Multiplex 240 Queen Street Landowner Pty Ltd v Department of Natural Resources and Water
[2008] QLC 52
•22 February 2008
LAND COURT OF QUEENSLAND
CITATION: Multiplex 240 Queen Street Landowner Pty Ltd & Anor v Department of Natural Resources and Water [2008] QLC 0052 PARTIES: Multiplex 240 Queen Street Landowner Pty Ltd
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)ING Management Limited as Responsible Entity
(appellant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NOS: AV2005/0805 and AV2005/0807 DIVISION: Land Court of Queensland – General Division PROCEEDING: Applications for costs DELIVERED ON: 22 February 2008 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr JJ Trickett, President ORDERS: (1) In the case of Multiplex 240 Queen Street Landowner Pty Ltd (Appeal AV2005/0805), the respondent pay the appellant's costs of and incidental to the appeal to the Land Court.
(2) In the case of ING Management Limited as Responsible Entity (Appeal AV2005/0807), the respondent pay the appellant's costs of and incidental to the appeal to the Land Court.
(3) The parties have liberty to make submissions as to the assessment of costs in both matters.
CATCHWORDS: Costs – unimproved value of land – appellants successful in appeals – entitlement to costs – where costs awarded in valuation matters – whether a discretion to award costs is limited to special cases – whether indemnity costs should be awarded – Land Court Act 2000 s.34, Valuation of Land Act 1944 s.66, s.70 APPEARANCES: Mr R Traves SC, for the appellants.
Mr T Quinn, for the respondent.SOLICITORS: Gadens Lawyers for the appellants.
Legal Services, Department of Natural Resources and Water for the respondent.
These are applications for costs of proceedings in the Land Court following decisions in respect of appeals against the unimproved valuations of properties owned by Multiplex 240 Queen Street Landowner Pty Ltd (Multiplex 240 Queen Street) and ING Management Limited as Responsible Entity (ING Management). The valuations were in respect of properties situated in the Central Business District of Brisbane (the CBD) at 240 Queen Street and 239 George Street respectively, made by the Chief Executive, Department of Natural Resources and Water (the Department) under the provisions of the Valuation of Land Act 1944 (the VLA).
Background
Following the revaluation of the City of Brisbane by the Department as at 1 October 2003, several landowners in the CBD appealed to the Land Court against the valuations applied to their properties. Five of those appeals were heard by the Land Court in 2006.
In the 240 Queen Street appeal, the valuation appealed against was $15,000,000. The valuation contended for by the appellant in the Notice of Appeal was $12,860,000. However, the Department led evidence for a valuation of $43,000,000 under s.3(2) of the VLA, or $34,000,000, under s.3(1)(b) of the VLA, and other valuations depending on the highest and best use of the land.
In the 239 George Street case, the valuation appealed against was $9,500,000. The valuation contended for by the appellant in the Notice of Appeal was $7,600,000. However, the Department led evidence to valuations of $23,041,111 (amended to $19,227,907) under s.3(2) of the VLA, or $14,000,000 under s.3(1)(b) of the VLA, and other valuations.
In the 240 Queen Street case, on 28 February 2007 the Land Court determined the unimproved value at $13,400,000. In the 239 George Street case, on 27 March 2007 the Land Court determined that the unimproved value at $8,400,000.
Applications for costs by both appellants were filed in the Land Court on 31 October 2007. The grounds for each of the costs applications were that the appellant had successfully contended that the issued valuation was wrong, while the Department had contended that the correct valuation was greater than the issued valuation, and the Land Court had determined a valuation lower than the issued valuation, nearer the appellant's valuation.
The Eligibility for Costs
Section 34(1) of the Land Court Act 2000 provides that:
" 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."
However, the proceedings in these appeals are governed the VLA, s.66 of which provides:
"Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Appeal Court may –
(a) affirm the valuation appealed against; or
(b)reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act;
and, subject to section 70, make such order as it sees fit with respect to the payment of costs."
Section 70 of the VLA provides:
"(1)Where the value of land as finally determined upon an appeal against the valuation is the value stated by the owner in the owner’s notice of appeal against the valuation, or is nearer to that value than to the valuation appealed against, costs shall not be awarded against the owner.
(2)Otherwise costs shall not be awarded against the chief executive."
