Commissioner of Highways v Farmer No 2 Pty Ltd; Commissioner of Highways v M & B Farmer Nominees Pty Ltd (No 2)

[2015] SASCFC 145

Supreme Court of South Australia

(Full Court)

COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD; COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD (No 2)

[2015] SASCFC 145

Judgment of The Full Court

(The Honourable Acting Chief Justice Gray, The Honourable Justice Kelly and The Honourable Justice Nicholson)

9 October 2015

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES - OTHER CONDUCT

Application for costs following a successful appeal to the Full Court.  The appellant successfully appealed against a determination of a question referred concerning whether interest is payable on non-monetary compensation in respect of a compulsory acquisition of land.  The appellant sought his costs of the trial and the appeal on a party and party basis.  The respondents accepted that the usual order as to costs should be made concerning the appeal.  The respondents contended that the appellant should only have half of his costs of the trial on a party and party basis as he had pursued, albeit successfully, a discrete and time consuming issue at trial that the respondents had argued, and the trial Judge agreed, was irrelevant.  The respondents had raised the issue in their summonses but had indicated prior to trial that they would not be pursuing it on the basis that it was irrelevant. 

Held per Gray ACJ (Kelly and Nicholson JJ agreeing)(allowing the application in part):

1.  The appellant should have his costs of the appeal on a party and party basis.

2.  The appellant should have 75 per cent of his costs of the trial on a party and party basis.

Land Acquisition Act 1969 (SA) s 33; Supreme Court Civil Rules 2006 (SA) r 263(1) and r 264(2); Supreme Court Act 1935 (SA) s 40, referred to.
Commissioner of Highways v Farmer No 2 Pty Ltd; Commissioner of Highways v M & B Farmer Nominees Pty Ltd [2015] SASCFC 121; Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 105, considered.

COMMISSIONER OF HIGHWAYS v FARMER NO 2 PTY LTD; COMMISSIONER OF HIGHWAYS v M & B FARMER NOMINEES PTY LTD (No 2)
[2015] SASCFC 145

Full Court:      Gray ACJ, Kelly and Nicholson JJ

GRAY ACJ.

1. This is an application for costs. 

   Background

2. For the purposes of the within application, the facts may be briefly summarised as follows.  In 2008, the appellant and applicant, the Commissioner of Highways, compulsorily acquired the land of the respondents, Farmer No 2 Pty Ltd and M & B Farmer Nominees Pty Ltd.  The Commissioner did not require all of the land acquired from the respondents.  As a consequence, the parties entered into a series of deeds in 2008 which granted the Commissioner possession only of the land required, notwithstanding that all of the land acquired from the respondents had vested in him.  In 2012, the parties entered into deeds of settlement concerning the compensation to be provided to the respondents for the acquisition of their land.  The compensation relevantly included a payment of cash and the return to the respondents of the land not used by the Commissioner.  The respondents had made limited use of the surplus land prior to its re-transfer, including fencing it off from the land used by the Commissioner. 

3. The parties agreed on the interest payable on the cash component of the compensation but could not agree on whether interest was payable on the non-monetary component of the compensation, namely the transfer of land back to the respondents. This question was referred to a Judge of the Court for determination. On 25 August 2015, this Court allowed an appeal from the Judge, holding that that section 33 of the Land Acquisition Act 1969 (SA) did not entitle the respondents to interest on non-monetary compensation provided to them by the Commissioner.[1] 

   [1]    Commissioner of Highways v Farmer No 2 Pty Ltd; Commissioner of Highways v M & B Farmer Nominees Pty Ltd [2015] SASCFC 121.

4. The Commissioner has sought the usual order for costs.  The respondents do not oppose an order that Commissioner have his costs of the appeal.  However, the respondents contend that they should only pay 50 per cent of the Commissioner’s costs of the trial on the basis that the Commissioner pursued a discrete and time consuming factual issue at trial which the respondents had contended was irrelevant.  The factual issue was whether the Commissioner had taken possession of the surplus land which was ultimately returned to the respondents and the use that the respondents had made of that land.  The trial Judge found in favour of the Commissioner on that topic, but considered that the issue was irrelevant.  The issue was not pursued on the appeal. 

   The Application

5. The general rule is that costs follow the event and are awarded on a party and party basis.[2]  This general rule is subject to “an absolute and unfettered discretion..., subject only to the requirement that the discretion be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.”[3] 

   [2]    Supreme Court Civil Rules 2006 rules 263(1), 264(2).

   [3]    Supreme Court Act 1935 (SA) section 40; Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 105, [55].

6. On the application for costs, the Commissioner pointed out that the respondents in their summonses for directions asserted that the Commissioner took and remained in possession of the surplus land, notwithstanding the terms of the possession and settlement deeds and the fact of the respondents having made use of the land after it had vested in the Commissioner.  It was submitted that the position taken by the respondents in their summonses was unreasonable and constituted a refusal to narrow the issues at trial.  The Commissioner also pointed out that the respondents devoted time at trial to contesting the evidence led by the Commissioner concerning possession and putting an alternative position on the topic in the event that its primary submission, namely that possession was irrelevant, was rejected. 

7. The respondents submitted that, notwithstanding the terms of the summonses, they did not run their case on the basis that possession was relevant and made clear prior to trial that they considered the issue to be irrelevant.  It was argued that the entirety of their case at trial on the topic of possession was responsive to the Commissioner’s case. 

8. In my view, the respondents should pay 75 per cent of the Commissioner’s costs of the trial.  The respondents by their summonses raised the issue of possession.  The position taken was contrary to their prior dealings with the Commissioner, as set out in the deeds entered into between the parties.  Against that background, it was appropriate for the Commissioner to put on affidavit evidence addressing the issue of possession and use of the land.  It is to be recalled that the Commissioner was ultimately successful on this issue at trial.  However, the respondents had indicated prior to trial that they considered the issue of possession to be irrelevant.  They maintained this position throughout the trial.  Counsel for the Commissioner at trial put a positive case in respect of the issue of possession, contending that there was no factual basis to impose interest.  In those circumstances, it was appropriate for the respondents to put an alternative position in the event that the Court took a different view.  A review of the transcript discloses that counsel for the Commissioner devoted considerably more time to the factual issue of possession at trial than counsel for the respondents.  It was only during the closing submissions that counsel for the Commissioner at trial accepted that the issue of possession would not affect the outcome.  Had the Commissioner accepted that the issue of possession was irrelevant from the outset of the trial, this would have materially shortened the length of the trial and reduced the complexity of the matter before the trial Judge.  In my view, the Commissioner’s decision to pursue a discrete, irrelevant issue in circumstances where it was unnecessary to do so having regard to the respondents’ position at trial warrants a reduction in the amount of costs that he can recover. 

   Conclusion

9. I would order that the Commissioner have his costs of the appeal and 75 per cent of his costs of the trial on a party and party basis.

10. KELLY J. I agree with Gray ACJ.

11. NICHOLSON J.    I agree with Gray ACJ.