Haber v Department of Main Roads
[2004] QLC 2
•30 January 2004
LAND COURT OF QUEENSLAND
CITATION: Haber v Department of Main Roads [2004] QLC 0002 PARTIES: Chief Executive, Department of Main Roads
(applicant)v. John Kevin Peter Haber
(respondent)FILE NO: A2001/0709 DIVISION: Land Court of Queensland PROCEEDING: An application for costs of and incidental to the hearing and determination of a claim for compensation under the Acquisition of Land Act 1967 DELIVERED ON: 30 January 2004 DELIVERED AT: Brisbane HEARD BY: Written Submissions MEMBER Mr JJ Trickett, President ORDERS: The claimant is ordered to pay 50% of the respondent's costs of and incidental to this matter, such costs to be decided by the appropriate assessing officer of the Supreme Court, under the scale of costs prescribed by law for proceedings in the Supreme Court. CATCHWORDS: Costs - Acquisition of Land Act 1967 s.27 - Departure from the General Rule - Discretion to award costs to respondent - Guidelines to be considered - Respondent substantially successful - Apportionment of costs SOLICITORS: Grasso Searles Romano, for the claimant
Crown Solicitor, Crown Law, for the respondent
This is an application for costs by the Chief Executive, Department of Main Roads arising from the hearing and determination of compensation payable to Mr JKP Haber following the taking of land owned by Mr Haber by the Department of Main Roads under the provisions of the Acquisition of Land Act 1967 for future road requirement purposes. In keeping with the terminology used in my decision on Mr Haber's claim for compensation, I will continue to refer to Mr Haber as "the claimant" and to the Chief Executive as "the respondent".
Background
The resumed land of 7,010 m², was undeveloped land at the rear of a caravan park, known as the Central Tourist Park, situated in Malcomson Street, North Mackay. Prior to the resumption on 19 February 1999, the total area of Mr Haber's land was 3.495 ha, most of which had been extensively filled and developed as a 200 site caravan park. Although the Pioneer Shire Council in 1975 had granted approval for the development of a 250 site caravan park, the rear land in respect of which 50 sites had been approved had not been developed. That rear land comprises low-lying tidal land, heavily vegetated with mangroves. That land was resumed as part of the proposed Mackay City East-West Connector Road.
The Positions of the Parties
The claimant's claim for compensation of $2,684,000 was filed in the Land Court Registry on 4 December 2001. However, on the final day of hearing, the claimant was granted leave to amend the claim to $2,500,000. Then during the addresses, the claimant abandoned several items of claim, so that the final position of the claimant was $1,591,000, including agreed disturbance of $11,000.
The final position of the respondent was $111,000, including agreed disturbance of $11,000. No advance against compensation had been paid to the claimant.
The compensation determined by the Land Court was $273,000. Therefore, the claimant succeeded in obtaining compensation of $162,000 more than the Department's final position, although compensation awarded was $1,318,000 less than the final position of the claimant.
The Power of the Land Court to award Costs
The general power of the Land Court to award costs is contained in s.34(1) of the Land Court Act 2000, which provides:
"Subject to the provisions of this or another Act to the contrary, the Land Court may order costs of a proceeding in the court as it considers appropriate."
However, in cases such as the present involving the determination of compensation under the Acquisition of Land Act, that general discretionary power is restricted. Section 27 of that Act provides:
"(1) Subject to this section, the costs of and incidental to the hearing and determination by the Land Court of a claim for compensation under this Act shall be in the discretion of that court.
(2) If the amount of compensation as determined is the amount finally claimed by the claimant in the proceedings or is nearer to that amount than the amount of the valuation finally put in evidence by the constructing authority, costs (if any) shall be awarded to the claimant, otherwise costs (if any) shall be awarded to the constructing authority."
