litigation that the losing party pays the winning party’s costs.
Given the present difficulties in obtaining an award for costs in the P&E Court, a widening of the costs provisions has been long overdue. However, the Government has made a clear decision to reverse the general costs rule, rather than broadening the exceptions to the existing rule.
So, how will this fundamental shift on who pays costs affect the appeal process and the parties involved?
Although the general rule will be that ‘costs follow the event’, the reforms do give the Court broad discretion to award costs. This should mean that, in appeals where each party has a well-founded argument and calls expert evidence to justify their position, the P&E Court will likely exercise its discretion to direct that each party bear its own costs. That is, the status quo in properly-contested, meritorious appeals will be maintained.
However, it’s possible that commercial competitor appeals and submitter appeals unsupported by expert evidence will not receive such equitable judgments under the proposed reforms. The risks in a ‘loser pays all’ scenario are potentially significant. So much so, that local communities and interest groups could be discouraged from legitimately appealing development approvals.
It is not uncommon for a commercial competitor (which has lodged a submission opposing a proposed development) to appeal an approval that is granted by the local government. The Government regards this as one of the ‘unsatisfactory outcomes’ that has arisen under the existing rule that each party must pay its own costs. That is, commercial competitors appeal against an approval ‘knowing that even if the case is unsuccessful they will not be penalised in costs yet will have achieved their desired outcome’.
For these cases, the new ‘loser pays’ rule may cause competitors to think twice before appealing an approval. That said, these types of appeals are traditionally litigated by leading lawyers and quite often important decisions and judicial direction arise from these hotly-contested cases.
But what is the risk to local governments? In the appeal process, where a commercial competitor is appealing the local government’s approval of a development, the local government becomes a Respondent to the appeal.
There could be the potential for costs orders to be made against the local government which granted the approval, if a commercial competitor successfully overturns the approval. If such a trend arises, we may see local governments seeking to be excused from active participation in commercial competitor appeals (similar to the position currently taken by some concurrence agencies).
A defining feature of the P&E Court is the ability for a submitter to a development application to commence or join an appeal in relation to a decision on that application. In the general civil jurisdiction, an individual person may be less likely to become involved in a legal dispute because of the threat of an adverse costs order which would likely be beyond their financial capabilities.
To counteract the threat of bankrupting costs on individuals, community action groups, NGOs and the like, the P&E Court has not generally followed the ‘loser pays’ rule, understanding that such a rule has a negative impact on access to justice. However, the SPOLA Explanatory Notes indicate an ‘anomaly’ has arisen where developments approved by the local government are being litigated by third parties on weak town planning grounds, even though these grounds might not fall into the category of ‘frivolous or vexatious’.
But what about genuine community interest groups who are honestly trying to protect an environmental or other public concern within their community? Such groups, which are usually funded by individuals, struggle to meet their own legal costs and often have to rely on pro bono legal and expert services. If they now face the possibility of not only paying their costs, but also the costs of the developer, the local government and even the concurrence agencies that join the appeal, community interest groups will be less likely to litigate in the public interest if there is the potential for an adverse costs order.
Even if a developer (or a local government) is successful in obtaining an order for costs against a submitter, what is that submitter’s potential to actually pay the costs? It may be that, in submitter appeals, a developer applies to the Court at the early interlocutory stage for an order as to security for costs. Given the broad discretion afforded to the Court, such an order may not be forthcoming, especially for community groups who are pursuing the public interest. However, if the Court is minded to make such an order and security for costs is not forthcoming, does this give the developer a ground to seek to strike out the appeal before any merits issues are ventilated?
Written submissions on SPOLA can be made to the State Development, Infrastructure and Industry Committee until 12 October 2012.
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