Holmes v Council of the Shire of Laidley

[1999] QLC 114

LAND COURT,

BRISBANE

25 October 1999

Re:	A98-52 – Application for Costs –
Acquisition of Land Act 1967 –
Resumption of an easement for drainage purposes.

J.G. Holmes and K.E. Woodrow
v.

Council of the Shire of Laidley

D E C I S I O N

On 17 July 1998, the Council of the Shire of Laidley (the Council), took an easement for drainage purposes over land situated at Storr Street, Laidley, owned by Mr Holmes and Ms Woodrow.

After amendment to an original claim in a higher amount, the owners claimed an amount of $15,874 including valuation fees of $100, as compensation for loss consequent upon the resumption. The amount of the valuation put in evidence by the Council was "Nil". It was the Council's contention that the value of the interest of the claimants in the land affected by the resumption, had been enhanced as a consequence of the resumption scheme. The Council agreed to the payment of $100 for the valuation fees, as claimed.

The finding of the Court in its decision delivered on 7 October 1999, was that enhancement, pursuant to section 20(3) of the Acquisition of Land Act 1967 (the Act) exceeded damage caused to the land and no compensation was payable, other than for the valuation fees as claimed and agreed.

The Council has now made application for its costs of and incidental to the hearing and determination of the claim for compensation.

Section 27 of the Act relevantly 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 to
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."
In this matter compensation was determined in the amount contended for by

the Council. The Council therefore is the party to which costs (if any) may be
awarded, in accordance with section 27(2) of the Act.

The Court's power to award costs is found in section 41(9) of the Land Act 1962 (preserved by section 521 of the Land Act 1994) which relevantly provides:

"The Court may make such order as it thinks fit as to the costs of or incidental
to any matter that it has jurisdiction to hear and determine …."

Subject only to the provisions of section 27(2) of the Act, the Court's

discretion to award costs is unfettered.

Written submissions were invited from the parties and have been received.
In its submission for costs, the reasoning of the Council is that the claim was

clearly exorbitant and made litigation unavoidable as evidenced by the claimants' actions in not adhering to a written agreement to grant the easement at no cost to the Council. It had been entirely successful and while the Council recognised that compensation cases are generally treated differently to ordinary legal proceedings, there were no special circumstances which would warrant departure from the general rule in ordinary legal proceedings, that costs should follow the event.

It is the submission for the claimants that the claim for compensation was made because a portion of an interest in the land had been resumed without compensation. They say it was reasonable for them to advance their claim in the circumstances in which they did, based in part, on their valuer's advice, notwithstanding the court's rejection of their valuer's assessment. It was further submitted that additional amounts claimed for damaged improvements "which, whilst not accepted in full by the Court, could nonetheless not be described as exorbitant". Both the Council and the claimants made reference, in their respective submissions, to findings in Yalgan Investments Pty Ltd v. Council of the Shire of Albert (an unreported Land Appeal Court judgment delivered 11 December 1997) and Commissioner for Railways v. Buckler [1996] 1 Qd R 18.

In Buckler (supra), McPherson J.A. said at p.23:

"In ordinary legal proceedings in the courts the general rule is that costs follow the event. To apply that rule in an unqualified way in compensation cases would in practice enable the claimant to contest the amount of compensation with more or less complete impunity as to costs. It is rare for no compensation at all to be awarded in such cases."

The Council took comfort from the first sentence in that passage while the claimants found the last sentence to be relevant.

In Yalgan (supra) the Land Appeal Court reviewed the leading decisions relevant to the scope and exercise of the Land Court's discretionary powers and stated, in summary form, in subparagraphs (a) to (k) "the propositions for which the judgments and section 27 of the Acquisition of Land Act 1967 stand".

The Council submitted that the matters addressed in Yalgan would not act so as to defeat the respondent in its application for costs and support the respondent in its submission. In subparagraph (k) in Yalgan, the Land Appeal Court stated:

"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 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."

The Council submitted that "there is no evidence to suggest that the respondent acted in other than in an appropriate manner in the circumstances. Given its position on enhancement, it would not have been appropriate for the respondent to make any offer in excess of nil compensation. The claimants at all times being aware of the respondent's position on the issue of enhancement". In the Council's opinion "the claim could only be described, at best, as being exorbitant and at worst as opportunistic and/or vexatious and thereby making litigation unavoidable".

In the claimants' submission particular reference was made to subparagraph (e) of the summarised review in Yalgan:

"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 to compensation which he or she could hardly be expected to renounce."

The authorities were interpreted by the claimants to "indicate that, in circumstances where an Applicant has an apparently good claim for compensation, he or she is expected to test that claim in Court".

In summary, the claimants' submission is that the discretion not to award costs ought to be exercised in the circumstances as:

"(a)	the Applicants legitimately advanced a claim for compensation which was supported by Mr Beasley's evidence;
(b)	they could hardly be expected to renounce that claim in circumstances where it is rare for no compensation to be awarded at all (Yalgan; Buckler; (ante));
(c)	it was the usual" (sic) "circumstances of the case which resulted in a finding of net enhancement."

The claimants consequently submitted that the appropriate order would be that there be no order as to costs.

CONSIDERATIONS: to claim compensation and to have the quantum of compensation determined, but it also enlivened the provisions in relation to costs.

This matter became one of compulsory acquisition, because the claimants,
after having executed an agreement to dedicate the easement at no cost to the Council
(see p.3 of the decision), changed their minds. The claimants had the choice of
avoiding the compulsory acquisition process. Having chosen to force compulsory
acquisition and the making of a claim for compensation under the Act, the claimants
also had the choice of first considering then deciding the quantum of the claim. The
original claim was not sought to be amended until the hearing had commenced.

At p.23 in Buckler, McPherson J.A., in reviewing the legislative history,

recognised that:

"Various devices have been tried with a view to encouraging early
settlement and discouraging exorbitant claims in compensation cases."

His Honour observed that section 27(2) of the Act was "the third in this line of attempts to resolve the question by means of a statutory provision governing costs".

In considering the "usual order as to costs" in civil proceedings, McHugh J. said in Oshlack v. Richmond River Council [1998] 193 CLR 72 at p.97:

"Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved …."

However, in compensation cases, a consideration relevant to the exercise of the Court's discretion, is identified in subparagraph (j) in the Yalgan review:

"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 authority. "

In this matter, subparagraph (k) in Yalgan, to which earlier reference has been made, is considered to be particularly relevant. First, the basis of the claim, including that part attributed to the claimants' valuer, was found to be flawed and the total claim so unreasonable that it failed entirely. The quantum of the claim may not have been great in monetary terms, but it was exorbitant in a relative sense.

The conduct of the claimant, not only in terms of the exorbitant claim, but also in the circumstances leading up to the litigation, is seen to have forced the Council, unreasonably and unnecessarily, into the litigation. On the other hand, there is not seen to be any conduct on the part of the Council, which would disentitle it to the beneficial exercise of the discretion (see Oshlack (supra) at p.97).

CONCLUSION:

It is my opinion that the respondent Council is entitled to its costs and the Court should exercise its discretion accordingly.

ORDER:

In accordance with the provisions of section 41(9) of the Land Act 1962 (preserved by section 521 of the Land Act 1994) it is ORDERED that the claimants pay the respondent's costs of and incidental to the hearing and determination of the amended claim for compensation, such costs to be ascertained and fixed by the Registrar of the Supreme Court at Brisbane according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court. The Registrar is authorised and required to ascertain and fix such costs in accordance with this Order.

(RE Wenck)

Member of the Land Court