LGM Enterprises Pty Ltd v Brisbane City Council
[2010] QLC 5
•29 January 2010 – Ex tempore
LAND COURT OF QUEENSLAND
CITATION: LGM Enterprises Pty Ltd v Brisbane City Council [2010] QLC 0005 PARTIES: LGM Enterprises Pty Ltd
(claimant/respondent)v. Brisbane City Council
(respondent/applicant)FILE NO: AQL 820-07 (formerly A2007/0820) DIVISION: Land Court of Queensland PROCEEDINGS: Hearing of applications HEARD ON: 29 January 2010 DELIVERED ON: 29 January 2010 – Ex tempore DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDERS: 1. LGM Enterprises Pty Ltd application for costs is dismissed.
2. Order 2 made by the Court in LGM Enterprises v Brisbane City Council [2009] QLC 0178 is set aside and in lieu thereof it is ordered that the respondent pay interest at the rate of 2.625 per cent per annum on the amount of $152,250 from 1 June 2005 to the date of payment of the advance, 11 July 2009, and thereafter on the amount of $116,594 up to 24 December 2009.
CATCHWORDS: SECTION 12 Land Court Act 2000 – application for rehearing – application of and consideration given to ss.7 and 12 of Land Court Act 2000 – correction of allowance for interest on economic loss when losses occurred over a period of time.
COSTS – s.27(2) of Acquisition of Land Act 1967 considered. - Application of s.27(2) of Acquisition of Land Act 1967 – Commissioner for Railways v Buckler (1996) 1 Qd R18 considered.
APPEARANCES: Mr L McGinn, Company Director of LGM Enterprises Pty Ltd, in person.
Mr M Hinson SC, instructed by Brisbane City Legal Practice, for the respondent/applicant.
THE COURT RESUMED
HIS HONOUR: As I said, I intend to dispose of these applications now but I reserve the right to tidy up my reasons.
I have before me two applications. The first is an application under section 12 of the Land Court Act 2000 brought by the respondent in the substantive proceedings, the Brisbane City Council. The second application is a costs application brought by the claimant company, LGM Enterprises Pty Ltd. I'll deal with each of those applications in turn.
On 27 November 2009 I handed down my decision in the substantive matter. The full citation of that case is LGM Enterprises Pty Ltd and Brisbane City Council 2009 QLC 0178.
The relief granted was in the following terms:
"1. Compensation is determined in the amount of $152,250.
2. I order that the respondent pay interest at the rate of 5.25 per cent per annum on the amount of $152,250 from the date of resumption, 7 January 2005 to the date of payment of the advance, 11 July 2009, and thereafter on the amount of $116,594 up to the day immediately preceding the day upon which the balance of the compensation is paid."
I'd note here that the balance of $116,594 was paid by the council on 24 December 2009.
Compensation comprised mainly of elements of economic loss which was incurred over a period of time commencing not from the date of resumption, 7 January 2005, but from the time the roadworks underlying the resumption commenced.
In paragraph 15 of my reasons I found that the roadworks commenced in June 2005 and were practically completed by April 2006.
In paragraph 21 of my decision I determined that the amount of $36,800 was the appropriate level of compensation to compensate the claimant for economic loss incurred during the time of construction. I also found though that the claimant suffered economic loss after the actual roadworks were completed. This was contrary to the case advanced by the council.
In paragraph 43 of my reasons I determined that economic loss would continue through to mid-2010. My decision when read as a whole records the following: first, economic loss did not start to occur from the date of resumption but from the date works commenced in June 2005. Second, economic loss due to the actual roadworks totalled $36,800 covering the period June 2005 to April 2006. Third, thereafter economic loss continued at or about the same rate as during the construction period through to at or about June 2008. Fourth, thereafter economic loss fell away at an accelerating rate to mid-2002. I refer here to paragraphs 41, 42 and 43 of my reasons. And, fifth, in total, compensation in the amount of $115,450 was determined for business losses incurred after the road construction period.
