Alex Gow Pty Limited v Brisbane City Council
[2001] QLC 3
•20 February 2001
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BRISBANE
20 February 2001
Re: Determination of Compensation -
Resumption for road purposes -
Acquisition of Land Act 1967.
(A99-44).
Alex Gow Pty Limited
v.
Brisbane City Council
APPLICATION FOR COSTS
Consequent upon the judgment of the decision on 5 October 2000 on compensation due in the above matter, the respondent Brisbane City Council submitted on 27 October 2000, an application for partial costs to be awarded in its favour to the extent of three-quarters of the respondent's costs of and incidental to the hearing and determination of the amended claim for compensation.
The claimant, Alex Gow Pty Limited, responded on 15 November 2000, submitting that there should be no order as to costs in favour of the respondent, and seeking costs to the claimant. At the handing down of the decision on 5 October 2000, both parties agreed that the matter of costs would be determined on the written submissions provided to the Court. The claimant has subsequently appealed the decision on the merits of the case.
The initial claim for compensation submitted by the claimant was $307,207 plus interest at $257,698, or a total of $564,905. That claim was amended during the hearing to $574,970.70 plus interest of $557,494.72 or a total of $1,132,465.40. The final submission by the respondent was for $51,207 plus disturbance items and interest. The disturbance items, excluding those in the $51,207, amounted to $39,401, giving a total amount by the respondent of $90,608.
The Court awarded compensation at $133,137, plus interest determined at $70,317.82, or a total amount of $203,454.82, plus interest at 6.75% per annum from the date of hearing on 2 May 2000 up to and including the date of final payment.
The Respondent's Claim -
The respondent argues that s.27(2) of the Acquisition of Land Act 1967 (the Act) provides guidance for the awarding of costs in such matters. In accordance with that guidance the respondent argues that the final amount determined by the Court is much nearer to the amount contended by the respondent, than that contended by the claimant. The half-way point between the amount contended was $332,789.35.
The respondent seeks support in guidance provided in Yalgan Investments Pty Ltd v. Albert Shire Council (1998) 17 QLCR 401, where the Land Appeal Court summarised relevant precedents, and said at p.408:
"(j)Section 27(2) of the Acquisition of Land Act 1967 should not be regarded as a legislative suggestion that, where the claim is substantially more than the amount awarded, and the amount put in evidence by the construction authority is not substantially less than the amount awarded, the Court should not merely refrain from awarding any costs to the claimant but should award costs to the authority. (Moyses and Others v. Townsville City Council (1979) 6 QLCR 271 at p.274).
(k)Where the Land Court is considering whether it should award costs to a constructing authority, it could be wrong to have regard merely to the amounts of the claim and of the award and of the value put in evidence by the authority. Usually it would be more relevant to enquire whether the conduct of the claimant (such as, for example, making an exorbitant claim) has been such as to force the authority, unreasonably and unnecessarily, into litigation. (Moyses and Others v. Townsville City Council (1979) 6 QLCR 271 at p.274) or whether the claimant has pursued a vexatious, dishonest or grossly exaggerated claim or presented his case in such a way as to impose unnecessary burdens on the constructing authority or the Court (Banno and Another v. Commonwealth of Australia (1993) 81 LGERA 34 at p.53)."
The respondent argues that it is not the reasonableness of the delay in pursuing the claim that is relevant, but rather that the claim was "exorbitant or greatly exaggerated". The respondent notes that the final amount awarded represents only 23% of the amended claim. On that basis the respondent argues that the claimant has pursued a grossly exaggerated claim which resulted in the respondent being unreasonably forced into litigation. The respondent argues that the claim for loss of profits between 1989 and 1991 was rejected, and the claim for loss of land and business value was seen as grossly exaggerated.
The respondent further submits that the increase in the amount finally claimed, compared to the amount initially claimed when the appeal was first lodged on 1 September 1999, had the effect of preventing any prospect of settlement in the matter.
The respondent however concedes that the claimant was moderately successful in gaining more than the amount contended for by the respondent. The respondent also concedes that no advance payment was made. It is on that basis that the respondent suggests that a partial award of 75% of his costs would be appropriate.
