Gales Holdings Pty Ltd v Valuer General

[2007] NSWLEC 14

Land and Environment Court

of New South Wales

CITATION:	Gales Holdings Pty Ltd v Valuer General [2007] NSWLEC 14
PARTIES:	APPLICANT Gales Holdings Pty Ltd RESPONDENT Valuer General
FILE NUMBER(S):	30945; 30946 of 2005
CORAM:	Talbot J
KEY ISSUES:	Costs :- Compensatory order where additional costs incurred as a consequence of failure of the other party to comply with directions in Class 3 proceedings.
LEGISLATION CITED:	Land and Environment Court Act 1979 Land and Environment Court Rules 1996 Valuation of Land Act 1916
CASES CITED:	Grant v Kiama Municipal Council [2006] NSWLEC 70 ; Hunter Development Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292; Manly Warringah Rugby League Club Pty Limited v Warringah Council [2006] NSWLEC 88; Stanley v Phillips (1996) 115 CLR 470.
DATES OF HEARING:	22/11/2006, 23/11/2006, 24/11/2006
DATE OF JUDGMENT:	12 January 2007
LEGAL REPRESENTATIVES:	APPLICANT Mr T F Robertson SC SOLICITORS Woolf Associates RESPONDENT Mr G Newport, barrister SOLICITORS NSW Crown Solicitors

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Talbot J

12 January 2007

30945 of 2005 Gales Holdings Pty Ltd v Valuer General
30946 of 2005 Gales Holdings Pty Ltd v Valuer General

JUDGMENT

1 Talbot J: On 22 December 2006 I determined that the total aggregated land value of the applicant’s holdings in and about Kingscliff in Northern NSW at 1 July 2003 was $9,152,000 and at 1 July 2004 was $11,058,580 as summarised at [38] and [39] in the judgment. Those amounts are less than the total aggregate land value determined by the Valuer General but significantly more than the land value contended for by the applicant in its original objection.

2 Each party compromised its position as the hearing progressed and during the process of Court directed conferencing between the experts. Neither party achieved outright success although it must be considered that the applicant has been successful in having the original land values reduced. On the other hand the Valuer General has succeeded to the extent that the land values have been assessed by the Court at an amount in excess of the applicant’s original claim.

3 Section 69(2) of the Land and Environment Court Act 1979 confers an unfettered discretion in relation to costs, subject to the Rules of the Court. Part 16 Rule 4 of the Land and Environment Court Rules makes a special provision for costs in Class 3 proceedings under s 37 of the Valuation of Land Act 1916 as follows:-

(2) No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable.

4 The subject proceedings fall within the above Rule.

5 The present Chief Judge of the Court has identified examples of the categories of cases in which the circumstances might justify an order for costs (Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15] and Manly Warringah Rugby League Club Pty Limited v Warringah Council [2006] NSWLEC 88). In its written submissions in support of its opposition to an application made by the applicant for an order for costs in its favour these categories of cases have been conveniently summarised by the respondent as follows:-

(a) Where the proceedings cease to have the character of a merits review;
(b) Where the matter the subject of the costs application involves only a preliminary question of law;
(c) Where a party fails to provide or delays unreasonably in providing information or documents required as part of the application for approval;
(d) Where a party has acted unreasonably in the conduct of the proceedings such as:
(i) Delaying unreasonably and taking action or making proper concessions or agreeing to proper amendments;
(ii) Unnecessarily protracting the proceedings either during the interlocutory phase or during the preparation for the hearing;
(e) Where a party has acted unreasonably in circumstances leading up to the proceedings, such as effectively inviting the litigation;
(f) Where the proceedings or the defence has been commenced or continued where it had no chance or very poor prospects of success;
(g) Where a party conducts its case for extraneous purposes.
(h) When a party discontinuous its appeal without consent of the other parties in circumstances that may be regarded as an abandonment of the claim.

6 I agree with the applicant’s submission that the factors referred to by Preston CJ are not a code and should not be regarded as an inflexible set of principles.

7 The applicant in its written submissions correctly deduces the following propositions from the judgments of Bryson JA and Basten JA in Hunter Development Brokerage Pty Ltd v Cessnock City Council [No 2] [2006] NSWCA 292:-

a. Rule 4(2) is a new beginning and earlier practices, case law and the former Practice Direction have no influence on its application: [3].

b. Case law which reflected the operation of the former Practice Direction should be treated with great caution because it reflected a practice as to the award of costs which was untenable: [35].
c. There is a substantial difference between the discretion conferred by the rule and that reflected in the former Practice Direction: the test of exceptional circumstances provides a higher hurdle for departure from the general approach that there be no order as to costs than does the language of the rule: [39].

d. Rule 4 identifies an exception to the “no costs” rule by reference to particular circumstances, and this refers to the conduct of the parties in commencing or maintaining the particular litigation, rather than the outcome or result of the proceedings, which is the event of primary importance in determining whether an unfettered discretion as to costs should be exercised in favour of the successful party: [50].

e. The Court should not fetter its power to award costs in particular cases by reference to a principle which requires a particular result: [60], [35].

