Permanent Trustee Australia Ltd as Trustee v Department of Natural Resources and Mines - [2002] QLC 93

LAND COURT OF QUEENSLAND
CITATION: Permanent Trustee Australia Ltd as Trustee and Anor v Department of Natural Resources and Mines [2002] QLC 093

PARTIES:Permanent Trustee Australia Ltd as Trustee and Commonwealth Bank Officers Superannuation Corp. Pty Ltd as Trustee
(appellants/respondents)
v
Chief Executive, Department of Natural Resources and Mines
(respondent/applicant)

FILE NO:V2000-0392, V2000-0393, AV2001-0384 and AV2001-0385

DIVISION: Land Court of Queensland

PROCEEDING: Application for Costs thrown away under the Valuation of Land Act 1944

DELIVERED ON: 28 November 2002

DELIVERED AT: Brisbane

HEARD AT: Brisbane

MEMBER: Dr NG Divett

ORDER: The Court orders that the respondent to this application pay the applicant’s costs of, and incidentals to the appeals, including this application for costs, such costs only occurring subsequent to and including 16 August 2002, and until the date of hearing on 26 August 2002. Such costs to be ascertained by the appropriate assessing officer of the Supreme Court in Brisbane according to the scale of costs prescribed by law for the time being in respect of procedures in the Supreme Court, and in accordance with the provisions of s.34 of the Land Court Act 2000.

CATCHWORDS: Statutory Valuations – Valuation of Land Act 1944 – application for costs thrown away – reasonable grounds for awarding costs – partial costs awarded.

APPEARANCES: Mr T Quinn of Counsel for the applicant
Mr D O’Brien of Counsel for the respondent.

Application for Costs:

Background:

This matter relates to an application for costs thrown away by the Chief Executive, Department of Natural Resources and Mines (the applicant) in respect of the late withdrawal of several appeals against annual valuations by Permanent Trustees Australia Ltd as Trustee and the Commonwealth Bank Officers Superannuation Corp. Pty Ltd as Trustee (the respondent). The appeals related to valuations determined at 1 October 1998 and 1 October 2000. Mr TW Quinn of counsel, instructed by Mr J O’Rourke, Principal Legal Officer, appeared for the applicant. Mr D O’Brien of counsel, instructed by Clarke and Kann, Solicitors, appeared for the respondent.
The respondent is the owner of two properties which include a major shopping centre at Beenleigh. By two appeals received on 8 August 2000 the respondent appealed the valuations at 1 October 1998. By a further two appeals received on 7 August 2001 the respondent appealed the valuations at 1 October 2000. By court notice of 1 March 2002 the four matters were set down for hearing on 15 April 2002. By agreement with the parties the matters were adjourned for hearing until 17 June 2002; and following a further request from the parties the hearing was then adjourned until 24 July 2002.
On 1 July 2002 the Chief Executive made applications to the Court for directions in respect of the exchange of documents and expert witness reports; and also in respect of particulars of the grounds of appeal which were to be relied upon at the scheduled hearing. Following the hearing of the application on 3 July 2002, the Court issued the following consent directions on 3 July 2002:
“1. On or before 12 July 2002 the appellants supply to the respondent in the form set out in the attachment A hereto particulars of those grounds of appeal upon which they propose to rely at the hearing.
2. On or before 19 July 2002 the parties make disclosure of relevant documents.
3. On or before 9 August 2002 the parties make available disclosed documents for inspection.
4. On or before 9 August 2002 each party provide the other party with a statement of the evidence to be given by any expert witness at the hearing.
5. On or before 9 August 2002 each party provide the other party with a statement of the evidence to be given by any non-expert witness at the hearing.
6. The matter is set down for hearing commencing on Monday 26 August 2002 at 10 a.m.”
On 16 July 2002 the registrar of this Court advised both parties that the matters were rescheduled for hearing on 26 August 2002. On 26 July 2002 the solicitors for the respondent owners filed a disclosure list including certain documents, and claiming legal professional privilege in respect of other documents prepared for the purpose of obtaining or receiving legal advice in relation to the action.
On 16 August 2002 the solicitors for the respondent owners filed by facsimile a Notice of Withdrawal or Discontinuance (Form 15) with the registrar of the Court. Attached to the Notice was a copy of a letter of 16 August 2002 to the Department of Natural Resources and Mines confirming a telephone conversation of the same date, and stating:
“Our client is prepared to discontinue the appeals on the basis that:
1. Our client does not resile from its position taken in respect of the valuations which our client believes are excessive; and
2. both parties bear their own respective costs in the matter to date.
We are filing a notice of discontinuance today.”
Both documents (the Form 15 Notice of Withdrawal or Discontinuance and the attached letter), contain the same facsimile details of dispatch.
On 20 August 2002 the Chief Executive forwarded by facsimile to the registrar of the Court a copy of a letter of 20 August 2002 from Mr J O’Rourke to the appellant confirming the respondent department’s telephone advice that it did not “consent to the discontinuance of those proceedings without payment of its costs”.
On 23 August 2002 the applicant department filed by facsimile with the Court an affidavit setting out the history of events. Details of that history revealed that there had been some delays in the exchange of documents, including delays in the providing of documents due on 12 July 2002 (the Grounds of Appeal) and 19 July 2002 (relevant documents). By negotiations between the parties the disclosure lists were provided by the appellant owner (25 July 2002), and the respondent department (22 July 2002). Inspection of the disclosed documents occurred on 31 July 2002.
At the request of the appellant owner, and consented to by the respondent department, the expert witness reports due on 9 August 2002 were delayed until 13 August 2002. However, following several telephone requests by Mr O’Rourke to the appellants’ solicitor, the reports were not exchanged as agreed on 15 August 2002. On 16 August 2002 the solicitor for the appellants advised that the appeals would be withdrawn as outlined in paragraph [5]. On 19 August 2002 the appellants’ solicitor wrote to the respondent confirming that a Notice of Withdrawal or Discontinuance had been filed with the Court. (received by the department on 21 August 2002).
In respect of a copy of a letter from the appellant/owners’ solicitors of 7 August 2002 to the department, proposing a joint meeting of valuers on 13 August 2002, Mr O’Rourke advises that meeting did not occur.

