Buller Ski Lifts Ltd v Commissioner of State Revenue
[2001] VSC 309
•30 August 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6486 of 2000
| BULLER SKI LIFTS LTD. | Plaintiff |
| v. | |
| COMMISSIONER OF STATE REVENUE | Defendant |
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JUDGE: | HABERSBERGER, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 18 JULY 2001 | |
DATE OF JUDGMENT: | 30 AUGUST 2001 | |
CASE MAY BE CITED AS: | BULLER SKI LIFTS LTD. v. COMMISSIONER OF STATE REVENUE | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 309 | |
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CATCHWORDS: Practice and Procedure – Costs – Principles governing exercise of discretion where proceeding does not proceed to trial – Exception to normal rule – Defendant acted unreasonably in refusing to exercise administrative law power.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. P. Crutchfield | Arnold Bloch Leibler |
| For the Defendant | Mr. J. Gobbo Q.C. and Mr. J. Castelan | Solicitor for the Commissioner of State Revenue |
HIS HONOUR:
On 16 August 2000 the plaintiff instituted this proceeding by filing an originating motion seeking an order in the nature of mandamus. The plaintiff sought an order compelling the defendant to perform his public duty to determine the plaintiff's objections to the defendant's assessment of land tax in 1997, 1998 and 1999 in respect of certain land at Mt. Buller, pursuant to s.24A of the Land Tax Act 1958 ("the Land Tax Act").
On 18 October 2000 the defendant made its determination disallowing the 1997 and 1999 objections and forwarded its Notices of Decision to the plaintiff's solicitors. (The parties had agreed that the defendant would apply its decision in relation to the 1997 objection to the 1998 objection.) On 20 October 2000 the defendant made a fresh determination in respect of the 1999 objection, having noticed that the relevant Notice of Decision had been addressed to the wrong objector.
Although there was some further skirmishing whilst the plaintiff considered amending the proceeding to claim damages for the delay, eventually those aspects were resolved and their costs dealt with by an order of Master Kings made 28 March 2001. Accordingly, the only issue which I have to decide is that of the costs of the proceeding itself. The parties had sought to argue that issue before Beach, J. in the Practice Court on 30 November 2000 but the matter was referred to the Causes List.
Both parties agreed that in relation to a proceeding which has not received a hearing on the merits, the normal rule is that stated by McHugh, J. in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia: Ex parte Lai Qin[1]:
"In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
…
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (References omitted.)
[1](1997) 186 C.L.R. 622 at 624
Mr. Crutchfield of counsel, who appeared on behalf of the plaintiff, submitted that the circumstances of this case were such that they fell within one of the exceptions to the rule, expressly recognised in Lai Qin, namely, that where in administrative law matters "the defendant has acted unreasonably in exercising or refusing to exercise a power and the plaintiff had no reasonable alternative but to commence a litigation"[2], the plaintiff can recover all or some of its costs.
[2](1997) 186 C.L.R. 622 at 624-625. See also R. v. Gold Coast City Council; Ex parte Raysun Pty. Ltd. [1971] QWN 13.
Mr. Gobbo, one of Her Majesty's counsel, who appeared with Mr. Castelan of counsel on behalf of the defendant, had provided written submissions to both Beach, J. and to me seeking its costs of the proceeding. However, in his oral submissions Mr. Gobbo stated that he no longer pressed for his costs up to 18 October 2000, submitting that the appropriate order to that date was that there be no order as to costs, but that the defendant should be entitled to its costs after 18 October 2000.
It is necessary, therefore, to examine the circumstances leading up to the eventual disallowance of the objections, but before doing so I should set out what I understand to be the relevant legislative provisions. Because the land in question had been valued for the defendant by the Valuer-General the objections had to be considered and determined by the defendant in accordance with the provisions of s.24A of the Land Tax Act (see s.38, and now s.20, of the Valuation of Land Act 1960). Section 24A contains the following sub-section:
"(3A)The Commissioner shall not make a decision upon any objection relating to the amount at which the unimproved value of any land was assessed without consulting the Valuer-General."
By virtue of the definitions of "site value" and "improvements" in s.2 of the Valuation of Land Act 1960, one of the matters relevant to the assessment of the unimproved value of the land was the value of certain improvements made to the land by the owner or occupier of the land or at that person's expense within the 15 years before the valuation.
I turn then to the history of this matter. By letter dated 1 May 1997 the plaintiff, through its solicitors Arnold Bloch Leibler ("ABL"), lodged its objection to the unimproved site value of the land in question on the ground that the value assigned to that land was too high. The defendant acknowledged receipt of the objection by letter dated 6 May 1997. That letter contained the following statement:
"The State Revenue Office has a policy of resolving all issues as quickly as possible, normally within a period of 60 days from receipt for disputed assessments. If circumstances arise at any stage in this process which preclude this matter from being finalised within the normal 60 day period, we will further advise you of the reason for the delay and expected additional time required for resolution."