The Claimant's Response -
The claimant argues that the particular features of the case made it necessary for the matter to proceed to the Court and be fully litigated. The claimant also argues that the final amount determined by the Court was significantly above the figure contended for by the respondent, and that the final amounts awarded are both significant and substantial, and justify the actions taken by the claimant. The claimant contends that he also acted in a reasonable manner, accepting advice of technical experts in their respective fields.
The claimant details the chronology of communications and events leading up to the lodging of the appeal on 1 September 1999. It is contended that those communications and events demonstrate the reasonableness of the claimant's conduct in seeking settlement of the matter. The communications also demonstrate the level of willingness of the respondent to make a reasonable offer during that period.
The communications documented (total 34) extend from 4 September 1995 to 16 November 1999. The communications include 23 from the claimant to the Council, 8 of response from the Council, and 3 notes of discussions and conversations between the parties. There is an inference in the communication from the claimant's solicitors of 6 June 1997 of an agreement of an amount of $91,350 for the value of the land, plus interest calculated at $96,564,52 to that date. However, the only written indication of value of the subject land by the respondent is in a letter from the Council's valuer of 25 March 1998 indicating a value of $10,000. Inspite of the claimant's offer to accept that amount of $10,000 as an advance in the matter, there was no formal settlement paid by the respondent prior to 5 October 2000.
The claimant seeks support for a payment of its own costs in the matter in the decision of Merivale Motel Investments Pty Ltd v. Brisbane Exposition and South Bank Redevelopment Authority (1984-85) 10 QLCR 175, at pages 202 to 209 and in particular page 207.
The Legislation -
As section 34 of the Land Court Act 2000 in respect of costs did not come into effect until 1 July 2000, the general powers of this Court in this matter in respect of the awarding of costs are to be found in the provisions of s.41(9) of the Land Act 1962 which states:"41(9) The Court may make such order as it thinks fit as to the costs of or incidental to any matter that it has jurisdiction to hear and determine including, without limiting the generality of this subsection, the costs of an adjournment or application made in a pending matter, allowances to witnesses attending for the purpose of giving evidence at the hearing and the costs of any survey of boundaries."
Any costs are further directed under s.27 of the Acquisition of Land Act 1967 which states:
"27. Costs
(1) Subject to this section the costs of and incidental to the hearing and determination by the Land Court of a claim for compensation under this Act shall be in the discretion of that Court.
(2) If the amount of compensation as determined is the amount finally claimed by the claimant in the proceedings or is nearer to that amount than to the amount of the valuation finally put in evidence by the constructing authority, costs (if any) shall be awarded to the claimant, otherwise costs (if any) shall be awarded to the constructing authority."
In seeking guidance in respect of exercising my discretion in this matter, I note that the powers vested in the Land Court in respect of the awarding of costs, are established entirely by legislation, but they are also fully or completely discretionary in nature. However, it has been held that in exercising that discretion this Court must do so in a judicially sound manner, and by reference to relevant considerations. In this regard I note the findings of the Land Appeal Court in Townsville City Council v. Moyses and Morris & Others (1979) 6 QLCR 271, where the Land Appeal Court said at p.273:
"The general rule, then, is that costs are in the discretion of the Court, but of course the discretion must be exercised judicially, that is, by reference to relevant considerations. "
The general power to award costs was considered by the Full Court of the Supreme Court of Queensland in Wyatt v. Albert Shire Council [1987] 1 Qd.R. 486. The Full Court also considered the scope of a section of legislation which gave the Local Government Court power to "make such order as it thinks fit as to the costs of any proceeding before it, which it saw as essentially the same as the power conferred upon the Land Court, and which was described by the Full Court as "complete". (page 488).
I am also directed to the need to examine the reasonableness of the conduct of the parties in deciding whether or not to award costs in this matter. In that respect I note the findings of the Land Appeal Court in Moyses (supra), where the Land Appeal Court followed guidance outlined in Middleton v. Freier and Others (1958) Qd.R. 351, where Philp J, speaking for the Full Court, said at page 357:"---- Where an unfettered discretion is given by statute or a rule no court can by its decision impose conditions upon the free exercise of that discretion by another court----."
