McKay v Commissioner of Main Roads [No 7]
[2011] WASC 223 (S)
•1 SEPTEMBER 2011
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | McKAY -v- COMMISSIONER OF MAIN ROADS [No 7] [2011] WASC 223 (S) |
| CORAM | : BEECH J | ||
| HEARD |
| ||
| DELIVERED |
| ||
| SUPPLEMENTARY | |||
| DECISION |
| ||
| FILE NO/S |
| ||
| BETWEEN | : RODERICK DOUGLAS McKAY |
KATHLEEN GLENYS McKAY
Plaintiffs
AND
COMMISSIONER OF MAIN ROADS
First Defendant
WESTERN AUSTRALIAN PLANNING
COMMISSIONSecond Defendant
Catchwords:
| Costs - Compensation for land taken for a public work - Whether ordinary costs rules apply - Whether O 66 r 1(1)(a) applies - Whether appropriate to identify the party who was 'successful' - Approach to be taken to costs discretion in valuation cases - Relevance of Calderbank offer - Whether Calderbank offer can lead to party-party costs only if the rejection of the offer was unreasonable - Appropriate costs orders | [2011] WASC 223 (S) |
| Legislation: |
Land Administration Act 1997 (WA), s 223(3), s 223(9)
Rules of the Supreme Court 1971 (WA), O 66 r 1
Result:
Defendants pay plaintiffs' costs to 16 October 2009
Plaintiffs pay defendants' costs after 16 October 2009
Category: A
Representation:
Counsel:
| Plaintiffs | : | Mr P M McGowan & Mr C J Graham |
| First Defendant | : | Mr K M Pettit SC & Ms F B Seaward |
| Second Defendant | : | Mr K M Pettit SC & Ms F B Seaward |
Solicitors:
| Plaintiffs | : | Cornerstone Legal |
| First Defendant | : | State Solicitor for Western Australia |
| Second Defendant | : | State Solicitor for Western Australia |
Case(s) referred to in judgment(s):
Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Patricia Margaret Hannell as Executor of the Estate of David Richard Hannell (Dec) [2007] WASCA 158 (S)
AMP Capital Investors Ltd v Transport Infrastructure Development Corporation
(No 3) [2007] NSWLEC 724
AMP Capital Investors Ltd v Transport Infrastructure Development Corporation
[2008] NSWCA 325; (2008) 163 LGERA 245
[2011] WASC 223 (S)
Banno v Commonwealth of Australia (1993) 45 FCR 32
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)
Calderbank v Calderbank [1976] Fam 93
Cerini v The Minister for Transport [2001] WASC 309 (S)
Clifford and Shire of Busselton [2007] WASAT 89 (S)
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Constantino v Roads and Traffic Authority (NSW) (No 2) [2005] NSWLEC
209; (2005) 144 LGERA 224
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008]
NSWCA 273
Den Hoedt & Anor v Barwick [2006] WASCA 196
Dobb v Hacket (1993) 10 WAR 532
Duvall v Godfrey Virtue & Co (a firm) [2001] WASCA 163
Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322
Filip Yakas v Roads and Traffic Authority of New South Wales (No 2) [2004]
NSWLEC 589; [2004] 139 LGERA 116
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC
122 (S); (2003) 28 WAR 95
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009)
41 WAR 1
Grbavac v Hart [1997] 1 VR 154
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2)
[2008] NSWCA 85
Leda v Weerden (No 3) [2006] NSWSC 220
Lo Presti v Ford Motor Company of Australia Ltd [No 2] [2008] WASC 12 (S)
Maclean v Rottnest Island Authority [2001] WASCA 323
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Mercer v Western Australian Planning Commission [2008] WASC 124 (S)
Minister for the Environment v Florence (1979) 21 SASR 108
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Mount Lawley Pty Ltd v Western Australian Planning Commission [2006]
WASC 82 (S)
Murdesk Investments Pty Ltd v Roads Corporation [2007] VSC 175; (2007) 155
LGERA 13
Naidoo v Williamson [2008] WASCA 179
Nasser v Roads and Traffic Authority (NSW) [2006] NSWLEC 562; (2006) 149
LGERA 289
North Albury Shopping Centre Pty Ltd v Albury Municipal Council (1983) 49
LGRA 215
| Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Overton Investments Pty Ltd v Minister Administering the Environmental | [2011] WASC 223 (S) |
Planning and Assessment Act 1979 [2001] NSWCA 137; (2001) 113
LGERA 439
Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC
164; (2000) 110 LGERA 223
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153; (2010) 175
LGERA 189
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2010]
NSWLEC 27
Western Australian Planning Commission and Shim [2007] WASAT 262 (S)
BEECH J [2011] WASC 223 (S)
BEECH J:
Introduction
1 On 1 September 2011, I delivered my reasons on the trial of the
plaintiffs' claim for compensation for the value of land taken: McKay v
Commissioner of Main Roads [No 7] [2011] WASC 223.2 Apart from the question of costs, the orders necessary to give effect
to my reasons were not controversial. On 1 September 2011, I ordered
that the defendants pay the plaintiffs:
(1) $5,827,500, being compensation for the value of the subject land (lots 191 and 192) and for the taking without agreement, less the advance payment already made; and (2) $1,778,904.25, being interest on that sum from 1 August 2006
until judgment.
I also made directions for submissions and affidavits on the question
of costs.
4 Both parties seek an order for costs in their favour, although the
defendants seek costs in their favour only from 7 October 2009, the day
after they made a Calderbank offer.
For the reasons that follow, I would make orders substantially to the effect sought by the defendants.
The parties' submissions raised some issues of general significance to the exercise of the costs discretion. The main issues are:
(1) Is there a special rule for costs in compensation cases? (2) What are the conditions and circumstances in which a Calderbank
offer is relevant to the exercise of the costs discretion?(3)
As an aspect of (2), is the test for using a Calderbank offer for indemnity costs applicable to the use of a Calderbank offer for party-party costs?
(4) What weight should be given to the Calderbank offer in this case? (5) As an aspect of (4), was the offer, open for ten days immediately
before trial, open for a reasonable time?
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It is convenient to begin with some background.
Background facts and circumstances
The subject land, and part of lot 189, were taken under the Land Administration Act 1997 (WA) (the LA Act) in July 2006.
In May 2007, the defendants made an open offer of compensation to the plaintiffs under s 217 of the LA Act. The plaintiffs rejected the offer.
10 On 16 May 2007, the defendants made an offer to make an advance
payment in partial discharge of the plaintiffs' claim. The plaintiffs
accepted that offer.11 On 22 May 2007, the defendants paid the sum of $10,063,956.16 by
way of advance payment, of which $9.6 million was principal
compensation.12 The action was commenced in 2007. As explained in my primary
reasons at [12], the action initially concerned compensation in respect of the taking of lot 189, as well as in respect of the taking of lots 191 and 192. The parties settled the plaintiffs' claims respecting lot 189 during the course of the trial. By a Deed of Settlement dated 27 August 2010, the defendants agreed to pay $3.75 million to the plaintiffs in settlement of the claims respecting lot 189, and that part of the costs of this action that related to lot 189.
13 By an amended statement of claim dated 3 October 2007, the
plaintiffs claimed the sum of $46.5 million in total, including the claims respecting lot 189, not including compensation for taking without agreement.
14 On 17 July 2008, the defendants made an offer under Rules of the Supreme Court 1971 (WA) O 24A in the sum of $12.3 million plus interest and costs. The offer was not accepted.
In May 2009, the parties conducted a mediation before a judge of the
court.
On 14 May 2009, the defendants made an O 24A offer in the sum of $15 million plus interest and costs. The offer was not accepted.
17 On 28 August 2009, the plaintiffs filed a statement of issues, facts
and contentions (SIFC). The plaintiffs' SIFC foreshadowed what was
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referred to as the 'split taking' case. That notion is explained in my
primary reasons at [94].
At this stage, the trial was listed for six weeks, commencing on 19 October 2009.
On 15 September 2009, the defendants filed their SIFC.
On 16 and 17 September 2009, a further mediation of the action took place before the same judicial mediator.
21 On 16 September 2009, the plaintiffs filed substantial further
evidence in support of the split taking case, including statements from planning and engineering experts. On 18 September 2009, the plaintiffs filed and served valuation reports based on the split taking approach.
22 On 18 September 2009, the defendants filed an application seeking
orders to the effect that the plaintiffs be precluded from advancing the split taking case. The defendants' application was made returnable on 22 September 2009.
23 On 21 September 2009, the plaintiffs' solicitors advised the
defendants' solicitors and the court that the plaintiffs abandoned the split taking case. At a directions hearing the next day, I made unopposed orders that the plaintiffs pay:
(a) the defendants' costs of its application of 18 September 2009; and (b) the defendants' costs of responding to the split taking issue in the plaintiffs' SIFC. 24 On 6 October 2009, two weeks after the plaintiffs' abandonment of
their split taking case, the defendants made a Calderbank offer in the sum of $24 million, plus interest and costs. That offer was in respect of the whole of the plaintiffs' claim, namely their claim in respect of lots 191, 192 and 189. This offer is the foundation of the defendants' position on costs. They contend that the plaintiffs would have been better off accepting the offer than commencing the trial, and that the plaintiffs should pay the defendants' costs thereafter.
