Mercer v Western Australian Planning Commission
[2008] WASC 124 (S)
•30 JUNE 2008
MERCER -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2008] WASC 124 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2008] WASC 124 (S) | |
| Case No: | CIV:2597/2004 | 12 - 23, 29 & 30 NOVEMBER 2007, 3, 12 & 13 DECEMBER 2007, 20 FEBRUARY 2008, 27 JANUARY 2009 | |
| Coram: | JENKINS J | 30/06/08 | |
| 18/02/09 | |||
| 22 | Judgment Part: | 1 of 1 | |
| Result: | The defendant pay 65% of the plaintiffs' costs of the action Special costs orders made | ||
| B | |||
| PDF Version |
| Parties: | ROBERT WILLIAM MERCER RICHARD TAUNTON SAUNDERS MICHELLE JONNINE McALLISTER & CRAIG DOUGLAS McALLISTER as Executors of MABEL JOYCE PALMER WESTERN AUSTRALIAN PLANNING COMMISSION |
Catchwords: | Costs Compensation for land taken for a public work Identification of the party entitled to costs Relevance of Calderbank offer Relevance of failure of the successful party on certain issues Whether successful party is entitled to special costs orders |
Legislation: | Land Administration Act 1997 (WA), s 211, s 223 (3), s 223(9) Legal Practice Act 2003 (WA), s 215 (2) Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA) Rules of the Supreme Court 1971 (WA), O 66 r 1 |
Case References: | Banno v Commonwealth of Australia (1993) 45 FCR 32 Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541 Cerini v McLeods (A Firm) [2004] WASC 45 Cerini v The Minister for Transport [2001] WASC 309 (S) Clifford v Shire of Busselton [2007] WASAT 89 Cretazzo v Lombardi (1975) 13 SASR 4 Downie v Sorell Council (2005) 141 LGERA 304 Duffy v The Minister for Planning [2002] WASC 201 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 Mercer v Western Australian Planning Commission [2008] WASC 124 Minister for the Environment v Florence (1979) 21 SASR 108 Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82 (S) Murdesk Investments Pty Ltd v Roads Corporation (2007) 155 LGERA 13 O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S) Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439 Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223 State of Tasmania v Effingham Pty Ltd (No 2) [2006] TASSC 32 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 19 FEBRUARY 2009 FILE NO/S : CIV 2597 of 2004 BETWEEN : ROBERT WILLIAM MERCER
- RICHARD TAUNTON SAUNDERS
First Plaintiffs
MICHELLE JONNINE McALLISTER & CRAIG DOUGLAS McALLISTER as Executors of MABEL JOYCE PALMER
Second Plaintiffs
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Defendant
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Catchwords:
Costs - Compensation for land taken for a public work - Identification of the party entitled to costs - Relevance of Calderbank offer - Relevance of failure of the successful party on certain issues - Whether successful party is entitled to special costs orders
Legislation:
Land Administration Act 1997 (WA), s 211, s 223 (3), s 223(9)
Legal Practice Act 2003 (WA), s 215 (2)
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA)
Rules of the Supreme Court 1971 (WA), O 66 r 1
Result:
The defendant pay 65% of the plaintiffs' costs of the action
Special costs orders made
Category: B
Representation:
Counsel:
First Plaintiffs : Ms L E Rowley
Second Plaintiffs : Ms L E Rowley
Defendant : Ms D E Quinlan
Solicitors:
First Plaintiffs : Deacons
Second Plaintiffs : Deacons
Defendant : State Solicitor for Western Australia
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Case(s) referred to in judgment(s):
Banno v Commonwealth of Australia (1993) 45 FCR 32
Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541
Cerini v McLeods (A Firm) [2004] WASC 45
Cerini v The Minister for Transport [2001] WASC 309 (S)
Clifford v Shire of Busselton [2007] WASAT 89
Cretazzo v Lombardi (1975) 13 SASR 4
Downie v Sorell Council (2005) 141 LGERA 304
Duffy v The Minister for Planning [2002] WASC 201
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748
Mercer v Western Australian Planning Commission [2008] WASC 124
Minister for the Environment v Florence (1979) 21 SASR 108
Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82 (S)
Murdesk Investments Pty Ltd v Roads Corporation (2007) 155 LGERA 13
O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S)
Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439
Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223
State of Tasmania v Effingham Pty Ltd (No 2) [2006] TASSC 32
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- JENKINS J:
Introduction
1 These are my reasons in respect to competing applications for costs orders following my decision in respect to the plaintiffs' application for compensation for their interest in certain land taken under the Land Administration Act 1997 (WA) (LA Act): Mercer v Western Australian Planning Commission [2008] WASC 124.
