Guida & Ors and Commissioner Of Main Roads

[2017] WASAT 141 (S)

GUIDA & ORS and COMMISSIONER OF MAIN ROADS [2017] WASAT 141 (S)

Last Update :19/03/2018

Jurisdiction:	STATE ADMINISTRATIVE TRIBUNAL	Citation No:	[2017] WASAT 141 (S)
Published:
Act:	LAND ADMINISTRATION ACT 1997 (WA)
Case No:	DR:352/2016	Heard:	DETERMINED ON THE DOCUMENTS
Coram:	MS C WALLACE (SENIOR MEMBER)	Delivered:	16/03/2018
No Pages:	16	Judgment Part:	1 of 1
Result:	Costs awarded to the respondent
Category:	B

Parties & Catchwords
Summary


Judgment

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : LAND ADMINISTRATION ACT 1997 (WA) CITATION : GUIDA & ORS and COMMISSIONER OF MAIN ROADS [2017] WASAT 141 (S) MEMBER : MS C WALLACE (SENIOR MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 16 MARCH 2018 FILE NO/S : DR 352 of 2016 BETWEEN : GUIDA & ORS

Applicants

AND

COMMISSIONER OF MAIN ROADS
Respondent

Catchwords:

Costs ­ Proceedings for compensation for compulsory acquisition of land ­ Award of compensation less than formal settlement offer ­ Whether costs should be awarded when landowners' claim for compensation is grossly exaggerated ­ Factors relevant to exercise of discretion whether to award costs

Legislation:

Land Administration Act 1997 (WA), s 217, s 219, s 220(c), s 240, s 241, s 241(7)(b), s 248
State Administrative Tribunal Act 2004 (WA), s 9, s 87, s 87(1), s 87(2), s 89
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42, r 42A
Strata Titles Act 1985 (WA), s 81(7)

Result:

Costs awarded to the respondent

Summary of Tribunal's decision:

The Tribunal previously awarded an amount of compensation to the applicants due to the compulsory acquisition of land by the respondent. The award was far less than that contended for by the applicants and considerably less than a formal settlement offer made by the respondent early in the proceeding in conformance with the State Administrative Tribunal Rules 2004 (WA). The respondent made a claim seeking a costs order in its favour on the basis that the applicants had acted unreasonably in pursuing a claim for compensation which was not supported by evidence and therefore rejecting a reasonable offer of settlement. The respondent submitted that in doing so the applicants had not acted in a manner cognisant of the Tribunal's statutory objectives to act speedily and in a manner which minimises costs to parties. The applicants submitted that the Tribunal ought not to depart from the usual position that each party bear its own costs and although they were ultimately unsuccessful, that in itself did not support the position that their compensation award ought to be eroded by way of a costs order made against them.
The Tribunal found that in all the circumstances it was fair and reasonable to award costs in favour of the respondent fixed in the sum of $33,386.94. The Tribunal found that although it should approach the question of costs in favour of a resuming authority with caution, it was also necessary to ensure that landowners pursued claims for compensation supported by evidence and not pursue grossly exaggerated claims. The Tribunal found that in this specific matter that the claim was excessive and that in pursuing it and rejecting reasonable offers of settlement made at an early stage of the proceeding, was acting in a manner inconsistent with the Tribunal’s statutory objectives. The Tribunal however noted that full costs from the date of the formal settlement offer should not be awarded given the nature of the jurisdiction and applied a 50% reduction to the costs incurred in reaching the assessed amount of costs.

Category: B

Representation:

Counsel:

Applicants : Mr T Houweling
Respondent : Ms C Ide

Solicitors:

Applicants : Cornerstone Legal
Respondent : State Solicitor's Office

Case(s) referred to in decision(s):

Chew and Director General of the Department of Education and Training [2006] WASAT 248
Guida & Ors and Commissioner of Main Roads [2017] WASAT 141
Marvelle Investments Pty Ltd and Argyle Holding Pty Ltd [2010] WASAT 125 (S)
Perth Central Holding Pty Ltd and Doric Constructions Pty Ltd [2008] WASAT 302
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32

REASONS FOR DECISION OF THE TRIBUNAL:

The proceeding and application for costs

1 The applicants brought a claim pursuant to s 241 of the Land Administration Act 1997 (WA) (LA Act) as a result of a compulsory acquisition of land by the respondent acquired for the purpose of the construction of the Perth­Darwin National Highway. The applicants accepted an offer made by the respondent in October 2015 by way of an advance payment of compensation pursuant to s 248 of the LA Act which was paid to the applicants in December 2015. The advance payment amount was in the sum of $354,640 together with interest at the rate of 6% per annum. At the time of the advance payment the applicants claim was significant, seeking compensation in the sum of $3.9 million. A significant component of the compensation claim was in respect of a claim for 'injurious affection' pursuant to s 241(7)(b) of the LA Act. The respondent's consistent position was that there was no merit in the applicants' claim for injurious affection.