From what I have said it can be seen that notwithstanding the fact that economic loss did not commence until June 2005 and was incurred over a period of time through to mid-2010, interest has been awarded on compensation from the date of resumption through to the day immediately preceding the final payment for compensation subject of course to adjustments for the payment of the advance.
On 7 January 2010 the respondent filed an application in this Court seeking the following relief:
"1. Leave be granted pursuant to section 12 of the Land Court Act 2000 for the rehearing of argument and submission in relation to the award of interest, and
That interest should be awarded on amounts of business losses from the time that those losses accrued rather than from the date of the taking of the land."
This application raises two issues - first, whether leave should be granted to rehear the matter of interest; second, whether or not in the circumstances of the case it is appropriate to amend the order concerning interest.
While the respondent does not contend that no interest should be awarded it does point out that the issue of interest was not addressed in the pleadings or the written submissions of the parties. It should have been and in this regard much of the blame must lie at my feet. Had I raised this issue before making my final determination on this matter it is unlikely that this application would have been necessary.
Sections 7 and 12 of the Land Court Act 2000 are particularly relevant. Section 7 provides, "In the exercise of its discretion the Land Court
(a) is not bound by the Rules of Evidence and may inform itself in the way it considers appropriate, and
(b) must act according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms or the practice of other Courts."
Section 12 provides
A party to a proceeding who is dissatisfied with the Land Court's decision may apply to the Court for leave to have the matter reheard.
The application must be made within 42 days after the order containing the decision made by the Court.
If the application is granted the matter must be reheard if practicable by the Member who gave the decision on which the rehearing is sought."
As to section 7 the fact that the Land Court is a Court of equity and good conscience is significant but it does not mean that the Court can effectively act from time to time in whatever manner it considers fit. A Court of equity and good conscience is still required to act judicially and to apply the requirements of the relevant legislation and common law to the facts of the case before it. The Court must afford all the parties who come before it the principles of natural justice. If I could refer here to the decision of his Honour Justice Keane of the Court of Appeal in Queensland in Townsville City Council and Chief Executive, Department of Main Roads 2006 1 Queensland Reports at 77.
Section 7 in effect allows the Land Court to exercise its judgment according to its good conscience and according to what it sees as the substantial merits of the case and permits resort to common sense judgments in all the circumstances. It does not however allow the Court to act in an arbitrary manner or to act in a way inconsistent with the principles of natural justice.
As his Honour Justice Keane said in paragraph 37 of the Townsville City Council case, "The discretion conferred by section 12 of the Act is conferred to avoid an unjust outcome of proceedings before the Land Court and to ensure that the decision of the Land Court reflects the true merits of the case as between the parties. It must be exercised in accordance with that purpose. This is especially so in light of section 7 of the Act which instructs the Land Court to exercise its jurisdiction according to equity, good conscience and the substantial merits of the case.”
His Honour also correctly, in my respectful view, observed in paragraph 45 of his Judgment that the discretion to be exercised pursuant to section 12 involves the matter of balancing competing considerations having regard to all the relevant circumstances.
In all the circumstances I've reached the conclusion that, and this isn't really contested by Mr McGinn subject to some matters I will deal with in a moment, this is an appropriate case where leave ought be given to allow the matter of interest to be reviewed.
Turning then to the merits of the application I should first observe that in circumstances where the claimant suffered no loss prior to the commencement of the roadworks there seems to be no basis for allowing interest on compensation prior to that.
Adopting the date advanced by the respondent, that would be 1 June 2005. It follows then that no interest should be awarded on any amount of compensation prior to that date. I note here that Mr McGinn candidly agreed with that approach. Also, in respect of the issue of interest factors that have to be brought into account is that the determination of compensation reflects losses which occurred over time not at one instant and involved, at least to a small extent, an element of future economic loss. In calculating these losses no allowance was made by me to bring any of these economic losses back to a present day value, I'll return to this point in a moment.
