CFT No. 8 Pty Ltd v Sydney Metro (No 2)
[2025] NSWLEC 124
•30 October 2025
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New South Wales |
Case Name: | Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro (No 2) |
Medium Neutral Citation: | [2025] NSWLEC 124 |
Hearing Date(s): | 27 June 2025 |
Date of Orders: | 30 October 2025 |
Decision Date: | 30 October 2025 |
Jurisdiction: | Class 3 |
Before: | Duggan J |
Decision: | See orders at [47] |
Catchwords: | COSTS – application for costs in Class 3 proceedings – Civil Procedure Act 2005 (NSW), s 98 – whether failure on a main contention disentitles costs – Respondent to pay Applicants’ costs |
Legislation Cited: | Civil Procedure Act 2005 (NSW), ss 98, 101 |
Cases Cited: | Banno v Commonwealth of Australia (1993) 45 FCR 32; (1993) 81 LGERA 34 |
Category: | Costs |
Parties: | In proceedings 2022/00391925: |
Representation: | Counsel: |
File Number(s): | 2022/00391925; 2022/00391937 |
Publication Restriction: | Nil |
JUDGMENT
Nature of Proceedings
In Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro [2025] NSWLEC 42 (Judgment) I determined the compensation payable to the Applicants by Sydney Metro as a consequence of its compulsory acquisition of their interest in the Acquired Land.
The Applicants seek an order that Sydney Metro pay their legal costs of these proceedings. Sydney Metro accepts that it should pay a portion of the Applicants’ costs but submits that such an order should exclude that part of the proceedings upon which the Applicants were not successful and with respect to that portion each party should pay its own costs.
Facts
The facts relevant to the substantive proceedings are set out in [2]-[20] of the Judgment, which are adopted here without repetition. I also adopt the defined terms used in the Judgment.
In the substantive proceedings the parties took a divergent approach to the determination of market value of the Acquired Land with the genesis of the difference relating to the highest and best use of the Acquired Land. In setting out the issues for determination I summarised the parties’ positions on market value at [22]-[23] of the Judgment as follows:
22 The Applicants contended that the highest and best use of the Acquired Land was redevelopment in conjunction with the adjoining land at 33 Bligh St [Amalgamation Scenario]. On that basis, the parties contended significantly different values for the Acquired Land varying from $210,000,000 (Respondent) to $431,200,000 (Applicants), with a variety of alternative value scenarios ranging between these amounts.
23 The Respondent contended that the highest and best use of the Acquired Land was the use of the Acquired Land as at the Date of Acquisition. The value on that basis determined as a capitalisation of passing rent, represented a value of $200,000,000. If the highest and best use was determined as the current use of the Acquired Land (which the Applicants dispute) the Applicants do not dispute the value derived for this use.
The public purpose for which the Acquired Land was acquired was held as a single public purpose, being Metro West (Public Purpose). Because of this finding, I held for the purpose of s 56(1)(a) of the Just Terms Act the acquisition of Metro West was to be disregarded and the acquisition of Metro CSW was not to be disregarded: see Judgment at [68].
The conclusions are set out in [219]-[220] of the Judgment, in which it was held that the highest and best use of the Acquired Land was for the current use of the Acquired Land without a capacity to develop in conjunction with 33 Bligh St: see Judgment at [219](5)]. The market value of the Acquired Land was therefore determined in the agreed sum of $200,000,000 to be apportioned between the Applicants on a pro rata land size basis. Disturbance was determined in the agreed sum of $565,085.65 for each of the Applicants.
In addition to the facts as set out in the Judgment Sydney Metro identified the following facts relating to the conduct of the proceedings as being relevant to its submissions on costs:
(1)The proceedings were commenced on 29 December 2022. The Applicants initially claimed approximately $259,000,000 for market value (plus disturbance). The Applicants claimed that Sydney Metro compulsorily acquired the Acquired Land “for the purpose of the construction of the railway station forming part of the Sydney Metro West Project (Public Purpose)”.
