PT Limited & Westfield Management Limited v Department of Natural Resources and Mines

[2007] QLAC 121

LAND APPEAL COURT OF QUEENSLAND

CITATION:

PT Limited & Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 121

PARTIES:

PT Limited (ACN 000 454 666) and Westfield Management Limited (ACN 001 670 579)
Appellants

v

Chief Executive, Department of Natural Resources and Mines
Respondent

FILE NO/S:

LAC 2006/0804

DIVISION:

Land Appeal Court of Queensland

PROCEEDING:

Application for costs

ORIGINATING COURT:

Land Court of Queensland

DELIVERED ON:

3 December 2007

DELIVERED AT:

Brisbane

THE COURT:

White J
Mr JJ Trickett, President of the Land Court
Mr RS Jones, Member of the Land Court

ORDER:

It is ordered that:

1.       The respondent pay the appellants’ costs of and incidental to the appeal to the Land Appeal Court.

2.        The respondent pay the appellants’ costs of and incidental to the hearing of the proceedings in the Land Court.

CATCHWORDS:

REAL PROPERTY - VALUATION OF LAND - OBJECTIONS AND APPEAL - HEARING - COSTS - where the appellant appealed against a decision of the Land Court - where the appellant was successful on appeal - where the appellant sought an order for costs of and incidental to the appeal to the Land Appeal Court and of the proceedings in the Land Court - where the Land Court Act 2000 does not include the common law principle that "costs follow the event" - whether the discretion to award costs is limited to "special" cases - whether costs should be awarded

Land Court Act 2000 (Qld), s 34
Valuation of Land Act 1944 (Qld), s 3(1)(b), s 3(2), s 66, s 70
Uniform Civil Procedure Rules 1999 (Qld), r 689

Assignment Pty Ltd v Kirby [1981] Qd R 129, cited
Bowden v Valuer-General (1980) 7 QLCR 138, considered
Commissioner of Land Tax v Nathan (1913) 16 CLR 654, cited
Department of Lands v Juris Towers Pty Ltd (1994-95) 15 QLCR 273, cited
Hymix Industries Pty Ltd v Valuer-General (1990-91) 13 QLCR 173, disapproved
Knight v Clifton [1971] Ch 700, cited
Scougall v Department of Natural Resources (1996-97) 16 QLCR 536

Tamawood Limited v Paans (2005) 2 Qd R 101

APPEARANCES:

Mr S Doyle SC and Mr LF Kelly SC and Mr JM Horton of counsel for the appellants

Mr DB Fraser QC and Mr T Quinn and Mr B Codd of counsel for the respondent

SOLICITORS:

Mr R Bowie and Mrs A McDonnell – Minter Ellison Lawyers for the appellants

Legal Services, Department of Natural Resources and Mines for the respondent

1. PT Limited is the registered proprietor of land located at Chermside which has been developed as a major regional shopping complex known as the Chermside Shopping Centre.  The second appellant, Westfield Management Limited, is the corporate entity responsible for the management of the shopping centre located on the land. 

1. Dissatisfied with the respondent's assessment of the unimproved value of the land, the appellants appealed to the Land Court and on 20 October 2006 the learned Member determined the unimproved value of the land to be $112,000,000.  Dissatisfied with that decision the appellants appealed and on 17 October 2007 this Court ordered that the appeal be allowed and determined the unimproved value of the land to be $34,000,000.  The appellants now seek their costs of and incidental to the appeal to this Court and of the proceedings below. 

Background

1. The approach of the respondent in valuing the land could only be described as convoluted and elusive.  The learned Member set out its history in the following terms:[1]

"…  Before me the respondent contended for a final valuation figure for the subject land of either $151,000,000 or $142,500,000 depending upon the disposal of a question of law.  In contrast with these figures the 2003 valuation has been issued at $54,000,000.  The appellant in its Notice of Appeal provided an estimate of the valuation of the subject land at $21,500,000.

The valuation of the subject land issued in the amount of $120,000,000; a substantial increase over that of $25,500,000 which applied as at 1 October 2001. Following objection the valuation was reduced to $54,000,000 for reasons stated as, 'the valuation requires calculation by a different methodology'. That methodology was purported to rely on s 3(2) of the Act and paying regard to amendments which took effect on 2 June 2003 but which had retrospective effect with regard to the 2002 valuation. The appellant sought and received a statement of reasons pursuant to Judicial Review Act (1991) (Qld):  a document that could at best be described as inadequate and at worst as misleading.  Evidence was then led before me to a valuation of $116,000,000 or $125,000,000, then to $144,000,000 or $154,000,000 and finally to the amounts mentioned above."