However, the Land Appeal Court in Moyses (supra) went on to explain the nature of the judicial decision at page 274:
"Second, where the Court is considering whether it should award costs to an authority, it could be wrong to have regard merely to the amounts of the claim and of the award and of the value put in evidence by the authority. We would think that usually it would be more relevant to enquire whether the conduct of the claimant, including his making of an exorbitant claim, if he has made one, has been such as to force the authority; unreasonably and unnecessarily, into litigation. "
I am also drawn to the general guidance on the awarding of costs as outlined by the Land Appeal Court in Yalgan Investments Pty Ltd (supra) at pages 406 to 408. In respect of the amounts for consideration under s.27(2) of the Act, I note that it is the final positions taken which is relevant. (Commissioner for Railways v. Buckler (1996) 1 Qd.R.18 per McPherson JA at 23).
In summarising directions provided in Yalgan I believe the key issues relevant in this matter relate to the quantum of the amounts claimed; the actions of the parties in seeking resolution of the matter; and the reasonableness of the claim. It is also noted that in exercising its unrestrained discretion in this matter, this Court is not bound by any firm rules of Court which might otherwise hinder discretion.
The Quantum of the Claims -
The final amount of compensation awarded ($133,137) lends weight to the respondent's assertion that the respondent had a more realistic appreciation of the true perspective of the value of the loss to the claimant. In the general jurisdiction it may be appropriate to say which party has won or lost. However in a compensation matter such a conclusion is not supported by the courts. That conclusion was found in Minister for the Environment v. Florence (1980-81) 45 LGRA 127, where Wells J said at page 149:"Upon an ordinary claim in the general jurisdiction it is, generally speaking, obvious who has won and who has lost, and correspondingly clear why costs usually follow the event. Upon a claim for compensation for land compulsorily acquired, it is not, generally speaking, appropriate to speak of one party as having won; compensation is awarded to one who had already been given, by statute, the right to receive it. It is therefore as just to say of the latter sort of case that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due, as it is to say of the former sort of case that prima facie costs follow the event in favour of the party who has won. But costs are, as always, discretionary, and no hard and fast rule will ever be allowed to occupy part of an area controlled by a discretion, however predictable the results of its exercise may be in certain sorts of cases. "
It is the claimant's case that the final amount determined by the Court is more than twice the amount contemplated by the respondent. In my opinion, a very large part of the claimant's expectations of lost value, was enshrined in his over-sanguine assessment of the forces impacting the claimant's market share of an industry, which was at that time moving through a period of change. As noted, in my opinion, the evidence did not support the claimant's view that most of the loss of total funeral numbers was attributed to the resumption process.
In seeking guidance upon the weight to be applied to directions in section 27(2) in respect of apportioning costs, I am directed by the respondent to Chief Executive, Department of Transport v. Nadco Pty Ltd (1998) 18 QLCR 408. In that matter the Land Appeal Court noted that the intentions of the legislation was to discourage exorbitant claims in compensation cases, when it said at page 418:"A clear intention evident in s.27(2) is to discourage exorbitant claims in compensation cases. It would not be unreasonable to describe the claim to $1,193,593.63 as exorbitant since it exceeded the sum arrived at by the member by such a large amount. It remained the claim until nearly all of the costs of the hearing had been incurred. With hindsight it can be seen that the claimant was permitted the substantial advantage of avoiding any possibility of an order for costs against it by its late amendment; to add to that an order of costs in its favour went far too far we think. In the result we conclude that the member's discretion on the matter of costs miscarried and that she should have made no order as to costs. "
While it is agreed that the purpose of s.27(2) is directed to discouraging exorbitant claims, the above decision also highlights the importance of considerations of the actions of the parties prior to the leading of evidence in respect of the final amount argued. In Nadco, an important issue on costs was clearly not just the quantum agreed, but also the perceived advantage accruing to the claimant from a belated acceptance of an application to reduce the claim, after nearly all of the costs of the hearing had been incurred.
The impacts of s.27(2) in respect of delays in defining the quanta last claimed, was also noted by the Queensland Court of Appeal in Commissioner of Railways v. Buckler (supra) where McPherson JA said at page 23:"Stated in general terms, what the Court is now required to do in fixing the incidence of costs under this rule is look to the final positions taken up by the parties. In the case of the claimant, it is the quantum of compensation last claimed. Theoretically at least, its amount might not be known until the final address of counsel for the claimant. In practice, however, s.24(2A) furnishes a disincentive against conduct like that. It does so by restricting the right to amend a claim once it has been filed in accordance with s.24(2A) of the Act. Thereafter an amendment may be allowed; but on terms including payment of costs; see s.24(3).
