Opposition Leader Matthew Guy spent millions of dollars of taxpayers’ money to confidentially settle a lawsuit over a botched planning decision because he feared losing his job if the case went to court.
Key documents in a massive, 80,000-page dossier assembled by the Andrews government and tabled yesterday show that Mr Guy, as planning minister in the Baillieu-Napthine government in 2013, personally ordered a last-minute settlement be paid to the owner and purchaser of the Ventnor farmland on Phillip Island.
The settlement cost Victorian taxpayers $2.5 million plus costs, for a total of more than $3.5 million, the documents reveal. Senior lawyers had told the government that it should have paid a maximum of $250,000 plus legal costs.
The documents show Mr Guy ordered the multimillion-dollar payment despite repeated legal advice from a number of senior lawyers that the government had a strong case, and there was little or no grounds for a damages claim against it.
“This may be winnable @ law but this is a political fight and it is unwinnable,” Mr Guy is quoted as saying in confidential notes made by the Victorian Government Solicitor’s Office in July 2013.
“This can’t go to court. I shall not be in the job if it goes to [court].”
Fear for his job appeared to motivate Mr Guy throughout negotiations - though it’s unclear from the documents if he feared for his ministerial position or his parliamentary seat. In a 2013 meeting with senior bureaucrats, Mr Guy also expressed reservations about testifying in court and being cross-examined.
“I’m v. good in [question] time. But Q time is v diff [different] forum to court of law!” said Mr Guy, according to hand-written notes.
“[The minister] was concerned about having to give evidence before the judge,” according to departmental notes of another meeting. “The minister said that the matter needs to settle.”
The demand for a settlement came even though the government’s legal position was so strong that the state government's insurer, the Victorian Managed Insurance Authority, would only indemnify Mr Guy for a maximum of $250,000 for the Ventnor case, plus legal costs.
The documents released on Monday also raise questions about the accuracy of Mr Guy’s public justification for the settlement in the aftermath.
On ABC radio with Jon Faine days after the settlement, Mr Guy claimed the deal had been primarily made to save taxpayers the cost of a trial and made on the “recommendation of the Government Solicitor”.
The 32 boxes of documents that were dramatically tabled on Monday by the Andrews government included highly sensitive and confidential legal briefs and notes relating to Mr Guy’s controversial rezoning decision in 2011. The release of documents was ordered in March by the Labor-controlled lower house.
The state opposition opposed the tabling of the documents, which include cabinet-in-confidence and legally privileged material, claiming the government had broken a raft of precedents including the confidentiality of documents from previous governments.
The Ventnor documents raise serious questions for Mr Guy, including the potential misuse of taxpayer funds to avoid the public airing of detail about the most damaging controversy in his tumultuous stint in planning.
They also reveal a troubling involvement by senior public servants who sanctioned the multimillion-dollar payout without clear justification.
But on Monday Mr Guy said he was unconcerned. “I’m focused on preventing crime. The Labor Party is focused on issues that are seven or eight years old, throwing mud at political opponents.”
On Monday night a spokesman for Mr Guy said: “As these documents show, the legal advice was not to settle because the minister did nothing wrong. However, as is often the case, a decision was made to settle the claim to avoid creating a lawyers' picnic."
The Age understands the government is now considering referral of the Ventnor settlement to the police or the Independent Broad-based Anti-corruption Commission.
On September 8, 2011, Mr Guy stunned many in politics, planning and the law, when he used special ministerial powers to override the local Bass Coast council to rezone 24 hectares of farmland for housing at picturesque Ventnor on Phillip Island.
Plaintiff - good moral position but bad legal. Minister - has the inverse.Notes from the Victorian Government Solicitor's Office in 2013.
The intervention was against the advice of two expert planning panels, the minister’s own department and lawyers, and the unanimous position of the local council.
It sparked a storm of protest including from local residents, Mr Guy’s own Liberal colleagues and even US celebrity Miley Cyrus.
Days later, Mr Guy was forced into a humiliating backflip. He was later sued by the then purchaser of the property, Carley Nicholls. She had signed a sales contract on the basis of the rezoning, anticipating a windfall from the rise in land value.
At the time, Ms Nicholls' husband, Jim Hopkins, was a property developer, member of the Liberal Party on Phillip Island and family friend of Kennett government-era planning minister Rob Maclellan.
The Age later revealed that Mr Maclellan had lobbied for the rezoning on Mr Hopkins’ behalf.
Throughout 2013 the merits of the government’s defence in the case were assessed and re-assessed by a string of senior government solicitors and barristers as it headed towards trial. Lawyers repeatedly advised there was little legal basis for settling.
“Plaintiff (Ms Nicholls) – good moral position but bad legal,” according to notes from the Victorian Government Solicitor’s Office. “Minister – has the inverse.”
In July 2013 just weeks before the scheduled trial a senior lawyer says the government’s legal case was so “good” it should reduce its offer of settlement to $250,000. She notes that the “collateral damage @ best ‘shambolic office’.”
Initially Mr Guy seemed determined to defend the Nicholls claim, with departmental deputy secretary Prue Digby noting at the time that the minister wanted to fight it “tooth and nail”.
But Mr Guy’s resolve weakened as the reality of a Supreme Court hearing neared.
In documents marked cabinet-in-confidence from June 2013, Mr Guy laid out his justification for his request for taxpayer funding for between $600,000 to $1.1 million to settle. Among the reasons cited for avoiding a trial were the “reputational risk to the state due to a ministerial decision-making process being publicly scrutinised”.
By settling out of court, Mr Guy averted a public grilling for himself but also of senior party figures who had been embroiled in the Ventnor saga, including then federal frontbenchers Greg Hunt and Andrew Robb, and former premier Ted Baillieu.
The documents reveal concern about a subpoena issued to then premier Baillieu.
“Only the minister and [Ted Baillieu] know whether we have something to worry about,” a government barrister is quoted as saying.
Ultimately, the $250,000 figure suggested by the government's insurers was not sufficient to cover the compensation being sought by Ms Nicholls and landowner John Cadogan.
The documents reveal that just days before the scheduled hearing, Mr Guy authorised planning department deputy secretary Prue Digby to settle with Ms Nicholls and Mr Cadogan for $2.5 million.
This did not include legal costs for all the parties, which the government covered to the value of more than $1 million.
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Royce Millar is an investigative journalist at The Age with a special interest in public policy and government decision-making.