(2)On 5 May 2023, Sydney Metro filed its Points of Defence. It contended that the market value of the Acquired Land was $180,000,000, and that the public purpose was Metro West. Sydney Metro also contended that:
(a)33 Bligh St was acquired for two distinct public purposes:
(i)the Public Purpose; and
(ii)for the purpose of the Metro CSW;
(b)Even if the Public Purpose was disregarded for the purposes of s 56(1)(a) of the Just Terms Act, 33 Bligh St would have been acquired for the purpose of the Metro CSW; and
(c)It would therefore not have been possible for the Acquired Land to be amalgamated with 33 Bligh St as 33 Bligh St was not available for amalgamation as at the Date of Acquisition of the Acquired Land.
(3)On 16 November 2023, the Court of Appeal heard the appeal in Drivas CA.
(4)On 6 June 2024, the High Court refused special leave to appeal from the Court of Appeal’s decision: see G&J Drivas Pty Ltd v Sydney Metro [2024] HCASL 162.
(5)On 15 May 2024, the Applicants filed a motion to vacate the hearing. This motion was heard on 7 and 14 June 2024. The Court dismissed that motion and ordered that the costs be Sydney Metro’s costs in the cause.
(6)On 30 August 2024, Sydney Metro served its valuation report prepared by Mr David Lunney. Mr Lunney assessed the value of the Acquired Land as $188,500,000. He did so on a capitalisation of income basis.
(7)On 24 September 2024, the parties’ valuers prepared their first joint valuation report. That report noted the valuation experts’ agreement that a total value of $200,000,000 reflected the position of the commercial investment market acquiring the Acquired Land as income generating assets.
(8)On 27 September 2024, the Applicants amended their Points of Claim to claim an amount of approximately $432,000,000 for market value. The Applicants did not amend their description of the Public Purpose. The Applicants also contended that the land at 33 Bligh St had been acquired on 5 November 2021 for both the Public Purpose and the Metro CSW. The Applicants further contended that, but for the proposal to carry out and/or the carrying out of the Public Purpose, the land at 33 Bligh St:
(a)Would not have been required for the construction of an underground Metro station and Sydney Metro would have only required an extension of the existing leasehold interest for the construction of the Martin Place section of the Metro CSW; or, in the alternative
(b)If the freehold was required for the Metro CSW, Sydney Metro would have divested or otherwise disposed of its interest following the construction of the Martin Place section of the Metro CSW.
(9)On 9 October 2024, Sydney Metro filed its Points of Defence to the Amended Points of Claim, contending that the market value of the Acquired Land was $199,250,000.
(10)On 15 October 2024, the Applicants filed a further Amended Points of Claim. The amount claimed for market value remained the same. On the same date, Sydney Metro filed its Points of Defence to the Further Amended Points of Claim, contending that the market value of the Acquired Land was $200,000,000.
(11)Also on the same date, Sydney Metro served its opening written submissions which included the following, after referring to Drivas CA and oOh!media:
11 The Applicants' counterfactual position is now plainly foreclosed. Sydney Metro will ask the Court to make that finding at the beginning of the hearing when dealing with objections to evidence.
12 On that basis, this Court should accept the agreement of the parties' expert valuers that the value of the Land as at the Acquisition Date was $200 million. If the Court does not accept Sydney Metro's contentions as to the dual public purpose, then the Court should find that the value of the Land as at the Acquisition Date was, at most, $210 million to account for the possibility of amalgamation with 33 Bligh Street. The ambit of that dispute is very narrow. The vast majority of the expert evidence is now irrelevant and the case is a simple one. It can be disposed of in a matter of days, not weeks.
(12)On 18 October 2024, Sydney Metro provided the Applicants (and the Court) with submissions setting out the basis of their objections to lay and expert evidence concerning the Refined Grimshaw Scheme. In both of those documents, Sydney Metro set out its position on Drivas CA and its consequences. It contended that the following contentions of the Applicants were wrong as a matter of law in determining market value pursuant to s 56(1)(a) of the Just Terms Act:
(a)That actions taken by the Applicants in the period of approximately three years leading up to the acquisition should be disregarded; and
(b)That what the Applicants would have done after the Date of Acquisition but for the acquisition should be taken into account.
(13)Sydney Metro contended in its written and oral opening submissions that the amount of compensation payable to the Applicants (excluding disturbance) was $200,000,000, reflecting the parties’ expert valuers’ agreement of the value of the land as at the Date of Acquisition without counterfactual assumptions as to planning or amalgamation matters. This amount was greater than the valuation provided by the Valuer-General of $178,000,000. The Applicants contended that the amount payable was approximately $457,000,000.
