Bowers v Council of the Shire of Pine Rivers
[2005] QLC 53
•8 November 2005
LAND COURT OF QUEENSLAND
CITATION: Bowers & Anor v Council of the Shire of Pine Rivers [2005] QLC 0053 PARTIES: Olive Louise Bowers and Lynette Ann Crane (as personal representatives)
(claimants)v. Council of the Shire of Pine Rivers
(respondent)FILE NO: A2004/0137 DIVISION: Land Court of Queensland PROCEEDING: Application for costs. DELIVERED ON: 8 November 2005 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDER: The respondent's application for costs is dismissed. Background
The claimants were the owners of 16.187 hectares of land located at Bunya Road, Ferny Hills, more properly described as Lot 1 on Registered Plan 13591 County of Stanley, Parish of Bunya. By proclamation published in the Queensland Government Gazette dated 9 May 2003 the whole of the land was resumed by the respondent for "rubbish depot purposes".
A claim for compensation pursuant to section 19 of the Acquisition of Land Act 1967 was filed in this Court by the claimants on 10 November 2004, seeking compensation in the amount $2,600,000 made up of – "Land and Improvements": $2,500,000 and "Disturbance": estimated at $100,000. When the matter commenced before me on 7 March 2005 the claimants, relying on a valuation prepared by a registered valuer, were claiming compensation in the amount of $3,185,000 excluding interest and disturbance. The respondent, also relying on valuation advice put forward two valuation scenarios, one yielding a figure for compensation in the amount of $490,000, the other $400,000. Both of these amounts were exclusive of any allowances for disturbance and interest.
On the last day of the hearing the claimants, without objection by the respondent and with the leave of the Court, amended their claim to $2,821,000 exclusive of disturbance and interest. The various disturbance claims were agreed in the amount of $20,000 on an "all up" basis. The total amount of compensation being finally claimed by the claimants was therefore $2,841,000 plus interest.
A brief summary of events following the resumption of the land includes:
·On 10 November 2004 proceedings were commenced in this Court by the claimants, seeking compensation in the amount of $2,600,000 plus interest.
·On or about 28 November 2003 the respondent paid to the claimants the amount of $400,000 by way of an advance of compensation.
·The hearing of this matter, which was originally estimated to require only five days of Court time, commenced on 7 March 2005 and occupied five days including opening addresses and a view. The matter being only part heard was adjourned on 11 March to resume on 11 April 2005 for a further five days.
·On 11 April 2005 the proceedings resumed and occupied a further five days of hearing time. The matter, still not being finished on 15 April was adjourned to 6 June 2005.
·By letter dated 21 April 2005, headed "Without prejudice except as to costs" the respondent made to the claimants an "all up" offer to settle in the amount of $825,000.
·On 6 June 2005 proceedings resumed and occupied a further five days.
·On or about 24 June 2005 the respondent paid to the claimants the amount of $110,000 by way of a further advance of compensation.
·On 15 September 2005 I determined compensation in the amount of $832,000 (inclusive of disturbance) together with interest.
The respondent has applied, pursuant to s.27 of the Acquisition of Land Act 1967 ("ALA"), for orders in the following terms:
"(a)the Applicants pay to the Respondent its costs of, and incidental to, the proceeding incurred after 21 April 2005; and
(b)the Applicants pay to the Respondent its costs of, and incidental to, the proceeding up until 21 April 2005."
The claimants oppose the orders sought and contend that the Court should make no orders as to costs.
Section 27 of the ALA
As already identified above, compensation was determined in the amount of $832,000 together with interest. This amount was made up of the value of land and improvements, $812,000 and disturbance (as agreed) $20,000. In these circumstances, costs, if awarded, can only be awarded in favour of the respondent, such is the effect and operation of s.27 of the ALA which provides:
(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.
(3)Subsection (2) does not apply to any appeal in respect of the decision of the Land Court or to costs awarded pursuant to section 24(3) or section 25(3).
It was submitted on behalf of the respondent that, for the purposes of s.27(2) of the ALA, its "ultimate" position was that compensation should be assessed at $510,000. The written submissions made on behalf of the claimants accept the respondent's argument where, in paragraph 5, it is stated that the respective positions of the parties were: the claimants $2,841,000; the respondent $510,000.
The only reason for emphasising the respondent's position is that, as referred to above, the respondent ran an alternative valuation case. And, while there is little doubt that the respondent's primary case was for compensation in the sum of $510,000, it was made clear on the last day of proceedings that the alternative case was not abandoned.[1] In these circumstances, it seems to me that it was at least arguable that the "… valuation finally put in evidence by the constructing authority …" was $420,000 and not $510,000. However, as both parties have agreed on the figure of $510,000, that is the figure I will adopt. Further, for reasons which will hopefully become clear, I would have come to the same conclusions had $420,000 and not $510,000 been the true final valuation of the respondent.
