New South Wales Golf Club v Valuer General New South Wales (No 2)

[2012] NSWLEC 186

Land and Environment Court

New South Wales

Medium Neutral Citation:

New South Wales Golf Club v Valuer General New South Wales (No 2) [2012] NSWLEC 186

Hearing dates:

2 August 2012

Decision date:

10 August 2012

Jurisdiction:

Class 3

Before:

Lloyd AJ

Decision:

The orders are:

1)The applicant's notice of motion for costs is dismissed.

2)The applicant must pay the respondent's costs of the motion.

Catchwords:

COSTS - valuation appeal - class 3 of the court's jurisdiction - appeal wholly successful - no costs order unless fair and reasonable in the circumstances - whether something out of the ordinary to justify an order for costs - no costs ordered

Legislation Cited:

Civil Procedure Act 2005, s 98
Land and Environment Act 1979, s 39
Land and Environment Court Rules 2000,
r 3.7
Uniform Civil Procedure Rules 2005, Pt 1.7 Sch 2, Pt 42.1
Valuation of Land Act 1916, ss 14I, 37(1)

Cases Cited:

Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, 158 LGERA 224
Hastings Point Progress Association Inc. v Tweed Shire Council [2010] NSWCA 39, 172 LGERA 157
House v The King (1936) 55 CLR 499
Maurici v Chief Commissioner of State Revenue (No 8) [2007] NSWLEC 37, 155 LGERA 115
New South Wales Golf Club v Valuer General of New South Wales [2012] NSWLEC 137
Port Stephens Council v Sansom [2007] NSWCA 299, 156 LGERA 125
St Marys Land Ltd v Valuer-General of New South Wales [2011] NSWLEC 2

Category:

Costs

Parties:

New South Wales Golf Club (Applicant)
Valuer General New South Wales (Respondent)

Representation:

Counsel:
PJ McEwen SC (Applicant)
JB Maston (Respondent)
Solicitors:
Bicknell & Monteith Lawyers (Applicant)
Crown Solicitor's office(Respondent)

File Number(s):

30424 of 2011

Judgment

1. On 19 June 2012 I allowed an appeal under the Valuation of Land Act 1916 against the Valuer General's determination of an objection to the valuation of land occupied by the New South Wales Golf Club : New South Wales Golf Club v Valuer General of New South Wales [2012] NSWLEC 137. The Valuer General had determined the value of the Golf Club's land as $6.01 million. The Club had initially contended that the value was $2.5 million, but in evidence the Club's valuer contended that a hypothetical purchaser, given the terms of the Club's lease, would pay nil for the land. I accepted the expert evidence of the Club's valuer, revoked the Valuer General's determination and determined the value of the land as nil. The Club now seeks an order that the Valuer General pay its costs of the appeal.

1. Costs are in the discretion of the Court, subject to the rules : s 98 Civil Procedure Act 2005. The general rule applying to orders for costs found in Part 42.1 of the Uniform Civil Procedure Rules 2005 is that costs follow the event "unless it appears to the Court that some other order should be made". However, Part 1.7 and Schedule 2 of the Uniform Civil Procedure Rules provide that the Land and Environment Rules 2000 prevail of the Uniform Civil Procedure Rules.

1. Rule 3.7 of the Land and Environment Court Rules applies to an appeal under s 37(1) of the Valuation of Land Act, which was the appeal decided in the present case. That rule relevantly states :

"(2) The Court is not to make an order the payment of costs unless the Court considers that the making of the order as to the whole or any part of the costs is fair and reasonable in the circumstances."

The rule sets out some circumstances (without limitation) which the Court might consider to be fair and reasonable in the making of a costs order.

The Club's Submissions

1. The appeal in the present case raised a number of issues in which the club was generally successful. Firstly, at the commencement of the hearing the Valuer General applied for summary judgment against the Club on the ground that the Club's evidence did not raise a prima facie case. The Club submits that what the Valuer-General sought to do was preclude the Club from being heard in its challenge to the figure and methods contended for by the Valuer-General.

1. Secondly, all of the valuation methods advanced by the Valuer General were, according to the Club, rejected. These were (a) direct comparison with sales of similarly zoned open space, (b) analysis of rents for golf course and capitalisation of the expected market rent for the subject land, (c) analysis of sales of existing golf courses and (d) valuation based on potential income. The first three methods were rejected as being unreliable. The fourth method was accepted by both of the parties' valuers and by the Court as probably how a hypothetical purchaser would look at the property, but Mr Dupont (the valuer called by the Valuer General) had not taken into account all of the actual trading figures of the Club.