25 The offer was expressed to be made in accordance with the
principles in Calderbank v Calderbank [1976] Fam 93 and to be open for acceptance until 4.00 pm on Friday, 16 October 2009. The significance of that date was that the trial was due to commence the following Monday, 19 October 2009.
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26 On 9 October 2009, the plaintiffs' solicitors wrote to the defendants'
solicitors in response to the Calderbank offer of 6 October 2009. The
letter:
(a) noted that the defendants had chosen to make an offer in accordance with the principles in Calderbank rather than pursuant to O 24A; (b) suggested that the principles of Calderbank were inapplicable in circumstances where O 24A was available and where it had not been used in order to circumvent the time limit prescribed in O 24A; (c) cited a passage from the reasons of Anderson J in Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569; (d) stated that any settlement offer put forward by the defendants must allow the plaintiffs enough time to give serious thought to the offer; (e) requested that the defendants reconsider making the offer pursuant to the provisions of O 24A.
There is no evidence of any further communications about the defendants' Calderbank offer.
28 Ms Payne's affidavit of 27 October 2011 states that the defendants
did not make their offer of 6 October 2009 under O 24A 'as the offer was made less than 28 days prior to the commencement of the trial on 19 October 2009' (par 8).
29 Order 24A r 3(3) provides that an offer under O 24A shall not be
open for acceptance for less than 28 days. By O 24A r 10, a plaintiff who accepts an O 24A offer is entitled to costs up to the day of acceptance. The combined effect of these rules is that if an offer had been made on 6 October 2009 under O 24A, the plaintiffs could have accepted it at any time up to 3 November 2009, more than two weeks into the trial, and be awarded costs, including the cost of the trial, up to 3 November 2009.
30 I infer that it was for this reason that the defendants did not make
their offer under O 24A, but made a Calderbank offer open until
16 October 2009.
The trial commenced, as planned, on 19 October 2009.
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I refer to the outline of the course of the trial in section 1.6 of my primary reasons.
As the plaintiffs' case developed at trial, they put their case on the value of the land in three ways:
(a) valued on the basis that the highest and best use of the land was as a district commercial centre with intensive residential development, the land was worth about $60 million to $70 million; (b) valued on the basis that the land was zoned urban, and that its highest and best use was for urban subdivision, the land was worth about $60 million to $65 million; and (c) valued on the basis that the land was zoned rural, with strong potential to be imminently rezoned to urban, the land was worth about $36 million to $40 million. 34 The defendants' case at trial was that the highest and best use of the
land was for future urban use, and that its urban potential was uncertain and in the medium or long-term. Valued on that basis, the defendants contended that the land was worth about $6 million to $7 million.
35 The defendants counterclaimed in respect of the advance
compensation they had already paid. They claimed that they had paid more than the land was worth, and counterclaimed for the difference. The parties agreed that the counterclaim should be stood over pending my determination of the value of the land.
36 In the event, I determined that the subject land was worth
$14.025 million, and that, including compensation for the taking without agreement, the plaintiffs were entitled to $15,427,500, plus interest. The counterclaim was dismissed.
37 I concluded that the land should be valued on the basis that it was
zoned rural with urban potential. A large part of the trial was taken up with the plaintiffs' unsuccessful contention that, but for the proposed public works, the land would have been zoned urban (see sections 4 - 6 of my primary reasons). The plaintiffs' commercial case was also unsuccessful (see section 8).
38 The valuers' evidence occupied two weeks, one of which concerned
the urban potential valuations. Apart from the valuers, substantially all the oral evidence was adduced in the nine weeks from 19 July 2010 to
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16 September 2010. More than half of that time was concerned with the plaintiffs' unsuccessful past hypothetical urban rezoning case and their commercial case.
39 It is clear that the defendants' Calderbank offer would have been a
significantly better outcome for the plaintiffs than was achieved at the trial. The offer covered all parts of the plaintiffs' claim, which then included lot 189. At that stage, the plaintiffs' claim in respect of lot 189 was valued by their valuers at not more than $3.6 million so, on any view, the offer provided more than $20 million for lots 191 and 192, plus interest on that sum. Taking into account interest, the offer was at least $6 million better for the plaintiffs than was achieved by judgment after trial.
The parties' submissions
In summary, the plaintiffs submit that:
(1) different costs principles apply to acquisition cases as against
ordinary litigation. Among those differences are that:
(a)
in the absence of special circumstances, the general principle is that the dispossessed landowner ought to receive his costs of the action;
(b)
for the purposes of O 66 r 1(1), there is not a 'successful party';
(c)
there is no suitable method of determining the successful party in this case;
(d)
in any event, the success of a party is a factor, but is not determinative of the appropriate costs order;
(2)
in any event, to the extent that the question of who was successful bears on the issue of costs, the plaintiffs were the successful party; and
(3)
the plaintiffs did not unreasonably refuse to settle. The defendants' Calderbank offer of 6 October 2009 should not be given significant weight for reasons that include:
(a)
it was open only for 10 days and was not made under O 24A, which would have allowed 28 days, permitting adequate consideration by the plaintiffs;
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(b) despite a request by the plaintiffs, the defendants did not revise the offer to make it under O 24A; (c) in any event, the plaintiffs acted reasonably in refusing the Calderbank offer.
In summary, the defendants submit that:
(1) the special rules for compulsory acquisition cases propounded by
the plaintiffs should be rejected;(2) the principle is no more than that a landowner should receive their reasonable costs of obtaining due compensation. Those costs ceased once the defendants made their Calderbank offer, since it was for an amount exceeding what the court assessed as just compensation; (3) in all the circumstances, including that there had been two mediations, one of which was on 16 and 17 September 2009, the defendants' Calderbank offer was open for a reasonable time to enable the plaintiffs to assess and respond to it; (4) accordingly, the plaintiffs should be ordered to pay the defendants'
costs after 6 October 2009; and(5) alternatively, taking into account the way the trial was fought, and the parties' relative success on the issues, the defendants should be seen as the successful party and should have their costs. If not, the parties should bear their own costs. 42 I start by considering general principles relevant to the exercise of
the costs discretion, and the plaintiffs' submission that different principles
apply in compensation cases.
General principles: a special rule for compensation cases?
43 In my view, to say there is a special costs rule for compensation
cases is an overstatement. However, the fact the case involves valuation for compensation for the taking of land is relevant to and part of the framework for the exercise of the costs discretion.
The starting point is and must be the statutory framework.
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Section 223(3) of the LA Act provides:
If a person is entitled to bring an action for compensation under this Part, the action may be commenced and maintained in a court of competent jurisdiction and is to be heard and determined in the same manner as ordinary actions, with ordinary rights of appeal in regard to the amount of compensation awarded or to any question of law or fact or of mixed law and fact, except that no question is to be determined by a jury.
46 As Parker J observed in Cerini v The Minister for Transport [2001] WASC 309 (S) [20], the statement that the compensation claim is to be 'heard and determined in the same manner as ordinary actions' offers little encouragement to the notion that there is a special position for compensation cases regarding the operation of the rules of the court.
47 Section 223(9) of the LA Act provides that the costs of the action are
'at the discretion of the court'. Nothing in that section prescribes the manner of the exercise of the broad discretion which it confers. Of course, the discretion must be exercised judicially: Naidoo v Williamson [2008] WASCA 179 [39], [42]. The discretion must not be exercised arbitrarily, capriciously or so as to frustrate the legislative intent: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [22].
Order 66 r 1(1) provides as follows:
1. General rules as to costs
(1) Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally order that the successful party to any action or matter recover his costs.
49 The effect of this rule is that O 66 r 1(1) applies to all proceedings
unless a statute or rule of the Supreme Court expressly provides
otherwise.50 I do not consider that s 223(9) expressly provides otherwise. Like
s 37 of the Supreme Court Act 1935 (WA), it provides a broad discretion
to the court in relation to costs.
The plaintiffs accept that O 66 r 1(1) applies: ts 7447.
52 In Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82 (S) [61], Templeman J said that in
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exercising the costs discretion the starting point must be O 66 r 1(1). I
agree.53 The plaintiffs emphasise that, in Mount Lawley, Templeman J adopted a view of the limits on the court's role in valuation cases that I do not share. Templeman J said as follows:
It is well settled that the Court does not itself carry out valuations. Again, speaking generally, the Court decides the value on the basis of the expert valuation evidence adduced by one of the parties, in preference to that adduced by the other.
It follows, that the outcome of the litigation will be the determination of a value which is, or is close to, that advanced by one of the parties. It will therefore be clear whether the owner or the WAPC has been the successful party.
Adopting that approach in the present case, there can be no doubt that the WAPC has succeeded. That is because I accepted the evidence of one of its valuers at $4 million and did not accept the evidence of Mount Lawley's valuers at between $11 million and $15.5 million [65] - [67].
54 It will be apparent from what I wrote, and did, in my primary reasons
that I respectfully disagree with Templeman J in this respect. However, in my view that does not detract from the proposition that O 66 r 1(1) applies and, therefore, provides a starting point by reference to the 'successful party'.
