ISPT PTY LTD and VALUER GENERAL
[2007] WASAT 276 (S)
•19 OCTOBER 2007
ISPT PTY LTD and VALUER GENERAL [2007] WASAT 276 (S)
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 276 (S) | |
| VALUATION OF LAND ACT 1978 (WA) | |||
| Case No: | DR:310/2005 | 20 NOVEMBER 2007 | |
| Coram: | JUSTICE M L BARKER (PRESIDENT) | 19/10/07 | |
| 26/03/08 | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application for costs dismissed | ||
| B | |||
| PDF Version |
| Parties: | ISPT PTY LTD VALUER GENERAL |
Catchwords: | Costs Review jurisdiction Offers to settle Discretion Conduct of parties Whether genuine attempt to make decision on merits Whether rejection of an offer to settle more favourable than the Tribunal's ultimate decision should result in the exercise of discretion to award costs |
Legislation: | State Administrative Tribunal Act 2004 (WA), s 17(1), s 87(1), s 87(2), s 87(4), s 87(5) State Administrative Tribunal Rules 2004 (WA), r 40(1), r 41, r 42 Valuation of Land Act 1978 (WA), s 33 |
Case References: | Clifford and Shire of Busselton [2007] WASAT 89(S) Springmist Pty Ltd and Shire of Augusta-Margaret River [2005] WASAT 143(S) |
Orders | 1. The applicant's application that the Valuer General pay its costs of the proceedings from 18 July 2005 is dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : VALUATION OF LAND ACT 1978 (WA) CITATION : ISPT PTY LTD and VALUER GENERAL [2007] WASAT 276 (S) MEMBER : JUSTICE M L BARKER (PRESIDENT) HEARD : 20 NOVEMBER 2007 DELIVERED : 19 OCTOBER 2007 SUPPLEMENTARY
DECISION : 27 MARCH 2008 FILE NO/S : DR 310 of 2005 BETWEEN : ISPT PTY LTD
- Applicant
AND
VALUER GENERAL
Respondent
Catchwords:
Costs Review jurisdiction Offers to settle Discretion Conduct of parties Whether genuine attempt to make decision on merits Whether rejection of an offer to settle more favourable than the Tribunal's ultimate decision should result in the exercise of discretion to award costs
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Legislation:
State Administrative Tribunal Act 2004 (WA), s 17(1), s 87(1), s 87(2), s 87(4), s 87(5)
State Administrative Tribunal Rules 2004 (WA), r 40(1), r 41, r 42
Valuation of Land Act 1978 (WA), s 33
Result:
Application for costs dismissed
Category: B
Representation:
Counsel:
Applicant : Mr MN Solomon
Respondent : Ms FB Seaward and Ms CA Ide
Solicitors:
Applicant : Gadens Lawyers
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Clifford and Shire of Busselton [2007] WASAT 89(S)
Springmist Pty Ltd and Shire of Augusta-Margaret River [2005] WASAT 143(S)
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Summary of Tribunal's decision
1 On 19 October 2007, the Tribunal allowed the review application of the applicant and replaced the Valuer General's assessment of the unimproved value of land.
2 The applicant offered to settle the proceedings on 18 July 2005 and after 21 August 2006. The Valuer General declined the offers.
3 The Tribunal considered the statutory framework relating to the award of costs. The Tribunal then analysed the offers and the conduct of the parties in the proceedings.
4 The Tribunal found that it was not an appropriate case to exercise its discretion to award costs in favour of the applicant. The application for costs was therefore dismissed.
Issue
5 The issue the subject of this decision is whether the Valuer General should pay the applicant's costs in the proceedings from 18 July 2005.
Provisions bearing on costs
6 On 19 October 2007, the State Administrative Tribunal (Tribunal) handed down its decision on the review application of the applicant. The Tribunal allowed the review application and ordered that the Valuer General's assessment of the unimproved value of the subject land be replaced with an assessment of $25,000,000.
