Guida & Ors and Commissioner Of Main Roads
[2017] WASAT 141
•14 NOVEMBER 2017
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: LAND ADMINISTRATION ACT 1997 (WA)
CITATION: GUIDA & ORS and COMMISSIONER OF MAIN ROADS [2017] WASAT 141
MEMBER: MS C WALLACE (SENIOR MEMBER)
MR B SMITH (ASSESSOR)
MR D HALL (ASSESSOR)
HEARD: 26 AND 27 JUNE AND 16 AUGUST 2017
DELIVERED : 14 NOVEMBER 2017
FILE NO/S: DR 352 of 2016
BETWEEN: GUIDA & ORS
Applicants
AND
COMMISSIONER OF MAIN ROADS
Respondent
Catchwords:
Compensation for compulsory acquisition of land - Section 241 of the Land Administration Act 1997 (WA) - Principles of land valuation - Claim for 'injurious affection' - Whether value of rural property diminished due to construction of highway - Highest and best use of land - Whether construction of highway interfered with 'rural ambience' of market garden - Comparable properties - Appropriate valuation adjustments
Legislation:
Land Administration Act 1997 (WA), s 161, s 177, s 178, s 241, s 248
Shire of Chittering Town Planning Scheme No 6
Result:
No further compensation payable by the respondent
Summary of Tribunal's decision:
The applicants are the registered proprietor of an estate in fee simple of land known as 211 Almeria Parade, Muchea. On 10 June 2015 the Commissioner of Main Roads, the respondent in the proceeding, compulsorily acquired part of the applicants property pursuant to s 177 and s 178 of the Land Administration Act 1997 (WA) (LA Act). The compulsory acquisition was for the purpose of constructing the PerthDarwin National Highway. The applicants brought a claim pursuant to s 241 of the LA Act seeking compensation. The main issues in contention in the proceeding was in respect of the appropriate value for the taken land and whether the applicants ought to be compensated for 'injurious affection' suffered by the remaining land. The applicants contended that the value of the land prior to the compulsory acquisition was $32,000 per hectare, which following the land acquisition reduced to a value of $24,000 per hectare. The respondent contended that the land was appropriately valued at $25,000 per hectare both before and after the compulsory acquisition and that there was no basis on which the applicants could claim compensation for 'injurious affection'.
The Tribunal found that the appropriate value of the land prior to the compulsory acquisition was $30,000 per hectare. The Tribunal did not accept the position of the applicants that they were entitled for compensation for injurious affection. The Tribunal did not accept that the land was a lifestyle property and also did not accept that the construction of the proposed highway would adversely affect the 'rural ambience' of the market garden such that it would suffer a diminution of its property value. The Tribunal found that there was no evidence to support the applicants claim in this regard. The Tribunal therefore found that an appropriate amount of compensation was $352,000. Given that the applicants received an advance payment from the respondent on 4 December 2015 in the amount of $354,640 plus interest at an annual rate of 6%, no further compensation amount was required to be paid to them.
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):
Brewarrana Pty Ltd v Commissioner of Highways (1973) 5 SASR 541
Cerini v The Minister for Transport [2001] WASC 309
Duffy v The Minister for Planning [2003] WASCA 294
Lenz Nominees Pty Ltd v The Commissioner of Main Roads [2012] WASC 6
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The applicants in this proceeding, John Guida, Maria Nicoli, Vincenzo Guida and Josephine Guida, are the registered proprietor of an estate in fee simple of land which was, prior to 10 June 2015, described as Lot 31 on Diagram 72548 on Certificate of Title Volume 1868 Folio 803, more commonly known as 211 Almeria Parade, Muchea, and comprising 52.327 hectares in size.
The land has been used, in part, for market gardens. It is zoned 'agricultural resource' under the Shire of Chittering Town Planning Scheme No 6. The improvements on the land include a transportable home and two large sheds constructed near the Almeria Parade frontage of the property.
