Mio Art Pty Ltd & Ors v Brisbane City Council
[2010] QLC 86
•4 June 2010
LAND COURT OF QUEENSLAND
CITATION: Mio Art Pty Ltd & Ors v Brisbane City Council [2010] QLC 0086 PARTIES: Mio Art Pty Ltd as trustee of the Ecomonitors Unit Trust
(applicant)v. Brisbane City Council
(respondent)Greener Investments Pty Ltd
(applicant)v Brisbane City Council
(respondent)Brisbane City Council
(applicant)v. Neovest Ltd (in liquidation)
(respondent)FILE NOS: AQL1084-08 (Mio Art Pty Ltd)
AQL006-08 (Greener Investments Pty Ltd)
AQL851-07 (Neovest Ltd)DIVISION: General Division PROCEEDING: Application for costs; Interest Rates; Publication Restrictions DELIVERED ON: 4 June 2010 DELIVERED AT: Brisbane HEARD AT: Brisbane PRESIDENT: Mrs CAC MacDonald ORDER: 1. The application for costs is refused.
2. The respondent is ordered to pay interest at the rate of 6% per annum on the sum of Sixteen Million, Six Hundred Thousand Dollars ($16,600,000) for the period commencing 31 August 2007 up to and including 4 October 2007.
3. The respondent is further ordered to pay interest at the rate of 6% per annum on the sum of Seven Million, One Hundred Thousand Dollars ($7,100,000) for the period commencing 5 October 2007 up to and including 7 December 2008.
4. The respondent is further ordered to pay interest at the rate of 5% per annum on the sum of Three Million, One Hundred Thousand Dollars ($3,100,000) for the period commencing 8 December 2008 up to and including the day immediately preceding the date on which that amount is paid by the respondent.
5. Order 2 made on 24 November 2009, that publication of the adjusted sales rate for 98 Montague Road in paragraph [214] and the whole of paragraphs [221], [222], [224], [225] and [235] of the decision in Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177 be restricted until further ordered by the Court, is not varied.
CATCHWORDS: Costs – Acquisition of Land Act 1967 s.27 – Discretion to award costs to respondent – Guidelines to be considered – Discretion not exercised in favour of respondent – Application refused.
Interest – Acquisition of Land Act 1967 s.28 – Orders for payment of interest – applicable rates of interest fixed.
APPEARANCES: Written submissions SOLICITORS: Delta Law for the applicant Mio Art Pty Ltd
DLA Phillips Fox for the respondent
Application for Costs
This is an application for costs by the Brisbane City Council in respect of the hearing and determination by the Land Court of the compensation payable following the taking of land by the Brisbane City Council under the provisions of the Acquisition of Land Act 1967 (the Act). The land was taken on 31 August 2007 for road purposes associated with the construction of the Hale Street Bridge in Brisbane. Compensation was determined in the sum of $16,600,000.
As at the date of resumption the land was owned by Mio Art Pty Ltd and subject to mortgages held by Perpetual Nominees Ltd, Grenfell Securities Ltd, Greener Investments Pty Ltd and Neovest Ltd. The history of the proceedings between these parties is set out in my decision determining compensation, Mio Art Pty Ltd v Brisbane City Council[1]. The active claimant participants at the hearing of the compensation claims were Mio Art Pty Ltd and Greener Investments Pty Ltd.
[1] [2009] QLC 177.
The Brisbane City Council has applied for costs against each of those claimants submitting that it should receive not less than half the total costs (assessed on a standard basis) incurred by it in defending the two claims. As the two claims were heard together, the Council contended that an order should be made that each of Mio Art and Greener pay half of the costs awarded in favour of the Council.
Section 34 of the Land Court Act 2000 provides -
"34. Costs
(1) Subject to the provisions of this or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate.
(2) If the court does not make an order under subsection (1), each party to the proceeding must bear the party's own costs for the proceeding.
(3) An order made under subsection (1) may be made an order of the Supreme Court and enforced in the Supreme Court.
(4) For subsection (3), it is enough to file the order in the Supreme Court.
(5) The court may, if it considers it appropriate, order the costs to be decided by the appropriate assessing officer of the Supreme Court, under the scale of costs prescribed by law for proceedings in the Supreme Court.
(6) If the court makes an order under subsection (4), the assessing officer may decide the appropriate scale to be used in assessing the costs."
Section 27 of the Acquisition of Land Act provides -
"27. Costs
(1) Subject to this section, the costs of and incidental to the hearing and determination by the Land Court of a claim for compensation under this Act shall be in the discretion of that court.
(2) If the amount of compensation as determined is the amount finally claimed by the claimant in the proceedings or is nearer to that amount than to the amount of the valuation finally put in evidence by the constructing authority, costs (if any) shall be awarded to the claimant, otherwise costs (if any) shall be awarded to the constructing authority.