2 In order to understand the applications for costs, it is necessary to briefly summarise the history of the proceedings.
3 The land, being better known as 499 and 507 Wellington Street, Perth, was taken on 5 September 2003 for the purposes of the planning and construction of the Perth to Mandurah Railway and for the redevelopment of land directly affected by the construction of the William Street railway station, as well as land adjacent to the station.
4 On 2 March 2004 the plaintiffs lodged their claim for compensation in the amount of $4,840,000 pursuant to the LA Act s 211.
5 On 17 June 2004 the defendant made an offer of compensation in the sum of $1,590,000 plus solatium of $159,000. The defendant also offered to pay interest at the rate of 6% per annum from 2 March 2004.
6 On 12 July 2004 the plaintiffs refused the defendant's offer of compensation but accepted the offer of an advanced payment in the sum of the offer of compensation. On 20 July 2004 a Partial Discharge of Claim was completed by the plaintiffs and the defendant. On 26 July 2004, $1,796,860.43 was paid to the plaintiffs. This sum represented 100% of the offer of advanced payment for compensation, together with interest thereon at the rate of 6% per annum from 2 March 2004 to 26 July 2004, less an adjustment for outstanding rates and taxes.
7 On 10 December 2004 the plaintiffs filed a statement of claim in their action for compensation against the defendant. Paragraph 18 of the statement of claim referred to the claim of 2 March 2004 and described the amount claimed as an 'arbitrary amount', 'based on rudimentary and preliminary advice'.
8 By [23] of the statement of claim the plaintiffs claimed the value of the land, without stating that value. The plaintiffs also claimed acquisition costs of a replacement property, professional and legal fees, solatium, interest and GST. In its defence dated 20 January 2005 the
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- defendant admitted that the plaintiffs were entitled to adequate compensation but denied that such relief necessarily included the acquisition costs of a replacement property, professional and legal fees, interest and GST.
9 On 5 February 2007 the defendant made an offer to settle the plaintiffs' claim in the following terms:
1. $2,160,000 for land value and solatium but exclusive of any GST payable;
2. costs on a party party basis up to and including the date of the offer to be taxed if not otherwise agreed;
3. interest; and
4. that the offer would remain open for a period of 28 days (the Calderbank offer).
10 The Calderbank offer was rejected by the plaintiffs.
11 The trial of the action commenced on 12 November 2007. In their written and oral opening submissions the plaintiffs relied on valuation evidence from two valuers, being Mr Terrence Dix and Mr Duncan Cameron. Mr Dix wrote his first valuation report in November 2004 and in that report he valued the land at $6,201,000, as at the date of taking. By the trial, Mr Dix had revised this value to $6,849,000. This latter figure was based on $8,615.00 per sqm of improved land. In the alternative, the plaintiffs relied on the valuation report of Mr Cameron completed in January 2006. Mr Cameron valued the land at $3,500,000. This figure was comprised of $3,500 per sqm of unimproved land, $500 per sqm value of improvements to the land and $300,000 as a premium to the adjoining land owner. Additionally, the plaintiffs sought a declaration that they were entitled to acquisition costs in respect of a replacement property or a declaration that they were so entitled, solatium and interest.
12 The defendant relied on two valuers, being Mr Graham Kennedy and Mr Keith Wilson. Mr Kennedy prepared a written valuation in August 2003 in which he valued the land at $1,590,000, as at the date of taking. At a later time, for the purposes of trial, Mr Kennedy prepared a written valuation which valued the land at $2,000 per sqm on an improved basis or $1,600,000 in total. The defendant's second valuer, Mr Wilson, also prepared his first valuation in 2003. He prepared a further report in 2005. Mr Wilson valued the land at $1,590,000. This was broken up into
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- $1,750 per sqm of unimproved land and $200,000 for the improvements to the land.
13 In the defendant's written opening submissions it submitted that the evidence would establish that the plaintiffs' claim was 'grossly inflated and that the true value of the subject property at the relevant date was no greater than $1,600,000'.