On 9 May 1997 the plaintiff paid the assessed land tax of $199,079.33 under protest.
Thereafter, the plaintiff sought unsuccessfully to resolve the objection by seeking information about the tax paid in respect of land, and the valuation of that land, at the ski resorts at Mt. Hotham and Falls Creek. The officer handling the matter on behalf of the defendant advised ABL that there were restrictions on the defendant's ability to provide such information and that, in any event, it would not be a meaningful exercise. Nevertheless, it was not until 18 December 1997 that the defendant referred the 1997 objection to the Valuer-General as required by s.24A(3A) of the Land Tax Act. Given my view of later events it is not necessary, in my opinion, to decide who, if anyone, was at fault in respect of this period of delay.
On 5 January 1998 the Valuer-General wrote to ABL requesting a submission "detailing your opinion of the site value of the subject property". Mr. Des Burkitt, who was handling the matter for the Office of Valuer-General, was informed that Mr. Grant Jackson of LandMark White, Valuers, would be providing submissions. Again it is not necessary to examine this period in any great detail. It is sufficient to note that for a number of reasons Mr. Jackson's submissions were not provided to the Valuer-General until 20 November 1998, despite some inquiries as to their progress by Mr. Burkitt in the intervening period. Further details were provided in a letter dated 2 December 1998 from Mr. Jackson to Mr. Burkitt. Mr. Jackson's submissions accepted the site value of $5,800,000 as assessed by the Valuer-General and argued that there should be deducted from that figure an amount of $3,460,000 as the value of the site works or improvements, leaving the final site value at $2,340,000. At a meeting between the valuers on 17 December 1998 Mr. Jackson agreed to provide Mr. Burkitt with advice from ABL on the allowable expenditure for improvements to the property. The further details were not provided until 23 March 1999. Further, on 16 June 1999 Mr. Jackson informed Mr. Burkitt that the plaintiff may have other matters it would raise in support of the lower site value.
On 5 August 1999 the defendant wrote to the Mt. Buller Alpine Resort Management Board ("the Management Board") seeking information in relation to the plaintiff's submissions. No response was forthcoming from the Board for many months. In the meantime, however, Mr. Jackson provided amended submissions dated 22 March 2000 to Mr. Burkitt. The amended submissions used a different methodology to that used in the initial submission and included a statement that the amount paid for an 80% interest in the plaintiff in 1992 was $4,056,365. Based on the new methodology the site value was said to be $3,000,000 but as the value of the improvements was now said to be $3,135,195 the final site value was nil. It is the delivery of these amended submissions which renders virtually irrelevant, in my opinion, the preceding period of nearly 35 months since the lodging of the objection to the 1997 assessment.
On 18 April 2000 ABL wrote to the defendant seeking to have its objections "resolved as soon as possible" and by no later than 22 May 2000. There was a further letter from ABL on 26 April 2000 which included the statement that if the defendant required any further information, it should let ABL know. By letter dated 29 May 2000 the defendant wrote to ABL in substance requesting the plaintiff to provide the information previously requested from the Management Board in August 1999. By letter dated 5 June 2000 ABL wrote to the Management Board requesting this information. On 19 June 2000 ABL sent to the defendant a copy of the Management Board's letter to it of 16 June 2000. ABL's letter also stated as follows:
"2.BSL is at present unable to add to the information which has been provided by the Resort Management Board. As discussed, Mark Arnold of BSL will tomorrow visit Mt. Buller to speak with Bob Bateup, the Outside Operations Manager at Mt. Buller to determine whether he is able to provide any further information which will be of assistance to you. However, given the urgency of this matter, and the likelihood that BSL will not be able to provide any further documentary information, would you please deal with this matter on the basis of the information provided to date (including the enclosed). We will let you know as soon as possible whether Mr. Bateup is able to add anything to the information already provided.
3.We are most concerned that Des Burkitt's imminent retirement will make your assessment and determination of our client's objections more difficult than would otherwise be the case.
… "
Mr. Burkitt did retire before any decision was made by the Office of the Valuer-General and Mr. Peter Ralton assumed the conduct of the file. Mr. Ralton indicated to the defendant that he needed clarification of some of the matters raised. On 23 June 2000 Mr. King of ABL informed Mr. Vasilopoulos of the defendant that the plaintiff could not provide any further information and that a decision on the objections should be made on the basis of the available information.