(14)The hearing commenced on 21 October 2024. On the second day of the hearing, Sydney Metro made submissions on its objections to the evidence relating to the Amalgamation Scenario. I ruled that it was a matter for evidence and that it was a matter for the Applicants to make good the relevant findings of fact. The Applicants’ expert evidence was admitted subject to relevance.
(15)The Applicants’ key lay witness was Mr Michael Coombes. Five affidavits of Mr Coombes were read at the hearing. The Applicants also relied on the lay evidence of Mr Thomas Waters.
(16)The Applicants adduced expert evidence in the following disciplines: town planning, architecture, sky view factors, design excellence, traffic, heritage, wind, ecologically sustainable development, construction programming, quantity surveying and valuation. With the exception of a small part of the Applicants’ architecture expert report, these experts addressed the Amalgamation Scenario. Sydney Metro put on responsive expert evidence in all disciplines except heritage, ecologically sustainable development and wind. Sydney Metro’s architecture and town planning experts addressed sky view factors and design excellence. Joint conclaves were held, and joint reports were produced in all disciplines except heritage and ecologically sustainable development (with a joint wind report produced mid-hearing as a result of a supplementary wind report tendered by the Applicants on the first day of the hearing).
(17)Cross-examination of the expert witnesses took place over approximately 7 days, all of which was directed to the Amalgamation Scenario.
(18)On 24 October 2024, part way through the hearing, the Applicants sought leave to adduce further evidence in chief from Mr Waters. Mr Shearer SC appeared on the voir dire for Sydney Metro. The Court ordered that the costs of that motion be Sydney Metro’s costs in the cause.
(19)At the hearing, the Applicants contended that the two stated metro projects for the acquisition of 33 Bligh St were in fact a single public purpose, namely for the provision of a metro.
(20)Part way through the hearing, the parties reached agreement on the Applicants’ disturbance claims for legal costs and valuation fees under s 59(1)(a) and (b) of the Just Terms Act. The Court rejected the Applicants’ claims for disturbance for stamp duty, mortgage and legal costs under s 59(1)(c)-(e) and (f) of the Just Terms Act.
Applicable Principles
The Court’s discretionary power to award costs is conferred under s 98(1) of the Civil Procedure Act 2005 (NSW) (CP Act) and is unconstrained except by the limitation that such discretion must be exercised judicially. This discretion is not confined by the operation of any presumption as to costs such as the presumption that costs follow the event (Uniform Civil Procedure Rules 2005 (NSW), r 42.1) or that there be no order as to costs (Land and Environment Court Rules 2007 (NSW), r 3.7).
A number of relevant considerations in the exercise of the costs discretion to be exercised in compulsory acquisition proceedings have been identified in judgments in the Court of Appeal and in this Court. Whilst not exhaustive, such decisions are of assistance in the consideration of an application for costs.
As have often been stated there is a general principle that a disposed owner who has had their land compulsorily acquired should generally be entitled to an order for its costs. This principle was identified by the Court of Appeal in Dillon v Gosford City Council [2011] NSWCA 328; (2011) 184 LGERA 179; (2011) 284 ALR 619 (Dillon) per Basten JA at [70]-[71] as:
70 In other respects, however, the appellants' propositions may be accepted. They support the proposition that a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense.
71 That approach is also consistent with the absence of any general presumption that costs should follow the event: the owner who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered.
As to what is relevant to a consideration as to whether the disposed owner has taken reasonable steps in the proceedings Basten JA further observed at [72]:
72 Whether steps taken in maintaining proceedings are reasonable will depend upon the circumstances of the particular case. These may include a comparison between the positions adopted by the parties at the commencement of proceedings and the final outcome. To the extent that a claimant obtains less than the valuation provided by the Valuer-General, the claimant has been unsuccessful in the litigation. That will be a factor to be taken into account, but the weight given to that factor may depend upon the extent of the failure. The Court may also take into account the time and expense incurred in relation to specific items. Beyond such general statements, it is unhelpful to go, lest the very generality of the discretion be thought to be fettered in some way. In short, the purpose of an award of costs must be taken into account, namely to compensate the party for expenditure incurred in the course of litigation; the nature of the litigation and the reasonableness of the conduct of the litigation are central considerations.