2 Ultimately the Tribunal found that the compensation payable to the applicants was $352,000, being less than the advance payment made to them by the respondent. The application was therefore dismissed. Reasons for that decision were published by the Tribunal on 14 November 2017: Guida & Ors and Commissioner of Main Roads [2017] WASAT 141 (Guida).

3 Although the applicants initially sought $3.9 million by way of compensation from the respondent, at the time of the hearing the claim had reduced significantly to a sum of $786,525 plus interest. The value of the taken land and the value of the severed land was of minor import in the proceeding given that the applicants contended the value was $307,209 and the respondent contended that the value was $240,000. The difference between the parties, therefore, being approximately $67,000. The more contentious matter was whether there ought to be compensation awarded for injurious affection, and if so, what value ought to be attributed to the claim. In this regard the applicants at the time of final hearing sought compensation of $341,814. The respondent submitted that no compensation ought to be awarded for injurious affection. Ultimately, as mentioned, the respondent's position was accepted by the Tribunal.

4 On 4 December 2017 the respondent made an application pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and r 42A of the State Administrative Tribunal Rules 2004 (WA) (the SAT Rules) seeking that the Tribunal order the applicants to pay the respondent's costs fixed in the amount of $50,000.

Settlement offers

5 In September 2015 the respondent made a formal offer pursuant to s 217 of the LA Act of compensation in the amount of $354,640 plus interest. The applicants rejected the formal offer of compensation pursuant to s 219 of the LA Act, although accepted the offer by way of an advance payment. In November 2016 the applicants referred their claim to the Tribunal pursuant to s 220(c) of the LA Act. As mentioned previously the compensation claimed at this time was in the sum of $3.9 million.

6 On 15 March 2017 the respondent made an offer to the applicants pursuant to r 40 of the SAT Rules in the amount of $500,000 plus interest in full and final satisfaction of the applicants claim for compensation. The offer was stipulated to remain open until close of business on 31 March 2017. The settlement offer was not accepted by the applicants. Following the lapsing of the settlement offer the parties were required to prepare for a formal hearing including filing expert reports, experts attending an expert conferral and the filing of a joint expert report and ultimately preparing for and attending a final hearing in the matter.

7 The respondent is seeking a costs order in its favour in respect of costs incurred from 15 March 2017. The total costs incurred from that date by way of legal costs and disbursements and expert fees total $89,773.88. However, the respondent seeks that costs be fixed in the sum of $50,000.

Legal principles

8 The respondent's costs application has been made pursuant to s 87 of the SAT Act which provides as follows:

Costs of parties and others

(1) Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.

(2) Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under section 35.

(3) The power of the Tribunal to make an order for the payment by a party of the costs of another party includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought.

(4) Without limiting anything else that may be considered in making an order for the payment by a party of the costs of another party where the matter that is the subject of the proceeding comes within the Tribunal’s review jurisdiction, the Tribunal is to have regard to ­

(a) whether the party (in bringing or conducting the proceeding before the decision-maker in which the decision under review was made) genuinely attempted to enable and assist the decision-maker to make a decision on its merits;

(b) whether the party (being the decision-maker) genuinely attempted to make a decision on its merits.

(5) The rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party.

(6) The Tribunal may order that the representative of a party, rather than the party, in the representative’s own capacity compensate that or any other party for costs incurred because the representative acted in, or delayed, the proceeding in a way that resulted in unnecessary costs.

9 In relation to the assessed amount of costs, s 89 of the SAT Act provides as follows:

Costs, assessment of if not fixed
If the Tribunal makes an order under this Division for the payment of costs and does not fix the amount of costs, that amount is to be assessed or settled in accordance with the rules.

10 As mentioned previously, the respondent is also seeking to rely on r 42 of the SAT Rules in respect of its costs application. Rule 42 of the SAT Rules provides as follows:

Order for costs if settlement offer is rejected

(1) This rule applies if ­

(a) a party to a proceeding (other than a proceeding in the Tribunal’s review jurisdiction) gives another party to the proceeding an offer in writing to settle the proceeding; and

(b) the other party does not accept the offer within the time the offer is open; and

(c) the offer complies with rules 40 and 41; and

(d) in the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer.

(2) If this rule applies, the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal’s order.