The Effects of the Notice of Withdrawal or Discontinuance -

Mr Quinn argues that because of the attached letter of 16 August 2002 to the Notice of Withdrawal or Discontinuance the department had been unsure of the overall intentions of the appellant owner. He argues that the withdrawal was not unconditional, if the accompanying letter was to be read in conjunction with the notice. The Department had rejected the conditions contained in that letter of 20 August 2002. For those reasons he argues that the department had been forced to incur substantial costs in preparing for the hearing of the appeals, including costs associated with extensive discussions with counsel and expert witnesses up to and including 16 August 2002. (Affidavit, item 24). Mr Quinn had been briefed on 10 July 2002, and now argues that the appeals had not formally been unconditionally withdrawn.
Mr O’Brien discounts that statement arguing that the actual Notice of Withdrawal or Discontinuance contains no specific conditions of the withdrawal, and is therefore unconditional. He further argues that the matter is therefore terminated, and the only outstanding issue is whether there are any costs which should be allowed for the applicant. He notes further that was also likely to be a matter for determination by the Court, and could not be resolved between the parties. Mr O’Brien argues that there is no provision under the Land Court Rules 2000 for a party to unilaterally file a notice of discontinuance and attach conditions to it. If conditions were to have relevance they must be consented to by the other party, which had not occurred. Mr O’Brien notes that procedure is established in s.16(3) of the Rules.
Mr Quinn queries the wording of the Notice of Withdrawal or Discontinuance, noting that it could be read that the appeals “are withdrawn from the list of cases awaiting hearing and determination”. He questions whether that might be interpreted to mean that the appeals might be restored at a later date? Mr O’Brien concedes that there may have been some confusion, but in the end he argues that the notice form is clear, and the withdrawal is unconditional, as required by rule 16(3). Mr O’Brien was unsure why the letter of 16 August 2002 had been included with the withdrawal form, but he argues that does not detract from the advice that the matters are not proceeding.
In respect of the preliminary matter for consideration as to whether the appeals are now terminated, I accept that the evidence confirms Mr O’Brien’s advice to that end, and so determine.