The decision in Dillon was further considered by the Court of Appeal in Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) [2012] NSWCA 404; (2012) 191 LGERA 267 (Brock), where Tobias AJA noted at [92]-[98]:
92 …Only two factors were referred to by the primary judge which could be said to be in some way adverse to [the appellant]. The first was his Honour’s statement at [113] of the costs judgment that she would have been better off had she accepted the statutory offer or either of the offers of compromise made close to the date of trial. As she did not accept those offers, his Honour considered that she was unsuccessful in her litigation. With the benefit of hindsight this was so.
93 The second was his Honour’s observation at [123] that the appellant may have had unrealistic hopes or expectations for her litigation. However, she was entitled to rely on the advice of Mr Jones and her legal representatives and there was no suggestion that she was acting unreasonably in doing so.
94 Neither of these factors could, as a matter of principle, carry determinative weight in the application of the discretion with respect to costs in what has been referred to in the authorities as “out of the ordinary litigation”. Further, neither factor is capable of displacing the principle that a claimant for compensation with respect to the compulsory acquisition of his or her land should usually be entitled to recover the costs of the proceedings where he or she has acted reasonably in pursuing the proceedings and has not conducted them in a manner which gives rise to unnecessary delay or expense. In the present case, his Honour specifically found (at [123]) that he could find no basis for a finding that the appellant (or for that matter the respondent) behaved unreasonably in the conduct of the litigation. Additionally, as the appellant submitted, his Honour did not find that it was unreasonable for the appellant to have held hopes or expectations with respect to the outcome of her litigation which ultimately turned out to be unrealistic.
95 As was noted by Basten JA in Dillon at [71], an owner of land who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the court in respect of the adequacy of any compensation offered. The appellant took such steps and there was no suggestion that in so doing she acted unreasonably. Although in one sense she was unsuccessful in the litigation in that she obtained less than the statutory offer and accepting that that is a factor to take into account, on the other hand at trial she obtained an award of compensation which, with respect to market value, exceeded the amount contended for by the respondent by $117,087. In other words, at trial the respondent contended that apart from disturbance the amount which should be awarded to the appellant for the market value of the land as well as injurious affection and severance was $320,000. His Honour found that the proper amount was $437,087. To that extent she had a victory at trial.
96 As Basten JA concluded at [72] in Dillon, the purpose of an award of costs, being to compensate the party for expenditure incurred in the course of litigation, must be taken into account although the nature of the litigation and the reasonableness of the conduct of the litigation by the claimant are central considerations.
97 The nature of the litigation is, as Wilcox J observed in Banno, that it is not “ordinary litigation”. Furthermore, as I have already noted, there was no finding by the primary judge that the appellant had acted in any way unreasonably in conducting the litigation. Finally, there was no finding by the primary judge that the appellant had pursued a vexatious, dishonest or grossly exaggerated claim.
98 It follows from the foregoing that, given the findings to which I have referred, it is apparent that his Honour's order that the appellant should bear her own costs of the proceedings was inconsistent with the application of the correct principles. That inconsistency involved an implicit erroneous decision as to correct principle and thus gave rise to a question of law.
Submissions
Applicants
The Applicants contended that they should be awarded their costs of the proceedings as:
(1)Each of the Applicants were successful in its objection to the amount of compensation offered by Sydney Metro in that each Applicant was awarded compensation well in excess of that offered as determined by the Valuer-General, and/or as offered by Sydney Metro since the commencement of proceedings until a short time prior to the commencement of the hearing (Sydney Metro having amended its Points of Defence on 15 October 2024 to reflect the “agreed” position of $200,000,000);
(2)To the extent that the Applicants were “unsuccessful” in relation to the Amalgamation Scenario, mere lack of success on a component of the Applicants’ case is alone an insufficient basis to displace the entitlement to costs in the circumstances of the whole of the case: see Bannov Commonwealth of Australia (1993) 45 FCR 32; (1993) 81 LGERA 34 (Banno) at 51; and
(3)To displace the generally accepted entitlement to costs it would be necessary for the Court to find that the Applicants had acted unreasonably in maintaining or in the conduct of that part of their case relating to the Amalgamation Scenario. The concept of unreasonableness with respect to a claim for costs was considered in Brock at [79]-[82] which identified circumstances such as: where an applicant runs a case contrary to the application of correct principles; or runs its case in a manner that causes delay; or the incurring of unnecessary expense; or was based on some form of fanciful or absurd proposition, as being examples of the type of unreasonableness that may impact on an order for costs. Such had not been demonstrated in this case.