(3) In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal ­

(a) must take into account any costs it would have ordered on the date the offer was made; and

(b) must disregard any costs it ordered in respect of any period after the date the offer was received.

11 Rule 42 requires that settlement offers are to comply with r 40 and r 41of the SAT Rules. Those rules provide as follows:

40. Settlement offers
(1) An offer to settle a proceeding that is before the Tribunal may be made ­
(a) with prejudice, meaning that any party may refer to the offer, or to any terms of the offer, at any time during the proceeding; or

(b) without prejudice, meaning that the Tribunal is not able to be told of the making of the offer until after it has made its decision in respect of the matters in dispute in the proceeding (other than in relation to the making of orders in respect of costs).

(2) If an offer does not specify whether it is made with or without prejudice, it is to be treated as if it had been made without prejudice.

(3) A party may make more than one offer.

(4) If an offer provides for the payment of money, the offer must specify the amount of money to be paid and when and how that money is to be paid.

41. Acceptance of settlement offers
(1) An offer may be open for acceptance for any period. However, an offer must be open for acceptance until the commencement of the hearing or until the expiry of a specified period after the offer is made, whichever is the shorter period.

(2) The minimum period that can be specified is 14 days.

(3) An offer cannot be withdrawn while it is open for acceptance without the permission of the Tribunal.

(4) In deciding whether to give permission, the Tribunal may examine the offer, even if it was made without prejudice.

(5) If the offer was made without prejudice, a member of the Tribunal who examines it for the purposes of subrule (4) must take no further part in the proceeding after determining whether or not to give permission.

(6) A party can only accept an offer by giving the party who made it a signed notice of acceptance.

(7) A party may accept an offer even though the party has made a counter-offer.

[Rule 41 amended in Gazette 13 Apr 2006 p. 1558.]

12 It is not in dispute that the effect of s 87(1) of the SAT Act is such that the starting position in respect of any application seeking costs is that each party is to bear its own costs, and the onus is on the party seeking costs to persuade the Tribunal that it ought to exercise its discretion to order otherwise. As made clear from the excerpts of the legislation set out above, the power of the Tribunal to make an order requiring one party to contribute to the other party's costs is contained in s 87(2) of the SAT Act.

13 Some of the factors relevant to exercising the discretion whether to award costs pursuant to s 87 of the SAT Act were identified in Chew and Director General of the Department of Education and Training [2006] WASAT 248 at [85]:

[T]he Tribunal should not generally make an award for costs unless a party has conducted itself in such a way as to unnecessarily prolong the hearing; has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious; or the proceedings in some other way constitute an abuse of process. The Tribunal might also make an order as to costs where a matter has been brought vexatiously or for improper purpose.

14 More recently, the Court of Appeal in Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale) gave consideration to the operation of s 87(1) of the SAT Act and the exercise of the discretion conferred on the Tribunal by s 87(2) of the SAT Act, albeit in relation to a different enabling Act. The following relevant principles were found to apply to the resolution of a costs dispute:

1) The discretionary power is to be exercised judicially; that is not arbitrarily, capriciously or so as to frustrate the legislative intent; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [48];

2) Although not expressed in s 87(2) of the SAT Act, the power is to be exercised if it is fair and reasonable in all the circumstances of the case to do so, the 'judicial nature' of the exercise of the power and the overall scheme of the SAT Act is indicative of that legislative intent; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [49];

3) The onus is on the party seeking an order in its favour to establish that a favourable order should be made; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [51];

4) The relationship between the parties giving rise to the litigation is relevant particularly in matters where a landowner has been dispossessed of their land by a public authority. In those cases the litigation does not 'arise out of their mutual desire' but rather arises as a result of a unilateral decision of the respondent to compulsorily acquire the applicants land in order to meet the needs of the general public; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [53];

5) Every party to proceedings before the Tribunal is taken to be cognisant of the objectives of the Tribunal as expressly provided for in s 9 of the SAT Act. It is therefore necessary for the respondent to establish that the applicants conduct has impaired the attainment of the Tribunal's objectives to have the proceedings determined fairly and in accordance with the substantial merits, with as little formality and technicality as possible and in a way which minimises the costs to the parties; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [54];

6) The mere fact that a party ultimately fails on a contention advanced during the course of the hearing does not, in itself, signify that the party has acted inconsistently with the objectives set out in s 9 of the SAT Act; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [55];

7) Parties should have the opportunity to access the justice system in order to present an arguable and well­organised case. However, this should be distinguished from the situation where a party pursues a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on courts or tribunals; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [56]; and

8) In circumstances where r 42 of the SAT Rules applies, the weight to be given to that mandatory consideration will be determined on a case by case basis. Its importance is evidenced from the legislative intent requiring, where possible, for parties to proceedings to take reasonable endeavours to consider and explore settlement. However, it does not flow that properly interpreted, that r 42 means that costs necessarily follow the event particularly in cases where there has been a compulsory acquisition of land where ordinarily an applicant, if it acts reasonably, would be entitled to a favourable costs order; Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [59] ­ [60].