8 The Court of Appeal judgment in Hunter Development Brokerage Pty Ltd does not disturb the effect of Part 16 Rule 4 but rather provides guidance to the effect that the Court should proceed with caution and in particular not rely on the significant body of precedents created under the regime of the former Practice Direction.

9 The basis of the application by the company for an order for costs in its favour relies substantially on the alleged breaches of the Court’s directions by the respondent thereby causing unreasonable delay in the production of the respondent’s valuation evidence which frustrated the joint conferencing process and impeded the preparation of a joint report by the valuers. It is claimed that the conduct of the respondent caused actual unfairness to the applicant in the conduct of the proceedings because it prevented the applicant from making offers to compromise the proceedings and so avoid the significant cost of a contested hearing, or at least to truncate the hearing and so reduce the cost of the proceedings.

10 It is true that apart from some matters of detail the valuers ultimately were able to present the Court with a joint report that consisted largely of a consensus position dependant upon a determination of a dispute between the expert planners in certain important respects.

11 The respondent does not seriously take issue with the applicant in respect of the failure of the respondent’s valuer to comply with the Court’s directions. However in his written submissions Mr Newport provides an explanation for the non-compliance and delay, although the submission is not supported by any formal evidence. Whether or not a compromise could have been reached if the directions made by the Court had been complied with as the applicant contends is equally a matter for conjecture. The only support for the applicant’s argument that a compromise could have been reached and the attendance of the valuers over the period of the two-day hearing avoided is to be drawn from the contents of their joint report.

12 As a matter of principle, I accept that if the failure by a party to comply with the Court’s directions results in an adverse costs result for the other party then it is appropriate for the disadvantaged party to be compensated by a cost order. In the present case I cannot be satisfied that any additional witnesses expenses were incurred as a consequence of the failure by the respondent’s valuer to comply with the Court’s directions. The extent of the conferencing between the valuers over the two day period of the hearing and immediately beforehand does not necessarily lead to the conclusion that additional professional time was taken up, but merely that it occurred later than it would have otherwise occurred if the directions had been complied with. More over, the town planners’ evidence was not completed and made available to the valuers in a final form until that time.

13 However, I am satisfied that the hearing time was protracted by the fact that both parties were unable to present the evidence of either the planners or the valuers on the first day. Instead an extended view was undertaken by the Court on that day. The observations made by the Court during the view following the ultimate consensus on most critical matters by both sets of experts were of little value and provided almost no assistance. I am satisfied that if the joint conferencing process had taken place in accordance with the Court’s directions then a second day for the hearing may have been entirely unnecessary. I recognised however that an inspection of the sites would have assisted the Court to understand the nature of the subject lands and their features although of doubtful value beyond that purpose.

14 Apart from the site inspection, which occupied the whole of the first day the actual Court hearing time, was one and a half days. It is my assessment that if the respondent’s case has been prepared in accordance with the Court’s directions the hearing, including a view, would have been completed in a day and a half.

15 Apart from the abovementioned consequence of an extended time for the hearing, there is no circumstance in relation to the completion of the proceedings that in my view displaces the initial presumption raised by Part 16 Rule 4(2) that there will be no order for the payment of costs. It is my opinion that it is fair and reasonable to allow the reimbursement of the wasted costs incurred by the extended hearing time. Accordingly the respondent will be ordered to pay one half of the applicant’s costs in respect of the hearing itself but otherwise there will be no order as to costs. In so concluding I have not accepted the submission on behalf of the applicant that it should be entitled to the benefit of the whole or a substantial part of its costs because of the lost opportunity to compromise the outcome. I have not been persuaded that such a result was inevitable. Therefore it would have been necessary for the Court to resolve some outstanding disputes between the parties after hearing evidence from the planners in a concurrent session and also possibly after hearing short evidence from the valuers assisted by submissions from counsel representing the respective parties.

16 Mr Newport makes an additional submission that any costs order should be made only on the basis of allowing for the cost of a junior counsel. It is submitted on behalf of the respondent that there were no complex questions of law involved which warranted senior counsel being briefed and that the nature of the case, its complexity and importance did not warrant “calling for skill and experience beyond that of the junior bar” (Stanley v Phillips (1996) 115 CLR 470 at [486]).

17 Stanley v Phillips involved questions that arose where two counsel were briefed at the time when it would follow as a matter of course that the services of senior counsel could not be obtained unless junior counsel was also briefed. In this case no junior counsel appeared with Mr Robertson SC, and accordingly the cost of only one counsel was incurred at the hearing.

18 There were significant issues at stake and the land values concerned were great enough and the differences between the parties, initially, were of a magnitude to justify the engagement of counsel with an appropriate and proper degree of competence and experience. It is appropriate therefore that the costs of senior counsel be allowed.

19 I make the following orders:-

1. That the respondent pay one half of the applicant’s costs incurred for the appearance of senior counsel and attendance of expert witnesses at the hearing over 3 days: 22, 23 and 24 November 2006.
2. Apart from the costs in order 1, I make no order for the payment of costs in the proceedings.
3. The respondent is ordered to pay such of the applicant’s costs that are referrable to the application for an order for costs, generally the preparation of written submissions.