From a consideration of the substance of the proceedings it is apparent that the case, including that aspect of the case relating to the Amalgamation Scenario, was founded in correct principle and was not unreasonable in the context of the types of considerations identified in Brock. Nor could it ever be said that the Court’s ultimate conclusion was inevitable, having regard to the competing evidence and submissions made at hearing.
As was noted in the Judgment, the divergence in the market values contended for by the parties had its genesis in what was considered to be the highest and best use of the Acquired Land. The Applicants’ primary case at the hearing was that the highest and best use of the Acquired Land was redevelopment in conjunction with the adjoining land at 33 Bligh St. However, by the Date of Acquisition of the Acquired Land, 33 Bligh St had already been acquired by Sydney Metro and for a public purpose aligned with that related to the Acquired Land. The fundamental issue in the proceedings was whether the acquisition of 33 Bligh St by Sydney Metro was to be disregarded. That, in turn, depended upon the construction of the public purpose for which 33 Bligh St was acquired.
As was observed in [58] of the Judgment, the principles to be applied in determining the scope of the public purpose highlight that there are no strict rules for determining the public purpose at the appropriate level of generality. Factors to be taken into account may include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority. This is a recognition that there is a genuine complexity in determining, on the facts of each case, the ambit of the particular public purpose to be disregarded. That was true in the circumstances of this case. A finding on that issue did not then lead to a mere adjustment to the market value of the land it led to the significantly different, and complex, determination of market value as a function of the role of the Acquired Land in the Amalgamation Scenario.
The Applicants were entitled to advance the case, based on the relevant legislation and facts, that the relevant public purpose, properly understood at the relevant level of generality, was the single public purpose of the provision of the metro network, comprising, in part, Metro West and Metro CSW.
There was a genuine dispute as to the highest and best use of the Acquired Land at the Date of Acquisition. If the highest and best use was, in fact, an amalgamation with 33 Bligh St, it was common ground between the parties that the value of the Acquired Land would be far higher than its standalone value; and at least the additional $10,000,000 identified by the valuers. This amount and prospect, alone justifies the course taken.
Sydney Metro’s characterisation of the Applicants’ pursuit of compensation based on the highest and best use of the Acquired Land being an amalgamated site as an irrelevant “frolic” should be rejected. The submission pays insufficient regard to the importance in the statutory scheme of the determination of the highest and best use of the Acquired Land in determining compensation nor the complexity in determining the scope of the public purpose.
The determination of the appropriate highest and best use was centred in facts including evidence of the cooperation between adjoining landowners and the evolution of a scheme. Accordingly, albeit a valuation scenario ultimately rejected by this Court, the Applicants were entitled to proceed on the basis of their alternatives, and there is no disentitling conduct in having done so.
The Amalgamation Scenario was thus not unreasonable on the evidence and was maintainable as a matter of law. Whilst the Court ultimately concluded against the Applicants in respect of the Amalgamation Scenario, it was nevertheless an issue which was plainly arguable and which the Applicants were reasonably entitled to pursue: see Dillon at [71].
Further, as the identification of the relevant public purpose was one of the critical steps to be determined in assessing the market value of the Acquired Land under s 56(1) of the Just Terms Act, the Applicants also needed to address the question of whether the acquisition caused a decrease in the value of the Acquired Land. That was a factual question and the Applicants were obliged to adduce expert evidence in order to demonstrate (to take an example) the planning pathway leading to a potential approval from the consent authority for a tower on an amalgamated site, the design for such a tower and the cost of construction of the tower. Other than to say that the Applicants were ultimately unsuccessful on this point, there is no basis to say that the costs in putting together this evidence (and for Sydney Metro to rebut it) were “unnecessary”. Again, these were reasonable costs which were necessary if the Applicants were to succeed in persuading the Court that the highest and best use of the Acquired Land, absent the public purpose, was a substantial tower constructed on the amalgamated land.