These provisions and similar provisions in land acquisition statutes in other States and in the Commonwealth have been considered by courts on a number of occasions. In Yalgan Investments Pty Ltd v Council of the Shire of Albert (1997) 17 QLCR 401, the Land Appeal Court of Queensland had regard to the leading cases on the scope and exercise of the Land Court's discretionary power to award costs and identified a number of general principles which must be considered. In addition to Commissioner for Railways v Buckler (1994) 15 QLCR 262 (Queensland Court of Appeal), those authorities included Moyses & Ors v Townsville City Council (1979) 6 QLCR 271 (Land Appeal Court), Minister for the Environment v Florence (1980-81) 45 LGRA 127 (South Australia Supreme Court), Banno & Anor v Commonwealth of Australia (1993) 81 LGERA 34 (Federal Court) and Kabale Holdings Pty Ltd v Director-General, Department of Transport (1997) 18 QLCR 166, in which the Land Appeal Court quoted passages from decisions of the Full Court of the Supreme Court of Queensland in Wyatt v Albert Shire Council [1987] 1 QdR 486 and Assignment Pty Ltd v Kirby [1981] 1 QdR 129.
The Land Appeal Court in Yalgan stated the principles derived from those authorities at pp.406-408, those relevant to this matter being:
·Compulsory acquisition cases differ from ordinary claims in the significant respect that the claimant, unlike the ordinary plaintiff, had no choice whether to make a claim or not. The mere acquisition by compulsory process gave the claimant a claim for compensation which he or she could hardly be expected to renounce (Florence at p.l49, Banno at p.53).
·The discretion whether to award costs may not be exercised in an arbitrary manner but must be exercised on principled grounds (Banno at p.53) or judicially, that is, for reasons that can be considered and justified (Wyatt at p.489) by reference to relevant considerations (Moyses at p.273).
·In general, a party who is wholly successful in litigation can expect an order for costs in his favour. Where compensation is awarded to one who had already been given, by statute, the right to receive it, it is just to say that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due. But costs are discretionary and no hard and fast rules will ever be allowed to occupy part of an area controlled by a discretion, however predictable the result of its exercise may be in certain sorts of cases. In some cases, the Land Court may consider that there are sufficient reasons for departing from the general rule (Moyses at p.278, Florence at pp.149-150).
·Although the exercise of the power does not exclude resort to the "settled practice" of a court where such a practice has evolved, a purported exercise of discretion which fails because the mind is closed to relevant considerations through a rigid adherence to preconceptions involves an error of law that is open to correction on appeal (Wyatt at p.489).
·Section 27(2) of the Acquisition of Land Act 1967 should not be regarded as a legislative suggestion that, where the claim is substantially more than the amount awarded, and the amount put in evidence by the constructing authority is not substantially less than the amount awarded, the Court should not merely refrain from awarding any costs to the claimant but should award costs to the constructing authority (Moyses at p.274).
·Where the Land Court is considering whether it should award costs to a constructing authority, it could be wrong to have regard merely to the amounts of the claim and of the award and of the value put in evidence by the authority. Usually it would be more relevant to inquire whether the conduct of the claimant (such as, for example, making an exorbitant claim) has been such as to force the authority, unreasonably and unnecessarily, into litigation (Moyses at p. 274) or whether the claimant has pursued a vexatious, dishonest or grossly exaggerated claim or presented his case in such a way as to impose unnecessary burdens on the constructing authority or the Court (Banno at p. 53).
The General Rule
The general rule in civil litigation is that costs follow the event and that the successful party will be awarded costs, unless there are circumstances which require departure from the general rule. But in Buckler at pp.268-269, McPherson JA pointed out that compensation cases are different and to apply the general rule in an unqualified way would enable the claimant to contest the amount of compensation with more or less complete impunity as to costs, as it is rare for no compensation to be awarded. His Honour then traced the history of the various legislative devices enacted "with a view to encouraging early settlement and discouraging exorbitant claims in compensation cases". Those provisions limited the general discretion of the Land Court as to costs by making it subject to a rule that costs, if any, were to be awarded to the constructing authority, unless the amount of compensation determined by the Court was the amount claimed by the claimant or was nearer to it than the amount offered by the authority, in which case costs, if any, were to be awarded to the claimant.
His Honour went on to say at pp.269-270:
"Section 27(2) of the Acquisition of Land Act 1967 is thus the third in this line of attempts to resolve the question by means of a statutory provision governing costs. It preserves the device used in the earlier two provisions by treating nearness to the amount awarded as decisive, but does so with two changes. One is that, in deciding the question, it is not the first amount but the 'final' amount claimed by the claimant that is relevant; the other is that it is not the amount of any offer made by the constructing authority but 'the amount of the valuation finally put in evidence by the constructing authority' that matters.