On 10 June 2015, upon registration of Taking Order No 236671, the Commissioner of Main Roads, being the respondent, compulsorily acquired that part of Lot 31 which now comprises Lots 191 and 196 on Deposited Plan 405697, an area of 5.8197 hectares ('the taken land') pursuant to s 177 and s 178 of the Land Administration Act 1997 (WA) (LA Act). The taken land comprises a portion of land towards the east and rear boundary of Lot 31 running from the southern boundary up towards the north-eastern corner of the land. The statutory authorisation underpinning the acquisition of the taken land is set out in s 161 of the LA Act which empowers the respondent to 'undertake, construct or provide any public work'. The respondent identified the designated purpose of the taking being the construction of the Perth-Darwin National Highway (PDNH).
The remaining portions of Lot 31 are now known as Lot 190 on Deposited Plan 405697 and comprise of two moieties: a western moiety of 42.7229 hectares and an eastern moiety of 3.7806 hectares. The western moiety continues to have access to Almeria Parade with the eastern moiety having access from PDNH via a new slip road which will be constructed by the respondent. The western moiety continues to be used by the applicants for market garden purposes.
The applicants are entitled to make a claim for compensation as a result of a portion of the land being taken by the respondent pursuant to s 241 of the LA Act. The parties attempted to agree to the amount of compensation applicable but ultimately were unable to reach agreement. However, on 6 October 2015 the applicants agreed to accept an offer from the respondent by way of an advance payment of compensation pursuant to s 248 of the LA Act ('the advance payment') which was paid to the applicants on 4 December 2015. The advance payment amount was in the sum of $354,640 together with interest at a rate of 6% per annum from 22 June 2015.
Legal framework
Section 241(1) of the LA Act provides as follows:
In determining the amount of compensation (if any) to be offered, paid, or awarded for an interest in land taken under Part 9, regard is to be had solely to the matters referred to in this section.
Section 241(7) of the LA Act provides the following:
If the fee simple in land is taken from a person who is also the holder in fee simple of adjoining land, regard is to be had to the amount of any damage suffered by the claimant
(a)due to the severing of the land taken from that adjoining land; or
(b)due to a reduction of the value of that adjoining land,
however, if the value of any land held in fee simple by the person is increased by the carrying out of, or the proposal to carry out, the public work for which the land was taken, the increase is to be set off against the amount of compensation that would otherwise be payable under paragraph (b).
As Parker J observed in Cerini v The Minister for Transport [2001] WASC 309 (Cerini) at [224]:
[Although] s 241(7) does not contain any reference to [the term] 'injurious affection', it is common for [s 241(7)(e)] still to be referred to as the injurious affection provision.
Parker J went on at [230] in Cerini to note the following:
While section 241(7) is regrettably unclear, in particular because of the incompleteness of par (b), I am inclined to the view that par (b) is intended to allow compensation where retained adjoining land of a claimant is reduced in value by reason of the public work for which land of the claimant was resumed. I prefer to see the justification for that interpretation, however, in the context and the opening words of the subsection and by adopting reasoning akin to that adopted in Konowalow in respect of the former s 63(b).
As for the general principles applicable to assessing compensation in cases of compulsory acquisition of land, they are usefully set out by Edelman J in Lenz Nominees Pty Ltd v The Commissioner of Main Roads [2012] WASC 6 (Lenz) at [66] as follows:
1)Assessment of compensation must be conducted with regard only to the matters contained in s 241 of the LA Act.
2)No regard is to be had to the value of any improvements made without the consent of the Minister for Land after the registration of the notice of intention.
3)The purpose of the assessment of compensation for resumed land is to ensure that the person to be compensated is given a full money equivalent of their loss.
4)Compensation for the value of the resumed land should be addressed in a theoretical, albeit artificial, fashion by assuming that the land had been sold on the date of its acquisition by the resuming authority.
5)This theoretical approach to assess compensation for the resumption of the land requires the court to identify the price which would be paid under a hypothetical bargain between a person desiring to buy the land to a vendor willing to sell it for a fair price but not desirous to sell.
6)In assessing the price payable in this hypothetical sale, it must be assumed that the hypothetical purchaser would be purchasing the land for the most advantageous use for which it could be adapted, that is, the 'highest and best use of the land'.
7)The highest and best use of the land may be a single use or it may be a package of alternative uses.