55 Order 66 r 1(1) directs attention to identifying the successful party to
an action. The character of a compensation action, and the questions
which it involves, bear upon the identification of the successful party.56 Both parties cited numerous authorities in their submissions on costs.
Before dealing with the cases, I make two preliminary, but nevertheless in my view important, points.
57 First, the costs discretion falls to be exercised in the applicable
statutory framework. Most of the authorities relied on by the parties were
decided in other jurisdictions, with different statutory frameworks.58 Secondly, and in any event, the costs discretion is broad.
Observations made by one judge in exercising the costs discretion do not constitute a firm proposition of law and do not control the exercise of discretion in another case. There are no hard and fast rules controlling the broad costs discretion conferred on the court. However, general principles in the nature of guidelines may develop: Oshlack v Richmond
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River Council [35]. In some jurisdictions, where there is no rule of court to that effect, the general rule that a successful party should receive its costs unless there is good reason to the contrary is one such guideline: Oshlack [35]. Another illustration is the approach to be taken to Calderbank offers in the exercise of the costs discretion: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 [30].
In Minister for the Environment v Florence (1979) 21 SASR 108, Wells J made the following general observations:
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 s 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 has 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. But costs are, as always, discretionary, and no hard and 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 (134 - 135).
Both parties rely on this passage. It has been quoted with approval in many cases. I too would adopt it.
61 Wells J suggested that a starting point is that a claimant should
generally receive his reasonable costs of due compensation. If due compensation, as assessed by the court, is more than the statutory offer by the taking authority and more than the value contended by the authority at trial then, leaving aside any settlement offers, I think the proper starting point is that the claimant should have his or her costs.
62 There are many other authorities that take that approach. For
example, in a passage often cited with approval since, Cripps J said that it was not apparent why a dispossessed landowner should have to bear his
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own costs of seeking what 'turns out to be just compensation': North Albury Shopping Centre Pty Ltd v Albury Municipal Council (1983) 49 LGRA 215, 221. Although said in the context of a question of statutory construction about whether there was a power to award costs, the statement has often been referred to in the exercise of the costs discretion. See, for example, Constantino v Roads and Traffic Authority (NSW) (No 2) [2005] NSWLEC 209; (2005) 144 LGERA 224 [7] - [9].
63 Wells J's observations in Florence were, of course, made in the context of the statutory and rule framework in South Australia. For present purposes, O 66 r 1(1) applies. As I have said, that directs attention to who was the successful party. In the circumstances that I have just postulated, I consider that, generally but, as I will explain, not inevitably, a claimant in that position is 'successful' for the purposes of O 66 r 1(1).
64 Leaving aside the effect of any without prejudice offers, in this case
the plaintiffs were awarded compensation that exceeded the amount of the defendants' statutory offer and the amount for which they contended at trial.
65 The defendants submit that Wells J's observations support recovery
of the costs of obtaining just compensation, not the costs of seeking more than just compensation. They contend that just compensation of $15.4 million could have been obtained, indeed substantially exceeded, by acceptance of their offer of 6 October 2009. Thus, they contend Wells J's statement does not support recovery of the plaintiffs' costs after the settlement offer. I will return to this submission when I deal with the relevance of Calderbank offers.
66 In Florence, counsel for the resuming authority invited the court to 'create a new principle' by making costs orders based on the question 'who, on the whole, has been the most successful' (136). Wells J concluded that that was a question that should be asked and answered, in the preliminary stages of reasoning, but was a medial, not decisive, conclusion (137). His Honour's conclusion in that regard must be understood as a response to the submission which had been made. That submission suggested that the question of who, on the whole, was most successful would be determinative.
67 I agree that the costs discretion should not be controlled by the
answer to that question. However, the statutory framework for my decision differs from what applied before Wells J. Order 66 r 1(1) creates a starting point of costs in favour of the successful party.
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68 Nevertheless, in my view, a broad practical judgment of that kind is
of assistance in the exercise of the costs discretion. In Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2001] NSWCA 137; (2001) 113 LGERA 439 [72], Stein JA observed (Powell JA and Ipp AJA agreeing) that a judge is entitled to 'look realistically at the litigation, the issues, the way it was conducted and the result, in order to assess who really succeeded and to what extent'. In Mercer v Western Australian Planning Commission [2008] WASC 124 (S) [34], Jenkins J adopted that approach. So do I.
In Banno v Commonwealth of Australia (1993) 45 FCR 32, 51, Wilcox J made some tentative observations about costs, without hearing from counsel. He suggested that 'perhaps' people whose land has been resumed 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 costs if their case proves unpersuasive.
70 These observations have been adopted in many cases in other states
since. Some of the authorities were collected by Biscoe J in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2010] NSWLEC 27 [35]. These observations were mentioned among the relevant considerations by Pain J in AMP Capital Investors Ltd v Transport Infrastructure Development Corporation (No 3) [2007] NSWLEC 724 [19] - [21]. An appeal from Pain J's costs decision was dismissed: AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325; (2008) 163 LGERA 245 [101] - [104].
In Pastrello v Roads and Traffic Authority of New South Wales
[2000] NSWLEC 164; (2000) 110 LGERA 223, Talbot J said that:
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 [17].
72 That passage has been referred to with apparent approval in a
number of subsequent cases in other states. See, for example, Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153; (2010) 175 LGERA 189 [21]; Filip Yakas v Roads and Traffic Authority of New South Wales (No 2) [2004] NSWLEC 589; [2004] 139 LGERA 116 [12],
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[20]. The passage was referred to and applied, as one of several considerations, by Pain J in AMP Capital Investors, from which the appeal on costs was dismissed. So far as I am aware, it has not been adopted in Western Australia. It was rejected by Templeman J in Mount Lawley.
73 In Mount Lawley, the plaintiff relied on a number of the cases to which I have referred. Templeman J summarised them in detail. At the end of his outline of the authorities relied on by the plaintiff in that case, Templeman J stated his conclusions that:
(1) there is no overriding principle in a compensation case or valuation case that the amount of compensation determined by the court should not be eroded by denying the plaintiff his costs or by requiring him to pay the costs of the relevant authority; and (2) it cannot be said that only in an exceptional case should an applicant be deprived of his costs or required to pay the costs of the relevant authority: [51]. 74 I respectfully agree with those propositions. Templeman J expressed
these propositions, or at least the first of them, as emerging from the cases to which he had referred. I would not say that, but, as I have said, I agree with the propositions.
I think that Templeman J's conclusion on these cases was part of what was adopted by Jenkins J in Mercer [24].
76 In one New South Wales case it was said that the discretion to award
costs in compensation matters is 'uniquely applied to tilt the discretion in favour of the dispossessed owner': Nasser v Roads and Traffic Authority (NSW) [2006] NSWLEC 562; (2006) 149 LGERA 289 [32]. That statement has been cited with approval in subsequent cases, for example Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [34]; Taylor v Port Macquarie-Hastings Council [20].
With respect, I do not consider that this statement is a helpful framework for the exercise of the costs discretion.
The plaintiffs rely on a statement by Osborn J in Murdesk Investments Pty Ltd v Roads Corporation [2007] VSC 175; (2007) 155 LGERA 13 [26] that if a claimant recovers a sum in excess of what was offered by the resuming authority it should be considered as having succeeded on the core issue of the proceedings, so that an entitlement to
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costs will naturally follow. That statement was made in the context whether the taking authority had conceded the claimant's core entitlement to costs: see [19]. Moreover, it was said in a context where evidently no settlement offers had been made, in that there was no reference to settlement offers in the consideration of the proper exercise of the costs discretion. In that context, provided it is understood as a starting point (as I think was intended by his Honour), I agree with Osborn J's statement.
79 It is uncontroversial that the circumstance that there has been a
compulsory acquisition is a relevant circumstance in the costs discretion: Mount Lawley [50]; Cerini [21]; AMP Capital Investors Ltd [2008] NSWCA 325 [108].
80 The starting point for cases in the State Administrative Tribunal
(SAT) is its general 'no-costs' rule: State Administrative Tribunal Act 2004 (WA) s 87(1). In a valuation case for land taken under the LA Act, the SAT exercises the costs discretion conferred on it under s 223(9) of the LA Act. The SAT Rules 40 - 42 deal with settlement offers and orders for costs if settlement offers are not accepted.
81 In Clifford and Shire of Busselton [2007] WASAT 89 (S) [54] - [57], Barker P outlined some general principles relevant to the exercise of the costs discretion in valuation on compulsory acquisition cases. He suggested that as a starting point, ordinarily, fairness will dictate that an owner who recovers more than the authority had offered should be awarded costs, and an owner who recovers less than that should pay the authority's costs. The costs rules about settlement offers permit, but do not require, that a party who has made a better offer (from the opposing party's perspective) than the ultimate outcome to be awarded costs: [58] - [63]. He suggested that, while there is a discretion, that would ordinarily be the result: [61].