1. Thirdly, the question of whether the course construction and layout could be considered as "land improvements" and be thus included in the valuation was determined adversely to the Club, but I accept the Club's submission that this played no effective role in the ultimate determination by the Court.

1. Fourthly, section 14I of the Act required the land value to be determined taking into account the restrictions on the disposition or manner of use applying to the land by reason of being subject to the Crown lease. The Valuer General's construction of this provision, coupled with the terms of the lease, was rejected and was largely determinative of the appeal.

1. The Club relies upon its success in the first, second and fourth issues, together with the fact that the third issue, although determined adversely to the Club, played no effective role in the Court's ultimate determination. The Club also relies, however on the fact of the overall result, namely, a valuation in the amount contended for by the Valuer General of $6.01 million was reduced to nil, which is said to be exceptional.

1. The Club submits that the proceedings were a form of judicial review, going beyond the question of legitimacy at law of the impugned decision, including gathering aspects of evidence, submissions and considerations more consonant with ordinary adversarial litigation.

1. The Club also submits that the challenge in this case ought to be treated in a similar way to compensation for compulsory acquisition matters in Class 3 of the Court's jurisdiction. In both kinds of case the challenge is the same, being a challenge to a figure contended for by the respondent. The basis of challenge, the evidence, the legal submissions and the judicial analysis is invariably comparable. Where in the same circumstances it is accepted that a resumee, if successful, ought to be indemnified in costs, then there is no rational basis for a successful challenger to a valuation being denied costs. That is, since there is no difference in substance between a valuation appeal and a claim for compensation for compulsory acquisition, it is similarly fair and reasonable that the same practise as to costs should apply.

1. The Club submits that a valuation appeal stands apart from the variety of matters to which rule 3.7 applies. A challenged valuation is against something imposed by the State and against the wishes of the land owner or tenant. The land owner's (or tenant's) only recourse is to bring proceedings of the present type, in contrast to the voluntary nature of proceedings in Class 1 of the Court's jurisdiction, being typically planning appeals, to which the rule also applies. Where a land owner or tenant is forced to commence proceedings against an instrument of the State to achieve the proper outcome, then if successful the land owner or tenant should be indemnified in costs.

The Application of the Rule

1. As previously framed, the predecessor rule in the Land and Environment Court Rules (Pt 16, r 4(2)) stated :

"No order for the payment of costs will be made in proceedings to which this Rule applies unless the Court considers that the making of a cost order is, in the circumstances of the particular case, fair and reasonable."

The change in wording from "in the circumstances of the particular case" to "in the circumstances" in the present rule widens the discretion to depart from the presumption underlying the rule.

1. As to the general rule under Part 42.1 of the Uniform Civil Procedure Rules, noted at [2] above Young JA (McColl JA concurring) said, in Hastings Point Progress Association Inc. v Tweed Shire Council [2010] NSWCA 39, 172 LGERA 157 at [18] :

"The Rule speaks for itself. However, judicial exposition has noted that it means that a person seeking to displace its prima facie effect must show that there is something out of the ordinary in the case to justify the departure : see eg New South Wales v Gebethner [2009] NSWCA 237." (Emphasis added)

1. Similarly, in applying rule 3.7 of this Court's rules, I accept that the rule must speak for itself. In the ordinary case the presumptive rule applies. As Spigelman CJ said in Port Stephens Council v Sansom [2007] NSWCA 299, 156 LGERA 125 at [48] : "The starting point must be the presumptive rule that there will be no order as to costs." From that starting point, to apply the reasoning of Young JA in Hastings Point, noted at [13] above, there must be something out of the ordinary to justify a finding that it is fair and reasonable to depart from the presumptive rule.

1. The rule applies not only to appeals under the Valuation of Land Act but also to a variety of matters within the Court's jurisdiction which would be properly described as administrative appeals. As Spigelman CJ observed in Port Stephens Council v Sansom at [21], the Court is, simultaneously, both a court of law and an administrative tribunal. However, his Honour also noted that when the court is performing an administrative tribunal function, "the usual approach to administrative decision making, where there is no general tradition of costs being awarded, is clearly more applicable."

1. I reject the Club's submission that the appeal was a form of judicial review. In judicial review cases the question is whether the original decision maker made a legal error in coming to the decision in the sense described in House v The King (1936) 55 CLR 499 at 505 :

"It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed ..."