Therefore, in both appeals, the Court has jurisdiction to award costs against the Department. However, the eligibility of the appellants for an award of costs merely means that this Court has the discretion to award costs or not to award costs, but if it does so, the costs must be awarded to the appellants.
The Appellants' Submissions
The appellants submit that they are each entitled to costs of the appeals and that such costs should be assessed on an indemnity basis. However, if costs are not awarded on an indemnity basis, the appellants apply for costs on a standard basis. The appellants' submission in support of their costs applications placed particular emphasis on the following matters:
· the proceedings were conducted in wilful disregard of clearly established law, because much of the respondent's case based on the "Denman theory", ought never to have been made;
· the conduct of the respondent unnecessary prolonged the case; a relatively small proportion of the time was spent in considering the facts which ultimately determined the case;
· two preliminary points were decided against the respondent;
· the respondent took the protection of s.70 (where the eligibility for costs is calculated against the issued valuation rather than the valuation led in evidence), refusing to amend the valuations, but contending for far higher figures in order to test a thesis, while minimising its potential exposure to costs;
· the respondent did not seek to support the issued valuations, yet refused to amend them;
· the respondent sought to defeat the appeal on the basis that the presumption of correctness in s.33 of the VLA had not been rebutted;
· the respondent's case was self-indulgent and in disregard of well established principle;
· the appellants conducted their cases at significant risk; they were faced with the threat of vastly higher valuations led in evidence against them; such threat was faced by no other landowners;
· the novel argument run by the respondent, the "Denman theory" which occupied most of the time of the hearing, was rejected by the Court;
· parties against whom novel arguments are unsuccessfully run should not be required to pay for the frolic;
· the appellants incurred greater expense in the preparation and presentation of the cases by the valuation figures led in evidence by the respondent based on alternative highest and best uses, upon different valuation methodologies and upon different interpretations of the VLA;
· the time taken in arguing about the s.3(2) evidence, which was ultimately ruled inadmissible; notwithstanding this, the appellants still had to defeat a case in 240 Queen Street based on the highly improved sale of the subject land;
· an award of costs on a standard basis will not fully compensate the appellants for the expense involved in prosecuting the appeals.
The Department's Submissions
On behalf of the Department, it was submitted that no order for costs should be made for the following reasons:
· the unexplained delay between the delivery of the decisions and the appellants' applications for costs; however, it was not suggested that delay alone would result in the appellants being refused costs to which they would otherwise be entitled;
· the failure by the appellants to prove their grounds of appeal identifying only three sales, which the Court held were of no utility;
· the failure by the appellants to succeed on the QNI point, which had led them to wrongfully exclude the residential sales which the Court found to be crucial;
· the appellant's contended value for 240 Queen Street was lower than the value determined by Land Court for the previous valuation as at 1 October 2000;
· the Court's rejection of the appellants' valuer's discounting of the sale prices of residential sales where there was deferred settlement of the sale;
· the rejection by the Court of the appellants' reliance upon negotiated settlements;
· the grounds of the applications do no more than establish that the appellants are not disqualified from obtaining an order for costs; for costs to be awarded something more is required.
In addition, the Department contends that regard should be had to the difficulty confronting departmental valuers in making proper valuations under a difficult and artificial statutory regime. The appeals resulted in relatively small reductions of only 10.7% in 240 Queen Street and 9.5% in 239 George Street. Furthermore, the appellants fell short of the valuation for which they contended.
The Department submits that in the circumstances it would not be a proper exercise of the Court's discretion to make an order for costs. The Court, it is submitted, should adopt a restrained approach.
The Department rejects the contention made by the appellants that Mr Denman's evidence and the Department's case based upon the "Denman theory", was made in disregard of clearly established law, referring to the recent criticism of Toohey's Limited v Valuer-General (1925) AC 439 by the Chief Justice of the Supreme Court of New South Wales in Commonwealth Custodial Services Ltd v The Valuer-General [2007] NSWCA 365.
The Department rejects the criticism of its use of improved sales, pointing out that the method was specifically endorsed by the High Court in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111. The sale of 240 Queen Street itself was an issue addressed by both parties. Therefore, it was submitted, it can hardly be suggested that it was an unreasonable course to take.