On the other hand there seems to be no comparable restriction preventing the constructing authority from deferring disclosure of its final position until a late stage of the proceedings. It will be discoverable only from 'the amount of the valuation finally put in evidence by the constructing authority', which means that it cannot with confidence be known what the amount of it is until the constructing authority closes its case. "
However in the current matter the claimant in fact was granted leave to amend his claim during the hearing from $307,207 plus interest, to a revised figure of $574,970.70 plus interest. While the quantum difference between either figure claimed and the resulting compensation determined by the Court still favours the respondent, the actions of the claimant suggest that no strategy was contemplated to minimise costs as occurred in Nadco.
However, I note particularly the directions of the Land Appeal Court in Moyses at page 274, where it directed that costs should be awarded to the authority where the claim substantially exceeds the award, and where the amount put in evidence by the authority is not substantially less than the amount ordered. In the current matter the conditioning influence in exercising discretion to the authority, in my opinion, is likely then to rely upon an understanding of the words "substantially less than the amount awarded".
The respondent's final evidence was for an amount of $90,608 plus interest, which is to be compared to the amount determined at $133,137 plus interest. That indicates a difference of $42,529 (47%), which the claimant argues could hardly be described as "insignificant or insubstantial" compared to the respondent's offer. On that comparison I could agree with the claimant. However compared to the final amount claimed by the claimant ($514,970.70 plus interest) the difference of 8.2% assumes a less substantial nature.
The Actions of the Parties -
As noted in Moyses, it is important not only to consider the quantum of the claim, but also the conduct of the claimant. While that matter dealt with a request for costs by the authority, in the circumstances of that case, the Land Appeal Court said at page 278:"There have been a number of similar cases in the Land Court in which no order as to costs has been made. We are not to be taken as indicating that, in any case in which enhancement is in issue, a claimant is entitled to take the matter to Court without incurring any risks as to the costs of the authority. But we do say that there are cases in which the Court can properly take the view that it was reasonable to have the matter decided by the Court and that, notwithstanding the failure of the claim, there should not be any order as to costs."
Further, while it is the conduct of the claimant which is to be considered in relation to whether the authority has been forced into "unreasonable and unnecessary litigation", the actions of the authority during the negotiations have also been the subject of judicial comment. For example, in Florence (supra), Wells J said at page 153:
"I bear in mind, however, that the approach of the authority has not been such as would have instilled complete confidence into those having the carriage of the claimant's case. There were, in particular, the strange discrepancies between the statutory offer and the open offer, on the one hand, and the value supported by the testimony of the authority's valuer, on the other. The claimant and his advisers could well have viewed, with a measure of disquiet, a case that exhibited, in deployment, such curious asymmetry."
In the negotiations between the parties from the date of resumption on 25 July 1987, and the commencement of the hearing on 2 May 2000, there were protracted communications. The reasons why the matter was delayed initially until lodgment of the claim to the respondent in September 1995, and then subsequent actions by both parties, were discussed in my decision of 5 October 2000.
However the subsequent correspondence submitted in the claimant's outline in respect of costs in this matter, indicate a level of concern that was apparently developing in the claimant's mind. Following his detailed outlined of his claim on 4 September 1995, and his offer to reach a negotiated settlement, despite repeated reminders to the respondent (15), the first indication of the respondent's intentions in respect of a response on compensation offered was on 25 March 1998. The figure of $10,000 was well below the claimant's initial expectation of $653,755.02.
The claimant formally rejected the offer from the respondent on 5 May 1998, and a conference was agreed between the parties and was held on 26 August 1998. Following lodgment of a formal claim to this Court in September 1999, the claimant indicated on 16 November 1999 a willingness to attend mediation. However, following a preliminary approach to the Court, and further discussions with the respondent who declined mediation on 28 February 2000, the parties went to hearing on 2 May 2000.
The pattern of those extended communications would indicate that it was inevitable that the matter would need final resolution by the Court. It is argued by the respondent that that conclusion was as a result of the exaggerated claims by the claimant. The claimant argues that he was reasonable in his conducting of his attempts to negotiate with the respondent, who demonstrated a reluctance to deal diligently with the matter. On the evidence I believe that both of those factors were likely to have contributed to the final outcome.