82 In Western Australian Planning Commission and Shim [2007] WASAT 262 (S), Chaney DP applied the principles stated by Barker P, and the principles stated by Templeman J in Mount Lawley [51]. Chaney DP said as follows:
In my view, the observations by Barker J in Clifford are entirely consistent with the authorities referred to by Templeman J in Mount Lawley and the conclusion reached by him, having regard to the particular statutory context within which the State Administrative Tribunal operates. As Barker J observed, the notion of 'success' requires an examination of the particular circumstances of each case. Sometimes the question will involve nothing more than an examination of the comparison between the compensation awarded, and the position adopted by each party at the
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hearing. Frequently, however, the determination of compensation will be, as it was in this case, at a figure different from that propounded by either party at the hearing. In those cases, determination of a fair order in relation to costs may involve an examination of the outcome of particular issues in dispute at the hearing and a comparison of the rationale for the ultimate award as against the arguments advanced by each party at hearing.
Where there have been offers made by either or both of the parties in negotiations prior to hearing, whether in accordance with the SAT Rules, or as Calderbank offers, it will be necessary to have regard to those offers to determine what is fair by way of a costs order in the circumstances [9] - [10].
83 Although made in the context of the legislation and rules application
in SAT, I think these general observations made by Barker P and Chaney DP are broadly consistent with the approach to be taken to costs in a compensation action in this court.
84 Statements in the cases about the proper approach to costs in a
resumption valuation claim are not all consistent. Given the discretionary character of the costs decision, that may not be surprising. I do not discern any inconsistency in the Western Australian cases, but I think some of the statements in cases in New South Wales are inconsistent with each other and with the approach in the Western Australian authorities.
85 From this review of the authorities, I set out my view of the general
approach to the exercise of the costs discretion in valuation cases, without
regard to O 24A or Calderbank offers.
(1) Section 223(9) of the LA Act confers a very broad discretion in
relation to costs.(2)
The character of a valuation case, and the fact that it follows a compulsory acquisition of land owned by the claimant, are relevant circumstances in the exercise of the costs discretion.
(3)
A proper starting point is that if due compensation is more than the statutory offer by the taking authority, and more than the value contended by the authority at trial, then (leaving aside any settlement offers) the claimant has succeeded and is prima facie entitled to his or her costs.
(4)
However, that is a starting point, not a rule. In exercising the costs discretion, the court can look realistically at the issues in the action, the way the case was fought, and assess who really
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succeeded and to what extent. Where compensation is determined at a figure different from that propounded by either party, the rationale of the ultimate award can be considered against the arguments advanced by each party at the hearing.
(5) There is no principle in compensation cases that:
(a) the amount of compensation fixed by the court should not be eroded by denying the plaintiff costs or requiring him or her to pay the costs of the taking authority; or (b) only in an exceptional case should a claimant be deprived of his or her costs or ordered to pay the costs of the relevant authority; or (c) a claimant should be free to run any arguable case without being constrained by the risk of an adverse costs order.
86 I turn to the topic of Calderbank offers. I do not think that there is
anything about compensation cases that detracts from the relevance and
weight of a Calderbank offer to the exercise of the costs discretion.
Calderbank offers: general principles; the parties' submissions
It was common ground that, at least in some circumstances, a Calderbank offer may be relevant to the costs discretion.
88 The way in which, and circumstances in which, a Calderbank offer
affects the exercise of the costs discretion was in substantial dispute in the
submissions made to me.
The plaintiffs submit that:
(1) a Calderbank offer is never relevant to the identification of the
'successful party' for the purposes of O 66 r 1(1);(2)
the principles that inform and limit the use of a Calderbank offer to sustain an indemnity costs order against the offeree apply equally to the use of a Calderbank offer to award party-party costs against the offeree;
(3)
in particular, a Calderbank offer cannot justify a party-party costs order against the offeree unless the court is satisfied that its rejection was unreasonable, assessed at the time of the offer and
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without the benefit of the hindsight view of the judgment after
trial; and
(4) the distinction between an O 24A offer, which has presumptive costs consequences, and a Calderbank offer should be kept squarely in mind: a Calderbank offer should not be elevated to equivalent status with an O 24A offer when it comes to costs consequences.
The defendants' primary submissions are that:
(a) a Calderbank offer is relevant to the identification of the successful party for the purposes of O 66 r 1(1); (b) subject to (c), an offeror who makes a 'better than judgment' Calderbank offer is the successful party and, consequently, is presumptively entitled, without more, to a party-party costs order; (c) the proposition in (b) will not apply if the offer did not reasonably promote the settlement of the action; for example, if its terms were uncertain, it was open for an unreasonably short time or its amount meant that it did not reflect any element of compromise; and (d) when the presumption in O 66 r 1(1) is engaged in this way, the question of costs remains one for the discretion of the court, to be exercised in all the circumstances of the case.
Alternatively, the defendants submit:
(a)
there is a fundamental distinction between the use of a Calderbank offer to sustain indemnity costs, and its use to justify party-party costs, and different tests apply to those uses;
(b)
a Calderbank offer that is (proves to be) more favourable than judgment is, without more, capable of justifying a party-party costs order against the offeree. In that respect, it is not an essential precondition to the exercise of the costs discretion for party-party costs against the offeree that the court find that, assessed at the time of the offer, the rejection was unreasonable; and
(c)
the weight to be given to a Calderbank offer is a matter for discretion in all the circumstances. The matters in par (c) of the previous paragraph will be relevant, namely whether the offer was sufficiently certain, open for an adequate period and involved an element of compromise. If affirmative answers are given to those
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enquiries, the policy objectives of promoting settlement mean that substantial weight should be given to the Calderbank offer in the costs discretion.
As will appear, in substance I accept the defendants' alternative submission.
Calderbank offers: general principles
92 Order 24A provides a regime under the rules for making settlement
offers which have presumptive costs consequences. A more favourable offer, measured against the judgment ultimately given, gives rise to a presumptive order for costs thereafter in favour of the offeror, unless the court otherwise orders: O 24A r 10(4) and O 24A r 10(5).
93 It is clear, and not in dispute, that O 24A is not an exclusive code for
the making of settlement offers with costs consequences. Calderbank offers are informal offers made on terms expressed to be without prejudice save as to costs. A Calderbank offer can be considered as a relevant factor in the exercise of the costs discretion: Dobb v Hacket (1993) 10 WAR 532, 540; Duvall v Godfrey Virtue & Co (a firm) [2001] WASCA 163 [6] - [7]; Den Hoedt & Anor v Barwick [2006] WASCA 196 [112] - [113]. There are numerous appellate decisions in other States to the same effect.
94 The court's approach takes into account the private and public
benefits of encouraging reasonable settlements, including by possible costs consequences for the party rejecting the offer: Dobb v Hacket (540); Grbavac v Hart [1997] 1 VR 154, 165; Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 [7]. The policy of encouraging reasonable settlement of an action is a factor in the exercise of discretion on costs.
95 Recently, the New South Wales Court of Appeal considered the
relevance of a Calderbank offer to the exercise of a discretion which was, by the rules, to be exercised presumptively in favour of an order that costs follow the event. Basten JA (McColl and Campbell JJA agreeing) explained that there were two ways of viewing the offer of compromise. One way was to treat it as a basis for the court otherwise ordering; the alternative view is that the offer changed the proper characterisation of the event. On that latter approach, the party who fails to accept the offer and obtains no better result in the judgment is, from the date of the offer, treated as the unsuccessful party: Miwa v Siantan [7]. The defendants invite the adoption of that approach.
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96 On that view of things, I think it is clear that the power to use a
Calderbank offer to sustain a party-party costs order is not conditioned on a finding that the rejection of the offer was unreasonable, as judged at the time of the offer. It would not seem to me to make sense that the offeror is, from the date of the offer, the successful party if and only if rejection of the offer were unreasonable.
97 It is not necessary to decide whether a Calderbank offer affects the
identification of the successful party for the purposes of O 66 r 1(1). That is because, assuming favourably to the plaintiffs that it does not, I would order that the plaintiffs pay the defendants' costs after the offer. The balance of these reasons is taken up with explaining why that is so.
98 I turn now to explaining why I do not accept the plaintiffs' contention
that a finding of unreasonable rejection, judged at the time of the offer, is a precondition to any power to amend party-party costs based on a Calderbank offer.
Calderbank offers: is unreasonable rejection a precondition to a power to award party-party costs?
99 In my view, given the breadth of the costs discretion, it is for a party
who contends that the power to award costs is constrained by a precondition to make good that proposition. For the reasons that follow, I am not persuaded that the discretion is confined in the way contended by the plaintiffs.
100 Calderbank offers may be used in support of an application for
indemnity costs, or for an order that the offeree pay the offeror's costs on a party-party basis. The plaintiffs rely heavily on the authorities relating to indemnity costs based on a Calderbank offer.
101 In Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [16], [23], [28], the Court of Appeal held that the test for whether a Calderbank offer may justify an award of indemnity costs is whether its rejection was unreasonable. The mere fact that the recipient of the offer is ultimately worse off after judgment than he or she would have been had the offer been accepted does not mean its rejection was unreasonable: [18]. All the relevant facts and circumstances must be considered in determining whether the rejection of the offer was unreasonable: [17].