Stated in general terms, what the court is now required to do in fixing the incidence of costs under this rule is to look at the final positions taken up by the parties. In the case of the claimant, it is the quantum of compensation last claimed. Theoretically at least, its amount might not be known until the final address of counsel for the claimant. In practice, however, section 24(2A) furnishes a disincentive against conduct like that. It does so by restricting the right to amend a claim once it has been filed in accordance with section 24(2A) of the Act. Thereafter an amendment may be allowed; but on terms including payment of costs: see section 24(3).
On the other hand, there seems to be no comparable restriction preventing the constructing authority from deferring disclosure of its final position until a late stage in the proceedings. It will be discoverable only from 'the amount of the valuation finally put in evidence by the constructing authority', which means that it cannot with confidence be known what the amount of it is until the constructing authority closes its case."
In the present case, the claimant has been partially successful. However, the amount of compensation determined by the Court is much nearer to the amount of the valuation finally put in evidence by the respondent than to the amount claimed by the claimant. Therefore, by virtue of s.27(2) of the Act, the Court cannot award costs to the claimant but has the discretion to award costs to the respondent.
However, in accordance with the principle established in Moyses, that does not mean that the Court should simply award costs to the respondent, as it would be wrong to simply have regard to the amounts of the claim and of the award and of the valuation finally put in evidence by the respondent. Rather the authorities suggest that other criteria must be considered in deciding whether or not costs should be awarded to the respondent:
·whether the conduct of the claimant (eg making an exorbitant claim) has been such as to force the authority, unreasonably and unnecessarily into litigation; or
·whether the claimant has pursued a vexatious, dishonest or grossly exaggerated claim; or
·whether the claimant has presented his case in such a way as to impose unnecessary burdens on the constructing authority or the Court.
Clearly, this list is not exhaustive.
I turn now to consider the written submissions of the parties.
The Respondent's Submission
The respondent claimed to be entitled to an award of costs because the claimant had been substantially unsuccessful in each item of his claim for compensation. The respondent referred to the late amendment of the claim on the last day of hearing and the abandonment of what were alleged to be "clearly unsustainable items of claim" after the evidence had been concluded. The respondent argued that this ought not to be allowed to place the claimant at a tactical advantage in respect of costs; for that purpose, the claimant should be considered as having contended for an amount of $2,511,000 and the respondent for an amount of $111,000.
The respondent submitted that the claim could only be described as exorbitant, forcing the respondent into litigation, referring to the observation of McPherson JA in Buckler, that s.27 of the Acquisition of Land Act was designed to discourage exorbitant claims. Furthermore, the respondent argued, the claims made amounted to behaviour on behalf of the claimant which imposed unnecessary burdens on the respondent and made litigation unavoidable.
The respondent acknowledged that in resumption cases it is not always appropriate to look at who "won" or "lost" the case. However, it was submitted that in this case most of the claims were clearly unsustainable having regard to well established legal and/or valuation principles; therefore, an award for costs in favour of the respondent is appropriate. The respondent concluded by asserting that the primary reason for ordering costs is not to punish the unsuccessful party, but to indemnify the successful party who was forced into litigation as a consequence of the claimant's unreasonable claims.
The Claimant's Submissions
The claimant submitted that the Court should exercise its discretion and make no order as to costs. He contends that until the parties exchanged valuation reports in April 2003, the only offer of compensation from the Department of Main Roads had been $1,000. By the time reports were exchanged, preparations for the hearing were at an advanced stage.
The claimant argued that it was necessary to bring the matter to Court to resolve the conflicts and uncertainty issues arising out of the resumption and that it was a reasonable basis to litigate the claim. Negotiations for compensation extended over a long period concerning those uncertainties.
It was submitted that just because the approach of the claimant's valuer was not accepted by the Land Court, this was not in itself a reason to order costs in favour of the respondent. Although s.27(2) of the Acquisition of Land Act provides that costs may be awarded to a party whose final valuation is nearer to the award of the Court, it is not automatic that such a party is awarded costs; it is not automatic that an order for costs be made in favour of the respondent; there is no hard and fast rule in respect of the costs discretion: Dellow v Council of the Shire of Livingstone (1992) 14 QLCR 66.