On 19 July 2000 Mr. Rino Grollo, a director of the plaintiff, wrote to the defendant complaining about the failure to resolve the objections. On or about 26 July 2000 Mr. Ralton informed Mr. Jackson that he had been reviewing the calculations and requests for information and that he was still awaiting further instructions from the defendant, after which he would have to meet with Mr. Jackson.
By letter dated 1 August 2000 ABL wrote to the defendant stating that unless the defendant made a decision on the objections within 14 days a writ of mandamus would be issued. The defendant did not receive this letter until 7 August 2000. Nevertheless, by letter dated 8 August 2000 the defendant replied to ABL referring to s.24A(3A) of the Land Tax Act and advising that:
"Given that the objections against the above assessments related to the unimproved value of land and all of the information requested in our letter dated 29 May 2000 has not been provided, the Commissioner is currently consulting with the Valuer-General on the resolution of the objections against the above assessments, based on the information provided."
ABL had already advised on 23 June 2000 that the plaintiff could not provide any further information in respect of the information requested in the letter of 29 May 2000. Despite this, on 11 and 15 August 2000 Mr. Ralton sought to arrange a meeting with Mr. Jackson but Mr. Jackson was away. In a telephone conversation on that same day Mr. Zwier of ABL told Mr. Vasilopoulos that the plaintiff would proceed to seek a writ of mandamus irrespective of whether the proposed meeting between the valuers took place.
On 16 August 2000 the plaintiff issued its originating motion seeking relief in the nature of mandamus.
On 21 August 2000 Mr. Ralton informed Mr. Jackson that they must meet to discuss concerns he had over some figures relied on in support of a 1997 objection. Mr. Jackson undertook to seek clarification of those matters from the plaintiff. On 30 August 2000 Mr. King of ABL informed Mr. Raheem, a solicitor from the defendant, that he would send some or all of the information previously requested in the defendant's letter of 29 May 2000. There is a dispute between these two solicitors as to the exact content of this conversation, which I am not in a position to, nor do I need to, resolve.
On 11 September 2000 Mr. Ralton advised Mr. Jackson that they needed to meet as soon as Mr. Jackson had clarified the figures he was waiting for. On 27 September 2000 Mr. Ralton fixed 10 October 2000 as the date for the meeting between the valuers.
As there was still no decision on the objections, the plaintiff issued, on 22 September 2000, a summons in respect of the originating motion which was returnable on 2 October 2000. In a without prejudice letter dated 29 September 2000 Mr. Raheem wrote to Mr. King as follows:
"… The Commissioner is desirous of resolving the various issues that arise in this matter as soon as possible, whilst ensuring that your client's rights to pursue its objections to the unimproved value in the assessments are preserved to it. To that end the Commissioner could issue decisions on your client's objections to the 1997 and 1999 land tax assessments disallowing the same. The decisions would advise your client of its review and appeal rights.
In the circumstances, please let me know whether your client is agreeable to withdraw the Supreme Court Proceeding on the basis that each party would bear its or his own costs upon the Commissioner issuing the above decisions. Upon receipt of that confirmation steps will be taken to issue the decisions immediately.
If your client is not agreeable to the above, the Commissioner intends to oppose your client's application …"
By letter dated 6 October 2000 ABL forwarded to the defendant further information as indicated in the conversation between solicitors on 30 August 2000. A without prejudice meeting was held between Mr. Ralton and Mr. Jackson on 10 October 2000 and again on 16 October 2000. During the second meeting Mr. Jackson confirmed that he had received information that the actual consideration paid for the 80% share of the plaintiff in 1992 was approximately $35,000,000 and not about $4,000,000 as previously claimed. Nevertheless, Mr. Jackson still maintained that the resulting site value would be zero. The valuers were unable to reach agreement as to an amended site value of the property. As previously stated the defendant made its decisions on 18 October 2000 disallowing the objections.
It seems to me that the starting point for deciding whether or not the defendant has acted unreasonably in failing to make a decision on the objections before litigation was commenced, is to look at how matters stood on the day the originating motion was issued. That day, 16 August 2000, was nearly five months after Mr. Jackson's amended submissions had been provided to the Valuer-General, nearly two months after the plaintiff's solicitors had advised that the plaintiff could not provide any further information and had sought that the objections be dealt with on the basis of the information provided and eight days after the warning that proceedings would be issued if no decision was made. The plaintiff submitted that, in the circumstances, the defendant's conduct was unreasonable. It submitted that the defendant had the information it needed to make a decision on the objections prior to the plaintiff commencing proceedings.