7 The question then arose whether the Valuer General should be ordered to pay the applicant's costs of the proceedings.
8 As noted, the principal proceedings were in the review jurisdiction of the Tribunal. They arose under s 33 of the Valuation of Land Act 1978 (WA) which provides that a person dissatisfied with a decision of the Valuer General on an objection may require the Valuer General to refer the valuation to the Tribunal for a review.
9 Section 17(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) provides that:
"If the matter that an enabling Act gives the Tribunal jurisdiction to deal with is a matter that expressly or necessarily
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- involves a review of a decision, the matter comes within the Tribunal's review jurisdiction."
10 It follows, and is not in dispute, that these proceedings are within the Tribunal's review jurisdiction. The general philosophy of the jurisdiction in relation to costs is well established; that it is a costs-neutral jurisdiction and ordinarily the parties will bear their own costs. This is reflected in s 87(1) of the SAT Act which provides:
"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."
11 Nonetheless, it is also accepted that under s 87(2) the Tribunal has discretion to order one party to pay the other party's costs in an appropriate case.
12 Section 87(4) expressly provides that where the proceedings are within the Tribunal's review jurisdiction, the Tribunal "is to have regard to" whether the decision-maker genuinely attempted to make a decision on its merits, without limiting anything else that may be considered.
13 Section 87(5) of the SAT Act provides additionally that the Rules may deal with the effect of certain offers to settle.
14 Rule 40(1) of the State Administrative Tribunal Rules 2004 (WA) (Rules) provides that an offer to settle a proceeding that is brought 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)."
15 Rule 41 specifies the time periods for the making of settlement offers.
16 Rule 42 expressly deals with the power of the Tribunal to order costs if a settlement offer is rejected. It is in these terms:
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- "(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;
(b) the other party does not accept the offer within the time the offer is open;
(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."
17 The applicant says that s 87(5) is not, in its terms, limited in contemplating the manner in which the Rules will deal with the effect of offers to settle. Nonetheless, in respect of prescribing the "effect" of "certain offers" the Rules appear to relate to offers to settle in proceedings that do not come within the Tribunal's review jurisdiction.
18 However, the applicant points out that Division 5 of the Rules, in which r 40 and r 41 appear, deals with the form of offers and does not appear to be limited in terms of whether the proceedings do or do not come within the Tribunal's review jurisdiction.
19 The applicant points out that only r 42 in Division 6 appears to prescribe the effect of offers and expressly provides that it does not apply to proceedings in the review jurisdiction. Accordingly, the applicant accepts that the prescriptive operation of r 42 does not apply in this case.
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20 However, the applicant contends that the Tribunal has a broad discretion in proceedings within its review jurisdiction to award costs under s 87(2) and is not limited by r 42.
21 The applicant refers to Clifford and Shire of Busselton [2007] WASAT 89(S) (Clifford) and notes that it is authority for the proposition that s 87(5) reveals a Parliamentary intent to encourage settlement and that the SAT Act generally encourages matters to be resolved by settlement. Moreover, consistently with that intent, the SAT Act reflects an intention to take into account as a significant and persuasive factor a party's refusal of an offer where it receives a decision from the Tribunal less favourable than the offer.
22 The applicant contends that a party's conduct in relation to a settlement offer should thus weigh heavily on the exercise of the Tribunal's discretion under s 87(2). While the Rules do not prescribe the "effect" on cost orders of particular types of offers, the Parliamentary intent remains relevant and significant.
23 The applicant points out that here the Valuer General declined an offer contained in a letter from the applicant's then solicitors dated 18 July 2005 which, if accepted, would have been significantly more favourable to the Valuer General than the Tribunal's ultimate decision.
24 The applicant also says that following a mediation conference on 21 August 2006 the Valuer General declined an offer which would have been significantly more favourable to the Valuer General than the Tribunal's decision.
25 Additionally, the applicant draws attention to the conduct of the respondent in the proceedings. The applicant says the respondent changed its position in relation to its valuation methodology, as noted by the Tribunal at [17] of its decision. Initially, the respondent put most weight on its expert's assessment of the earlier sale of a 50% interest in the subject property. Just a few days before trial, the respondent filed a comprehensive fresh expert report which adopted a significant new element on which the respondent put its primary position - the "reduced scope" approach.
