PORT Stephens Council has agreed to pay developer David Vitnell an undisclosed amount, believed to be more than $2 million, to settle a legal battle that had its origins in the 1970s.
But the total cost to the council of the Lagoons Estate drainage saga, which is already in the many millions of dollars, is set to get much bigger after the council was given a December, 2020 deadline to complete drainage works it failed to do in 2006, despite a court order.
The failure to do the drainage works formed the basis of Mr Vitnell's Supreme Court case against the council from 2016. Previous estimates of the cost of the drainage work have been more than $10 million.
The works are required to stop stormwater from roads and a residential estate, developed by the council in the 1970s, from being directed to Mr Vitnell's Lagoons Estate housing development at Nelson Bay.
In May, 2018 the council acknowledged work "in purported compliance" with the 2006 court order had failed to stop excessive stormwater flowing on to the estate, which residents alleged caused damage to property.
Port Stephens mayor Ryan Palmer declined to give a total cost of the Lagoons saga, referring the Newcastle Herald to the council's annual reports where he said the costs of the legal battle since 2016 were disclosed.
Volume one of the council's 2017-18 annual report noted it spent $272,955 on the Lagoons case between July, 2017 and June, 2018 as part of a total legal fees bill of $409,735. Volume two recorded $2.779 million in council legal expenses, with an additional "legal costs provision" of $1.825 million at the end of 2018.
After questions at a council meeting councillors were told the $2.779 million legal costs was due to "an on-going legal matter" where there had been a "judgment or potential for the judgment", although the Lagoons case was not specified.
Council's 2018-19 annual report notes $727,000 in legal expenses, with a $925,000 "legal provision write back", but it is not stated how much of these figures relates to the Lagoons case.
The total bill to ratepayers of the Lagoons saga includes $1.3 million spent on failed drainage works before the council was taken to court in 2006 and ordered to stop the stormwater drainage from flooding the estate.
It also includes a failed agreement with a former owner that cost the council $750,000, but was not worth the paper it was written on. The money was part of a settlement agreement with a previous Lagoons owner that a confidential council document showed was "insurance for council that costs will not be further expended on this matter in court".
The "insurance" failed because the agreement did not bind new owner Mr Vitnell from taking action against the council.
The council is yet to fully account to the public how much has been spent fighting the Lagoons case and failing to do the drainage works since the original owner first complained more than three decades ago.
In May last year, after current councillor and former Port Stephens mayor John Nell said his "gut feeling" was that the total cost so far was $15 million, Councillor Paul Le Mottee said that at some point the council "should publish a full explanatory document about what this has cost".
Mr Vitnell confirmed there had been a settlement, but said he had not yet received his money. The settlement prevents him from disclosing the amount.
Under the terms of the agreement the council has until December to complete the works.
Mr Vitnell said he believed the works would require "some sort of joint solution for the site".