8)In assessing the highest and best use, the existing use will be a relevant, although not necessarily determinative, factor.
9)The hypothetical purchaser must be assumed to have regard to all relevant available information and be cognisant of all circumstances that might affect the value of the land.
10)However, the hypothetical sale and the determination of the value of the claimant's interest in the land taken, and the compensation payable must be calculated by discounting any increase or decrease in value attributable by the proposed public works themselves.
11)In conducting the valuation exercise it is often emphasised that a court must not usurp the skill and experience of a valuer and become effectively the 'third valuer'.
12)However, the prohibition against a court becoming a 'third valuer' does not prevent it from making its own adjustments to valuations, particularly where a valuer's adjustments to comparative sales are not wholly accepted.
13)If any doubts exist in assessing the compensation payable, then those doubts must be resolved by a liberal estimate in favour of the dispossessed owner.
In relation to the comparable sales method of valuation it is useful to refer to McLure J in Duffy v The Minister for Planning [2003] WASCA 294 (Duffy):
There is no hard and fast rule by which a valuer can draw the line that clearly separates sales that are comparable from those that are not. It is a matter of degree. Some adjustment is always necessary but too much adjustment may render it unsafe to use as a sale. Where the line is to be drawn is a matter for the expert valuer to determine. Further, just because a sale is excluded from use in the comparable sales reasoning process does not necessarily mean that it is irrelevant[.]
His Honour then set out this useful extract from the decision of Wells J in Brewarrana Pty Ltd v Commissioner of Highways (1973) 5 SASR 541 at 550551 (at [24]):
It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances … appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia … to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape … land use (actual and potential), scope for, and difficulties of, development, …; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected.
Pursuant to s 241(8) of the LA Act an additional amount of 10% of compensation awarded is payable to compensate for the taking of the applicants' land without agreement which is often referred to as 'solatium'. However, whilst interest is payable on the award of compensation (s 241(11)), s 241(12) takes into account any advance payment made when determining interest. Interest is payable on the full amount of any award of compensation only for the period until the date of the advance payment (or the first of any advance payments) and thereafter interest is payable only on the balance outstanding.
Issues for determination
The issues for determination can be set out by reference to the relevant provisions in the LA Act as follows:
1)the value of the taken land: s 241(2) of the LA Act;
2)the value of the eastern moiety of the land due to its severance from the rest of the property: s 241(7)(a) of the LA Act;
3)compensation for 'injurious affection': s 241(7)(b) of the LA Act;
4)consequential loss in the form of maintenance and ongoing costs of severed portion of the land: s 241(6) of the LA Act;
5)solatium: s 241(8) and (9) which the parties agree should be at 10%; and
6)whether interest is payable which needs to take into account the advance payment made to the applicants by the respondent: s 241(11) and (12) of the LA Act.
Parties' positions
It is useful to set out in tabular form the position of the parties in respect to each of the heads of claim identifying how each amount has been calculated.
| Head of claim | Applicants' position | Respondent's position |
| Value of land taken: s 241(2) of the LA Act | $32,000 per hectare x 5.8197 hectares = $186,230 | $25,000 per hectare x 5.8197 hectares = $145,500 |
| Severance of eastern moiety: s 241(7)(a) | $32,000 per hectare x 3.7806 hectares = $120,979 | $25,000 per hectare x 3.7806 hectares = $94,500 |
| Injurious affection for western moiety: s 241(7)(b) | $8,000 per hectare x 42.7267 hectares = $341,814 | Affected value of severed western moiety is nil |
| Consequential losses for management and fencing of severed land: s 241(6) of the LA Act | $25,000 for management + $25,000 for fencing + $16,000 for consequential loss for water = $66,000 | $5,000 for fees, $3,000 for fencing, $8,500 for fire break maintenance and $15,000 for weed control = $31,500 |
| Solatium: s 241(8) and (9) of the LA Act | 10% of $715,023 = $71,502.30 | 10% of $271,500 = $27,150 |
| Interest: s 241(11) | 6% from date of taking (10 June 2015) to payment on additional compensation to advance payment $414,285.30 x 0.06 x number of days | No interest applicable |
Determination
Value of taken land and value of severed eastern moiety: s 241(2), s 241(7) and s 241(8)
At the hearing the Tribunal had the benefit of lay witness evidence from Mr John Guida who also filed a written witness statement dated 8 June 2017 (Exhibit 5). The Tribunal also had the benefit of expert evidence given by way of concurrent evidence from Ms Jenny LeFevre, expert valuer retained by the applicants, who filed an expert report and an addendum report with the Tribunal (Exhibits 8 and 9); Mr Keith Wilson, expert valuer on behalf of the respondent who also provided an expert report (Exhibit 10); and Mr Wayne Srhoy, also an expert valuer for the respondent who provided an expert report (Exhibit 11). The experts also participated in a chaired expert conferral and produced a joint expert statement dated 6 June 2017 (Exhibit 7).