The Relevance of Costs -

I turn then to whether the circumstances of this matter warrant the determination of costs for the applicant. I note that it is agreed that the power to award costs is found in s.34(6) of the Land Court Act 2000. It is also agreed that the discretion on the awarding of costs is unfettered to the Court.
However in awarding costs, if any, Mr Quinn argues that it would be wrong to conclude that costs should only be awarded where there was evidence that the party, against whom costs are awarded, acted in an arbitrary, capricious, or frivolous or vexatious manner. He argues that would unreasonably constrain the discretion of the Court, distinguishing s.70 of the Valuation of Land Act 1944, under which those substantive appeals arose. He notes that s.70 deals only where an appeal has been finally determined by the Court, which is not relevant in the current issue. He notes also that s.70 provides guidance only to the Court in respect of whether costs should not be awarded to either party.
In providing further guidance for the Court on costs, Mr Quinn notes that Rule 18 of the Land Court Rules 2000, directs:
“18. If an applicant discontinues or withdraws, the court may order the applicant to pay –
(a)the costs of the party to whom the discontinuance or withdrawal relates up to the date of the discontinuance or withdrawal, if the party has not consented to the discontinuance or withdrawal; and
(b)the costs of another party or parties caused by the discontinuance or withdrawal.”
Mr Quinn concedes that rule 18 is merely subordinate legislation, and must always be read in conjunction with the Act, emphasizing the discretionary nature of s.34(1) by directing only that the court may order the applicant to pay. However Mr Quinn argues that in exercising its discretion the court would be entitled to consider the reasonableness of the behaviour of the appellant owner in withdrawing the appeals at the eleventh hour in this matter. To support that conclusion he draws support from the findings of this Court in Chief Executive, Department of Natural Resources and Mines v Sabina Three Gorges Corporation Limited, (V00-43 and Others) 12 April 2001, unreported.
In the Sabina Three Gorges matter, the hearing of those appeals had been withdrawn belatedly after a series of directions from the Court, only six days after the last directions hearing, and only six days prior to the date set down for the hearing of the merits of the matter. The applicant advised in that matter that the appellant had withdrawn “as the potential savings from successful appeals were outweighed by the costs that would be incurred”. The learned Member concluded at page 4:
“It is difficult not to conclude that the lateness of the decision to withdrawn was the result of tardiness, a lack of concern that the orders of the court ought to be complied with or a failure to have regard to the inconvenience and costs being borne by the applicant.”
In that matter the learned Member Mr Scott distinguished the findings of this Court in Dreamworld Pty Ltd v Chief Executive, Department of Natural Resources 20 QLCR 170 where it had been determined that each party bear their own costs. In Dreamworld both parties were found to have contributed to the belatedly withdrawal of the appeals, as the Member found at page 176 and 177:
“However in the current matter I am aware that the town planning advice changed the direction of both parties. Had either party taken that advice earlier, and thought to negotiate on a ‘without prejudice’ basis, even at the preliminary conference, or near the directions hearing, then the protracted nature of the appeals may have been reduced.”
As that contributing factor is not present in the current issue, I feel Dreamworld can also be distinguished in the current circumstances.
In the Sabina Three Gorges matter, Mr Scott found that there had been some lethargy on the part of the appellant in deciding to withdraw the appeals, which had led to the respondent department incurring unnecessary additional costs. In awarding some partial costs he noted at page 8:
“I think that it is appropriate that the respondent be held responsible for costs incurred after it became clear, or ought to have become clear, that it needed to act to withdraw its appeals or decide to prosecute them. That date was 9 October 2000, the date of the notice of hearing. Any costs incurred by the applicant before this date would be costs arising out of its statutory duty or costs incurred in anticipation, only, of the appeals being set down for hearing.”
I turn then to Mr Quinn’s concern that there had been no stated reasons for the decision to belatedly withdraw, from what had, until that date, been a matter strongly contested by the appellant owners. Mr Quinn has speculated that because there was no reason stated on the Form 15, then it could be assumed that any such reason might in fact not be helpful to the appellant’s arguments against costs.
However I agree with Mr O’Brien that such speculation does little to justify why costs should be awarded against the respondent/appellant; noting also that the onus to prove that costs thrown away in this matter lies with the applicant department. However I agree also with Mr Quinn that Rule 16(4) of the Land Court Rules 2000 is really directed towards the efficient operations of the Court, and its resources. The reason outlined in that rule would, in my opinion, be directed at why the belated decision to withdraw did not give consideration to the consequences of such a late withdrawal in respect of the ability of other appellants to have their concerns addressed. However an apparent lack of consideration for other appellants is not grounds for the awarding of costs thrown away by the respondent department in the current matter.