26 The applicant makes the point that it was put to the expense of detailed consideration of three reports. The first report of Mr Alan Bray
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- was abandoned by the Valuer General. The second was from Mr Collins which the Valuer General effectively abandoned and changed significantly some days before trial. The third report, of Mr Collins, relied on at trial was premised on the reduced scope approach. The applicant points out that the Tribunal accepted the applicant's criticisms of the method, virtually in their entirety.
27 The applicant says the other matter on which the Valuer General placed most weight was the complex analysis of the David Jones site, in respect of which the Tribunal concluded that the analysis was of no help.
28 In these circumstances, the applicant submits that the Valuer General cannot be said to have "genuinely attempted to make a decision on its merits". In this context, the word "genuinely" cannot mean "subjectively sincere". That would allow a patently unarguable, but sincerely held, view to insulate a decision-maker against costs. The preferable construction is to regard the word "genuine" as importing an objective degree of reasonableness, which test the Valuer General fails in this case.
29 The applicant finally contends that even if the Valuer General's conduct does not persuade the Tribunal that the Valuer General did not genuinely attempt to make a decision on the merits, it is nonetheless conduct that ought to weigh in favour of an award of costs, at least in respect of the abandoned expert reports in getting up on the matter prior to the respondent's provision of its final expert report. Those costs were largely wasted on any view of the matter.
Valuer General's contentions
30 As to the offer to settle, the Valuer General accepts that by letter dated 18 July 2005 the applicant made a without prejudice offer to settle which was open for eight days and which he rejected. He accepts that the offer met the requirements of an offer under r 40.
31 However, the Valuer General says that the offer did not meet the requirements of an offer under r 41 as it was not open until the commencement of the hearing or for a minimum of 14 days.
32 The Valuer General contends that r 42 is not applicable to proceedings in the review jurisdiction. Accordingly, the rejection of the offer is of no assistance in an argument for costs: Springmist Pty Ltd and Shire of Augusta-Margaret River [2005] WASAT 143(S) at [67] (presiding member Deputy President Judge Chaney).
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33 Nonetheless, the Valuer General accepts that an offer which does not comply with the Rules will not automatically be irrelevant: Clifford at [65].
34 As to the relevance of Clifford, the Valuer General points out that the Tribunal said at [51] that r 42 might be considered particularly relevant to proceedings in which the parties are in dispute "about financial matters". The Valuer General says that there is a difference between a review of a valuation decision, on the one hand, which is in the review jurisdiction of the Tribunal, and a proceeding for compensation in the original jurisdiction of the Tribunal related to the taking of proprietary interest in land. The former should not be considered a "financial matter".
35 The Valuer General argues that in the event that the Tribunal is of the view that the rejection of the offer is a relevant matter, the rejection was not unreasonable and therefore costs should not be awarded against the Valuer General.
36 The Valuer General says the offer was accompanied with only an undated expert report from the applicant's valuer. It provided no clear explanation or reason for the assessment. The Valuer General draws attention to the Tribunal's criticism of Mr Jackson's ultimate report in the proceedings at [112].
Tribunal's findings on costs
37 In the Tribunal's view, r 40 and r 41 in Division 5 of the Rules and r 42 of Division 6 of the Rules are primarily relevant to proceedings in the original jurisdiction of the Tribunal.
38 Rule 42 plainly does not apply to proceedings in the review jurisdiction.
39 As a matter of general principle, if an offer to "settle" a review proceeding is made under r 40 and r 41, or otherwise made in terms that do not comply with r 40 and r 41, it may nonetheless be relevant to the exercise of discretion to award costs in review proceedings under s 87(2) and (4). For example, the offer may bear on the general question of whether the decisionmaker "genuinely attempted" to make a decision on its merits or unreasonably maintained its position in review proceedings having regard to the substantial merits of the case as it may have developed.
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40 In this case, I do not consider that the simple fact that offers to settle were made by the applicant and declined by the Valuer General discloses on its face or otherwise suggests that the Valuer General at material times did not genuinely attempt to make a decision on its merits in relation to the valuation question raised in proceedings, or resulted in the unjustified maintenance of its position in the review proceedings.