This was a particularly difficult case in respect to identifying the value of the taken land because of the 'dearth of the sales' (T:16; 27.06.17) and the fact that there was no particular sale which indicated the extent of the value of the subject property when all of its overall characteristics were taken into account. Nevertheless, as the case law in this jurisdiction has made clear, the difficulty of the task does not remove the obligation on the Tribunal to try to determine, as best as it can, an appropriate value for the taken land. However, the Tribunal is mindful of the fact that when comparable sales evidence is limited, as it was in the present case, the need for adjustments to be made and 'best guess' analysis to be performed is heightened.
The Tribunal found that each of the independent expert valuers were suitably qualified and experienced to give expert valuation evidence in this matter. However, in relation to the issue in respect of the value of the taken land the Tribunal has placed more weight on the evidence of Ms LeFevre and Mr Wilson than that of Mr Srhoy. The Tribunal is concerned that Mr Srhoy only undertook a kerbside inspection of the subject land rather than a full inspection (T:85; 26.06.17). In addition, Mr Srhoy only had the benefit of photographs which he himself did not take (T:86; 26.06.17). As only a kerbside inspection was undertaken by Mr Srhoy this brings into question his ability to make an accurate and considered comparison to his sales evidence. The Tribunal therefore has some concerns as to the adjustments Mr Srhoy may have made to his sales evidence to arrive at his assessment of $25,000 per hectare.
The Tribunal is therefore left with the valuations of Ms LeFevre and Mr Wilson which achieved relatively similar valuations for the taken land. Ms LeFevre determined a valuation of $32,000 per hectare and Mr Wilson determined a valuation of $30,000 per hectare. Although Mr Wilson made comments during his oral testimony that, having heard the oral evidence of Mr Guida that the land is often waterlogged, he considered that his valuation ought to have been less favourable. He nevertheless chose not to adjust his valuation and remained with the $30,000 per hectare position (T:90; 27.06.17).
Effectively the difference between the valuation derived at by Mr Wilson and that derived at by Ms LeFevre can be explained by their assessment of the subject land and its highest and best use which therefore dictated the basket of evidence to which it was compared. Mr Wilson considered that the subject land was rural in nature which is certainly supported by its zoning. In contrast Ms LeFevre contended that the subject land was more properly described as a rural lifestyle property and placed great emphasis on the frontage to the Ellen Brook and the presence of the market garden and transportable home. However, it is not in dispute between the parties that the property has never been used as a 'lifestyle property' and there was no evidence before the Tribunal to support that the Ellen Brook or the market garden were attributes of the land which specifically increased its value compared with properties without those features.
In the Tribunal's view this lifestyle slant given to the property by Ms LeFevre was not supported by the evidence. Therefore that raises some concern with the Tribunal regarding Ms LeFevre's choice of comparable properties and, more so, in respect of the adjustments which she made to her comparable properties which were made on the basis of her assumption that the 'lifestyle' characteristics of the subject land added economic value (T:6065; 27.06.17). However, Ms LeFevre's valuation evidence is of some use to the extent that it is substantively close in value to that of Mr Wilson given that she and Mr Wilson shared five common comparable sales. They each also approached the task of valuation by rounding up their valuation to achieve the most favourable value per hectare. In the Tribunal's view, based on Ms LeFerve's most comparable sale, if she had not made adjustments for the 'lifestyle' features of the subject land, she would have arrived at the same valuation as Mr Wilson. In this regard, the Tribunal notes that Ms LeFevre identified sale 4 from her basket of evidence as the most comparable to the subject property. Sale 4 is 299 Brand Highway, Muchea and although it is an older sale, the Tribunal acknowledges that it had some comparable characteristics with the subject land and comprised cleared grazing lands, was 64.27 hectares in size and had the benefit of a commercial water licence as does the subject land. The property had a disadvantage of having a gas main easement running north to south through the rear of the property. However, it had similar improvements to the subject property including a modest three by one dwelling with sheds. Ms LeFevre assessed the land value at $28,006 per hectare.