The litigation involves the determination of compensation for the compulsory acquisition of the Applicants’ interests in land. As Talbot J stated in Pastrello v Roads and Traffic Authority of NSW [2000] NSWLEC 209; (2000) 110 LGERA 223 (Pastrello) at [17]-[18]:
17 …there needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case.
18 An order for costs against the interests of the applicants in this case would clearly have a significant impact on the ultimate amount to be recovered by the applicants.
To decline to award the Applicants their costs of the proceedings would have the effect sought to be avoided in Pastrello in circumstances where none of the potentially disentitling circumstances identified in Brock, or otherwise, arise.
Respondent
Sydney Metro’s primary submission was that the Applicants were entitled to part of their cost but not all. Sydney Metro contended that the Applicants should not be entitled to that part of their costs relating to the Amalgamation Scenario.
In the alternative, the Applicants would only be entitled to part of their costs with respect to the Amalgamation Scenario, depending upon the relevance of certain events such that the appropriate costs order would be:
(1)Each party bear their own costs in relation to the Amalgamation Scenario from the following dates (Alternative Costs Order):
(a)5 May 2023: the date Sydney Metro filed its Points of Defence confirming that 33 Bligh St was not available for amalgamation as at the Date of Acquisition;
(b)1 February 2024: the date of the Court of Appeal’s decision in Drivas CA;
(c)6 June 2024: the date the High Court refused special leave to appeal from Drivas CA; or
(d)24 September 2024: the date of the first Joint Valuation Expert Report;
(2)If one of the orders sought in the Alternative Costs Order is made, interest on costs should be payable from the date of the amount of costs is determined, whether by agreement or assessment pursuant to s 101(5) of the CP Act; and
In the further alternative, if the Court awards costs in relation to the Amalgamation Scenario, the Court should exclude the costs of obtaining expert advice on wind, heritage and design excellence (Further Alternative Costs Order).
Sydney Metro acknowledged that the usual position in Class 3 compulsory acquisition matters is that an applicant will receive their legal costs. However, such usual position would be departed from in the circumstances of this case in so far as it relates to the costs of the Amalgamation Scenario, as the Applicants’ failure on all major points, and the very significant legal costs incurred and time expended by all parties as a result of the Applicants’ pursuit of the Amalgamation Scenario warrant a departure from the usual position and such departure is consistent with the application of relevant principles.
The Applicants’ primary case was that the Acquired Land should be valued on the basis of the Amalgamation Scenario. 33 Bligh St, however, was not available for amalgamation at the Date of Acquisition. 33 Bligh St was compulsorily acquired prior to the Date of Acquisition. That was always Sydney Metro’s position. It was the Applicants’ pursuit of the Amalgamation Scenario and a forensic analysis of the potential gross floor area informed by various technical non-valuation experts, in the face of significant factual and legal obstacles, that resulted in the need for extensive expert evidence, a lengthy hearing and significant costs. The ultimate irrelevance of this frolic was demonstrated by the Judgment itself, which did not need to deal with the Amalgamation Scenario nor make findings in relation to any of the extensive expert evidence relating to the Amalgamation Scenario.
As the Court noted, “[f]undamental to the success of the Applicants’ case is that 33 Bligh St was available to be redeveloped in combination with the Acquired Land”: see [43], [88] of the Judgment. The Court found that the Public Purpose of 33 Bligh St was for the two distinct and separate purposes of Metro West and Metro CSW: see [66]-[67] of the Judgment. The Court found that, absent Metro West, Sydney Metro would have acquired the freehold of 33 Bligh St for the purpose of Metro CSW: see [95], [103]-[104] of the Judgment. The Applicants proffered various alternative scenarios in relation to 33 Bligh St, summarised at [72(3)] of the Judgment. The Court also rejected these at [87]-[95], [102]-[104], [172], [192]-[197], [208]-[213] of the Judgment.
Had the case been conducted on the basis of the highest and best use being the Acquired Land’s current use, the vast majority of the costs of the proceedings could have been avoided. The dispute would have been a narrow one concerning the valuation of that current use, rather than the vastly more complex valuation of a potential amalgamation and redevelopment of the Acquired Land and 33 Bligh St. Sydney Metro accepted that it would have been reasonable for the Applicants to obtain town planning, architectural and valuation evidence, although on a much narrower basis, and that costs were reasonably incurred on this basis until the parties’ expert valuers reached agreement on this scenario.