1. This was a statutory or administrative appeal : s 37 Valuation of Land ActMaurici v Chief Commissioner of State Revenue (No 8) [2007] NSWLEC 37, 155 LGERA 115 at [77]. It was a hearing de novo : s 39, Land and Environment Act 1979. Fresh evidence which was not before the decision maker was able to be called, in contrast to judicial review proceedings where only the material that was before the decision maker can generally be considered. I thus respectfully adopt the distinction made by Spigelman CJ in Port Stephens Council v Sansom noted at [15] above, in accepting that the rule expresses the usual approach to costs in administrative decision making.

1. In addition to the fact that proceedings to which the rule applies can be characterised as administrative appeals, the rule is rationalised on the basis that persons should not be discouraged from exercising their statutory right of appeal by the prospect of an adverse costs order. This rationale has been expressly recognised in planning appeals : Sansom, at [23], Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103, 158 LGERA 224 at [10]. The rule also underlies a "no discouragement" principle in valuation appeals : Maurici at [70], [78], St Marys Land Ltd v Valuer-General of New South Wales [2011] NSWLEC 2.

1. I now turn to consider the remaining matters on which the Club relies.

1. I do not consider that the Valuer General's unsuccessful application for summary judgment against the Club makes it fair and reasonable to attract an order for costs. The argument occupied about 2 hours on the first morning, it was a reasonably arguable application, and if it had been successful it could have saved the following two days of hearing.

1. As to the Club's submission noted at [5] above, the Valuer General's valuer, Mr Dupont, had provided a lengthy and detailed report of unusual thoroughness, in which he had researched and examined four valuation methods. It is apparent that Mr Dupont used each method as a cross check on the validity of his conclusion. I accept the Valuer General's submission that this is not a basis for finding that it is fair and reasonable to depart from the presumptive rule on costs. The fact that Mr Dupont did not include all of the Club's trading figures in his valuation based on potential income was, in the overall result, inconsequential.

1. The Valuer General's construction of s 14I of the Act and the application of that section to the terms of the Crown lease was not accepted. Nevertheless, the submissions advanced on behalf of the Valuer General in support of his preferred construction were clearly open and not without some merit. If it were otherwise then there may be an argument to depart from the presumptive rule, but this circumstance does not justify a departure in this case.

1. I have referred to the figures for which the parties contended - a valuation of $6.01 million by the Valuer General, compared with $2.5 million which was the Club's initial contention but which was amended during the hearing to a nil valuation based upon the evidence of its valuer, Mr Dundas, namely that a hypothetical purchaser, given the terms of the Crown lease, would not be prepared to pay anything more. The Club submits that the Court's adoption of the latter figure is exceptional : that is, it is a result that amounts to something out of the ordinary.

1. Whilst I accept that a reduction in the Valuer General's valuation from $6.01 million to nil is exceptional, that fact alone does not make it fair and reasonable to depart from the presumptive rule. Any departure from the presumptive rule must be fair and reasonable "in the circumstances". The circumstances here are not only the fact of the determination of the value as nil, but also the reason for that determination. The result was largely determined by the construction of s 14I of the Act and its application to the terms of the Crown lease, and to a lesser extent, the actual trading figures of the Club. I have found at [22] above that the Valuer General's submissions in support of his preferred construction of s 14I and its application to the Crown lease were open and not without some merit, which would not of itself justify a special order as to costs. As this was the basis for the ultimate finding, then in these circumstances the end result, although exceptional, does not make it fair and reasonable to depart from the presumptive rule.

1. The Club's analogy to cases of compensation for compulsory acquisition is attractive - the nature of the challenge being the same (being a challenge to a statutory valuation), as is also the nature of the evidence, the submissions and the judicial analysis. There, however, the comparison stops. In compulsory acquisition cases the landowner and/or tenant has been deprived of ownership of his interest in the land, often unwillingly. Although an objector to a valuation under the Valuation of Land Act is required to pay a compulsory levy based on the valuation also unwillingly, he retains his interest in the land. Moreover, rule 3.7 expressly applies to appeals under the Valuation of Land Act. If the Club's submissions were accepted it would reverse the object, scope and purpose of the rule.

CONCLUSION AND ORDERS

1. I conclude, therefore, that despite the carefully reasoned submissions on behalf of the Club, I am not persuaded that it is fair and reasonable in the circumstances to depart from the presumptive rule.

The orders are:

1) The applicant's notice of motion for costs is dismissed.

2) The applicant must pay the respondent's costs of the motion.

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Decision last updated: 10 August 2012