A Calderbank offer in an amount that exceeds the judgment sum does not give rise to a presumptive entitlement to indemnity costs: [31].
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103 The assessment of the unreasonableness of the rejection of a
Calderbank offer is to be made at the time that the offer is considered, and without the benefit of hindsight. Thus, the issue of unreasonableness is not to be determined by adopting the judgment sum as a yard stick: [89].
104 Buss JA [19] (Wheeler JA agreeing) adopted a non-exclusive list of
relevant factors in assessing the reasonableness of rejection of a
Calderbank offer:
(a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it. 105 Questions arise as to whether and to what extent these principles
apply to the use of a Calderbank offer to seek party-party costs, as distinct
from indemnity costs.106 The plaintiffs contend that the test to support indemnity costs - that
the rejection of the offer was unreasonable - applies to the use of a Calderbank offer in support of party-party costs. On their contention, on the proper approach, each of the discretions will be enlivened if and only if the court is satisfied that rejection of the offer was unreasonable, and the proper order will be a matter for the exercise of discretion. In support of these contentions they submit that:
(1) both uses involve seeking to use a Calderbank offer to alter what would otherwise be the appropriate costs order and 'there is no difference in nature' (ts 7465, 7471) and 'no difference in principle' (ts 7466 - 7467) between the two possible costs consequences; and (2) a contrary approach would defeat the principle articulated by
Wells J in Florence.
I do not accept either of propositions (1) and (2).
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108 I accept that it is logically possible that the same test may apply. But
to my mind, on the face of it, one might expect a different test of what is
required to enliven the power to make these two different costs orders.109 In my view, there are important distinctions between party-party
costs and indemnity costs. The distinction is not, as the plaintiffs submit, merely a matter of quantum. The power to award indemnity costs is exceptional in character. There needs to be some special or unusual feature to justify departure from the ordinary practice: Lo Presti v Ford Motor Company of Australia Ltd [No 2] [2008] WASC 12 (S) [8]. Most of the situations in which indemnity costs have been awarded involve an element of improper or unreasonable conduct on the part of the party or its advisers in the conduct of the case: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9]; Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 - 234. In my view, the exceptional character of an award of indemnity costs explains and justifies the need to demonstrate unreasonableness, judged at the time of the offer, to enliven the discretion to award indemnity costs based on the rejection of a Calderbank offer. The same considerations do not apply to the award of party-party costs. To my mind, that difference supports or would explain the view that there is a lower threshold for an award of party-party costs than for indemnity costs. I will return to this point.
110 As to the plaintiffs' second proposition, in my view, the principle
stated by Wells J in Florence (set out at [59] above) does not require acceptance of the need for a finding of unreasonable rejection before a Calderbank offer can bear on party-party costs. To the contrary, as the defendants submit:
(a) Wells J supports an award of a claimant's costs of recovering due compensation; (b) when an offer in an amount that exceeds due compensation is made, the plaintiffs no longer needs to litigate in order to obtain due compensation.
I think acceptance of this view is implicit in what Jenkins J said in
Mercer [40], about which I will say more shortly.
112 Perhaps surprisingly, the question I am considering does not seem to
have been directly addressed in the authorities. Counsel for the plaintiffs did not point to any authority stating that before party-party costs can be awarded based on a Calderbank offer, the court must be satisfied that
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rejection of the offer was unreasonable, judged at the time of the offer. Senior counsel for the defendants did not point to any authority expressly to the contrary.
113 In Mount Lawley, Mercer and Shim, the court (or Tribunal) gave substantial weight to the comparison between the amount of the Calderbank offer and the judgment sum, without an assessment of the reasonableness of its rejection judged at the time of the offer.
114 In Mount Lawley, Templeman J determined that the WAPC was the successful party and that costs would follow the event. He went on to express his views on the effect of a Calderbank offer that had been made by the WAPC for an amount exceeding the amount awarded at trial. He would have ordered party-party costs from the date of the offer. Templeman J said that the question of whether the offeree acted reasonably in rejecting the offer is to be made in hindsight, knowing the result of the trial: [89] - [91].
115 In Mercer v WAPC, the defendant had made a Calderbank offer that was for an amount less than the judgment sum. After setting out the law in detail, Jenkins J applied the law to the facts to explain her view that the plaintiff should be awarded costs:
On the one hand it may be said that the defendant was the party who on the whole was most successful in that the award of compensation was significantly closer to that proposed by the defendant's valuers than either of the plaintiffs' valuers. Further, it is also true that the defendant was more successful than the plaintiffs in persuading me as to its view in respect to a number of issues raised by the claim. On the other hand, I am of the view that it is a very significant point that the plaintiffs ultimately achieved an award which was some $95,000 more than the Calderbank offer and approximately $468,000 more than the compensation award sought by the defendant at trial. Thus, unlike Mount Lawley, the plaintiffs were, on the face of it, unable to obtain compensation in the amount in which it was awarded without proceeding to trial. It cannot be said that the balance of the amount of the award over and above the defendant's valuations and Calderbank offer was insignificant and did not justify the plaintiffs proceeding to trial in order to obtain it.
I do not accept that I can conclude that if the plaintiffs had queried the validity of their valuers' opinions when they received the Calderbank offer and, as a consequence, sought further negotiations with the defendant that settlement could have been reached at a figure close to my award. That is only one possibility. As I said to the defendant's counsel during the hearing, it is also possible that the Calderbank offer represented the upper limit of any offer that the defendant was prepared to make [40] - [41].
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116 In my view, her Honour put significant weight on the fact that the
Calderbank offer was less than the judgment sum. The nub of her Honour's reasoning is that the plaintiffs were justified in proceeding to trial to obtain the judgment sum, given that it exceeded, by more than a negligible amount, what had been offered by the Calderbank offer and what was contended by the defendants at trial. I think it is clear that if the Calderbank offer had been more than the judgment sum, her Honour would have exercised the discretion differently. In those circumstances, the plaintiffs would not have been 'unable to obtain compensation in the amount … awarded without proceeding to trial'.
117 As I have said, in WAPC and Shim, Chaney DP took into account Calderbank offers, as well as offers under the SAT rules, in exercising his costs discretion. See, in particular, [9] - [10] and [12] - [14].
118 Order 24A is a statutory scheme for making settlement offers. One
of the central elements of the scheme is that offers that prove to be better than the judgment sum have presumptive costs consequences. Another element of that scheme is that an O 24A offer must be open for at least 28 days.
119 The plaintiffs submit that a Calderbank offer should not be equated
with an O 24A offer. I agree. But that does not mean that a Calderbank offer may not, in some circumstances, in the exercise of discretion, have the same costs consequences. A party who chooses to make a Calderbank offer, open for less than 28 days, does not obtain the benefit of the presumptive costs entitlement that arises under O 24A. A party who makes a Calderbank offer in a sum that proves to be more favourable to the offeree than the judgment sum is not presumptively entitled to an order for costs, whether on an indemnity or party-party basis. The Calderbank offer is a consideration to be weighed in the costs discretion. The weight to be given to that offer is a matter for the discretion of the court in all the circumstances of the case. This approach is not tantamount to equating a Calderbank offer with an O 24A offer. In the latter case, the offeror knows its presumptive costs consequences. An offeror of a Calderbank offer takes the chance that, when the court exercises its discretion in all the circumstances, the offer will lead to costs consequences.
120 I note the suggestion in Dal Pont GE, Law Of Costs (2nd ed, 2009) [13.58] that the same approach applies to Calderbank offers for party-party costs as for indemnity costs, but the question of whether costs be awarded on an indemnity basis or party-party basis would depend on
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'the level of unreasonableness'. Such an approach might fit comfortably in a context where the test for indemnity costs were 'plainly unreasonable' or 'so unreasonable as to warrant indemnity costs' or the like. However, it is clear from Ford Motor Company v Lo Presti that this is not the law. The test for whether indemnity costs are available is 'unreasonableness' without any gloss.
121 In my view, the use of a Calderbank offer to found indemnity costs
requires a different level of justification from using an offer to lead to
party-party costs.122 One approach might be to say that the 'unreasonableness' test applies
differentially in the two contexts; that it is a different sense of 'unreasonable' for the two different purposes. I think such an approach would be liable to confuse and mislead, and I reject it.
123 Another approach, advocated by the plaintiffs, is that the same test
applies to both, and the rest is a matter of discretion. In my view, that has one of two consequences, each of which is unsatisfactory. Depending how 'unreasonableness' is applied in practice, this approach either makes indemnity costs available when it should not be, or it unduly constrains the award of party-party costs. That reflects my view that there may be many cases where justice requires that a Calderbank offer lead to party-party costs in favour of the offeror, but where indemnity costs would be wholly inappropriate and should be (and are) unavailable as a proper exercise of discretion. I will give an illustrative example.