I am also directed to the findings of Collins Foods International (Properties) No. 2 Pty Ltd v Chief Executive, Department of Natural Resources (1996) 16 QLCR 651. In that matter the learned Member found at page 665:
“This is not to say that the court will not, in a proper case, make an award of costs, but there would need to be sufficient reasons for such an award. In exercising its discretion, the court necessarily takes into account all of the circumstances then appearing. Such cases include cases where a party may justifiably seek costs through lateness of notice, or where the Court is satisfied that the proceedings are of a frivolous or vexatious nature or perhaps where a hearing is adjourned due to the wrongful conduct of a party. (See Bowden’s case at page 146 and The Valuer-General ats Queensland Club (1990-91) 13 QLCR 207 at 222-4 (Land Appeal Court) and cases cited therein.”
However I also note Mr O’Brien’s reliance upon Collins Foods, where the learned Member found at page 666.
“I am satisfied that the circumstances surrounding the withdrawal of the appeal are such that the order is warranted. Mr Crawford candidly acknowledged that the decision to withdraw the appeal, and the timing of the withdrawal, were matters for which the valuers were primarily, if not solely, responsible. It was their administrative inefficiency which resulted in the appellant’s case not being ready for hearing and which led to the making of a late decision to withdraw the appeal. This was not a case where an ill informed litigant in person got ‘cold feet’ just before a hearing, or where a litigant took an informed decision based on prospects of success of a properly prepared case.”
As Mr O’Brien notes in the current matter, the respondent/appellant took an informed decision, for whatever reason, to withdraw based upon his legal advice of the likely prospects of success. He notes further that while he did not articulate that legal advice, being protected by legal privilege, he was not bound to do so. O’Brien argues further that there was no evidence that the appellants’ case was not properly prepared; or one proposing that the normal rules be suspended; as demonstrated in the matters of Skyring.
The matter of professional privilege was addressed in Interchase Corporation Limited v Grosvenor Hill (Queensland) Pty Ltd (No 1) (1999) 1 QdR 141, where Pincus JA said at page 148:
“The principle which emerges from these cases is that documents used by an expert to form an opinion is not the subject of legal professional privilege, whether or not they emanated from the party claiming privilege. … So strong is the effect of holding a document to be the subject of legal professional privilege that even the risk that, absent the document, a person accused of a crime may be wrongly convicted, cannot override it. Rules of that kind are one of the reasons why judges from time to time urge caution on those who would look with equanimity on proposals to expand the scope of the protection of legal professional privilege; see for example Baker v Campbell (1983) 153 CLR 52 at 74 to 75 (Mason J.), Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 527 (Toohey J). There is risk that excessive enthusiasm for the achievement of one desirable end – that people may be free to deal privately with legal advisers – may inhibit achievement of others which are also desirable – such as at trials, civil and criminal, may reach fair and true results.”
In that matter Thomas J also said at page 162:
“I would hold that in general, when an expert is engaged by a solicitor for the purpose of giving evidence in a case, documents generated by the expert and information recorded in one form or another by the expert in the course of forming an opinion are not a proper subject for a claim of legal professional privilege. Privilege may however be claimed in relation to communications between the expert and the solicitor (both ways) when such communication is made for the purpose of confidential use in the litigation.”
The need for an effective manner of adequately identifying any privileged documents submitted, to facilitate their production, if ordered, was addressed in Interchase Corporation Limited v Grosvenor Hill (Queensland) Pty Ltd (No 2) (1999) 1 QdR 163, per de Jersey CJ at 170.
Further clarification of the relevant test for exception of providing information supplied under legal professional privilege was also provided by the High Court in Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia (1999) 201 CLR 49. In that matter the Court considered the relevance of the choice between the “sole purpose” test and the “dominant purpose” test to determine whether legal professional privilege was to be applied. The Court said at page 73:
“As a practical matter, the choice presently confronting this court is between sole purpose and dominant purpose. The dominant purpose test should be preferred. It strikes a just balance, it suffices to rule out claims of the kind considered in Grant v Downs and Waugh, and it brings the common law of Australia into conformity with other common law jurisdictions.”