14 By the end of the trial there was no issue between the parties as to the plaintiffs' right to solatium of 10% of the amount of the award. Neither was there any issue as to interest, which the parties said they would be able to agree once my decision had been made. The parties were also in agreement that GST was not relevant.
15 The trial took place between 12 - 23, 29 and 30 November, 3, 12 and 13 December 2007 and 20 February 2008. On 30 June 2008 I delivered my reasons for my decision to award the plaintiffs' compensation in the sum of $2,264,625 plus interest to be calculated at the rate of 6% per annum by the parties. This amount included land value assessed at the date of taking at $2,058,750. This in turn was made up of $2,250 per sqm of unimproved land and $270,000 for the value of the improvements. To the sum of $2,058,750 I added solatium of $205,875. I declined to make any award of compensation for the cost of a replacement property or to make a declaration that the plaintiffs were entitled to such an award.
16 In summary, my award was substantially less than the plaintiffs' claim based on the valuation of Mr Dix. The award also reflected a land and improvement value which was $1,441,250 less than Mr Cameron's valuation. The award reflected a valuation of the improved land which was approximately $468,000 more than that contended for by the defendant. I also valued the improved land approximately $95,000 more than the defendant had valued the land for the purposes of the Calderbank offer.
The parties' submissions
17 It is submitted on behalf of the plaintiffs that the defendant should pay their costs of the action taking into account the following matters:
(a) in the normal course a successful party has a reasonable expectation that costs will follow the event;
(b) deciding which party in an action for compensation for the taking of land is successful is not necessarily obvious nor appropriate;
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- (c) although the costs discretion of the court is not constrained by any 'hard and fast' rules, it does not follow that the exercise of the discretion may not be informed by considerations such as those precipitating the comments of Wells J in Minister for the Environment v Florence (1979) 21 SASR 108, 134 - 135 that absent special circumstances it is just that a recipient of compensation recovers costs as a successful litigant usually recovers costs;
(d) the compensation awarded to a land owner ought not to be eroded by not allowing recovery of costs;
(e) the unique circumstances of litigation relating to the taking of land, including that the landowner is an unwilling litigant, that the compulsory taking of land involves gross interference with the rights of private landowners, that the process of determining a fair amount of compensation in the absence of agreement between the parties can only be resolved by the decision of a court and that it is not unreasonable for a landowner to take the claim to court to test the appropriate amount to be awarded;
(f) nothing has been said nor could be said about the conduct of the plaintiffs in making the compensation claim that would justify the court depriving them of their costs; and
(g) the determination of the costs issue in a compensation case should not be based on the answer to the question of 'which party won'.
18 The defendant submits that the plaintiffs should pay its costs of the action taking into account the following matters:
(a) the amount claimed by the plaintiffs was well in excess of the amount of compensation awarded to them;
(b) the ordinary law applies to actions for compensation for compulsorily taken land in that whilst costs of the action are in the discretion of the court, the court will generally order that the successful party to any action recover his or her costs;
(c) the defendant was the successful party as the valuations of the plaintiffs' two valuers were rejected and the court substantially relied on the valuation of Mr Kennedy;
(d) the plaintiffs were unsuccessful in respect to the vast majority of the contested issues at trial whereas the court relied upon the defendant's witnesses in relation to heritage, town planning,
- highest and best use, development potential, valuation and the premium, if any, to be paid by an adjoining landowner;
- (e) thus had the defendant not put forward evidence of valuation, there would have been no evidence on which the plaintiffs could have discharged the onus of proving the value of the subject land;
(f) the length of trial was significantly increased due to the issues upon which the plaintiffs failed;
(g) the Calderbank offer was close to the final award and the offer should have put the plaintiffs on enquiry as to the validity of their claim and further negotiations could have flowed which may have resulted in agreement between the parties; and
(h) if it is only in exceptional cases that an applicant for compensation will be deprived of his costs claimants would be encouraged to make ambit claims and to litigate those claims speculatively without the usual sobering influence of costs.
The law
19 The LA Act s 223(9) provides that the costs of an action for compensation 'are at the discretion of the court'. Order 66 r 1 of the Rules of the Supreme Court 1971 (WA) (SCR) also applies and it states that:
Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings … 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.