124 Imagine an action for damages where the defendant denies it is liable
to the plaintiff and, in any event, there is a dispute between the parties about the amount of loss and damage. Both parties have a strongly arguable case based on apparently cogent evidence. The defendant makes a Calderbank offer in a sum substantially more than the amount recoverable on the defence case if is it liable to the plaintiff, and substantially less than the plaintiff's claim. At trial, the plaintiff establishes liability, but is only awarded damages based on the defendant's assessment of loss and damage. In such a case, the plaintiff would be the 'successful' party for the purposes of O 66 r1(1), as it succeeded in recovering damages from the defendant. By refusing the Calderbank offer, the plaintiff put the defendant to the costs of a trial that did not result in the plaintiff obtaining a better outcome than was offered by the defendant. In those circumstances, a party-party costs order in favour of the defendant from the date of the offer may well be appropriate.
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125 But, often at least, I think indemnity costs would be inappropriate
and unavailable. (See my observations in an analogous context in Lo Presti v Ford Motor Company [No 2] [22] - [27], upheld in the Court of Appeal, Ford Motor Company v Lo Presti [48] - [51], [76] - [78]). In my view, in a case of the kind I am hypothesising, the rejection of the offer cannot be said to be unreasonable. Thus, indemnity costs are not available. I do not think that is just a matter of discretion. The rejection was not unreasonable and the discretion to award indemnity costs is not enlivened. Indemnity costs are not an available option within discretion. But, in my view, party-party costs should be available to meet the justice of the case.
126 In a sense, the present case also illustrates my point. The defendants
do not seek indemnity costs. Nor, in my view, could they have. I am satisfied that the plaintiffs did not unreasonably reject the Calderbank offer so as to enliven a power to award indemnity costs. But, for the reasons I explain below, I am satisfied that the justice of the case is met by an order for party-party costs against the plaintiffs.
127 The breadth of the court's discretion ensures that the court retains the
maximum flexibility to meet the justice of the case. The character of what animates the exercise of the exceptional power to award indemnity costs explains why the courts require a finding of unreasonable rejection before indemnity costs are available based on a Calderbank offer. Those considerations do not apply to using a Calderbank offer to order party-party costs. I do not think the breadth of the costs discretion should be or is constrained by a requirement of finding unreasonable rejection as a prerequisite to a party-party costs order based on a Calderbank offer.
128 For these reasons, in my view, a finding that a Calderbank offer was
unreasonably rejected, judged at the time of the offer, is not a precondition to the power to award party-party costs based on a Calderbank offer.
129 The reasonableness, or otherwise, of a plaintiff's conduct in rejecting
a Calderbank offer may be relevant to determining whether and to what extent the Calderbank offer sustains an exercise of the costs discretion adverse to the plaintiff. The factors identified in Ford Motor Company v Lo Presti [19] are relevant to the question of reasonableness.
I turn to the question of the weight to be given to the offer in the exercise of the costs discretion.
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The weight to be given to the offer: plaintiffs' submissions
131 The plaintiffs' written submissions [67] - [68] asserted that the offer
was uncertain in that it failed to particularise the portion of the offer that related to lots 191 and 192. Counsel for the plaintiffs rightly abandoned that contention. The offer was perfectly certain. It offered $24 million plus interest and costs in satisfaction of the whole of the plaintiffs' claims. At the time of the offer, there was no occasion to particularise which part of the offer related to lots 191 and 192.
The plaintiffs submit that little weight should be given to the Calderbank offer given:
(a) its timing and duration - the offer was made on 6 October 2009 and was expressed to be open for 10 days until 16 October 2009. The trial commenced on 19 October 2009; and (b) in any event the plaintiffs acted reasonably in refusing the offer. 133 These are not separate questions. Rather, they are part of the
considerations relevant to the weight to be given to the Calderbank offer in the costs discretion. However, for ease of exposition it is convenient to deal with these issues separately.
I begin with the question of the duration of the offer.
The duration of the offer: the authorities
135 The duration of the offer bears on the weight, if any, to be given to
the offer in the exercise of the costs discretion. In some cases, the short duration of an offer has in itself meant that the offer produced no costs consequences. In other cases, the view has been taken that the shortness of the duration of the offer was relevant to whether the offeree's rejection was unreasonable.
136 At the risk of repetition, I introduce this discussion of the cases with
a reminder that each case turns on its own facts and circumstances. The reasonableness of the duration of a particular offer must be assessed in the circumstances of the case.
137 The rules of court in New South Wales analogous to our O 24A
provide that, in the 28 days leading to trial, an offer must be open for a 'reasonable' period. The cases about what period is 'reasonable' for the purpose of the rule are of some general assistance to the general discretionary question that I am considering.
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138 In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85, an offer was made the day before the trial, required to be accepted by no later than when the trial was due to commence, less than 23 hours later. The parties had made prior offers. Basten JA concluded that the case was 'truly borderline' but he was not satisfied that the offer was left open for a reasonable time: [23]. Basten JA made these observations:
In considering whether the time allowed for acceptance is 'reasonable in all the circumstances' once a trial commences, or indeed final preparation commences, three factors come into play. The first is that both parties may reasonably be expected to have a clear perception of the strengths and weaknesses of their positions, so that the reasonableness of a particular offer may be speedily assessed. Secondly, because significant costs will be accruing on a daily, even an hourly basis, there is a heightened incentive to respond within the time permitted. Thirdly, and counterbalancing the first factor, the need to address the terms of an offer, provide advice and obtain instructions will often be a significant distraction from final preparation.
In relation to the first factor, it should be accepted that by the day before the hearing, in commercial litigation involving experienced counsel and solicitors, the legal representatives would have been able to give the client an immediate assessment of:
(a) the approximate costs incurred to date; (b) the likely length of the trial; (c) the approximate amount of costs assessed on an indemnity basis if the matter proceeded to trial, and (d) the most likely outcome, which may involve a range as to quantum. It should also be accepted that someone with authority to bind the client would have been available to give instructions based on legal advice as to the preferable response [20] - [21].
I respectfully agree with these general observations.
140 As senior counsel for the defendants emphasised, the plaintiffs did
not lead any evidence to assert or suggest that they considered or found ten days was insufficient to consider and respond to the offer, or about how they were occupied during the relevant period. In Kooee, Basten JA said that such evidence would be irrelevant. The question of reasonableness is to be determined objectively, in the circumstances known or which should reasonably have been anticipated by both parties: Kooee [22]. Before me, both parties adopted this approach (ts 7507).
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141 In Maclean v Rottnest Island Authority [2001] WASCA 323, on the Tuesday before the trial (which was commencing the following Monday) the defendant's solicitors served a Calderbank offer that was open until noon that Friday. The trial judge ordered costs in favour of the plaintiff. The Court of Appeal dismissed an appeal from that costs order. The court made these observations:
However, the Court should not encourage the use of a Calderbank letter delivered shortly before trial when the other party might reasonably be expected to have their minds on a number of matters. The use of a Calderbank letter is an aid to the administration of justice and should be encouraged. Its use as an indiscriminately wielded tactical weapon should be discouraged.
Cases will vary as to their circumstances, but in the circumstances of this case we do not consider that the trial Judge fell into error in declining to accord the Calderbank letter much weight [36] - [37].
The plaintiffs rely heavily on these observations.
It is clear that each case is to be judged on its own circumstances.
144 One purpose of a Calderbank offer is always to influence the costs
discretion if the offer is not accepted. That is why it is marked 'without prejudice save as to costs', not 'without prejudice'. But another central purpose of a genuine Calderbank offer is to bring about a settlement by compromise. A last minute offer might be made in circumstances that support the view that it was not a genuine attempt to reach a settlement of the action by compromise, but was a tactic employed for the primary object of altering the costs orders. In those circumstances the offer would be worthy of little weight.
145 In Permanent Building Society v Wheeler (No 2) (578), Anderson J declined to give significant weight to an O 24A offer that was made four working days before trial and withdrawn after three days of the trial.
146 In Leda v Weerden (No 3) [2006] NSWSC 220, the defendant made an offer of compromise shortly before the hearing commenced, on terms that were more favourable to the plaintiff than the judgment subsequently obtained. The offer was open for four days. The offer was not accepted. Gzell J held that the offer was open for acceptance for a reasonable time in the circumstances. He reasoned as follows:
In my view, the parties will be in the best position to assess an offer when it is made shortly before the commencement of the trial. By that stage preparation for the trial will be well in hand and the legal advisers will,
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therefore, be armed with sufficient information to make a reasoned
judgment of the offer.It was said that the plaintiff was in the throes of significant preparation for trial and was not in a position to give consideration to the offer. The whole point about offers of this nature is to encourage the proper compromise of litigation in the private interests of litigants and in the public interest in the prompt and economic disposal of litigation. Recent reference to these matters was made by Hunt AJA in South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 at [83].
In my view, the offer was in compliance with the Uniform Civil Procedure Rules 2005, r 20.6 with the consequence that r 42.15(2)(b)(i) applies and, unless the court orders otherwise, Leda is entitled to an order against Mr Weerden for its costs in respect of the claim, to be assessed on the ordinary basis, up to the beginning of the day following that on which the offer was made and Mr Weerden is entitled to an order for costs on an indemnity basis thereafter. I propose to make orders in accordance with that provision. I do not see any basis upon which I should make an order to the contrary [10] - [12].