[1] T968 L30–45; T969 L1–10.
As was observed by McPherson JA in Commissioner for Railways v Buckler,[2] one of the likely purposes of the wording of s.27(2) is to discourage exorbitant compensation claims being made by the owners of land affected by compulsory acquisition. It is also well established that in cases involving the compulsory taking of land, where the estate and interest in the land converts into a right to claim compensation in the hands of the dispossessed owners,[3] it is not appropriate to resolve the question of costs simply by reference to which party notionally "won" or "lost". For example in the Minister for the Environment v Florence[4] it was said:
"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 result of its exercise may be in certain sorts of cases…"
[2] (1996) 1 Qd R 18 at 23.
[3] s.12(5) ALA.
[4](1981) 45 LGRA 127 at 149 – 150; refer also to Banno & Anor v Commonwealth of Australia (1993) 81 LGERA 34 at 53; Yalgan Investments Pty Ltd v Council of the Shire of Albert (1997) 17 QLCR 401; Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act (2001) 113 LGERA 439, paras [69]–[74].
To my mind, the summary of the principles relevant to the application of s.27(2) set out by the Land Appeal Court in Yalgan Investments Pty Ltd[5] (at pages 406 to 408) remains the most succinct yet comprehensive discussion of assistance on this topic. Of particular relevance to any application for costs by a resuming authority are the observations of that Court in sub-paragraph (k) at page 408,[6] where it was said:
"(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 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 at p.53)."
[5] 17 QLCR 401
[6]cited with approval by the Land Appeal Court in Chief Executive, Department of Main Roads v Hammercall Pty Ltd (2002) 23 QLCR 173 at paras 96–98.
The superficiality of merely having regard to the final claim, the final valuation of the respondent and the Courts determination is well illustrated in this case. If regard is had, for example, to only the amount of the final claim and the determination of the Court it might be suggested that this gives a clear indication that the claim was an exorbitant one and that therefore the claimants acted unreasonably. However, if the focus is turned to the comparison between the determination of the Court and the respondent's position an entirely different conclusion is open. That is, surely it was reasonable for the claimants to have this matter litigated as it netted them an additional $322,000 (excluding interest). The approach reinforced by the Land Appeal Court in Yalgan, of having particular regard to the reasonableness of the conduct of the claimant in circumstances where an application for costs by the constructing authority is being considered, is clearly preferable and more likely to lead to a fair and just result.
It also needs to be borne in mind that, in cases such as this, notwithstanding that costs are not awarded to punish the unsuccessful party but to indemnify the successful party,[7] the harsh reality for the claimant is that the likely consequence of such an order is an erosion of the benefit of just compensation as determined by the Court.
[7] Oshlack v Richmond River Council (1998) 193 CLR 72 at 75 per Brennan CJ and 97 per McHugh J.
In support of the respondent's application, in addition to drawing attention to the significant disparity between the amount finally claimed and the judgment, reference was also made to other facts and circumstances which are said to justify the costs orders sought. In particular, in paragraphs 4.1 to 4.3 of the written submissions relied on by the respondent it is asserted:
"4.1It is apparent from the matters noted in paragraphs 2.10 to paragraph 2.16 herein that the Applicants failure in this case arises from their failure to address the real issue in this case, being the impact of physical characteristics of the subject land (i.e. development constraints, particularly the non–availability of bulk water) upon the type of residential use which could reasonably have been expected on the subject land. The Applicants case simply involved an assumption (which the Court rejected) that a relationship between the Respondent's planning decisions and the scheme of resumption would necessarily involve a finding that the subject land would have been used for Residential A purposes.
4.2In these circumstances, it is submitted that the Court should exercise its discretion to award costs in favour of the Respondent for the entire hearing. This submission is also reliant upon the fact that, in comparison to the position adopted by the Applicants, the Respondent's final position was close to the determination of compensation by the Court. Further, it is noteworthy that the Respondent's position did not simply maintain that the reasonable land use was strictly limited by the Rural zoning and Rural designation of the subject land – rather, the Respondent's position acknowledged the potential for some further use (by way of Rural Residential subdivision) of the subject land.
4.3The Court could be satisfied that, if the Applicants had, in fact, given due consideration to the issue of site constraints, then:
(a)the Applicants claim for compensation (either initially or ultimately) would have been very substantially lower; and
(b)there would have been a real prospect that the matter could have been resolved without the need for a hearing".