20 The defendant submits that the usual rule applies in this action. It relies on the LA Act s 223(3) which provides that an action for compensation '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 …'
21 The plaintiffs rely upon dicta in cases from other jurisdictions to the effect that compulsory acquisition cases differ from ordinary claims in that the claimant, unlike an ordinary plaintiff, has no choice whether to make a claim or not. The classic enunciation of this position was made by Wells J in Florence 134 where his Honour said:
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
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- 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.
22 In South Australia, at that time, there was an applicable statutory provision which provided the court with a discretion to award costs as it thought proper and also articulated a number of circumstances which the court could take into account in exercising the discretion. These matters were the amount of compensation awarded as compared with the amount offered by the taking authority, the extent to which the proceedings had arisen from or been affected by unreasonable conduct on the part of either party and the extent to which the proceedings had arisen from or been affected by an excessive claim by the claimant or unduly depressed offer by the taking authority.
23 In Florence counsel for the taking authority submitted that Wells J should ask himself 'who, on the whole, has been the most successful?' Wells J was unpersuaded that that should be the main question for all cases but he thought that it should generally be asked and answered at least in the preliminary stages of reasoning. In that case the award was some $30,000 greater than the taking authority's offer and some $50,000 less than the claimant's final valuation. Thus, Wells J thought that the taking authority came out of the contest rather better than the claimant. He was also of the view that once the claimant received the open offer and the taking authority's valuation it ought to have put the claimant and his advisers on notice as to the validity of their valuation. His Honour was of the view that it was not unlikely that a further flow of negotiations would have commenced which could in turn have led to settlement at a figure not much different from his award. On the other hand, his Honour also bore in mind that there was a discrepancy between the taking authority's offer and the value supported by the testimony of the taking authority's valuer.
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- He said that this would not have 'instilled complete confidence' in those having carriage of the claimant's case. Wells J ordered that the taking authority pay 3/4 of the claimant's costs.
24 In Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82 (S) Templeman J considered the dicta of Wells J in Florence as well as a number of other cases relied on by the plaintiff, Mount Lawley Pty Ltd. The same cases are relied upon by the plaintiffs in this case. In so doing, his Honour summarised the salient points made in each decision. For the sake of brevity, I will not repeat that exercise in these reasons. Suffice it to note that in the course of determining these applications I have had regard to Brewarrana Pty Ltd v Commissioner of Highways (1973) 6 SASR 541, Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223, Downie v Sorell Council (2005) 141 LGERA 304, State of Tasmania v Effingham Pty Ltd (No 2) [2006] TASSC 32, Cerini v The Minister for Transport [2001] WASC 309 (S), as well as to Templeman J's decision in Mount Lawley, itself and I respectfully adopt Templeman J's summary of the aforementioned cases.
25 There are a few other authorities which are relevant. In Banno v Commonwealth of Australia (1993) 45 FCR 32, 51 Wilcox J determined an application, in the Federal Court, by landowners for compensation for the compulsory acquisition of their land. At the conclusion of his judgment and without the benefit of counsel's submissions his Honour said:
The Court has a general discretion as to costs, but the discretion must be exercised on principled grounds. The Commonwealth has succeeded on all issues. It would therefore seem difficult to justify ordering it to pay the applicants' costs. Moreover, if this was ordinary litigation, the Commonwealth might reasonably expect to obtain an order that the applicants pay its costs. But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position 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's costs if their case proves unpersuasive.
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26 In Mount Lawley, Templeman J determined that the defendant was the successful party because his Honour had accepted the evidence of one of the defendant's valuers who valued the relevant land at $4,000,000 and he had not accepted the evidence of the plaintiff's valuers who valued the land at between $11,000,000 and $15,500,000 [67]. His Honour saw no reason to depart from the usual principle that costs should follow the event. He was not only of the view that the defendant was the successful party but also that the plaintiff's approach to the litigation was fatally flawed because it did not follow the direction given by the Full Court in the plaintiff's appeal from the decision of the original trial judge. Thus, his Honour found that even if there is a principle that the plaintiff's compensation should not be eroded by an award of costs, the circumstances of that case were such as to justify a departure from that principle. This was because the plaintiffs were awarded only what the defendant had offered and the plaintiff had prolonged the hearing by seeking to prove that the land would have been rezoned and should be valued on that basis. Templeman J, therefore, concluded that the plaintiff should pay the defendant's costs of the trial and the retrial.