147 In Taylor v Port Macquarie-Hastings Council, Biscoe J dealt with the costs of a compensation case. The respondent made a Calderbank offer that was open for four days. Under the applicable rules, the offer was required to be open for such time as is reasonable in the circumstances. Biscoe J observed that in many, if not most cases of ordinary litigation, an offer of compromise open for four days made shortly before trial will be open for a reasonable time in the circumstances. His Honour observed that 'shortly before trial is the season for offers' [49]. Biscoe J described the case before him as borderline but determined that the offer was not open for a reasonable time, taking into account the particular factors relating to the age of the applicants and other matters: [50].
148 In Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322 [117], an offer made at a stage when no trial date was fixed that was only open for seven days was considered by McColl JA not to be one that would attract an indemnity costs order.
149 In County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2), the trial commenced on Tuesday, 20 February. An offer was sent in the middle of the day on Friday, 9 February expressed to be open until 4.00 pm Tuesday, 13 February. Thus the offer was open for less than three business days. The offeree contended that they were not given sufficient opportunity to consider and respond to the offer particularly at a time when they and their advisors were devoting their energies to
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preparation for the trial. McColl JA (Spigelman CJ and Beazley JA
agreeing) rejected that argument. Her Honour said as follows:The next question is whether Challenger and CHL had an appropriate opportunity to consider and deal with the offer. In my opinion they did. It smacks of naivety to contend that Challenger and CHL were so busy devoting their time to preparation for trial that they could not consider the offer. The period leading up to the trial is precisely when parties are often in the best position to consider an offer. While compromise should be considered from when a party's claim is foreshadowed, clearly the further the process of preparation for trial has advanced, the better will the recipient of an offer be able to assess its prospects of success. Experienced practitioners know that decisions as to whether offers should be accepted are often made in a matter of hours, not days. Further, County had, in my view, clearly explained the basis of its claims on the two earlier occasions to which I have referred. By 9 February 2007 Challenger and CHL had County's affidavit evidence and must have been in a position to evaluate it in light of its own case, an issue to which I will return when considering the reasonableness of the rejection of the offer. In any event, had Challenger and CHL needed more time to consider the offer, they could have asked for it: Elite (at [149]) per Basten JA. Instead they either responded with what could only be described as a disdainful offer of $50,000 inclusive of costs or, if their letter preceded County's, chose to sit on their offer. It can be inferred that they had evaluated what they regarded as County's prospects of success - wrongly as the judgment in this Court makes clear - at the time they sent their 9 February offer [35].
It can be seen from these cases that:
(a)
in some cases, offers open for less than a week have been sufficient, or described as borderline;
(b) an offer open for less than a day was 'borderline'; (c)
in other cases, offers made in the week before trial have been given little weight; and
(d) each case depends on its own circumstances.
Was ten days a sufficient time for the plaintiffs to respond to the offer?
151 In my view, for the reasons that follow, in the circumstances of this
case, ten days was sufficient time to provide the plaintiffs with a
reasonable opportunity to consider and respond to the offer.152 The plaintiffs point out, correctly, that the Calderbank offer was not
made immediately after the mediation, but was made 19 days after its conclusion. In that respect, it is relevant that immediately after the
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mediation, the defendants' focus was plainly on the introduction by the plaintiffs of the split taking case. Dealing with whether that should be permitted would have occupied the defendants' legal advisers into early the following week. At the directions hearing on 22 September 2009, the plaintiffs' abandonment of the split taking case was confirmed and consequential costs orders were made.
153 I have found that, on 6 October 2009, the reason the defendants did
not make their offer under O 24A was that they did not wish to make an offer that was open until 3 November 2009, the twelfth day of the trial, on terms that the defendants would pay the plaintiffs' costs up to the date of acceptance. I see nothing inherently unreasonable about that.
The plaintiffs submit that ten days was not a reasonable time for consideration of the offer, taking into account:
(a) in the two weeks preceding trial, the focus of the plaintiffs and their legal advisers would naturally have been on preparation for the trial; (b) preparation for the trial was a substantial task. The trial was listed for six weeks; and (c) the action was complex, involving a large volume of evidence, particularly expert evidence. Consequently, assessing the merits of the competing cases to form an assessment of the offer would have been a complex task. 155 I agree that the matters summarised in pars (a) to (c) are relevant
considerations. However, I consider that in all the circumstances, ten days was ample time to consider and respond to the offer. My reasons for that opinion are as follows.
156 First, the plaintiffs had a substantial legal team that was senior and
experienced in planning and valuation actions. Three counsel appeared for the plaintiffs when the trial commenced. In the two weeks prior to the commencement of the trial, the plaintiffs' counsel could reasonably have been expected to be available to give advice in relation to the offer.
157 Secondly, at the time of receiving the offer, the plaintiffs and their
legal advisers had the defendants' witness statements and expert reports, and their SIFC. They should be taken to have known of the defendants' case, and the evidence in support of that case, and to have a clear perception of the strengths and weaknesses of the plaintiffs' case.
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158 Thirdly, although it is true that the action was complex and involved
a substantial body of expert evidence, in another sense the value of the land was centrally influenced by a single issue: the timing of any urban rezoning and subdivision of the land. That was recognised in the plaintiffs' solicitor's letter of 20 May 2009 (annexure C to the plaintiffs' submissions) and was apparent from the parties' SIFCs.
159 Fourthly, and significantly, the receipt of the defendants' Calderbank
offer was not the first occasion for consideration by the plaintiffs, and their legal advisers, of the possible settlement of the action. The defendants had made O 24 offers in 2008 and in May 2009. There had been two previous mediations of the action. The more recent of those mediations had been conducted over two days, three weeks before receipt of the offer. Thus, the plaintiffs and their lawyers would have already given detailed consideration to their prospects of success and the question of an appropriate settlement, including only three weeks earlier.
I turn to the plaintiffs' contention that they acted reasonably in rejecting the offer.
Did the plaintiffs act reasonably in rejecting the offer?
161 In their written submissions [70] - [76], the plaintiffs submitted that
they were justified and acted reasonably in rejecting the offer of more
than $20 million for lots 191 and 192 in that:
(a) the defendants' valuers' valuation reports then available to the plaintiffs were, as the court subsequently found, defective; and (b) consequently, it was reasonable for the plaintiffs to have regard only to their valuers' reports, which produced valuations of at least $36.5 million for the subject land. 162 In oral submissions, counsel for the plaintiffs accepted that the first
step in this submission involved assessing the defendants' valuers' reports with the benefit of hindsight, informed by the court's conclusions after trial. The argument in that form was not pressed. Rather, the plaintiffs submit that:
(1)
because the defendants' offer was for an amount significantly more than the defendants' valuers' opinion, the offer carried an implicit rejection of the defendants' valuers' views;
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(2) that being so, the only available valuation reports were those of the plaintiffs' valuers. The plaintiffs' valuers valued the land considerably more than the offer; and (3) in those circumstances, the plaintiffs' rejection of the offer cannot
be said to be unreasonable.163 I do not accept this submission. Apart from anything else, I do not
accept the first step in the submission. The making of the offer of $24 million did not involve, in any sense, a rejection of the defendants' valuers' views. By its nature, an offer of settlement need not be, and often is not, premised on an acceptance of particular evidence and the rejection of other evidence. Rather, an offer of settlement will often involve an element of compromise, producing an offer in an amount that does not reflect the evidence or case of either party. Typically, an offer of compromise will be in an amount that falls between the outcomes achieved by success on the part of either party.
164 The defendants' offer was like this typical case. On the defendants'
case, the subject land was worth somewhere between $6 - $10 million. On the plaintiffs' case (at the time of the offer), the claim for lots 191 and 192 was worth $44 million, if the land was zoned rural, and substantially more if it were zoned urban. The defendants' Calderbank offer did not involve a rejection of one case and an acceptance of the other. It involved a substantial element of compromise.
I will say more about matters bearing on the reasonableness of the plaintiffs' rejection of the offer in the next section of these reasons.
The appropriate costs order
I have already found that the defendants' offer:
(a)
when viewed objectively against the background of the defendants' case and the evidence they had disclosed at the time of the offer, involved a substantial element of compromise;
(b) was certain in its terms; (c)
was made close to trial, after two mediations, one of which was recent;
(d)
was open for acceptance for ten days which was, in the circumstances, ample time to permit the plaintiffs to consider and respond to the offer; and
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(e) was in an amount that exceeded (substantially) the judgment sum. 167 The plaintiffs point out that the offer did not spell out how the figure
of $24 million was derived. It was not necessary that that be done. The absence of such an explanation does not affect the weight I give to the offer in the costs discretion. The amount of an offer will often be derived by weighing a number of competing considerations, such as the parties' cases, the perceived prospects of success, and the relative costs and benefits of a trial and a resolution by settlement. Viewed objectively, an analysis of that kind is the evident foundation for the defendants' offer in this case. Nothing was to be gained by spelling that out.