The defendant sought to justify its position in a number of ways. First, it was submitted that it was reasonable for the defendant to await the response of the Valuer-General who was at that time in consultation with the plaintiff's valuer. Mr. Gobbo argued that the position would have been different if Mr. Jackson had refused to continue the dialogue. In my opinion, this submission ignores the fact that the later discussions between valuers were without prejudice. More importantly, despite Mr. Ralton's efforts, there was no continuing dialogue between the valuers in the period between the plaintiff's solicitors requesting that the objections be dealt with on the basis of the information provided and the issue of the originating motion.
It was also submitted that the defendant was obliged to await the Valuer-General's response and that his recommendation was still under ongoing or active consideration. Mr. Gobbo submitted that I could not therefore say that the application for mandamus would necessarily have succeeded.[3] Whilst there is merit in this point, I consider that an objector is at some stage entitled to require a decision to be made. If the information it has provided is insufficient to persuade the Valuer-General that the original valuation was too high, then the objection will be disallowed. That is the risk the objector takes and ABL had clearly indicated that this was their position.
[3]See Lai Qin (1997) 186 C.L.R. 622 at 624
Moreover, it is clear from the without prejudice letter of 29 September 2000 that the defendant was prepared to disallow the objections, without seeing any further information, if the plaintiff agreed to bear its own costs of the proceeding. If the defendant was prepared to take that step in late September then I do not see why it could not have done so prior to 16 August 2000. Mr. Gobbo argued that the plaintiff was seeking to have its cake and eat it too by saying "We want a decision, but we want an informed decision". In support of this proposition he relied on paragraph 6 of Mr. Raheen's affidavit of 17 July 2001 and on exhibit AR4 to that affidavit. I do not agree. That material only indicates to me that the plaintiff was prepared to go on with its application not because it wanted an informed decision, but because the defendant had stated that it would only give its decision on the objections straight away if the plaintiff agreed not to seek its costs of the originating motion. The plaintiff's solicitors had already made it quite clear to the defendant, in my opinion, that it wanted a decision even if the information was insufficient. Accordingly, I consider that in all the circumstances, I can say that in my opinion it is likely that the application for mandamus would have succeeded.
The defendant further submitted that the amended submissions dated 22 March 2000 were substantially different to the initial submissions and that therefore new inquiries were needed and made. This is true, but in all the circumstances I consider that the defendant had had more than sufficient time to reach its decision, after taking into account the amended submissions, prior to 16 August 2000. This is particularly the case since ABL had made it clear from as early as mid-April 2000 that the plaintiff wanted the objections "resolved as soon as possible". Probably the decision would have been made before 16 August 2000 if Mr. Burkitt had not retired and Mr. Ralton had not had to start afresh. But this was not the plaintiff's fault and ABL had even warned of the difficulties that would be created should Mr. Burkitt retire before finalising the matter.
Finally, the defendant submitted that the plaintiff's position was constantly in a state of flux and that it continued to provide material to the defendant even after it had issued the proceeding. It was pointed out that it was only on 16 October 2000 that the plaintiff's valuer conceded that his figure of $4,000,000 for the cost of the 80% interest in the plaintiff was incorrect by some $31,000,000. Again this is true, but, in my opinion, not really relevant to the issue I have to decide. As I have stated before, the delay by the defendant in making its decision on the objections was unreasonable, in my opinion, viewed as at 16 August 2000. It should not be a criticism of the plaintiff that, having commenced litigation, it sought by every means at its disposal to obtain a decision on its objections. Further, in respect of the particular point about the cost of the 80% interest, if the Valuer-General was not satisfied with the plaintiff's claim that the price was only $4,000,000, then that argument could have been rejected.
After giving the matter careful thought, for the reasons discussed above I have decided that the defendant should be ordered to pay the plaintiff's costs of the originating motion. In my opinion, this is a case which falls within the recognised exception to the general rule that the Court will make no order as to the costs of the proceeding where, for whatever reasons, the proceeding has concluded without a hearing on the merits.
I have also given consideration to restricting the plaintiff's costs to a proportion of those costs, as was done by Pincus, J. in South East Queensland Electricity Board v. Australian Telecommunications Commission[4]. In the end, however, I have decided that such an order would not be appropriate in this case. Having decided that it was reasonable for the plaintiff to issue proceedings when it did, I do not see why it should not entitled to the further costs incurred by it in this proceeding, most of which, I expect, will relate to this very argument about costs. As the defendant was not prepared to offer to pay the plaintiff's costs up to 18 October 2000 at that time, I do not see why it should not also have to meet the plaintiff's costs incurred since that date.
[4](unreported; Federal Court of Australia; 10 February 1989)
Subject to anything that counsel may wish to say, the order of the Court will be that the defendant pay the plaintiff's costs of the proceeding, including the costs reserved by Beach, J. on 30 October 2000 and the costs reserved by Master Kings on 28 March 2001, such costs to be taxed in default of agreement.
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