The claimant acknowledged that s.27(2) is designed to discourage exorbitant claims in compensation cases, but argued that it is equally the intention of the legislation to discourage exorbitantly low offers of compensation by constructing authorities. He contended that by continuing to maintain an offer of only $1,000, the respondent was as exorbitant in its approach as the claimant was in his, forcing the claimant into litigation, imposing unnecessary burdens on the claimant and making litigation unavoidable.
Conclusion
Having regard to the final positions taken up by the parties with regard to compensation, the claimant has been partially successful to the extent of $162,000. However, on the other hand, the compensation determined by the Land Court was $1,318,000 less than the final position of the claimant. In terms of amount, the respondent was successful. In terms of issues, the respondent succeeded in most issues.
However, when this Court is considering whether or not to exercise its discretionary power to award costs to the respondent, the Land Appeal Court in Moyses has warned against having regard merely to the amounts of the claim and of the award and of the value put in evidence by the respondent. Usually it would be more relevant to consider whether the conduct of the claimant had been such as to force the respondent, unreasonably and unnecessarily into litigation, or as the Federal Court held in Banno, whether the claimant has pursued a vexatious, dishonest or grossly exaggerated claim, or has presented his case in such a way as to impose unnecessary burdens on the constructing authority or the Court.
The claim in the present case was not vexatious or dishonest. While it could be characterised as excessive, the claimant succeeded in obtaining $272,000 more than the respondent was prepared to offer as compensation, prior to the exchange of valuation reports in April 2003, just prior to the commencement of this case in May 2003.
The respondent argued that in the matter of costs, the late amendment of the claim and the abandonment of clearly unsustainable items of claim, should not be such as to place the claimant at a technical advantage in respect of costs. It has not done so. The determination of compensation was much nearer to the final position of the respondent than to that of the claimant, thus depriving the claimant of any right to costs: s.27(2).
In my view, this is what McPherson JA was referring to in Buckler when he explained that the purpose of s.27(2) and its predecessors was to encourage early settlement and discourage exorbitant claims. That provision prevents claimants who make exorbitant claims from any possibility of obtaining an award of costs, even though they may have been successful in obtaining more compensation than offered by the constructing authority. His Honour is not suggesting that in such cases there should automatically be an award of costs to the respondent, which is consistent with the principle in Moyses.
Therefore, partial success by the claimant does not entitle him to be considered for any award of costs unless he succeeds to the extent that compensation awarded by the Court is closer to his final claim than to the final valuation of the respondent. If he does not succeed to that extent, it is the respondent who is entitled to be considered for an award of costs.
The power of the Court to award costs is restricted to that extent by s.27(2). However, having determined which of the parties is entitled to be considered for an award of costs, the discretion of the Court in s.27(1) is absolute and unfettered. It is then that the guidelines established by the authorities collected in Yalgan should be considered. However, as was pointed out in Wyatt, those guidelines must not lead the Court to a rigid adherence to preconceptions which would not be a proper exercise of discretion if it led the Court to overlook relevant considerations.
In exercising that discretion it must be kept in mind that claims for compensation under land acquisition statutes are different. That difference was expressed by Wells J of the Supreme Court of South Australia when discussing costs provisions in the Land Acquisition Act 1969 (SA) in Florence at pp.149-150:
"Compulsory acquisition cases differ of course from ordinary claims dealt with in the general jurisdiction in one significant respect: the claimant, unlike the ordinary plaintiff, had no choice whether to make a claim or not: the mere acquisition by compulsory process gave him, by virtue of section 18 of the Act, a claim to compensation which he could hardly be expected to renounce.
Upon an ordinary claim in the general jurisdiction it is, generally speaking, obvious who has won and who has lost, and correspondingly clear why costs usually follow the event. Upon a claim for compensation for land compulsorily acquired, it is not, generally speaking, appropriate to speak of one party as having won; compensation is awarded to one who had already been given, by statute, the right to receive it. It is therefore as just to say of the latter sort of case that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due, as it is to say of the former sort of case that prima facie costs follow the event in favour of the party who has won. The costs are, as always, discretionary, and no and hard fast rule will ever be allowed to occupy part of an area controlled by a discretion, however predictable the result of its exercise may be in certain sorts of cases."