On balance I have reached the conclusion that in all the circumstances to allow the present orders on interest to stand would cause an avoidable injustice. I should say here, in the context of something that I said earlier, that Mr McGinn seems to be in general agreement with dealing with interest pursuant to section 12 but as a part of that wishes to agitate a new matter concerning other losses suffered by the company. I will come to those matters in a moment.
I should point out here that in determining compensation the conclusions that I reached, or more importantly the determination that I made adopted a broad brush approach. That was necessarily so given the lack of probative evidence that I had before me. Mr Calabro, the forensic accountant relied on by the respondent, for the reasons set out in my Judgment, made no assessment of economic loss past the construction date. As to the evidence of Mr Crawford, the forensic accountant relied on by the claimant, his evidence was for the most part rejected. It was for these reasons that I was required to adopt the broad brush approach that I did.
Mr McGinn argues that in fact I had adjusted compensation to bring it back to a present day value and in this regard referred me to paragraph 45 of my Judgment. With all due respect to Mr McGinn he has misunderstood that paragraph. The broad brush approach adopted by me did not include any notional or actual reduction in compensation to bring compensation back to a present dollar value.
In circumstances where economic loss has occurred over time and not as at one particular date and where an element of the loss is for future losses it is appropriate for the reasons outlined by his Honour Justice Thomas in Camm v. Salter (1992) 2 Qd R at 342 to bring this into account when determining the application of interest.
I should say that his Honour Justice Thomas in Camm identified that the usual practice of the Courts of Queensland, in circumstances such as this, is to generally reduce the rate of interest by half. An alternate method is to reduce the period over which interest is to be allowed but the former approach seems to be the most common in Queensland.
The only argument advanced by Mr McGinn in contest with this part of the application by the Council is that I had already discounted compensation to present day values and therefore it would be inappropriate to further discount the rate of interest. As I have already said that argument stems from a misunderstanding of what I said in paragraph 45 of my substantial judgment.
If I could then turn to the question of costs. The claimant is seeking its costs of and incidental to the hearing and determination of its claim for compensation. The respondent is not seeking costs but opposes any cost orders being made in favour of the claimant.
Essentially the claimant seeks costs on the basis that, in all the circumstances of the case it had a substantial win in the proceedings before the Court. A number of assertions were made against the respondent which could only be described as criticism of its conduct. It is not necessary for me to go into these matters in any detail but I note that the respondent wanted it put on the record that it rejected those criticisms. I don't intend to say anything more about those matters.
In seeking a favourable costs order the claimant specifically points out that the determination of compensation was in excess of four and a half times that of which the constructing authority was offering as an advance. Further, it could not be reasonably said that the claims made were dishonest or vexatious or that the claimant unreasonably burdened the respondent and/or the Court with an exorbitant claim or claims.
The claimant made passing reference to section 27 of the Acquisition of Land Act 1967 but then went on to refer in more detail to the common law principle which tends to dominate the exercise of a discretion to award costs, namely that costs should ordinarily follow the event. While that may be the usual common law position, in the circumstances of cases such as this, the discretion to award costs is prescribed by section 27 of the Acquisition of Land Act.
That section relevantly provides in subsection 2, "If the amount of compensation as determined is the amount finally claimed by the claimant in the proceeding 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."
In the Commissioner for Railways and Buckler (1996) 1 Qd R 18 his Honour Justice McPherson at page 23 said, "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 of 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."
Section 27(2) effectively provides that it is only that party that has the benefit of a determination which falls on their side of the imaginary half-way line between the respective positions of the parties that has an entitlement to costs. In this case the amount of the valuation finally put in evidence by the constructing authority was $35,656. As was pointed out in paragraph 5 of my substantive decision the claim before the Court at the commencement of the proceedings was $606,950. No attempt was made to amend that claim during the course of the proceedings.