(3) …"
As stated above, compensation was determined in the sum of $16,600,000. Mio Art's final claim for compensation for the value of the land taken was $35,950,000. Greener's final claim was for $39,537,500. The Brisbane City Council's final contention was that the value of the land taken was $13,100,000 although prior to the hearing the Council had paid out $13,500,000 by way of advances in respect of compensation.
The claimants have been successful in that they have obtained a determination of compensation which is $3,500,000 more than the Council’s final valuation. However the amount of compensation determined by the Court is much nearer to the amount finally contended for by the Council than to the amounts claimed by the claimants. It follows that by virtue of s.27(2) of the Act the Court cannot award costs to the claimants.
The Council has submitted that the Court's discretion to order costs in favour of the Council was enlivened because -
·The claims were exorbitant and forced the Council, as the resuming authority, unreasonably and unnecessarily into a lengthy, costly and complex two week trial;
·Although the claimants had obtained an award of compensation which was $3,100,000 more than the Council had paid as advances, that additional amount paled into insignificance compared to what was claimed by Mio Art and Greener. Mio Art sought an additional $22,450,000 while Greener sought an additional $26,450,000 [sic]. The additional amounts claimed were respectively 7.24 and 8.53 times that which was awarded. Given the disproportion between these amounts it was difficult to categorize the claims as being anything other than exorbitant ambit claims.
·The exorbitant nature of the claims was the result not of any proper analysis of the relevant facts and legal principles but rather of the amounts which the claimants decided to obtain. The many changes in valuers by Mio Art and the calling of a non valuer, Mr Jamie Horsburgh, by Greener were the most obvious examples of how the claimants pursued a case which was over the top and bound to fail. The claimants' positions as to the development potential of the subject land were extreme and were based on a false valuation premise, that the value of the land should be derived by working out the most intense level of development which might be approved, rather than what a hypothetical purchaser, applying the Spencer test, would have paid.
·If Mio Art and Greener had sought to pursue claims for an amount that reflected broadly the amount awarded as compensation, the response of the Council as constructing authority to the claims generally, and the length and cost of the trial would have been significantly different. It is telling that no offer to settle was made by either Greener or Mio Art. Had the claimants not pursued exorbitant claims, the trial could have been concluded in less time. Taking a broadbrush approach, the trial could have been concluded in a week.
The effect of s.34(1) of the Land Court Act and s.27(1) of the Acquisition of Land Act is that the Land Court has a complete discretion as to the award of costs, subject only to s.27(2) of the Act. The discretion is to be exercised judicially, that is, for reasons that can be considered and justified.[2] There are a number of factors that are relevant to the exercise of that discretion.
[2] Wyatt v Albert Shire Council [1987] 1 Qd R 486 at 489.
One factor is that
"Compulsory acquisition cases differ from ordinary claims in the significant respect that the claimant, unlike the ordinary plaintiff, has no choice whether to make a claim or not. The mere acquisition by compulsory process gave the claimant a claim to compensation which he or she could hardly be expected to renounce."[3]
And in Banno v The Commonwealth[4] Wilcox J said -
"… 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. I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court."
Similarly, in Pastrello v Roads and Traffic Authority (NSW)[5] Talbot J said -
"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."
[3]Yalgan Investments Pty Ltd v Council of the Shire of Albert (1997) 17 QLCR 401 at 407. See also Minister for the Environment v Florence (1980-81) 45 LGRA 127 at 149, 150.
[4] (1993) 81 LGERA 34 at 53.
[5] (2000) 110 LGERA 223 at 225.
Another factor to be considered is the quantum of the claims as compared with the amount of the Court's determination. The Council has submitted that the claims were exorbitant and that the effect of the exorbitant claims was that the Council was forced erroneously and unnecessarily into a lengthy and complex two week trial.
It is clear that the claims pursued by the claimants in this matter were substantially higher than the amount awarded as compensation. However, as pointed out by the Land Appeal Court in Yalgan Investments Pty Ltd v Shire of Albert[6], s.27(2) of the Act should not be interpreted to mean that where the claim is substantially more than the amount awarded, and the amount put in evidence by the constructing authority is not substantially less than the amount awarded, the Court should award costs to the constructing authority. It is more relevant to enquire whether the conduct of the claimant (such as, for example, making an exorbitant claim) was such as to force the authority, unreasonably and unnecessarily, into litigation or whether the claimant pursued a vexatious, dishonest or grossly exaggerated claim, or presented its case in such a way as to impose unnecessary burdens on the constructing authority.
[6] (1998) 17 QLCR 401 at 408.