15 If the Tribunal exercises its discretion to award costs, it approaches the task of fixing costs in a broad and relatively robust fashion; Perth Central Holding Pty Ltd and Doric Constructions Pty Ltd [2008] WASAT 302 at [67] and Marvelle Investments Pty Ltd and Argyle Holding Pty Ltd [2010] WASAT 125 (S) at [49]. The Tribunal does not necessarily tax or assess costs in the way that courts ordinarily do. However, although fixing costs involves a relatively broad brush approach, the Tribunal nevertheless needs to be satisfied that the costs incurred are reasonable and are not excessive.

The respondent's submissions in favour of a costs order

16 The respondent submits that it ought to be awarded costs on the following basis:

1) The advance payment made to the applicants was reasonable and if accepted would have negated the need for proceedings. The respondent has therefore been unnecessarily put to the expense of defending the applicants' claim for compensation;

2) In addition, the respondent made a settlement offer in accordance with r 40 of the SAT Rules at an early stage of the proceeding before any expert evidence was filed and significant costs were incurred by the parties. The formal offer was generous in that it was a sum significantly (being over 40%) higher than the amount of compensation ultimately found by the Tribunal to be due and payable to the applicants;

3) The applicants are taken to be cognisant of the Tribunal's s 9 objectives to act as speedily and with as little formality and technicality as is practicable, and minimise the cost to parties. Awarding costs to the respondent would therefore encourage acquiring authorities to make early reasonable settlement offers and would encourage applicants to properly consider such offers at an early stage in order to satisfy the s 9 objectives of the Tribunal;

4) The applicants acted in an unreasonable manner by pursuing a claim for injurious affection which was found by the Tribunal to be unsupported by the evidence (Guidaat [29] ­ [31]);

5) The applicants acted unreasonably in making an excessive claim unsupported by evidence, originally in the sum of $3.9 million which necessitated the respondent incurring significant costs in order to defend the claim. In the circumstances the respondent acted reasonably in seeking only to recover costs fixed in the amount of $50,000, being an amount just over half the costs incurred from the date of the formal settlement offer; and

6) In all the circumstances it is fair and reasonable that the respondent be reimbursed for a portion of the costs incurred in defending the applicants claim for compensation.

The applicants' responsive submissions to the costs application

17 The applicants contend that the Tribunal ought not to depart from the starting position that each party bears its own costs. They make that contention on the following basis:

1) The Tribunal is a no costs jurisdiction in order to allow parties to articulate and bring forward claims without fear of adverse costs applications being made against them;

2) The applicants pursued their claim for compensation on the basis of independent expert advice and on that basis could not be said to be acting in a frivolous or vexatious manner;

3) The applicants, having been deprived of land through no fault of their own, ought not to have compensation paid reduced because they sought to question the amount of compensation to be awarded. If the Tribunal awards costs in favour of the respondent, effectively the applicants will be deprived of their entitlement to compensation due to the compulsory acquisition of their land;

4) More broadly, if the Tribunal awarded costs in favour of the respondent it may have the effect of deterring aggrieved landowners from rejecting an offer made by a resuming authority and seeking compensation despite obtaining independent expert evidence in support of such action;

5) Although the Tribunal must take into account the settlement offer made by the respondent in accordance with the SAT Rules, it is not decisive as to whether costs ought to be awarded and the question is whether the offer was unreasonably refused. The mere rejection of the offer does not mean that the applicants have acted in a manner that is unreasonable; and

6) The mere fact that the applicants were unsuccessful is not decisive that costs should follow the event nor is it indicative that they have acted in a manner which is not cognisant of the Tribunal's statutory objectives. They have not acted in a way which has prolonged the proceedings or lead to increased costs being incurred by the parties.

18 In summary on the basis of the above reasoning the applicants contend that the Tribunal ought not to depart from the starting position that each party ought to bear their own costs.

Determination

19 Costs applications are difficult to determine in the context of landowners who have had land compulsorily acquired by a resuming authority. They do not come to litigation as a decision they have actively engaged in from the outset. They are ‘reluctant’ applicants to a certain degree.