Accordingly, Sydney Metro’s primary position on costs is that there should be no order as to costs in relation to the Amalgamation Scenario. That reflects Sydney Metro’s comprehensive victory on this point and the unnecessary expense to which both parties were put over the course of years. Those costs should not be borne by Sydney Metro.
In the alternative, Sydney Metro contended that:
(1)There should be no order as to costs from 5 May 2023, when Sydney Metro filed its Points of Defence and confirmed that its primary position was that 33 Bligh St was not available for amalgamation as at the Date of Acquisition. Sydney Metro took this position in its submissions to the Valuer-General dated 9 September 2022, and so the Applicants were on notice of this position prior to this time.
(2)In the further alternative to (1) that there should be no order as to costs in relation to the Amalgamation Scenario from 1 February 2024, the date of Drivas CA (or 6 June 2024, the date special leave to appeal from that decision was refused). Drivas CA made it plain that the Acquired Land had to be valued as it was as at the Date of Acquisition, and that choices made by the owner because of the proposed acquisition are not to be disregarded. The counterfactual scenarios alleged by the Applicants to suggest that a planning proposal would have been lodged by the Date of Acquisition fell away at this point. If a door was left open by Drivas CA, it was not one that was open to the Applicants on the evidence, despite four affidavits being filed by Mr Coombes on this point (the fifth relating to disturbance).
Moreover, even if the Applicants established that the Council’s position on redevelopment had been caused by the Public Purpose or the Pivot Decision was caused by the Public Purpose, the Court would not have found that the Applicants would have pursued the Amalgamation Scenario: see [192] of the Judgment. The Applicants attempted to characterise the “PSI Concept”, which was pursued through Council, as contemplating amalgamation of the Acquired Land with neighbouring land including 33 Bligh St. However, the PSI Concept related to a proposal to redevelop the Acquired Land only. The Court rejected the Applicants’ submission that they had actively pursued the Amalgamation Scenario prior to the Date of Acquisition, instead finding that the Applicants “had eschewed amalgamation with adjoining sites at all stages of its dealings with the Council with respect to the redevelopment of the Acquired Land” and “actively sought to convince the Council to change its position on amalgamation”: see [193]-[195] of the Judgment. The Court found that no proposal was on foot for any type of combined redevelopment scheme in addition to the Acquired Land, and characterised Mr Coombes’ evidence as “unspecific assertions contrary to the contemporaneous documentary evidence”: see [195] of the Judgment.
In other words, regardless of Drivas CA, the Applicants would not have been able to make out the factual basis for the Amalgamation Scenario. There was insufficient evidence that the Applicants would have pursued the Amalgamation Scenario absent the public purpose. Pursuing the Amalgamation Scenario was unreasonable in the circumstances and on the state of the evidence and put Sydney Metro to significant unnecessary expense.
Findings
In these proceedings, Sydney Metro did not seek its costs and accepted that it should bear the Applicants’ legal costs for the valuation of the Acquired Land on a standalone basis. The Applicants sought the costs of the primary proceedings. The divergence in position concerned whether Sydney Metro should be obliged to pay the Applicants’ costs in relation to the Amalgamation Scenario; if so, from what date and whether this should encompass the costs of preparing all disciplines of expert evidence.
In Class 3 compulsory acquisition proceedings the usual order for costs is an order for costs in favour of an applicant who has accessed the Court to hear and dispose of their claim for compensation, absent a finding of unreasonableness: see Dillon at [70]-[72]. Taking this general principle into account and the parties’ submissions, the question I am required to determine is whether it was unreasonable for the Applicants to advance the Amalgamation Scenario in the primary proceedings.
The main contention raised in support for the primary costs order was Sydney Metro’s “comprehensive victory” with respect to the determination of the highest and best use of the Acquired Land and how that victory rendered unnecessary a determination of the issues relating to the Amalgamation Scenario. The outcome of the litigation and whether an applicant is ultimately successful on a major point that it has raised, is a relevant consideration when determining reasonableness: see Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41; (2019) 99 NSWLR 279; (2019) 99 LGERA 389 at [67]. Although courts have made orders against the award of costs for unsuccessful litigants, such an outcome does not automatically disentitle an applicant to their costs: see Banno at [51]. Unrealistic expectations are also not grounds for refusing to make an order for costs in favour of an applicant: see Brock at [94]. The task of the Court is broader than merely identifying success or otherwise, it requires a consideration of the circumstances of the case, and whether, despite the failure, the applicant had acted reasonably in litigating the particular part of their claim upon which they were ultimately unsuccessful.