27 Osborne J delivered his decision in respect to costs in Murdesk Investments Pty Ltd v Roads Corporation (2007) 155 LGERA 13 on 29 May 2007, which was some two months after Templeman J delivered the costs decision in Mount Lawley.
28 In Murdesk, Osborne J determined which party should pay costs following the resolution of compensation proceedings arising out of the compulsory acquisition of certain land. The plaintiff's total claim was over $12,000,000. The acquiring authority had at various times offered sums up to $2,555,000 in full settlement of the claim. Ultimately judgment was entered in the sum of $3,298,100 in favour of the plaintiffs.
29 Osborne J said that it was conceded that the plaintiff had a core entitlement to costs relating to the assessment of compensation with respect to the value of the acquired land. This appears to have been a concession made by the acquiring authority. However, the acquiring authority submissions substantially eroded that concession by seeking a number of special costs orders. Osborne J accepted and adopted the statement of Wells J in Florence. His Honour said that it followed from the fact that the plaintiff had recovered a sum in excess of that offered to it, that it had succeeded on what he had characterised as the core issue in the proceeding. From the fact that the court's function is a compensatory one, the plaintiff was entitled to the core of its costs being those costs reasonably associated with the making of its claim for market value.
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- Ultimately, his Honour ordered that the acquiring authority pay 70% of the plaintiff's costs up until the first day of trial, excluding the costs for the plaintiff's unsuccessful claim for a replacement property and some reserved costs. His Honour further ordered the acquiring authority to pay the claimant's costs of the trial and mediation after the first day of trial. The reduction to 70% of the plaintiff's pre-trial costs was ordered because up until that date the plaintiff had pursued a number of discrete claims which it discontinued on that date.
30 The next case to which I refer is that of Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2001) 113 LGERA 439. This is a decision of the New South Wales Court of Appeal relating to a decision of the New South Wales Land and Environment Court awarding compensation for resumption of land. One of the issues which the Court of Appeal considered was whether the primary judge had erred in the exercise of his discretion as to costs. The amount of primary compensation determined was $105,000, the amounts contended for by the plaintiff ranged between $1.2 million and $4.19 million and the amount contended for by the defendant was $84,000. It is notable that the statutory regime in New South Wales provided for an independent valuation to be carried by the Valuer General prior to trial. It was open for the plaintiff to accept this valuation without proceeding to trial. The amount of the Valuer General's determination was $727,500. The plaintiff declined to accept this determination and proceeded to trial. The primary trial judge ordered that each party pay its and his own costs of the trial.
31 The specific statutory provision under which costs could be awarded was not stated in the judgment of the Court of Appeal. However, Stein JA (Powell JA and Ipp AJA agreeing) made some comments which appear to be of general application in compensation cases. His Honour said that he did not think that it should always follow, exceptional circumstances aside, that costs should follow the event of an award of compensation (69). His Honour said:
Nor do I see that it is a simple matter of ascertaining who won or lost the litigation. Compensation determinations are not like awards of damages for personal injury. Obtaining an award of compensation of $100 does not necessarily mean that a landowner 'wins' the litigation. 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 [72].
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32 As to the argument that if a landowner is not entitled to his costs of a trial where an award of compensation is obtained, then he could be at the mercy of the acquiring authority in prolonging the litigation, Stein JA said that he did not accept that this was so and indeed, the opposite could be claimed. His Honour said:
That is, if a landowner is always to get its costs so long as it obtains an award of compensation, however small, the resuming authority may be at the mercy of the landowner in prolonging a trial [74].
33 The appeals by both parties in respect to the trial judge's costs orders were dismissed.
34 I am very much attracted to Stein JA's view that a judge in determining the issue of costs in respect to an application for compensation for compulsorily taken land 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'. It may be as Wells J has said that a first step in this process is to consider 'who, on the whole, has been the most successful'.
35 Finally, I refer to Duffy v The Minister for Planning [2002] WASC 201 which was an action by a landowner for compensation for the compulsory acquisition of land for the purposes of a public road. The plaintiff claimed $8,116,916 and the ultimate award was $1,489,400. The defendant had already paid the plaintiff $1,400,000, leaving $89,400 due to the plaintiff. In that case, the defendant made an offer to compromise the action pursuant to SCR O 24A in a sum in excess of the ultimate award following trial. Consequently, the provisions of the rules applied in respect to costs following that offer. The case is not of any assistance to me in respect to those costs.