As for the criticism of the higher figures put in evidence, the Department submitted that it had contended for a range of values and that it was appropriate to put that evidence before the Court, rather than to presumptively amend the valuations.
As for the time spent on the s.3(2) evidence, the Department refers to the appellants' own evidence which included numerous highly improved sales, including 240 Queen Street itself. The appellants' own valuer had advanced the s.3(2) position, but only to counter the s.3(2) exercise by the Department's valuer.
The Award of Costs in Valuation of Land Act Cases
The traditional approach taken by this Court is not to award costs against either party in appeals under the VLA, except in special cases. The rationale for this restrained approach was explained by the Land Appeal Court in Bowden v The Valuer-General (1980) 7 QLCR 138.[1] There the Court discussed the ordinary rule that success in litigation in the Supreme Court carries with it an entitlement to costs and observed that the approach of the Supreme Court could not govern the approach of the Land Court or the Land Appeal Court. The Court went on to say:
"Fear of an adverse order with respect to costs may deter citizens with just complaints from resorting to the courts; that has in the past occurred, as will appear. It seems to us unjust to adopt a restrained attitude towards awarding costs against citizens without adopting an equally restrained attitude awarding costs against the Valuer-General. That is not to say that, in a proper case, the Land Court or the Land Appeal Court will not award costs against either a citizen or an authority subject to the provisions of the statute which governs the matter."
…
"Easy access to the Land Court to air grievances and have valuations reviewed is, as we have already stressed, most desirable in revenue cases, and such access should be available without fear of costs being awarded to either party except in special cases."[2]
[1] at 144-149.
[2] at 146-147.
After discussing the circumstances of that case, which involved whether or not the concessional provisions of s.11(1)(vii) applied, the Land Appeal Court found:[3]
"We are satisfied that the Valuer-General did not arbitrarily or capriciously adopt the interpretation of s.11(1)(vii) upon which he based his valuation. There seems to have been an enquiry and a supply of information from the appellant."
[3] at 149.
In Hymix Industries Pty Ltd v The Valuer-General (1990) 13 QLCR 173, the Land Appeal Court considered an application for costs by an appellant who had succeeded in having the unimproved value of its land significantly reduced. After referring with a approval to the paragraph in Bowden quoted above, the Court went on to say:
"In the subject case it could not be held that either party has approached the valuation in an arbitrary, frivolous or vexatious manner or has completely disregarded principles which given certain facts, should be applied. The position is more to the contrary. The evidence has demonstrated that some complexity was involved and in our opinion there still remains some doubt as to the correct value of this land. In the circumstances we are of the opinion that no order should be made."[4]
[4] (1990) 13 QLCR at 186.
Then in the Queensland Club v The Valuer-General (1991) 13 QLCR 207, the Land Appeal Court again considered an application for an award of costs in favour of a successful landowner. After quoting the general principle (easy access to the Land Court) in Bowden, the Court said:
"There is no suggestion that the Valuer-General has acted arbitrarily or capriciously in interpreting the law forming the basis of his valuation. The argument before the Land Court and this Court demonstrates otherwise."[5]
[5] (1991) 13 QLCR at 222.
In Department of Lands v Juris Towers Pty Ltd (1994) 15 QLCR 273, the Department had appealed against an award of costs in favour of a successful landowner. After discussing the circumstances of the case, the Court found that the case was not exceptional and all the circumstances were considered and that the application could be dealt with under the general principles contained in Bowden, citing the easy access principle as the dominant principle. The Court then referred to the finding in Hymix, that neither party had approached the valuation in an arbitrary, frivolous or vexatious manner, or had completely disregarded principles which should be applied.
The Land Appeal Court went on to say that it was unable to conclude that the appellant had acted in such a fashion, or had wantonly disregarded principles which should apply in valuing the subject land. The Court found that the exercise of the discretion of the Court below had miscarried in law and the decision should be set aside with no order as to costs.[6]
[6] (1994) 15 QLCR at 276.
