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

The parties to this matter were the Commissioner of Highways (the appellant and applicant) and Farmer No 2 Pty Ltd and M & B Farmer Nominees Pty Ltd (the respondents). The dispute concerned the costs of a trial and an appeal arising from the compulsory acquisition of the respondents' land. The core issue on appeal was whether the respondents were entitled to interest on non-monetary compensation, specifically the return of surplus land, following the acquisition. The Full Court of the Supreme Court of South Australia was required to determine the appropriate costs orders for both the trial and the appeal.

The legal issues before the court were primarily concerned with the exercise of the court's discretion regarding costs. Specifically, the court had to consider whether to depart from the general rule that costs follow the event. The respondents sought to limit their liability for the Commissioner's trial costs, arguing that the Commissioner had pursued a discrete and time-consuming factual issue at trial that was ultimately irrelevant to the outcome. This factual issue related to whether the Commissioner had taken possession of the surplus land and the use the respondents had made of it.

The court reasoned that while the general rule is that costs follow the event, this discretion must be exercised judicially. In this instance, the court found that the respondents should pay 75 per cent of the Commissioner's trial costs. The court acknowledged that the Commissioner had been successful on the issue of possession at trial, and it was appropriate for him to address this issue given the respondents' initial claims. However, the court also noted that the Commissioner had devoted significantly more time to this factual issue than the respondents, and had only accepted its irrelevance during closing submissions. The court concluded that the Commissioner's decision to pursue this discrete issue, which ultimately did not affect the outcome and could have been conceded earlier, warranted a reduction in the recoverable costs. The court ordered 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.