The Council submitted that the additional amounts claimed were respectively 7.24 and 8.53 times the additional amount that was awarded over and above the advances paid. I do not consider that that is a proper comparison of the differences between the parties for the purpose of considering an application for costs. Consistently with s.27(2) of the Act, a more appropriate approach would be to compare the final claims of the claimants with the amount of compensation determined by the Court. On that basis, Mio Art's and Greener's claims were respectively 2.16 and 2.38 times greater than the compensation awarded. When viewed on that basis, I do not consider that the claims were inherently exorbitant although the amounts claimed were large.
The claims may be characterised as excessive but it should be recognised that the claimants have, in effect, been penalised for making excessive claims through the operation of s.27(2) of the Act. The effect of s.27(2) is that the claimants are unable to obtain an award of costs even though they have obtained a determination that is $3,500,000 higher than the Council’s final valuation.[7] The question is whether the claimants' conduct has been such that, in addition to being deprived of the opportunity to obtain an award of costs, costs should be awarded against them.
[7]Springfield Land Corporation v The State (2003) 24 QLCR 161 at [24]; Haber v Department of Main Roads [2004] QLCR 0002 at [25], [26] (affirmed on appeal Haber v Department of Main Roads (2004) 25 QLCR 241).
The claims in this matter were not vexatious or dishonest. The claimants were entitled to pursue their claims for the loss of the land and, as recognised in Pastrello v Roads and Traffic Authority (NSW),[8] there needs to be strong justification for awarding costs against an applicant where the effect of the order is to erode the benefit of the just compensation awarded as a consequence of the Court's determination. There were legitimate and complex town planning, architectural and valuation differences between the parties related to the development potential of the subject land. Those issues were such that I consider that litigation was almost unavoidable. Moreover, the claimants were vindicated to the extent of an award of an additional $3,500,000 beyond the Council's final position. The evidence indicates that no offer to settle was made as between Mio Art or Greener and the Council, although prior to the hearing the Council had paid out $13,500,000 by way of compensation for the resumed land.[9]
[8] (2000) 110 LGERA 223 at 225.
[9]An affidavit sworn by AM Prokuda on 14 December 2009 shows that by Deed of Compromise dated 12 July 2007, the Council agreed to pay $9,500,000 as an advance payment of compensation to Perpetual Nominees Ltd, and that by Deed of Settlement dated 21 November 2008 made between the Brisbane City Council and Grenfell Services Limited (Receivers and Managers appointed), Council agreed to pay an agreed compensation amount of $4,000,000 into the Supreme Court of Queensland. It appears from the Council's submissions that these sums were paid on 5 October 2007 and 8 December 2008 respectively.
Once it is accepted that a hearing was necessary, it was almost inevitable that it would be lengthy. The issues were complex. There were two claimants, each of which was entitled to present its case. The differences between the parties resulted from differences of opinion held by their expert town planners, architects and valuers (leaving aside for the moment the fact that Greener did not call expert valuation evidence). The experts had met prior to the hearing and identified the issues on which they agreed and disagreed. Thus the hearing was confined to those issues that remained in dispute and, I consider, they were issues that were properly raised at the hearing.
With one exception, I do not consider that the Council's submissions that the claimants sought to establish the most intense level of development possible is established. The exception relates to Mr Lane's evidence.[10] I concluded in relation to Mr Lane's evidence that his proposed development reflected a design for an owner who wished to develop the site to its greatest extent rather than being a design which reflected the highest and best use that a prudent purchaser could reasonably expect to achieve.[11] There were further difficulties with Greener's case. No expert valuer was called by Greener which chose to rely on valuation evidence from Mr J Horsburgh, a director of the company. Because Mr Horsburgh was not an expert valuer and also because he had a vested interest in the outcome of the proceedings, I placed less weight on his opinion evidence than on that of the registered valuers.[12]
[10] Mr Lane is the architect called by Greener.
[11] Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177 at [166].
[12] Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177 at [187].
However, it was made clear to the Court in an adjournment application by Greener filed shortly before the hearing of the compensation claims, that Greener was in financial difficulties.[13] The Court was then formally advised, by letter dated 13 February 2009, that Greener's legal representatives had withdrawn although the reasons for the withdrawal were not made known to the Court. Consequently, Greener was not legally represented at the hearing and the proceedings were conducted on its behalf by Mr Horsburgh who is not a lawyer. These are factors that are relevant to the exercise of my discretion as to the award of costs. Although there were flaws and errors of principle in Greener's case, I have decided, on balance, that they were not such as to attract an order that Greener should pay any of the Council's costs in this matter. In the end, I do not consider that the time taken for the hearing was significantly increased because of the defects in Greener's case and, as stated above, this is a case where a hearing was almost inevitable.
[13] See affidavit of J Horsburgh filed 5 February 2009.
My conclusion in relation to Mio Art is, similarly, that I do not consider that it has been established that Mio Art should pay any of the Council's costs in this matter.
Interest
At the time of handing down the determination of compensation, I requested the parties for submissions as to the appropriate orders to be made concerning the payment of interest. There was some uncertainty as to whether interest had already been paid on the advances of compensation. The Council has subsequently advised that no interest has been paid.