The Court found that the test at common law for legal professional privilege, in relation to documents, was whether the communication was made, or a document was prepared, for the dominant purpose of a lawyer providing legal advice or legal services; and that test should be applied to the discovery and inspection of confidential written communication between lawyer and client.
In the context of the current matter the directions in Esso Australian Resources provide a more liberal description of legal professional privilege in respect of communications between the appellant/respondent and his legal advisers. I agree with Mr O’Brien that the appellant was not obliged to provide further reasons why the appeal was withdrawn. However, in the event, the appellant did provide the further statement in his letter of 16 August 2002, which led eventually to this appeal and costs.
In the matters of “Skyring’s Application” in the High Court of Australia Mr Skyring proposed that the normal processes of Government, as demonstrated by the presence of an Executive Cabinet, be dissolved (Application 1 (1985) 59 ALJR 123); and that the legal currency be restricted to gold and silver coinage (Application 2 (1985) 59 ALJR 561). Both of those applications were dismissed, however the basis of Mr Skyring’s argument was to generally overthrow the financial and legal system as they presently existed. I agree there is no argument in the current matter for any move from the normal procedures on costs as they have been exercised in this jurisdiction.
While Mr Quinn might speculate on the background to the reason as to why the appeals were subsequently withdrawn, that is not a matter for consideration by this Court. Indeed that was directed by the Land Appeal Court in JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, where it said at page 72:
“Neither this court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.”
That was also followed in BT Dillon v Valuer-General (1986-87) 11 QLCR 231, at page 233:
“The Legislature has not given this Court any investigatory powers under the Valuation of Land Act. If the Appellant’s case is not strong enough in its own right to establish the values contended for or to disprove the Valuer-General’s values, the Court is not empowered of its own volition to probe the fairness or correctness of the Valuer-General’s values and by this means arrive at its own estimate of value.”