In Scougall v Department of Natural Resources (1996) 16 QLCR 536, after referring to the easy access principle in Bowden, the Land Appeal Court referred to the decision of the Land Court in Queensland Landmark Developments Limited v The Valuer-General (1992) 14 QLCR 168, where the Court said:
"It can thus be seen that the attitude which the Court should take in the exercise of its discretion is primarily one of restraint which, speaking broadly, may be exercised against the Valuer–General if satisfied that he has acted arbitrarily or capriciously and against the owner if satisfied that he has acted in a frivolous or vexatious manner."[7]
[7] (1992) 14 QLCR at 171.
In Scougall, the Court went on to find that the case was not one in which an order for costs should be made against the appellant because, although the appeal had been unsuccessful, it had not been obviously frivolous or vexatious. [8]
[8] (1996) 16 QLCR at 556.
The question of costs in the Land Court and Land Appeal Court was recently considered in PT Limited and Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 0121. That matter arose following an appeal by the owners of the Chermside Shopping Centre against the unimproved value applied by the Department. In that case, as in the present case, the Department did not attempt to support the issued valuation, but led evidence to a valuation which was substantially higher. In the event, after a lengthy hearing, the Land Court had determined an unimproved value substantially higher than the issued valuation and closer to the valuation led in evidence by the Department than to the valuation contended for by the appellant. The landowners successfully appealed against the decision of the Land Court.
In its decision on costs, the Land Appeal Court pointed out that the jurisdiction to order or not order one party to litigation to pay the costs of the opposite party is entirely the creation of statute. The common law principle that costs follow the event which has been incorporated into Rule 689 of the Uniform Civil Procedure Rules 1999 is not found in either the VLA or the Land Court Act. Therefore, the Land Court is not bound by any presumptive rule or principle; the discretion is complete, but must be exercised judicially. However, in doing so, the Court is not precluded from resorting to "settled practice".[9]
[9] [2007] QLAC 0121 at [20] and [21].
The Land Appeal Court then turned to the observations in Bowden and while pointing out that it was entirely in accordance with proper exercise of discretion to give effect to the matters expressed in that case, it must be kept in mind that those observations should not be read as imposing a gloss on the legislation mandating when the discretion ought to be exercised or declined to be exercised. The Court held that the observations in Scougall are expressed too broadly if they seek to confine the exercise of the discretion to circumstances there mentioned. The Court observed that a cautious approach to costs, as recognised in Bowden, does not mean that in appropriate cases, costs orders should not be made.[10]
[10] at [23].
The Land Appeal Court pointed out that s.70 of the VLA determines which party may be entitled to costs following the determination of a valuation appeal by the Land Court. That formula depends upon the unimproved value as issued by the Department, as well as the unimproved value contended for by the appellant and the amount of the unimproved value determined by the Court. However, while that formula determines who may be entitled to be considered for an award of costs, the Land Appeal Court observed that the valuations contended for by the parties at trial are relevant in considering the question of the success of the parties.[11]
[11] at [26].
Conclusion
In the present cases, the appellant in the 240 Queen Street case after appealing against an issued valuation of $15,000,000 had to resist a number of valuations as high as $43,000,000 under s.3(2) and $34,000,000 or $21,300,000 under s.3(1)(b). Measured against those valuations, the determination of the Land Court of $13,400,000 means that the appellant had a significant success.
In the case of 239 George Street, the issued valuation was $9,500,000, but the appellant had to prepare for and meet various unimproved values ranging as high as $19,227,907 and $14,000,000. Once again, measured against those valuations, the Court determination at $8,400,000, is a significant success for the appellant in that case.
As was pointed out in their respective submissions, issues in these cases were decided in favour of both the appellants and the Department. While several issues were decided in favour of the Department, most of the issues upon which the majority of the time in the trials was expended, were decided in favour of the appellants. The s.3(2) method was held to be inadmissible, but only after substantial argument. The analyses of highly improved sales was not accepted. The "Denman theory" was held to be irrelevant. Those issues occupied more time than the issues upon which the Department was successful. The appellants' valuer had analysed improved sales, but had consistently stated that he did so only to satisfy himself that no scarcity premium had been paid for the sales of lightly improved land. He had no confidence in his analyses.
Although the percentage differences between the issued valuations and the decisions of the Court were relatively small, they were substantially lower than the preferred valuations contended for by the Department. Furthermore, the reductions were significant in monetary terms, sufficient to make the appellants eligible for consideration for an award of costs under s.70 of the VLA.