The Reasonableness of the Claim -
In seeking to understand what might be construed as the reasonableness of the claim, I note that the word "reasonable" has often been declared to mean "reasonable in all the circumstances of the case" (Opera House Investment Pty Ltd v. Devon Buildings Pty Ltd (1936) 55 CLR 110, at 116).
A "reasonable man (or person)" has been taken to mean "an ordinary person of either sex, not exceptionally excitable or pugnacious but possessed of such powers of self-control as everyone is entitled to expect that his fellow citizen will exercise in society as it is today" (Director of Public Prosecutions v. Camplin [1978] 2 All ER 168 at 173, 174). While the latter meaning has particular application to criminal law, the nexus to a person who is seen by society as demonstrating powers of self control acceptable to the wider community, would, in my opinion, appear to have relevance in the current matter.
The actions of both the claimant and the respondent may perhaps be understood in the context of whether they would be construed as meeting normal societal expectations. Did either party act in a manner which would be seen by the average person as unacceptable?
As noted in my decision of 5 October 2000, there is no evidence to discredit the reasonableness of actions of either party. (Page 30). The only criticism that might emerge could be whether either party has been less than diligent in their execution of negotiations between 1995 and 1999. It was on that basis that I apportioned interest due subsequent to 1995. I see no reason to review that conclusion in respect of how it may impact the awarding of costs in this matter.
I note the claimant's application that costs in his favour should be awarded on the basis of the decision in Merivale Motel Investments Pty Ltd (supra). In Merivale Motel Investments Pty Ltd, the learned Member (later President) decided that the legal costs of preparing a claim incurred between a notice of intention to resume and the date of lodgment of the claim to the Court, provided they are not too remote, and are the natural and reasonable consequences of the dispossession of the owner, are to be seen as part of the overall compensation costs. (Page 207).
In concluding that matter the President followed the rule expressed in Harvey v. Crawley Development Corporation (1957) 1 QB 485, per Romer LJ at 507.
In Merivale Motel Investments Pty Ltd the date of the notice of intention to resume was 2 March 1984, the date of resumption was 2 June 1984, and the claim to this Court for compensation was 10 October 1984. Legal costs were submitted from 31 May 1983 to 18 February 1985 on a party and party basis. The learned Member found that costs incurred after the date of lodgment of the claim in the Court are costs of the action to be considered in terms of s.27 of the Act. (Page 206).
He found that costs incurred prior to the date of the Proclamation of the notice of intention are matters not within the specified period and are not allowed. The learned Member also found that the notice of intention prompted the claimant to seek advice on the appropriate amount that he is likely to receive after resumption continued, and accordingly those costs should form part of the overall award. In the end the learned Member awarded compensation under all heads, including the appropriate costs of disturbance, but made no award for costs in respect of the exercise of his discretion.
In the current matter the costs identified by the claimant are more appropriately described as disturbance costs, and are not matters for consideration under s.27(2). The awarding of costs under s.27(2), as outlined, depends upon matters discussed previously in this decision. I see no special reason for an award of costs to the claimant based only upon Merivale Investments Pty Ltd.
Summary:
On the balance of evidence, I believe it was inevitable that the matter would eventually come to hearing. The actions of either party do not, in my opinion, lead me to move away from the normal conclusion that costs should follow the event.
However, in coming to that conclusion, I believe that while the respondent has a reasonable expectation to be awarded costs in his favour, he has also conceded that the claimant was partly successful in his claim. Mr Hinson also concedes that in the matter of "interest" that it may be appropriate to allocate responsibility for interest due on a 50%/50% basis. However the respondent now seeks reimbursement of 75% of his costs in view of the quantum of the determination.
I believe the history of delays between 1995 and 1999 lends weight to the conclusion that the claimant is not totally responsible for the costs incurred in the hearing and determination of the amended claim. As most of the diverging views between the parties on the compensation due occurred between 1995 and 1999, I find that a similar scenario on costs would be appropriate.
Order:
In the exercise of this Court's discretion, I now order that the claimant pay an amount equal to 50% of the respondent's costs of and incidental to the hearing and the determination of the claim for compensation. The amount of such costs shall be ascertained and fixed by the Registrar of the Supreme Court in Brisbane, pursuant to s.41(9) of the Land Act 1962.
(NG Divett)
Member of the Land Court
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