Somewhat similar sentiments were expressed by Wilcox J of the Federal Court in Banno at p.53:
"The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position should be allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the Commonwealth's costs if their case proves unpersuasive. I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court."
In Barns v Director-General, Department of Transport (1997) 18 QLCR 133 at 136, the Land Appeal Court found that such compensation cases justify some flexibility in the application of the general rule against the dispossessed owner.
Similar reasoning has been adopted in the New South Wales Land and Environment Court. In Pastrello v Roads and Traffic Authority (NSW) (2000) 110 LGERA 223, Talbot J said at 225:
"It has been said many times that the compulsory acquisition of land from an unwilling owner is a serious interference with that person's entitlement to quiet enjoyment and generally wide discretion to do with their own land as they see fit. It is a power of the State which is exercised for the public benefit. Very seldom does the resumption work to the benefit of the dispossessed owner. There needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case."
And again in Johnston v RTA (NSW)[2000] NSWLEC 226, Cowdroy J said at [9]:
"The claim for compensation in respect of the subject land was formulated by the applicant on a basis which was unsuccessful. However during the hearing the respondent conceded that adjustments needed to be made to its own assessment of the value of such land. In this respect the applicant's claim could not be said to have been wholly unsuccessful, for without it, the respondent would not have increased its compensation payment. Further, the mere fact that the Court did not adopt a method of calculation proposed by the applicant does not lead to the conclusion that the claim was baseless. The applicant was entitled to have its claim considered and the conduct of the applicant was not unreasonable."
In the present case, although I am reluctant to erode the claimant's compensation by an award of costs, the fact remains that the respondent has had very substantial success. In my view, it would be unjust to deprive the respondent of at least partial costs. The difficulty is to make an appropriate award in the circumstances of the case. To order costs of the five day hearing would substantially deprive the claimant of the compensation awarded.
In my view, the claimant's compensation should not be eroded to the extent that he presented an arguable and well-organised case. A principal issue related to the value of the land taken. This turned on whether or not the claimant would have been able to exercise the 1975 development approval, despite later legislation prohibiting the destruction of mangroves. It also depended on whether the development of additional caravan sites would have been economically viable. These were issues upon which the parties had taken entrenched positions and which had to be litigated. In my view, that imposed no unnecessary burdens on the respondent or the Court.
Similarly, the other major issue related to the effect of the resumption and the construction of the new road on the caravan park. The valuers for the parties agreed on the method of assessment but not on the extent of the likely effect and hence the capitalisation rate for the valuation after resumption. The Court did not accept the capitalisation rate adopted by either valuer. The rate adopted by the Court of 15.5% was closer to the 14.5% of the respondent's valuer than the 18% adopted by the claimant's valuer. However, the claimant was entitled to seek expert advice on the extent of the impact of the resumption. He had a successful business before the resumption and was concerned about its operations after the construction of the new road.
However, apart from these arguable issues, there were issues which the claimant may have thought to be arguable, but which were contrary to well-established legal and/or valuation practice. In those the claimant was unsuccessful and costs of litigating those issues should be awarded to the respondent.
The respondent argued that this is not a case where an apportionment of costs would be appropriate as the respondent had been so substantially successful. Furthermore, it was submitted, the primary reason for ordering costs is not to punish the unsuccessful party, but to indemnify the successful party. For that proposition the respondent referred to the judgments of the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. That case concerned the discretion of the Land and Environment Court of New South Wales to award costs of and incidental to proceedings in that Court. The High Court (Gaudron and Gummow JJ) found at p.88:
"There is no absolute rule with respect to the exercise of the power conferred by a provision such as section 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party."
And per Kirby J at p.122:
"It has often been said that costs are not awarded against such a party as a punishment. Nor are they awarded to express disapproval of the public or private inconvenience which that party has caused. If the party unreasonably pursues, or persists with, points which have no merit, such conduct will constitute a consideration relevant to the ordering of costs, even in circumstances where that party is generally successful." (Citations omitted)
In all the circumstances of the present case, I have come to the conclusion that the claimant should pay 50% of the respondent's costs of and incidental to this hearing.
Order
The claimant is ordered to pay 50% of the respondent's costs of and incidental to this matter, such costs to be decided by the appropriate assessing officer of the Supreme Court, under the scale of costs prescribed by law for proceedings in the Supreme Court.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
1
3
0