36 In respect to costs prior to the making of the O 24A offer, McKechnie J ordered that the parties bear their own costs. His Honour did not give detailed reasons for that order, other than to say that the order was made 'having regard to the fact that the action substantially failed'. The defendant had sought an order that the plaintiff pay its costs. The justifications for that application included that the case hinged on the value of the land, the plaintiff failed on that issue, the trial judge completely rejected the evidence of the plaintiff's witnesses on that issue, the claim should have proceeded solely in relation to the amount of solatium, the conduct of the plaintiff and that the ultimate award was 1/8 of what the plaintiff had sought. McKechnie J appears to have
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- rejected the argument based on the conduct of the plaintiff. He did not comment in respect to the remaining submissions.
37 The defendant claims that the present case has some similarities with Duffy. It does not seem to me that this is the case. There are a number of points of distinction between the present case and Duffy. The first is that in Duffy the trial judge accepted in full the evidence of one of the defendant's valuers. That cannot be said in the present case as, although I substantially accepted the evidence of Mr Kennedy, I increased his valuation to allow for matters I determined he had not considered. The second is that the balance left unpaid in Duffy was comprised solely of solatium, which the trial judge ordered was payable, over the objection of the defendant. The same cannot be said in the present case.
38 Lastly, whilst I found that Mr Dix's valuation was completely invalid, I found that the valuation of the plaintiffs' second valuer, Mr Cameron to be quite helpful and his approach was not that dissimilar to the approach of the defendant's valuers. Whereas, McKechnie J in Duffy also entirely discounted the valuation of the plaintiff's second valuer.
39 I now turn to apply the law to the facts of this case.
40 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.
41 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
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- 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.
42 For these reasons, I am of the view that the plaintiffs should be awarded their costs. However, I am also of the view that having regard to one particular issue on which the plaintiffs were unsuccessful, I should only allow them a percentage of their overall costs.
43 The issue to which I refer is whether the land ought to have been valued in accordance with Mr Dix's novel method of valuation by which he compared the potential lettable or leasable area of the subject land with the actual or potential lettable area of other land in the Perth CBD (Mr Dix's valuation method). From [158] - [185] of my reasons I analysed and ultimately rejected Mr Dix's method of valuation. I do not think that the plaintiffs should be deprived of their costs of pursuing the acceptance of Mr Dix's method of valuation simply because it was not accepted by me. I am of the view that the plaintiffs should be deprived of their costs in this respect because Mr Dix's method of valuation was not just unacceptable, it was unreasonable. Given the opinions of the valuers which I have already referred to, it is apparent that Mr Dix's method of valuation produced a valuation which was nearly twice that of the plaintiffs' second valuer, three times the valuation I accepted and over four times that of the defendant's valuers. That is one indication of the untenable and unreasonable nature of Mr Dix's method of valuation. Further, it was a method which had been criticised by Barker J in Clifford v Shire of Busselton [2007] WASAT 89 and a method which was not supported by any of the other three valuers presented by the parties. Mr Dix also attempted to support his valuation by reference to Reed R G, (ed) The Valuation of Real Estate (12th ed, 2007) 350 - 351. I noted that the text book suggested that Mr Dix's method of valuation was an appropriate method for valuing offices. The text did not support Mr Dix's method of valuation for land, such as the subject land, that was unlikely, in the short to medium term, to be used for offices and was not developed for use as offices. Finally, I noted that Mr Dix had valued the subject land at significantly more per square metre than any improved or unimproved property in the Perth CBD which had been relied upon by any of the four valuers, and which had sold in the four or so years proceeding the date of taking. I found that such a value was unwarranted [183].
44 The usual rule as to costs permits a judge to take into account an otherwise successful party's failure in respect to a particular issue in
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- determining an appropriate costs order: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748, 48, 136. The power of a judge to do so is put beyond doubt by O 66 r 1(3) which states that:
Where a party though generally successful in an action has, by the introduction of some issues or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
46 Whilst it would be possible for me to order that the plaintiffs' costs exclude the costs of proof of Mr Dix's method of valuation and to order that the plaintiffs pay the defendant's costs of disputing Mr Dix's method of valuation, in my view the fair and efficient approach is simply to allow the plaintiffs a percentage of their overall costs of the action. Thus, I
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- would order that the defendant pay 65% of the plaintiffs' costs of the action.