It is unclear to this Tribunal how Ms LeFevre was able to adjust that value upward to $32,000. In her oral evidence she simply noted that the following required adjustments: the absence of the Ellen Brook on the property, the presence of a gas pipeline easement and the fact that the property was larger than the subject land (T:74; 27.06.17). Although the Tribunal accepts that there is no exact science in valuation adjustments, there must certainly be an evidentiary basis for the adjustment. Whilst size of the property, timing of the sale, and easements are all appropriate reasons for a valuer to make an adjustment, the absence of the Ellen Brook is not a reasonable basis for an adjustment to be made as Ms LeFerve was unable to identify any evidence to support that its presence added value to the subject land. Therefore, although an adjustment of the comparable sale was required, in the view of the Tribunal, the size of the adjustment raises some concerns and appears excessive.
Mr Wilson also had a basket of evidence on which he undertook his comparable valuation analysis. He particularly relied on sale 9 in his report being a property located at 1928 Great Northern Highway, Bullsbrook which was zoned general rural and had a land area of 48.21 hectares. Mr Wilson noted that it was a property which had similar characteristics to the subject land, being a large rural site, although considerably smaller than the subject land. It had a main-road frontage and no proximity to a railway line. Mr Wilson found that the sale property was more desirable than the subject land because of the access/gravel road/railway line proximity issues posed with the subject land. In his analysis Mr Wilson gave a land value to this property of $29,040 per hectare. Mr Wilson concluded that this sale, supported by the other indicative sales in his basket of evidence, was the most comparable to the subject land. He acknowledged that it was important to adopt the most favourable valuation to the applicants in the context of land compulsorily acquired (Lenz at [66]) and therefore rounded the valuation figure up to $30,000 per hectare as at the taken date.
The Tribunal accepts Mr Wilson's position in this regard and also accepts that sale 9 is a comparable property to the subject land. Mr Wilson's valuation, in the Tribunal's view, is more consistent in reasoning and methodology and is better supported by his sales evidence analysis. In particular, Mr Wilson did not significantly depart from his sales analysis with adjustments. This valuation is also supported, in the Tribunal's view, by Ms LeFevre's best sales evidence, and if a lesser adjustment had been made in respect of that sale, the valuations of both experts would have been in almost identical values. In the Tribunal's view, Ms LeFevre's valuation contained a risk of error due to adjustments she made to address timing of sale and other land differential characteristics which required, in her view, inflating the value rate by in excess of 14%. In the Tribunal's view, this significant upward adjustment made by Ms LeFerve to her sale 4 was not justified on the evidence.
In summary therefore the Tribunal has determined that the appropriate value of the subject land as at the date of the Taking Order is $30,000 per hectare. This is therefore the value which will be given to the taken land. The Tribunal also notes that the parties have agreed that the severance of the eastern moiety should also be compensated to the applicants at the value determined by the Tribunal, being $30,000 per hectare. The compensation therefore which ought to be awarded to the applicants for the value of the taken land and the severance of the eastern moiety is 9.603 hectares at $30,000 per hectare which results in an amount of $288,090.
Injurious affection: s 241(7)(b) of the LA Act
The applicants claim that they are entitled to what is commonly referred to as 'injurious affection' pursuant s 241(7)(b) of the LA Act. The respondent submitted that there was no injurious affection to the remaining land as a result of the taken land, such a position being supported by both Mr Wilson and Mr Srhoy.