20 However, it must also be noted that it was open to Parliament when drafting the enabling legislation to prescribe in respect of claims made pursuant to s 240 of the LA Act, as has been done in other jurisdictions (see for example s 81(7) of the Strata Titles Act 1985 (WA)), that the Tribunal cannot make any order for the payment of costs. No such provision exists in the LA Act and therefore the provisions of the SAT Act and the SAT Rules to which I have already referred at [8] ­ [11] apply. Therefore although the Tribunal ought to proceed cautiously given the nature of the proceeding itself, the discretion nevertheless is open to be exercised when determined to be appropriate to do so in all of the relevant circumstances.

21 Ultimately in the present matter when weighing up all relevant factors, the Tribunal has concluded that it is appropriate to award costs in favour of the respondent for the following reasons:

1) The quantum of the compensation claim made by the applicants was ultimately determined to be frivolous or grossly exaggerated when compared to the amount ultimately awarded by the Tribunal. Indeed, the initial claim for compensation was in the realm of $3.9 million. Although the quantum changed a number of times, ultimately being in the amount of $786,525, the sum awarded was less than half that amount, being $352,000 and only a fraction of the original claim;

2) A large component of the applicants' claim for compensation comprised of their 'injurious affection' claim which the Tribunal found to be based 'on an assumption in circumstances where there is no evidentiary basis supporting the underlying assumption' (Guida at [29]). The Tribunal found that the claim had a 'complete absence of evidence' (Guida at [30]);

3) The applicants are taken to be cognisant of the s 9 statutory objectives of the Tribunal. The applicants therefore were expected to assist the Tribunal to ensure that the proceedings were determined fairly and in accordance with the substantial merits and in a way which would minimise the cost to parties. In this context the Tribunal also must consider the formal settlement offer made by the respondent in accordance with r 42 of the SAT Rules. That offer was made early during the course of the proceedings and was a fair and reasonable offer in light of the ultimate award of compensation made to the applicants. If that offer had been accepted the applicants would have received a higher compensation award and both parties would have incurred significantly less costs in the proceeding. The offer was rejected at a time when the applicants claim for compensation was grossly exaggerated;

4) Whilst the Tribunal concurs that it ought to approach an award of costs in favour of the respondent cautiously so as not to deter other landowners from legitimately pursuing entitlements to compensation when land has been compulsorily acquired, the Tribunal must balance that consideration with a need to ensure that landowners do not pursue, at significant cost, grossly exaggerated claims for compensation which cannot be substantiated on the evidence; and

5) It is fair and reasonable in all the circumstances that the respondent be reimbursed a portion of the costs incurred. The formal offer of settlement was generous and made at an early stage of the proceedings. It did not constitute a low offer or one which was unreasonable or strategic in nature. This is not a matter where the applicants merely failed to succeed on a contentious point which properly required determination.

22 The respondent seeks a proportion of its costs incurred from the date that the formal offer was made. The costs incurred are as follows:

a) expert fees of Mr Wilson in the amount of $19,937.50;

b) expert fees of Mr Srhoy in the amount of $23,000;

c) disbursements in the amount of $1,640.38; and

d) legal fees in the amount of $45,196.

23 The total costs the respondent has incurred since the date of the formal settlement offer is in the sum of $89,773.88. However, the respondent seeks that its costs be fixed in the sum of $50,000.

24 In the Tribunal's view it was not assisted by the expert evidence of Mr Srhoy and therefore those fees ought not be recoverable. The Tribunal found the evidence of Mr Wilson to be persuasive and useful and therefore will take into account those costs in determining an appropriate amount to be awarded. The Tribunal considers that the legal fees incurred at the relevant charge out rates and the amount of time invested to be reasonable in the circumstances of the matter.

25 As mentioned previously, the Tribunal takes a broad brush approach in fixing costs. They are not indemnity costs in the ordinary course but usually are a percentage contribution depending on the nature of the proceeding. In the current circumstances although the Tribunal has found that it is fair and reasonable to award the respondent costs, given the nature of the jurisdiction and the competing consideration to ensure that other landowners are not unfairly deterred in bringing forward legitimate claims for compensation, the Tribunal's view is that in this instance it ought to award only 50% of the respondent's costs incurred from 15 March 2017 (but removing those costs in respect of Mr Srhoy's fees). The reduced amount of costs incurred by the respondent is in the amount of $66,773.88. Fifty per cent of those costs equates to $33,386.94. The Tribunal therefore determines that sum is an appropriate award of costs to be made in favour of the respondent.

Orders

The Tribunal therefore makes the following order:

1. The applicants are to pay costs to the respondent fixed in the sum of $33,386.94 within 28 days of the date of this order unless otherwise agreed by the parties.

I certify that this and the preceding [25] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS C WALLACE, SENIOR MEMBER