Special costs orders
47 The plaintiffs seek the following special costs orders:
1. the limits contained in Items 1 (Writ), 4 (Reply), 7 (Discovery), 16 (Getting Up), 19 (Trial) 24 (Orders) in the Supreme Court Scale of Costs as determined by the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2006 (the Scale) (and any other corresponding applicable items in other scales) be removed.
2. The maximum hourly rate of any senior practitioner acting in the case be increased to $435 per hour.
3. Costs be allowed in respect of the Plaintiffs' expert opinion and advice including time spent in Court, advising on the Defendant's counterpart expert opinion.
4. There be a certificate for the transcript.
5. All reserved costs be allowed to the Plaintiffs.
48 The parties are in agreement that the following summary of the law is applicable in respect to special costs orders.
49 The Legal Practice Act 2003 (WA) s 215(2) states:
(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
…
(b) fix higher limits of costs than those fixed in the determination;
(c) remove limits on costs fixed in the determination;
…
(a) the amount of costs allowable under a determination is inadequate; and
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- (b) the inadequacy exists because of:
(i) the unusual difficulty or
(ii) the complexity, or
(iii) the importance of the matter.
[Inadequacy] will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination [16].
52 The plaintiffs submit that in respect to matters covered by their application the relevant determinations are inadequate for all three reasons mentioned in s 215(2). In respect to unusual difficulty the plaintiffs submit that the action had features of unusual difficulty in:
(a) the level of dispute between the expert witnesses;
(b) the history of land use in the precinct of the subject land;
(c) the significant impact of wide ranging social and planning change wrought through the construction of the Perth-Mandurah rail link relating to the underground railway in Perth; and
(d) the unusual factor of assessing the dollar value of the impact of these changes against the background of an expanding local economy.
53 In O'Rourke v P & B Corporation Pty Ltd [2008] WASC 36 (S) the Chief Justice made some comments about the meaning of unusual in this context. His Honour said:
The next question that arises for assessment under s 215 is the question of what the word 'unusual' means in that context. In my view, that word is to be construed by reference to the practice, presumably known to the legislature at the time that it enacted the section, of fixing a scale of costs which applies to all civil proceedings of whatever kind or nature.
So in that context it seems to me that the word 'unusual' means unusual having regard to what one might describe as the usual run of civil cases. The question is not, for example, in this case, whether this was an unusually difficult, complex or important case for specific performance of a contract for the sale of land which at the time the contract was entered into was not subdivided. Rather, the question is whether this was an unusually difficult, complex or important case, having regard to the usual
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- run of civil cases determined in the Supreme Court and generally in the District Court, because, of course, the Scale is generally applicable to proceedings in both courts [22] - [23].
54 In relation to complexity, the plaintiffs submit that the action was complex because:
(a) an historical exercise was required to assess the use to which the land was put over a significant period;
(b) a number of offers to purchase needed to be investigated;
(c) the changing characteristics of the area needed to be taken into account;
(d) the valuers used 36 properties as comparable sales and considerable analysis was required to consider each sale;
(e) different valuation methods were used by the valuers; and
(f) the comment of Pullin J in Cerini v McLeods (A Firm) [2004] WASC 45, [33] was applicable to the evidence. His Honour said:
Each allegedly comparable sale becomes a case in itself, as one party seeks to show how similar the attributes are to the subject land, and the other side strives to show how dissimilar those attributes are. Often other experts are called - traffic experts or accountants.
56 In Heartlink the Chief Justice commented that it seemed to him that by reference to importance, the legislature was referring to the significance of the issues that arose in the litigation. His Honour said:
Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally [19].
57 The application for special costs orders is supported by the affidavit of Linda Elizabeth Rowley sworn 9 October 2008. Annexed to Ms Rowley's affidavit is a draft bill of costs. The bill reflects the agreed hourly rates between the plaintiffs and Ms Rowley's firm in their costs agreement, from time to time. However, the costs agreement itself is not before me. Ms Rowley deposes that she provided most of the legal
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- services itemised in the draft bill and that she is a senior practitioner within the meaning of the relevant determination.
58 I now turn to consider each request.
1. Removal of limits for specific items
59 The defendant objects to the removal of the limits for the specified items. It says that the unusual difficulties and complexities of this matter, as identified by the plaintiffs, were of their own making and related to issues on which they were unsuccessful.