Effectively the applicants' claim is prefaced on a presumption that there are lifestyle features of the subject land in respect of which the construction of the PDNH will have a detrimental impact which will result in a diminution in the value of the subject land. The detrimental impacts were identified as:
a)noise;
b)fumes caused by traffic passing;
c)issues of security;
d)lights and strong night lights;
e)rubbish caused by people passing; and
f)interference with rural ambience.
Ms LeFevre stated that her view was that following the construction of the PDNH there would be a loss of 'rural ambience' to the market garden working environment (T:91; 26.06.17). Although Ms LeFerve raised concerns about noise emanating from the PDNH she conceded that there would be no impact on the current location of the transportable because of the distance between it and the proposed PDNH (T:65; 26.06.17). Although Ms LeFerve implied that the transportable may be moved, the evidence of Mr Wilson and Mr Srhoy was that it was located in the most appropriate area for its use and a dwelling was unlikely to be built elsewhere on the property because the bottom half of the property is water logged in winter months and because of the costs associated with locating a dwelling further back from the road (T:6263 and 81; 26.06.17). In addition, the unchallenged evidence before the Tribunal was that the subject land was already subject to similar noise levels due to proximity to Muchea South Road, a railway line and Almeria Parade, being a gravel road (T:58; 27.06.17).
The Tribunal rejects the expert evidence of Ms LeFevre in regard to her view that the construction of the PDNH would detrimentally affect the rural ambience of the subject land and result in a reduction in its sale value. Ms LeFerve's view appears to be based on an assumption in circumstances where there is no evidentiary basis supporting the underlying assumption. In particular the Tribunal notes the following:
1)The subject land is a rural property and could not be described as 'lifestyle';
2)Although there is a transportable located on the subject land which is used at times when the owners are working on the market garden, there is no permanent residence nor has there ever been a permanent residence. This is in keeping with the nature and use of surrounding properties which are used for agricultural purposes (T:83; 26.06.17);
3)There was no evidence before the Tribunal that the 'rural ambience' to the market garden would be impacted by the construction of the PDNH, rather it was simply submitted that an impact would be suffered. There was also no evidence before the Tribunal to support the contention that highways adversely impact rural properties and/or market gardens leading to a diminution in their value;
4)There was no environmental science expert evidence before the Tribunal to suggest an increase in pollution would occur as a result of the construction of the PDNH which would detrimentally affect the subject land;
5)There was no traffic engineering evidence before the Tribunal to suggest that there would be any adverse impacts on the subject land due to the construction of the PDNH;
6)There was no evidence before the Tribunal as to an increased risk of rubbish or security issues as a result of the construction of the PDNH;
7)There was no evidence before the Tribunal to support that the highest and best use of the subject land was lifestyle lots, which would be diminished by the construction of the PDNH. Indeed no such lifestyle lots are located within proximity to the subject land, none are proposed and on the evidence before the Tribunal would be unlikely particularly given the distance of the subject land to the town centre; and
8)As previously mentioned, there was no evidence before the Tribunal that blocking out the Ellen Brook aspect of the property would diminish the value of the subject land. Indeed there was no evidence before the Tribunal that its presence added any particular value to the subject land. The lack of evidence was conceded by Ms LeFerve in her oral testimony (T:93; 26.06.17).
The Tribunal has significant reservations as to the evidence of Ms LeFevre in relation to the 'injurious affection' claim. It is based on unsubstantiated assumptions without evidence to support the assumptions made. Indeed, the 'rural ambience' of a market garden is a proposition of mere speculation. Whilst the Tribunal accepts that a valuer must use his or her own judgment, the Tribunal notes that this claim is a significant one and ought to have some element of supportive evidence rather than a complete absence of evidence.
Mr Wilson was not able to identify any sales evidence that would suggest that the value of large rural properties are adversely impacted by the presence of a highway. Indeed in the joint statement of valuers (Exhibit 7, page 12), the valuers noted that the PDNH will be situated between 644.17 metres and 981.89 metres from the subject land's frontage at Almeria Parade and is therefore sufficiently set back from any residential dwelling accommodated near Amelia Parade so as to minimise any noise impacts. Ms LeFevre admitted that there was no evidence to demonstrate that the value of rural properties with market gardens are adversely affected by the presence of highways (T:91; 26.6.17; T:73; 27.06.17).
