'Lawyer's picnic': Matthew Guy insists Ventnor costs in the millions
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'Lawyer's picnic': Matthew Guy insists Ventnor costs in the millions

The state opposition has claimed that settling the Ventnor planning row out of court had saved taxpayers “tens of millions” of dollars in legal costs and damages, but official estimates suggest running the case would have cost a fraction of that.

Documents show the Baillieu government's own advice at the time said it was highly likely to win a court case, and its legal costs for running a full trial would have been about $300,000.

Matthew Guy in parliament on Wednesday. He claims his settlement saved taxpayers.

Matthew Guy in parliament on Wednesday. He claims his settlement saved taxpayers.

Photo: Justin McManus

Opposition leader Matthew Guy was questioned on Wednesday by 3AW’s Neil Mitchell about his last minute payout of $3.5 million (including costs) to the owners and buyers of farmland at Ventnor on Phillip Island to settle a legal case over his botched rezoning.

The settlement averted a Supreme Court trial and, Mr Guy said, had saved taxpayers a “lawyers’ picnic”.

“It would cost a hell of a lot more than that [$3.5 million]. And [the case could be] potentially lost. Can you imagine? It would cost even more … I was being advised that,” Mr Guy told Mr Mitchell on Wednesday.

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“I was pretty clear, and the discussions I had were pretty clear, that if you lost a court case it would cost a hell of a lot more than if you settled it out of court.”

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Mr Guy did not provide an estimate of the potential costs and damages, but shadow minister for education Tim Smith told Jon Faine on ABC Radio that the settlement had saved taxpayers “potentially tens of millions of dollars”.

Mr Guy did not respond to requests for comment from The Age.

But the Opposition claims about legal costs and exposure to damages contradict Mr Guy’s own submission to cabinet in 2013, which are contained in the 80,000 page Ventnor document archive tabled by the Andrews government on Monday.

Illustration: Matt Golding

Illustration: Matt Golding

Mr Guy sought approval from cabinet for a settlement with the Ventor land purchaser Carley Nicholls, of up to $1.1 million.

It included advice by three barristers that Ms Nicholls’ main case against Mr Guy’s rezoning backflip had no greater than a 50 per cent prospect of success. Even if she had won the case, no damages would be awarded, the advice said.

On matters where Ms Nicholls could potentially argue for damages against the government, the advice was that she had a “minimal” chance of winning, and even if she did win, the damages would be “negligible”.

The cabinet document said that, in the event of a loss at trial, the government could be liable for a “substantial costs award”. No figure was provided, but any award was likely to be substantially below Mr Guy’s estimate of “hell of a lot more” than $3.5 million.

Separate instructions issued to department lawyers by deputy secretary Prue Digby in mid-2012 showed the government estimated it would spend $300,000 for its own defence at trial.

The documents, which include confidential cabinet and legal briefs, show Mr Guy insisted on using taxpayers' money to settle the lawsuit anyway, because he feared losing his job if the case went to court.

This was despite repeated legal advice from senior lawyers that the government's legal position was so strong that any pre-trial settlement should have been a maximum of just $250,000 plus legal costs.

The farmland in Ventnor at the centre of Matthew Guy's controversial planning decision.

The farmland in Ventnor at the centre of Matthew Guy's controversial planning decision.

Photo: The Age, Eddie Jim

Liz Harris, a Melbourne-based legal costs expert, told The Age this week that for a matter like Ventnor, the total daily trial costs – taking in both sides – would be in the realm of $25,000 to $30,000 a day. A realistic estimate of the costs for a full 15-day trial was between $330,000 and $450,000 for both sides of the dispute.

Ms Harris said that if the government had lost the Ventnor case, it would likely have needed to pay pre-trial costs that could also run into hundreds of thousands of dollars.

No estimate comes close to the “tens of millions” of dollars suggested by Mr Smith.

The $3.5 million of taxpayers’ money was authorised personally by Mr Guy just days before the Supreme Court trial was due to being in August 2013.

The State Labor government will use its numbers to pass a censure motion against Mr Guy in Parliament on Thursday as a means of keeping the pressure on the opposition leader.
Mr Guy accused Premier Daniel Andrews and his senior ministers of being “obsessed” with the Coalition, instead of being focused on governing the state.

with Noel Towell

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Royce Millar is an investigative journalist with a special interest in public policy and government decision-making.

Chris Vedelago is an investigative journalist with a special interest in crime and justice.