60 As to the plaintiffs' request for the removal of the limits for item 1 (writ) and 4 (reply) the plaintiffs have not shown a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. This is particularly so in the case of the reply as the plaintiffs did not file a reply or any pleadings after their statement of claim. Neither have the plaintiffs shown a fairly arguable case that the limit under the relevant determination is inadequate in respect to item 24 (orders).
61 The draft bill of costs does disclose, in respect to items 7 (discovery), 16 (getting up) and 19 (trial), that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit than would be imposed by the relevant costs determination. Consequently, I am prepared to accept that for the purposes of this application, the amount of costs allowable under the relevant determination is inadequate. The next question is whether that inadequacy arises because of the unusual difficulty, complexity or importance of the matter.
62 The defendant's main objection to the matters raised by the plaintiffs is that the unusual difficulties and complexities of the action related to issues which the plaintiffs raised, which were not arguable and upon which they were unsuccessful. In my opinion I have already allowed for the costs of those matters by depriving the plaintiffs of a substantial proportion of their costs.
63 The fact remains that even the comparable sales evidence and other evidence of valuation presented by the parties raised unusually difficult issues and it was complex. There was significant disagreement between the valuers not only as to the value of the subject land but also as to the properties to be used for comparison purposes to ascertain that value.
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64 In my view it would be just to remove the limits on the items I have referred to. The defendant's arguments about the lack of merits of the issues raised by the plaintiffs are met by my decision to deprive the plaintiffs of a substantial proportion of their costs in any event.
2. Increase in the maximum hourly rate of any senior practitioner acting in the case
65 I do not understand the basis of this claim as the draft bill of costs indicates that the most recent work done by the plaintiffs' solicitor and charged on an hourly basis for a senior practitioner was charged at the rate of $395 per hour. As I have already stated, the affidavit of Ms Rowley says that the draft bill of costs reflects the agreed hourly rates between the plaintiffs and their solicitors in their costs agreement. If this is the case, the draft bill of costs indicates that in 2008 the agreed hourly rate in the costs agreement was $395 per hour. Thus, there would be no justification in lifting the figure to $435 per hour.
66 Further, this application appears to be made not on the basis that the unusual difficulty, complexity or importance of the case required a senior practitioner who was only available at a rate of $435 per hour but rather that the plaintiffs ought to be compensated for all their legal costs, by the defendant. Thus, they submit that as their costs agreement with their solicitor provided for a senior practitioner charging them at a certain rate per hour that is the rate at which their costs ought to be taxed.
67 I do not accept that the mere fact that a party has entered into a costs agreement with their solicitors which allows for practitioners of a certain level within the firm to charge over above the scale is justification for a court increasing the maximum hourly rate of that seniority of practitioner to that stated in the agreement. Something more would have to be shown to justify the amount claimed. In this case, the plaintiffs have failed to do that. I dismiss this application.
3. Costs in respect of the plaintiffs' expert opinion and advice including time spent in court advising on the defendant's counterpart expert opinion
68 As the defendant sought a similar order if it was successful in obtaining costs, it is implicit that the defendant does not, in principle, deny that a party entitled to costs is entitled to these costs, in particular.
69 However, the defendant, as I have indicated earlier, does object to the plaintiffs recovering Mr Dix's costs and costs related to proof of his method of valuation.
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70 In my view it is appropriate that I make this order. The defendant's objection has been met by the order that I have made depriving the plaintiffs of a substantial proportion of their costs.
4. Certificate for the transcript and reserve costs
71 The defendant has no objection to these costs orders being made in favour of the party who is successful in being awarded costs. The plaintiffs will be allowed these costs.
Conclusion
72 The defendant is ordered to pay 65% of the plaintiffs' costs of the action. The plaintiffs' costs are to be taxed having regard to the following special costs orders:
(a) the limits contained in items 7 (discovery), 16 (getting up) and 19 (trial) in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA) and other relevant determinations be removed;
(b) costs be allowed in respect of the plaintiffs' expert opinion and advice including time spent in court, advising on the defendant's counterpart expert opinion;
(c) there be a certificate for the transcript; and
(d) all reserved costs be allowed to the plaintiffs.
Costs of the applications for costs
73 In my view, having regard to the issues as to costs on which the plaintiffs and the defendant were successful or unsuccessful, it is appropriate that the parties bear their own costs in respect to the respective applications for costs orders.
0
16
4