In addition to there being no evidence to support the view of Ms LeFevre, that there would be a detrimental impact on the value of the subject land post the construction of the PDNH, the Tribunal notes that her best sales evidence is of a property with a highway frontage that being the sale at 299 (Lot 2929) Brand Highway, Muchea, being the sale most relied upon prior to upward value adjustment. To contend that proximity of a highway is detrimental to property value of similar lots is therefore a position that contradicts Ms LeFevre's most comparable sale property.
In summary the Tribunal rejects the injurious affection claim for compensation made by the applicants on the basis that no evidence was identified to substantiate a lower value per hectare for the western moiety as a result of the public work.
Applicants' claim for disturbance/consequential loss: s 241(6) of the LA Act
The applicants also claim compensation for the ongoing management of the severed part of the land in the amount of $50,000. The applicants' calculation includes a 'once off' allowance of $25,000 plus an allowance of a further $25,000 for fencing maintenance calculated on the basis of a claim of 10% of the value of a new fence every year over a period of 40 years. Mr Wilson allowed a total amount of $31,500 comprising:
a)an allowance of $5,000 for miscellaneous costs or fees;
b)future fencing replacement of $3,000 (based on replacing the fence in 20 years and again in 40 years);
c)fire break maintenance of $8,500; and
d)weed control of $15,000.
The Tribunal finds that Ms LeFevre's evidence in respect of these consequential losses is unjustified. There seems to be no evidentiary basis for the one off claim of $25,000 and the Tribunal is unable to properly assess the foundation of the claim. In relation to Ms LeFevre's calculation in respect to fencing, the Tribunal finds it to be excessive. Indeed she conceded in oral evidence that it was just a 'nominal figure' (T:98; 27.06.17). She further noted that it was almost 'unquantifiable'. The Tribunal does not accept the basis for the calculation and finds it speculative and also calculated on an unreliable presumption that the fence would be replaced every year. The Tribunal is more persuaded by Mr Wilson's evidence that the fence will merely need to be maintained and only be required to be replaced every 20 years. In addition the Tribunal accepts Mr Wilson's evidence that other foreseeable costs would include miscellaneous fees, fire break maintenance and weed control in order to maintain the severed portion of the land. The Tribunal therefore finds the amount of $31,500 to be an appropriate assessment of the applicants' consequential loss.
Ms LeFevre gave evidence that a further $16,000 should be awarded to the applicants to allow for a water service to the severed portion of the land. The Tribunal finds that there is no evidence to support that claim. Mr Wilson informed the Tribunal that he was unaware of any rural parcel that uses or maintains bores for firefighting (T:94; 27.06.17). When Ms LeFevre was questioned about why there was a requirement for a bore she was unable to identify a particular regulation to substantiate her position (T:95; 27.06.17). The Tribunal is therefore not persuaded that this is an appropriate claim.
Solatium
The parties are in agreement that 10% by way of solatium should be added to the compensation to be awarded to the applicants. The Tribunal has allowed in respect of the land taken the amount of $174,591 plus damage to the adjoining land of the eastern moiety of $113,418 plus consequential loss of $31,500 giving the applicants a total compensation amount of $319,509, which the Tribunal has rounded to a figure of $320,000. It is to that figure that the 10% solatium needs to be applied. Therefore the amount of solatium to be awarded to the applicants is $32,000 giving the applicants a total compensation of $352,000.
Interest applicable
The Tribunal notes that the amount awarded by it is less than the advance payment made to the applicants, the advance payment being $354,640. Therefore no interest is applicable.
Orders
1.On the basis that the applicants received an advance payment from the respondent which was in excess of that to which they were entitled pursuant to s 241 of the Land Administration Act 1997 (WA), no further amount of compensation is payable by the respondent.
2.The application is otherwise dismissed.
I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS C WALLACE, SENIOR MEMBER
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
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.
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).
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.
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
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.
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.
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
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.
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.
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.
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.]
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.
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.
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].
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
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
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.
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
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.
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.
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.
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.
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.
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.
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.
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MS C WALLACE, SENIOR MEMBER