Having regard to the circumstances of this case I do not accept that the Applicants’ pursuit of the Amalgamation Scenario was a “frolic”. Whilst ultimately the Amalgamation Scenario was not required to be determined such a position turned upon the findings made on the balance of probabilities on the evidence as it related to both the identification of the public purpose and the statutory disregard that followed from such identification. I do not consider that lack of success in discharging the evidentiary onus is a proxy for unreasonableness in this context. Rather, the real issue is whether the Applicants had no real evidence such that the outcome was not in a real sense disputable. In this case, the Applicants’ evidence and submissions were sufficient to raise a real question for determination as to the issues relating to the Public Purpose and the highest and best use of the Acquired Land. If the Applicants had been successful on those issues, it would have been essential for the Applicants to establish that development proposal upon which the market would determine the value of the land, which in this case was the evidence that related to the Amalgamation Scenario. In those circumstances, I am not satisfied that the lack of success on the issues that informed whether a consideration of the Amalgamation Scenario was required is sufficient to displace the usual practice relating to costs as I do not consider that the Applicants have been demonstrated to have acted unreasonably in the sense identified in Dillon and Brock.
Despite the divergence in position between the parties for determining the market value of the Acquired Land, both parties acted without “unnecessary delay or expense”: see Dillon at [70]. To the extent that it was held in the Judgment as unnecessary to consider aspects of the Applicants’ submissions or expert evidence, such a finding was contingent upon first considering both parties’ submissions.
Whilst the amount of compensation for market value ultimately conceded by Sydney Metro and the outcome determined by the Court are the same, this does not render the Amalgamation Scenario unreasonable. As outlined above, the parties took divergent approaches on determining the market value of the Acquired Land, the Applicants were ultimately unsuccessful on their approach on the evidence, that is the ordinary result of ordinary litigation. The Applicants failure on their approach was not the result of some conduct, evidentiary or legal insufficiency, or other consideration which would have rendered the maintenance of the position unreasonable.
In light of my findings as to the primary cost order sought by Sydney Metro the issues identified in its Alternative Costs Order do not arise. I do not consider that any of the events identified by Sydney Metro altered the Applicants’ position taken as being so changed by events that the maintenance of their position on the market value of the Acquired Land would operate to displace the presumption that the Applicants would ordinarily be entitled to the costs of the proceedings.
Considering the circumstances of the case, I do not accept that advancing the Amalgamation Scenario was unreasonable or that the Applicants conduct in pursuing the Amalgamation Scenario would displace the usual practice in relation to costs in compensation proceedings. The time and expense incurred in relation to the Amalgamation Scenario was therefore reasonable. As a result of these findings, the order will be that the Respondent pay the Applicants’ costs of the proceedings.
Class 3 proceedings are not “ordinary litigation”, they arise out of the “unilateral decision” of a public authority to acquire an applicant’s land “in order to satisfy a perceived public need”: see Banno at 51. For this reason, an applicant is entitled to access the Court to present an arguable and organised case. It was reasonable for the Applicants to advance the Amalgamation Scenario at hearing and for this reason I will order the Respondent pay the Applicants’ costs.
Submissions were made as to the two cost orders made in connection with the two interlocutory hearings referred to at [7(5)] and [7(18)] above. In each of those matters orders were made that the costs of the motions be the Respondent’s costs in the cause. In light of the proposed order the consequence is that those orders remain in force and the Applicants and Respondent will each pay their own costs of the two motions, that is, that the Applicants are not entitled for their costs associated with those motions.
Costs of the Costs Hearing
As a result of my findings, the Applicants, having been successful in their application for costs, are also entitled to an order that Sydney Metro pays the Applicants’ costs for the hearing on costs.
Orders
For the reasons set out above, the Court makes the following orders:
(1)The Respondent is to pay the Applicants’ costs of the proceedings;
(2)The Respondent is to pay the Applicants’ costs in relation to the hearing on costs; and
(3)The order in (1) is subject to any costs orders already made by the Court.
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