It is not necessary to set out in any detail the mathematics involved to recognise that the award of compensation in the amount of $152,250 falls well short of the threshold prescribed under subsection 2 of section 27. Accordingly, in my view the Court has neither the power nor the discretion to make the orders sought by the claimant.
Mr McGinn argued to the effect that I had some residual discretion regarding costs. The power of this Court to award costs though must stem from some statutory source. Section 34 of the Land Court Act 2000 deals with the question of costs but significantly in subsection 1 of that section it identifies that the operation of that section is subject to the provisions of any Act to the contrary.
In my opinion section 27(2) of the Acquisition of Land Act is such an Act and accordingly the claimant's application for costs must be dismissed. As I've already said the respondent does not seek any costs. In all the circumstances I propose to make no orders as to costs.
Before making final orders I should deal with what was effectively an application by the company to reagitate some of the substantive merits of the case again. It arises in this way. First, it is argued that section 12(1) should be read so as to allow all the merits of the case to be heard again. Second, that if that is correct the company should be allowed to, in effect, introduce new evidence and/or a new element of economic loss. That loss being, in effect, the additional interest charges incurred by the company on borrowings, such charges being the consequence of the works carried out by the Council.
I refuse to allow the company to pursue this course of action for the following reasons. First, the ambit of the application before me is set out in the application itself. It is clearly limited to the question of interest on compensation under section 28 of the Acquisition of Land Act. The matters that the company now seeks to raise are not, in any way caught up by or incidental to the matters raised by the Council's application.
It is, in effect, an application to reopen the merits of the case and introduce a new claim for compensation and the admission of new evidence or fresh evidence. To allow this to occur is not only beyond the ambit of the application before me but would require a full reopening of the case including the introduction of evidence concerning the interest payments made by the company. But it is not only that that concerns me, if this evidence were to be admitted it would, as Mr Hinson pointed out, cause a number of other matters to be revisited. In this regard I note that the question, or the failure by Mr Crawford to include interest on borrowings in his calculations was addressed during his cross-examination.
It seems fairly obvious to me that if that interest was brought into account, then the financial position of the company would have been worse than it appeared. As Mr Hinson pointed out, it would be inappropriate to look at just one side of the coin, namely the loss to the company. It would also be necessary to review how, if interest was brought into account, that might have affected the actual value of the company at any given time during the relevant period.
As I have already indicated to allow this evidence in would be to, in effect, allow the case to be substantially reopened and, as Mr McGinn candidly acknowledged, it is a matter that should have been raised at first instance. Further, if the claimant company did wish to have these matters agitated it should have done so in an appropriate way. For all these reasons I refuse to accept the tender of the material that was handed to me and I will return those documents to the company. Also for the reasons that I expressed it would not be appropriate to bring these matters into account in determining this application.
For the reasons given I order as follows:
That in respect of the substantive Land Court proceedings there be no order as to costs.
That order 2 made by me on 27 November 2009 be vacated and in lieu thereof it be ordered that the respondent pay interest at the rate of 2.625 per cent per annum on the sum of $152,250 from 1 June 2005 to the date of payment of the advance, 11 July 2009, and thereafter on the amount of $116,594 up to the date of payment of that amount being 23 December 2009.
Anything arising?
MS GREEN: Your Honour, council doesn't wish to make any application as to costs but, just to clarify it, the date of the payment of the balance of the advance I think is the 24th of December‑‑‑‑‑
HIS HONOUR: Oh, sorry‑‑‑‑‑
MS GREEN: ‑‑‑‑‑rather than the 23rd.
HIS HONOUR: No, you're right, yes - 24 - it's Christmas Eve.
MS GREEN: 24th, that's right.
HIS HONOUR: I didn't appreciate - 24 December 2009.
MS GREEN: Yes, thank you, your Honour.
MR McGINN: I don't have anything to add, your Honour.
HIS HONOUR: Thank you. We'll adjourn.
THE LAND COURT ADJOURNED
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