168 A party in the position of the plaintiffs who receives an offer in the
lead up to trial has to weigh risks, costs and benefits in deciding whether to accept the offer. On any view, the outcome of the trial in this case and, in particular, the ultimate value that might be adopted by the court, was highly unpredictable. In this case, in my view, assessed objectively, the plaintiffs should have appreciated that there was, at the least, a significant risk that:
(a) the plaintiffs' urban rezoning case would be rejected, and the land would be valued on the basis that it was zoned rural and had urban potential; (b) the court would assess the urban potential as more uncertain and less imminent than was the plaintiffs' case; and (c) valued on that basis, the court may not accept the plaintiffs' valuers' opinions, and may conclude that the subject land was worth less, perhaps very substantially less, than $20 million.
Acceptance by the court of the defendants' valuers opinion was not necessary (although sufficient) for such an outcome.
170 Further, in my opinion, in those circumstances, the plaintiffs should
have appreciated that in those events they would be better off to have accepted the offer than continuing with the action and, as intimated in the defendants' offer, they (the plaintiffs) would be at significant risk of having to pay the costs of the trial.
171 In this way, in deciding not to accept the offer, viewed objectively
the plaintiffs decided to accept, or may be taken to have accepted, the risk that the result of the trial would be judgment in an amount less than the Calderbank offer. Part of that risk was the risk of exposure to an adverse
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costs order as a consequence. That risk materialised. I do not think it unjust to the plaintiffs that they should be ordered to pay the costs of the trial that followed their decision not to accept the offer.
172 In the context of a dispute about the amount of compensation, I think
the justice of the case favours giving substantial weight to the Calderbank offer. Wells J said that justice requires that, generally, in a land resumption compensation case a claimant should have its costs of obtaining due compensation. I accept the defendants' submission that the costs of obtaining due compensation end when an offer for more than that is made. In my view, in some cases at least, thereafter the claimant should pay costs.
173 I think that approach is consistent with what was said by Jenkins J in
Mercer and by Chaney DP in Shim. Although Barker P did not refer to Calderbank offers, I think his discussion in Clifford of the framework for awarding costs in compensation cases is also consistent with this approach.
174 In my view, the policy of the law of encouraging settlements of
action supports giving significant weight in the exercise of the costs
discretion to the defendants' Calderbank offer.175 I have considered the plaintiffs' submission that, at most, the
Calderbank offer should result in no order as to costs. I do not think that is appropriate. In the circumstances of this case, I think the Calderbank offer is given appropriate weight by an order that the plaintiffs pay the defendants' costs thereafter.
For these reasons, I would order that the plaintiffs pay the defendants' costs after the Calderbank offer.
The appropriate costs order without regard to the Calderbank offer
177 For the sake of completeness, I will express my conclusions on the
assumption that I am wrong to give weight to the Calderbank offer. On that hypothesis, my starting point is that the plaintiffs obtained substantially more than the statutory offer and the defendants' stance in the trial, and so were 'successful' for the purposes of O 66 r 1(1).
178 However, for a number of overlapping reasons, the plaintiffs should
not be awarded all of their costs. Those reasons relate to the way in which the plaintiffs ran their case, the substantial issues on which the plaintiffs failed, and the lack of connection between the rationale for my decision
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and the submissions made and evidence led on behalf of the plaintiffs. Having regard to these matters, I would exercise my discretion under O 66 r 1(2) and O 66 r 1(3) to order that the plaintiffs should pay the defendants' costs of certain issues (identified below), and otherwise should be awarded one half of their costs.
179 As a starting point, courts will be slow to dissect the issues in a case
to identify who succeeded on which as a basis for a costs order: Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) [6] - [7]. This will not generally be appropriate unless there are discrete, severable issues on which the generally successful party failed, and which added to the costs of the proceedings in a significant and readily discernible way: Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Patricia Margaret Hannell as Executor of the Estate of David Richard Hannell (Dec) [2007] WASCA 158 (S) [7]. It is to be expected that a generally successful party will fail on some issues.
180 It is true, as the plaintiffs emphasise, that they succeeded on the two
major legal issues in the action: whether the hypothetical past rezoning case was legally permissible and the admissibility of post-taking evidence on the question of urban potential. But these issues were dealt with by written submissions and the post-taking evidence did not, in the context of the case as a whole, occupy much time.
181 The plaintiffs' hypothetical urban rezoning case was wholly
unsuccessful. It occupied a large and identifiable part of the trial. It added very significantly to the cost of the trial. In particular, the pre-IPRSP rezoning case occupied weeks of oral evidence and was supported by voluminous documentary evidence, chronologies and some expert reports. It did not assist in any significant way on the question of urban potential as at 2006; at that time, urban potential was to be assessed in the framework of the Peel Region Scheme and the Planning Review. More than a half of the non-valuation evidence from 19 July 2010 to 16 September 2010 was taken up with the plaintiffs' unsuccessful urban and commercial cases.
182 Not only was the plaintiffs' commercial case unsuccessful, in my
respectful opinion it should never have been run. For the reasons explained in section 8 of my primary reasons, the commercial case was misconceived, incoherent and involved inconsistent approaches between the plaintiffs' planners and their valuers. Among other things, the valuers assumed that the subject land would have been preferred, by the taking date, to Riverland Ramble as the Ravenswood commercial centre. There
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was never any foundation for that assumption. In my view, the
commercial case lacked any reasonable degree of merit.183 Very little of the enormous volume of evidence adduced by the
plaintiffs formed the basis for my reasoning in assessing the hypothetical planning status, urban potential and value of the land. I rejected the evidence on which the plaintiffs relied in their urban and commercial cases. On the question of urban potential, I did not accept the opinions of the (numerous) planners called by the plaintiffs, although I derived some assistance from consideration of their evidence. On the question of valuation, I did not accept the evidence of the plaintiffs' valuers. I derived no assistance from Mr Brown's evidence.
184 Without going into chapter and verse, there is force in the points
made in the defendants' written submissions on this topic: see
[112] - [115] and much of [137].185 Further, the volume of evidence called by the plaintiffs was more
than was reasonable, at least for the purposes of party-party costs. The plaintiffs chose to run their case by calling numerous planners to give written and oral opinions on the same and overlapping questions. Many of the plaintiffs' experts produced a large number of reports. The plaintiffs called five planners in the pre-IPRSP concurrent evidence session, five on the hypothetical IPRSP and four on the question of urban potential. I do not overlook that some of these had different particular experience and specialist knowledge. Nevertheless, I think it would be unjust to require the defendants to pay the whole of these costs.
186 In my view, there were also other witnesses whose written evidence
was disproportionately substantial when measured against the assistance it
provided, or was likely to provide.187 For the reasons set out in detail in sections 7.5.3.1 and 8.4 of my
primary reasons, the defendants should not pay the plaintiffs' costs in relation to Mr Haratsis' evidence. To the contrary, the plaintiffs should pay the defendants' costs in relation to Mr Haratsis' evidence, including the costs relating to the numerous objections and further iterations of his reports, and of the substantial court time occupied by his oral evidence.
For these reasons, assuming no weight were given to the Calderbank offer, I would have ordered that:
(1) the plaintiffs pay the defendants' costs of the plaintiffs' commercial
case and of all aspects of Mr Haratsis' evidence; and
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(2) the defendants pay one half of the plaintiffs' remaining costs of the
action, after excluding the costs referred to in (1).
Conclusion: the terms of the cost orders
189 The defendants filed a minute of proposed cost orders. In their
minute they sought an order that the costs be taxed as in an action, and sought an order that the limits in the Scale be lifted. However, in oral submissions, senior counsel for the defendants accepted that Item 27 of the Scale, providing for such costs as is reasonable, applies to the costs of this action. Consequently, there is no occasion to lift any limits, since no limits apply.
190 By way of general observations, for the assistance of the taxing
officer, although I have not been provided with any draft bill of costs, my starting point would be that what was required on the part of the defendants in order to meet the case presented by the plaintiffs means that it would not be surprising if the defendants reasonably incurred costs of trial, and costs of getting up between November 2009 and July 2010, substantially in excess of the limits provided by the Scale.
191 The defendants' minute provides that the defendants pay the
plaintiffs' costs up to the date of the offer. Although the defendants' written submissions, filed before their minute of proposed orders, contended that the defendants should have their costs before the offer, or that there should be no order as to costs in that regard, I proceed on the basis of the defendants' minute. In oral submissions, no argument was addressed to the question of the costs before the Calderbank offer.
192 The defendants' minute provides that the plaintiffs should pay the
defendants' costs from 6 October 2009, the date of the offer. I think the plaintiffs should pay the defendants' costs from the date when it is reasonable to expect that they would have responded to the offer. Although I think a reasonable time for the response was less than ten days, I will proceed on the basis, favourable to the plaintiffs, that a response was required by 16 October 2009, as that was the last day that the offer was open. Consequently, I order that:
(1) the defendants pay the plaintiffs' costs of the action, up to and
including 16 October 2009, to be taxed if not agreed;(2) the plaintiffs pay the defendants' costs of the action after
16 October 2009, to be taxed if not agreed.
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193 In addition, I make the orders in pars 5 - 8 of the defendants' minute
dated 20 October 2011. Those orders were not opposed by the plaintiffs,
in the event that the broad costs issue was resolved against them.
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