James and Green v The Director-General, Department of Transport

[1993] QLC 35

[1993] QLC 35

 

  LAND COURT

BRISBANE

18 NOVEMBER 1993

Re:     Claim for Compensation -
  Resumption for Road Purposes -
Acquisition of Land Act 1967

Kenneth James and Valma Ellen Green

v.

The Director-General, Department of Transport

DECISION ON APPLICATION FOR COSTS

The Respondent in this matter has made application for the Claimants to pay the Respondent's costs of the Land Court hearing.
           On 7 August, 1992, an area of 4.102 hectares of the Claimants' land, (causing severance of the land into two parcels for which separate titles were to issue) was resumed by the Respondent for a deviation of the Bruce Highway north of Rockhampton.  The land was being used for the training and spelling of horses, having recently been developed to allow such use.  It was the Claimants' intention to further develop the property for on-site management and more intensive spelling. 
           The Claimants had submitted a claim for compensation in the amount of $94,000.  The matter came to the Court for hearing on 2 August, 1993.  At the outset, leave was sought, and without objection, granted for the claim to be amended to an amount which was calculated to be $77,125.29.  Agreement was reached between the parties as to an amount of $1,200 for legal fees to the stage of compilation of the claim, which had the effect of further reducing the claim to $74,825.29, made up of:

Loss in value of land and improvements
           including severance and injurious affection -                   $39,000

Disturbance -  $35,825.29

The major component of the disturbance claim was an amount of $26,593.88 for "interest on outlays from date of contract to acquire replacement property to relocate the business". 
           It was the Claimants' case that once they had been informed of the Respondent's plans for the road deviation, they had formed the opinion that the land would no longer be suitable for the continued development of their plans.  Rather than have the build-up of business goodwill interfered with, or delayed in any way, the Claimants took the decision to acquire a replacement property early, rather than await the formal resumption procedure.  This decision and early development of the replacement property involved the borrowing of funds.  The interest amount claimed was the actual amount paid to the time of the hearing.  The claim for compensation was served on the Respondent on 21 May, 1993, and no application had been made for an advance against compensation. 
           The valuation put in evidence by the Respondent was in the amount of $21,000 "exclusive of amounts for valuer's fees, legal costs, etc." (the emphasis is added).  While the legal fees were agreed, the Respondent challenged the claim for valuation fees of $3,000, arguing that $1,600 was a reasonable fee.  The Respondent's case was that the existing use of the property had not been interfered with to the degree that relocation was necessary.
           The award of compensation was in the amount of $33,532.50, comprising $25,000 for loss of land and improvements, severance and injurious affection, and $8,532.50, including the agreed legal fees of $1,200 and the valuation fees, as claimed, of $3,000.  Disturbance items relating to the cost of acquisition of, and relocation to, a replacement property were allowed.  The argument for the Claimants that acquisition of a replacement property was a reasonable consequence of the resumption was accepted.  It was not accepted that the early relocation of the business as it existed was necessitated prior to the formal resumption procedure or that the borrowing costs were a natural and reasonable consequence of the dispossession of the owner.
           Another aspect which had effect on the values attributed to the property, before and after resumption, was the question of the added value of certain water improvements located within an unformed road reserve, fenced in with the land subject of the resumption.  The water improvements were of significance to the successful existing and planned future use of the property.  While it was found by the Court that the subject property possessed some added value through its potential to use the road reserve and the improvements thereon, the improvements were not included as the property of the Claimants.
Section 27 of the Acquisition of Land Act 1967 (the Act) deals with the question of costs. Subsection (1) provides that costs of and incidental to the hearing and determination by the Land Court of a claim for compensation shall be in the discretion of the Court. That discretion is then limited by subsection (2) as follows:

"(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, subject to the discretion of the Court being exercised, costs may be awarded to the Respondent.  When the Land Court decision was handed down in Brisbane, leave was granted for an application for costs to be made in writing.  This occurred, with a written response from the Claimants.
           In its application, the Respondent refers to "without prejudice" negotiations and an offer to settle made on 13 May, 1993.  Reference is made to the contentions of the Respondent and advice to the Claimants, prior to the hearing, of such contentions, relative to the question of interest payments and improvements on the road reserve.  The Respondent says that no objection was taken to the amendment of the claim "provided it was not prejudiced in any Application for Costs". 
The Claimants object to the Court giving consideration to matters where privilege was claimed and points out (correctly, on the Record) that leave for amendment of the claim before the Court was sought and granted without provision for any subsequent issue. Without considering the question as to whether privilege had been waived by the Respondent, the Court is required to decide the question of costs in terms of Section 27(2) of the Act, and not on "offers" made before or even during the hearing.
           Both the Respondent and Claimants raise various issues where it has been interpreted that the Court preferred the evidence of one or other of the parties, and both refer to the decision of the Land Appeal Court in Moyses and Ors. -v- Townsville City Council (1979) 6 QLCR 271.
           In submitting that this is an appropriate case where costs should be ordered in favour of the Respondent, it refers to the following passage of the Moyses judgment, at p.274:

"First, we do not think that the presence of Subsection (2) of Section 27 in the Act should be regarded as some sort of legislative suggestion that, where the claim is substantially more than the amount awarded, and the amount put in evidence by the 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. Second, where the Court is considering whether it should award costs to an 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. We would think that usually it would be more relevant to enquire whether the conduct of the Claimant, including his making of an exorbitant claim, if he has made one, has been such as to force the Authority, unreasonably and unnecessarily into litigation."

The Claimants see it as relevant to consider what was said at p.278 of the Moyses judgment:

"But we do say there are cases in which the Court can properly take the view that it was reasonable to have the matter decided by the Court and that, notwithstanding the failure of the claim, there should not be an Order as to costs.  We think that the learned Member was entitled to regard this as such a case".

The Claimants argue that the claim was not an exorbitant one, particularly when they acted on the best information available to them and acquired a replacement property when they did.  Because of this they actually expended the interest costs which formed part of the claim.  They say that by their deliberate actions in acquiring the replacement property and not proceeding with further development of the subject land in the period between initial advice of the planned deviation and the formal resumption procedure, they should have been seen to have limited the amount of their claim for compensation.  It is also submitted that because no advance against compensation had been paid and because separate titles had not issued immediately upon the resumption, the Claimants had been financially disadvantaged.

The question of the advance was one which could have been acted upon by the Claimants in terms of Section 23 of the Act.  The award of compensation was made on the basis that the property may have been offered for sale at the relevant date, not as separate titles, but with the potential for those titles to issue. 
           I have given consideration to the submissions of both parties.  I agree with the Claimants' submission that costs should not be awarded simply on the grounds that the determination was closer to the amount of the Respondent's valuation, than it was to the claim.  I also agree that while the Court found against certain aspects of the Claimants' case which were significant in the end result, the claim was based on factual matters.  The Claimants were seen to have acted reasonably in contesting the amount of the Respondent's valuation because of the questions of principle:

(1)Was the effect of the resumption such as to require acquisition of a replacement property?

(2)Did any added value attach to the resumed land due to the existence of the road reserve and the improvements thereon?

The Claimants succeeded in their arguments on these questions in principle, but not in quantum which would allow the ordering of costs to be decided in their favour. 
           In exercising the discretion provided by the Act, I see this as an appropriate case where the parties should bear their own costs.  I make no order as to costs accordingly.

MEMBER OF THE LAND COURT