The fact that the appellants both fell short of the valuations for which they contended is relevant to the matter of eligibility, but not to the exercise of the discretion as to whether costs should be awarded. On any measure, the appellants have been successful.
The appellants emphasise that the preferred valuation contended for by the Department in each case was greater than the issued valuation. In response, the Department contends that it sought to assist the Court with a range of options. The fact that the range of values included valuations in excess of the issued valuations, cannot of itself justify an order for costs. It was the evidence of a registered valuer who was not subject to the direction of the Department.
However, the range of values were alternative valuations and depended on what was found to be the highest and best use of the subject land. In my view, that was an extraordinary approach which required the appellants to meet each of the various alternative valuations. This added to the cost and length of the trial.
In any case, the Department's valuer clearly preferred valuations which were considerably higher than the issued valuations. None of the alternatives presented in either case was the issued valuation. In fact, no attempt was made to justify the issued valuations. Therefore, I reject the Department's argument that by presenting a range of valuations, the Department was simply endeavouring to assist the Court.
Therefore, having regard to all the circumstances of the two cases, but in particular the following:
(a)that the valuations which the Department contended for in each case were substantially higher than the issued valuations;
(b)the failure of the Department's arguments that the s.3(2) valuations should be accepted, notwithstanding that the Department's issued valuations were not made by that method;
(c)the Department's valuations based on the analyses of improved sales and the "Denman theory" were not accepted;
(d)the Department abandoned only in final submissions the sale of 6 Queen Street, which both valuers considered to be their best commercial site sale;
I have come to the conclusion that I should exercise my discretion and award costs in favour of the appellants.
In arriving at that conclusion, I have given due regard to the reasoning of the Land Appeal Court in PT Limited and Westfield Management Limited v Department of Natural Resources and Mines. After reviewing the cases which followed Bowden, particularly the Land Appeal Court decisions in Scougall and Hymix, which could be read as confining the discretion of the Court, the Land Appeal Court found that the discretion to award costs conferred by s.66 is unconfined. The Court added:
"While we agree that easy access of parties to the Courts in revenue cases is highly desirable, particularly with respect to first instance appeals, and a cautious approach to costs in such cases is justified, the question of costs is one that has always to be decided according to the facts and circumstances of each individual case."[12]
[12] at [34].
The Claim for Costs on the Indemnity Basis
The Department contends that the appellants are not entitled to seek costs on an indemnity basis because each of the applications filed in October 2007 sought orders that "the respondent pay the applicant's costs of and incidental to the appeal."
The appellants concede that the normal order for costs is on the standard basis and that some special reason is required for any departure from that. In this regard, the appellants referred to the judgment of Cullinane J in Smits v Tobone & Blue Coast Yeppoon Pty Ltd [2007] QCA 337, who in turn referred to the judgment of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, which identified categories of cases in which it would be appropriate to make an order for indemnity costs.
Among those categories are two which were argued in the present applications:
(i) where it is alleged that proceedings were commenced or continued in wilful disregard of known facts or clearly established law; and
(ii) where it is alleged that the case was unduly delayed by groundless contentions.
In response, the Department refers to Di Carlo v Dubois [2002] QCA 225, where White J after referring to the requirement that there be some special or unusual feature to justify departing from the ordinary practice, observed that orders on the indemnity basis ought not to be too readily available.[13]
[13] [2002] QCA 225 at [40].
The claimants contend that they have met all the requirements for costs to be awarded on an indemnity basis. However, as has been pointed out, the normal order for costs is on the standard basis. Some special reason is required for any departure from that.
I have reviewed these cases in the light of the authorities referred to me. I have come to the conclusion that although the circumstances of both of them were somewhat unusual, they were not so special as to warrant an award of costs on an indemnity basis. Therefore, costs will be awarded the standard basis.
Order
(1) In the case of Multiplex 240 Queen Street Landowner Pty Ltd (Appeal AV2005/0805), the respondent pay the appellant's costs of and incidental to the appeal to the Land Court.
(2) In the case of ING Management Limited as Responsible Entity (Appeal AV2005/0807), the respondent pay the appellant's costs of and incidental to the appeal to the Land Court.
(3) The parties have liberty to make submissions as to the assessment of costs in both matters.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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