The Discretion of the Court –

It is agreed by both parties that the Court has unfettered discretion in awarding costs in this matter, however that discretion must be exercised judicially. That was emphasized in Townsville City Council v Moyses and Others (1979) 6 QLCR 271, where the Land Appeal Court said at page 273:
“The general rule, then, is that costs are in the discretion of the Court, but of course the discretion must be exercised judicially, that is, by reference to relevant considerations.”
Now while it might be argued that there has been a general overall reluctance to award costs on appeals against valuations, there is no Land Court directions or rules to that end. However, even if the Court Rules were to be interpreted as providing some general guidance to the Court, the principle of judicial discretion in such matters must ensure that the Court remains unfettered in its decision. That was emphasized by the Land and Environment Court of New South Wales in Maurici v Chief Commissioner of State Revenue and Anor (No 5) [2001] 119 LGERA 395. In considering whether the existing practice directions of that Court should override the exercising of discretion on costs, Lloyd J said at page 399:
“In approaching the resolution of this question I am prepared to ignore the practice direction, which has been effectively set aside by the Court of Appeal as being an impermissible fetter on the exercise of the judicial discretion as to costs conferred by section 69(2) of the Land and Environment Court Act. As noted above, that section relevantly provides that costs are in the discretion of the court.”
In considering this matter I find nothing in the overall preliminary preparation of these cases for hearing, which would distinguish them from the normal course of matters under appeals from valuations. It is the rights of both parties in a disputed matter to take legal and expert advice in deciding the merits of their separate cases. Whether those appeals were also partly linked to other similar matters on similar shopping centres is not a matter for my consideration. In the current matters the appellants would have considered many influences upon the success or otherwise of their appeals.
However once the appeals had proceeded through a series of interlocutory direction hearings; and formal directions had been promulgated by this Court on 3 July 2002; the crystallization of the appeals should have focused the minds of both parties. That was likely to have been further focussed by the court notice of 16 July 2002. The further action by the appellant owners on 26 July 2002 to provide the disclosure list as directed by the Court, in my opinion, indicates that until that time the appellant owners intended to continue proceedings. Until that date at least I believe both parties were exercising their normal rights to prepare for a determination by the Court on 26 August 2002.
On 16 August 2002 the appellant owners, through their legal advisers, exercised their right to withdraw the appeals under Court Rule 16 which states:
“16.(1) A discontinuance or withdrawal is effected by filing a notice in the approved form and serving it as soon as practicable on the other parties in the proceeding.
(2) If a party to whom the discontinuance or withdrawal relates consents to the discontinuance or withdrawal, the party must sign the notice before the notice is filed.
(3) If the parties’ consent is on conditions, the conditions must be stated on the notice.
(4) If the discontinuance or withdrawal is effected within 7 days before the date set for hearing the proceeding, the court may require the parties to explain the reason for the late discontinuance or withdrawal.”
There was no consent by the respondent to the withdrawal. While the Form 15 contains no details of any proposed conditions of consent; a copy of the letter of the same date of 16 August 2002, proposing conditions to the respondent accompanied the Form 15. I believe it is therefore reasonable for the respondent department to have maintained uncertainty as to whether they would need to defend their valuation on 26 August 2002. That uncertainty would have continued until the hearing, when the Court accepted the withdrawal or discontinuance as unconditional. Any possible extra costs thrown away, in my opinion, would be constrained to the period 16 August 2002 to 26 August 2002, plus any costs associated with the hearing of the application for costs.
Clearly the preparation of the expert witness reports, and the legal advice prior to 16 August 2002, would be the normal costs associated in preparing for the matter.
In seeking guidance as to what circumstances surrounding the belated decision to withdraw might be seen as reasonable in this matter, I turn to principles on the exercise of judicial discretion in such matters. In seeking to understand the exercise of a judicial nature, I note in the Full Court of the Supreme Court of Queensland in Wyatt v Albert Shire Council (1987) 1 QdR 486, where the Court found at page 489:
“That can only mean for reasons that can be considered and justified. In saying that, we do not intend to imply that reasons must always be given for awarding or withholding costs. In some, perhaps many cases the matter may be so obvious as not to require explanation in the form of stated reasons. In such cases the findings themselves will ordinarily afford reasons and justification for the decision on costs that follows. But where what has been done appears to lack rational justification either in the findings or in the reasons expressed for it, a question may arise whether the decision has been arrived at judicially. It may then be open to review the decision on costs as involving errors or mistake of law.”
In Townsville City Council v Moyses and Others (supra), the Land Appeal Court also considered the matter of whether the Court should lay down rules or principles on how the Court’s discretion should be exercised, and followed the guidance outlined in Middleton v Freier & Ors (1958) QdR 351, where Philp J, speaking for the Full Court, said at page 357:
“… where an unfettered discretion is given by statute or a rule no court can by its decision impose conditions upon the free exercise of that discretion by another court …”
However, the Land Appeal Court in the Moyses case also noted at page 274:
“We would think that usually it would be relevant to inquire whether the conduct of the claimant, including his making of an exorbitant claim, if he has made one, has been such as to force the authority; unreasonably and unnecessarily, into litigation.”
The question then to be addressed in the current matter is whether the lack of certainty raised in the mind of the applicant/respondent, as to whether the appeal had been unconditionally withdrawn, could be seen as unreasonably and unnecessarily forcing the respondent department into preparing for litigation. On the evidence I believe that the conduct of the appellant owners can so be seen in the circumstances.

Conclusion:

Having considered the whole of the evidence I find that the respondent department has reasonable grounds for the awarding of some partial costs in this matter. I order that the respondent to this application pay the applicant’s costs of, and incidentals to the appeals, including this application for costs, such costs only occurring subsequent to and including 16 August 2002, and until the date of hearing on 26 August 2002. Such costs to be ascertained by the appropriate assessing officer of the Supreme Court in Brisbane according to the scale of costs prescribed by law for the time being in respect of procedures in the Supreme Court, and in accordance with the provisions of s.34 of the Land Court Act 2000.

NG DIVETT
MEMBER OF THE LAND COURT