It is true that the physical characteristics of the land and other constraints on development were issues that occupied a considerable amount of the time allocated to this matter. It is also true that the findings concerning the non–availability of town water were, at least in part, a consequence of the physical characteristics of the land and were fatal to the claimants Residential A development case. However, I do not accept that, on the part of the claimants, there was a "… failure to address the real issue in this case, being the physical characteristics of the subject land… " and /or simply an assumption "… that a relationship between the Respondent's planning decisions and the scheme of resumption would necessarily involve a finding that the subject land would have been used for Residential A purposes…"
This matter could only be described as a reasonably complex one. It occupied 12 days of evidence involving 13 expert witnesses of various disciplines and 89 exhibits, many of which are expert's reports and other technical documents. The Residential A scenario advanced on behalf of the claimants was based on a considered analysis of the town planning history relevant to the land and civil engineering, traffic engineering, surveying and environmental advice to the effect that there were no physical constraints that would have prevented Residential A development of the land. In my view, it could not be said that the case put forward on behalf of the claimants was one based on or arising out of a failure to address important issues nor one based on thoughtless or clearly unmeritorious assumptions or conclusions. It was not a frivolous case.
As I understand the respondent's position, it is not submitted that the claim was one made vexatiously or dishonestly. In my view there would be no basis for such assertions. Rather, the respondent argues that, in all the circumstances, the claim is one which should be categorised as being so unjustifiably excessive as to make settlement impossible and otherwise unnecessary litigation unavoidable. Submissions of this nature lead me to that part of the decision of the Land Appeal Court in Yalgan as set out in paragraph [10] above.
In circumstances where the respondent was contending only for a figure of in the order of $500,000, I do not see how, by refusing the respondents valuation and proceeding to a hearing of this matter, the claimants could be said to have acted unreasonably. As was pointed out by Wilcox J in Banno (at p. 53):
"The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position should be allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the Commonwealth's costs if their case proves unpersuasive. I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court…"
Leaving aside for the moment the respondent's offer dated 21 April 2005, the claimants could be said to have been successful in the litigation to the extent of having their due compensation entitlement increased by in the order of $300,000 or 60 per cent. To my mind, the respective positions of both of the parties as at the commencement of these proceedings made litigation really unavoidable.
In the absence of the offer I would not have been convinced that this was an appropriate case for making any costs orders against the claimants in favour of the respondent. I should point out that in reaching that conclusion I accept what was said on behalf of the respondent about the reasonableness of it meeting the claimants' Residential A case. In my view the claimant's case was not one where the respondent, acting prudently, could afford to be so bold as to not run an alternate case to the effect that, even if a Residential A development was theoretically possible, it was not economically viable.
The Respondent's Offer
On 21 April 2005, the respondent's solicitor put a written offer to settle to the claimants' solicitors in the following terms:
"As you know the hearing of the above appeal has been further adjourned. The resumption of the hearing is scheduled for Monday 6 June 2005.
With a view to the parties avoiding further unnecessary costs, Council is prepared to make an offer on a without prejudice basis except as to costs. The offer is an all up offer and includes an allowance for disturbance items and costs as well as loss of land. The amount of the offer is $825,000–00 (Eight Hundred and Twenty-Five Thousand Dollars).
Please note Council expressly reserves the right to draw the Court's attention to this correspondence if and when the question of costs is being considered.
This offer remains open for acceptance until 12 noon on Thursday 5 May 2005."The offer was under the heading "Without prejudice except as to costs".
In my view, the offer is only relevant to what occurred or should have occurred after 21 April 2005.
By April 2005 the case for the claimants was substantially complete and the respondent's case had already commenced and was well advanced. That is, both sides by that time were fully aware of the case they had to meet and should have had some real insight into the strengths and weaknesses of their respective cases.
As already identified the offer was on an "all up" basis and said to expressly include allowances for disturbance items and costs. By necessary implication the offer also included any interest on compensation that the claimants might have been entitled to.
When a quick comparison is made between the amount of the offer and the amount of compensation as finally determined, it may first appear that there might not be that much difference between them. However, the timing and the amount of the offer have to be seen in context. First, the offer came at a time after substantial costs, including those of lawyers and experts, would have been incurred by the claimants (and of course the respondent) in preparing for trial and in already having conducted two weeks of litigation. I have little doubt that once the claimant's costs of the litigation up to 21 April 2005 were taken into account the amount actually available to them would have been significantly less than $825,000. Second, in the absence of evidence, I am not prepared to infer that the claimants were not in the end still financially better off by rejecting the offer bringing into account the additional $7,000 and interest as ordered, even after the costs incurred by them after 21 April 2005 are also factored into the calculation.
Taking these matters into account, I have reached the conclusion that the circumstances of the offer are such as to not warrant disturbing the views I expressed in paragraphs [17] and [18] above. In all the circumstances, the claimants' rejection of the offer could not, in my view, be said to have been unreasonable or, to put it another way, the rejection of the offer was not conduct which unreasonably and unnecessarily forced the respondent to participate in an otherwise avoidable continuation of the litigation.
Accordingly, I dismiss the respondent's application for costs and make no orders as to costs.
R S JONES
MEMBER OF THE LAND COURT
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