41 Nor is there anything in the earlier objection proceedings to suggest that the Valuer General did not genuinely attempt to make the valuation decision on its merits.
42 I do not think that the simple fact that in review proceedings an offer to "settle" was made and rejected would of itself lead to the view that the s 87(2) discretion of the Tribunal to award costs should be resolved in an order of costs being made in favour of the applicant.
43 Review proceedings inevitably involve a range of matters of law, administration and policy. The simple fact that a particular proceeding involved a question of valuation of property should not readily lead to the view that costs will be paid where the Valuer General does not finish up with a result better than an offer made.
44 The related but more substantive issue raised by the applicant in this case is the fact that by the time the hearing commenced the Valuer General had moved his position significantly in relation to the valuation approach contended for. The applicant points out that the initial report of Mr Bray was abandoned by the Valuer General - or at least, by the valuer called at the hearing, Mr Collins. That is not surprising, however, because Mr Bray was unable to give evidence in the proceedings and Mr Collins was called in as an expert valuer in the proceedings after they had commenced in the Tribunal. It was the task of Mr Collins to submit for consideration his independent valuation, which he did. No criticism can be made of the Valuer General in this regard, or of Mr Collins.
45 As the applicant points out, as the matter proceeded closer to trial, Mr Collins, particularly following the conferral of expert witnesses, sought to advance a valuation approach which he considered in all the circumstances to be the correct and preferable approach. It differed from that previously submitted. In the event, Mr Collins argued long and hard at the hearing for his "reduced scope" approach to valuation. The Tribunal remarked that as interesting as it was, it was not an approach that commended itself to the Tribunal.
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46 However, be that as it may, the Tribunal does not consider the changed position of the Valuer General, in reliance on its expert valuer's opinion, to constitute an attempt to support a valuation of the subject property at the hearing different from that concluded for by the applicant in other than genuine terms. The Tribunal considers that the expert valuer called by the Valuer General was obliged to express his view of what the correct and preferable approach to valuation in the case was. Obviously the expert valuer had some difficulty with the approach initially adopted by the Valuer General.
47 Having observed Mr Collins in the witness box over a number of days in relation to the valuation of the subject site, the Tribunal cannot conclude that either he, or derivatively the Valuer General, was not genuine in arguing for the reduced scope approach. That it may in many respects have been a novel approach does not mean it was so unreasonable as to have made the respondent's position totally untenable. It may be that the valuation made by Mr Collins late in the piece was contentious, but the Tribunal does not consider that the Valuer General's reliance on the expert evidence of Mr Collins should result in the Valuer General having to pay the costs of the applicant in the review proceedings.
48 Nonetheless, there is a degree of force in the submissions made on behalf of the applicant. The facts are, as set out, that the early valuation advice of Mr Bray had to be abandoned and Mr Collins had to come into the matter. Mr Collins kept refining his approach to the valuation question. No doubt the proceedings were difficult for the Valuer General because significant valuation differences were present. There may well be circumstances where, if it could be shown that the Valuer General adopted a position in the review proceedings which, on any view, simply involved the inauthentic adoption of a "defence" to a compelling valuation case put by an applicant, the Tribunal would consider very carefully whether costs should be awarded in favour of an applicant. That type of case would involve an assessment that, having regard to information before the decisionmaker at material times, the decisionmaker maintained a position which it knew, or had reasonable grounds for believing, could not reasonably be maintained at a hearing before the Tribunal. However, the Tribunal is not satisfied that this is the case in this instance.
(Page 11)
Conclusion and order
49 For the reasons given above, the Tribunal is not satisfied that this is an appropriate case in which the Tribunal should exercise its discretion to award costs in favour of an applicant under s 87(2) of the SAT Act.
50 The application for costs is therefore dismissed.
51 The Tribunal orders as follows:
1. The applicant's application that the Valuer General pay its costs of the proceedings from 18 July 2005 is dismissed.
I certify that this and the preceding [51] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT
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