Section 28 of the Act provides –
"28 Interest
(1) Subject to subsection (2), in respect of the period or any part of the period commenced on and including the date on and from which any land is taken and ending on and including the day immediately preceding the date on which payment of compensation is made the Land Court or, upon appeal, the Land Appeal Court may order that interest be paid upon the amount of compensation determined by it.
(1A) Such interest shall be at such rate per centum per annum as the Land Court or, upon appeal, the Land Appeal Court, deeming reasonable, fixes by the order.
(1B) Interest so ordered to be paid shall be payable as if it were part of the compensation in question and shall be added to the amount thereof and be payable by the constructing authority accordingly.
(2) Interest shall not be payable in respect of any amount of compensation advanced under section 23."
Section 28(1A) provides that the rate of interest payable shall be such rate as the Land Court deems reasonable. The rates used by the Land Court in calculating interest on awards for compensation for resumptions under the Act are published on the Land Court's website.[14] These rates are the monthly Interest Rates and Yields – Capital Market for 10 years published by the Reserve Bank of Australia. The adoption of those rates appears to me to be reasonable and no submission has been made to the contrary, although the Council adopted different rates in its calculations.
[14]
Because there were two advances paid by the Council, my orders as to the payment of interest are divided into three time periods. I have adopted an average of the monthly rates applicable in each of those periods rather than undertaking the more detailed calculation used by Greener which calculated the interest payable for each month in accordance with the individual monthly rates.
The orders are set out below.
Publication Restrictions
When handing down my determination of compensation, I ordered that publication of certain information in the decision about a contract for the sale of property at 98 Montague Road be restricted until further ordered by the Court. The parties to the contract were Parmalat Australia Ltd and Multiplex Montague Pty Ltd. Although it is not apparent on the face of the written decision, I indicated at the time I handed down the decision that the restrictions did not apply to the parties and their professional advisers and copies of the unrestricted decision were given to the parties.
The Brisbane City Council was ordered to file and serve submissions as to the maintenance of the restrictions by 27 November 2009.
The solicitors representing the Brisbane City Council have advised the Court that the Council did not intend to make submissions opposing the publication of the judgment in its entirety. The solicitors representing Multiplex Montague Pty Ltd advised that their client did not intend to consent or object to the publication of the judgment.
Parmalat Australia Ltd is the owner of the land at 98 Montague Road. Although Parmalat was not a party to the compensation proceedings, leave was sought to make submissions on the basis that Parmalat was a party affected by the restriction orders made by the Court on 18 November 2008.
Parmalat has submitted that the restrictions imposed at the time of delivery of the judgment should be maintained until further order of the Court because –
(i) the land comprises approximately one-third of the land holdings of Parmalat located at South Brisbane, which are used in conjunction with its daily business;
(ii) Parmalat has intended for some years to either redevelop the land for its own purpose or relocate its business;
(iii) Parmalat apprehends that disclosure of the adjusted sales rate for the land might affect the price which Parmalat might achieve for the sale of that land or its other holdings at South Brisbane.
Parmalat was not a party to the compensation proceedings and produced the contract of sale in response to a notice of non-party disclosure issued by the Court. The restrictions imposed by Court order on 18 November 2008 limited copying of the contract and access to the copies. Those restrictions were imposed for the benefit of the parties to the contract. I have accepted that Parmalat is entitled to be heard in relation to the continuance of the restrictions since its commercial interests are affected by the Court's orders. I have also accepted that Parmalat's commercial interests could be adversely affected if the information in the compensation decision, which is currently the subject of restrictions orders, was made available to the general public. I consider that the potential adverse consequences are a sufficient reason for the restrictions to be maintained until further Order by the Court.
ORDERS
1.The application for costs is refused.
2.The respondent is ordered to pay interest at the rate of 6% per annum on the sum of Sixteen Million, Six Hundred Thousand Dollars ($16,600,000) for the period commencing 31 August 2007 up to and including 4 October 2007.
3.The respondent is further ordered to pay interest at the rate of 6% per annum on the sum of Seven Million, One Hundred Thousand Dollars ($7,100,000) for the period commencing 5 October 2007 up to and including 7 December 2008.
4.The respondent is further ordered to pay interest at the rate of 5% per annum on the sum of Three Million, One Hundred Thousand Dollars ($3,100,000) for the period commencing 8 December 2008 up to and including the day immediately preceding the date on which that amount is paid by the respondent.
5.Order 2 made on 24 November 2009, that publication of the adjusted sales rate for 98 Montague Road in paragraph [214] and the whole of paragraphs [221], [222], [224], [225] and [235] of the decision in Mio Art Pty Ltd v Brisbane City Council [2009] QLC 177 be restricted until further ordered by the Court, is not varied.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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