[1][2006] QLC 0068 at [1] and [2].

1. The proceedings below occupied 55 days of Court time and a transcript in excess of 5,000 pages.  Six senior counsel and four junior counsel were involved and twenty seven witnesses were called most of whom were experts and two of whom were from overseas.  A total of 279 exhibits were tendered many of which were extensive expert reports.  The proceedings in this Court occupied four days. 

1. Following the decision of the Land Court, the respondent sought orders that the appellants pay his costs of and incidental to the proceedings in that Court.  On 22 June 2007 the learned Member published his reasons refusing to make any orders as to costs.  There was no appeal against that decision. 

The Costs of the Appeal to the Land Appeal Court

1. The appellants contend that they should have their costs in this Court and below not only because they have been largely successful in the appeal or, put another way, because the appeal is one where the respondent has been plainly unsuccessful and all of the major issues in the appeal were decided in their favour, but also because the conduct of the respondent was such as to make a costs order against him appropriate. 

1. The respondent rejects the claim to success made by the appellants because the quantum determined was substantially greater than that contended for by the appellants.  He also contends that while unsuccessful in resisting the appellants’ arguments about the substantive issues in the appeal they were fairly arguable and were accepted by the Court below.  The respondent rejects any characterisation of his behaviour which would justify a costs order being made against him on that ground.  Finally, the respondent contends that to make costs orders against him would offend the approach laid down in a number of previous decisions of this Court that, in respect of valuation appeals under the Valuation of Land Act 1944 (“VLA”), costs will only be awarded in "special cases".

1. It is not disputed that this Court has the power to deal with the costs of the appeal and of the proceedings below.[2]  Nor was it disputed that, consistent with the decision of this Court in Bowden v Valuer‑General,[3] a restrained approach to awarding costs has been adopted by this Court and the Land Court in valuation appeals under the VLA.  It might be noted that below, the respondent had argued for the application of the rule enshrined in the Uniform Civil Procedure Rules 1999 that costs follow the event, while at the same time recognising the binding authority of Bowden on the learned Member.  We will say something more about Bowden and the decisions which followed it.

   [2]See Valuation of Land Act 1944, s 66 and the Land Court Act 2000 s 34.

   [3](1980) 7 QLCR 138 (LAC).

The Appellants’ Success

1. The substantive matters raised in the appeal to this Court were:

(i) the proper construction of s 3(1)(b) of the VLA;

(ii)    the application of the judgment of the High Court in Commissioner of Land Tax v Nathan,[4] referred to in the decision of this Court disposing of the appeal[5] and the decision of the Court below as the "Nathan formulation"; 

(iii)   the best evidence of the unimproved value of the land as at 1 October 2002.

On appeal the appellants succeeded in having each of these issues decided in their favour. 

[4](1913) 16 CLR 654.

[5][2007] QLAC 0077.

1. While it is true that each of the issues were decided in favour of the respondent by the Court below it is difficult to conceive how the statutory construction point could be said to have been "fairly arguable"[6] when it was, in effect, conceded not to be arguable by senior counsel for the respondent on the second day of the hearing of the appeal, although not conveyed to the appellants or their legal advisers before then.[7]

   [6]Respondent's submissions on costs, paras 24, 31 and 59.

   [7]Appeal transcript p 154

1. As to the so called "Nathan formulation", while there may be some merit in the contention that it was a fairly arguable point because it was accepted by the Court below, there is no escaping the fact that all of the members of this Court decided that it was clearly wrong to apply it in the valuation exercise contemplated by s 3(1)(b) of the VLA. Further, it would not be unreasonable to infer that if the concession concerning the construction of s 3(1)(b) had been made below, that is, that intangible improvements were improvements for the purposes of the operation of s 3(1)(b), the learned Member below might well have reached a different conclusion concerning the scope of operation of that formulation. Such an inference appears to us, with respect, to be consistent with the reasoning of the learned Member[8] particularly where he said[9]

"… Given that none of the intangible improvements defined in the Act are separately identified and valued the goodwill provided for in s 6(5) embraces the whole of the value of the shopping centre apart from the tangible improvements of land and physical improvements.  That is, it is the residual.  It has no separate existence from the enterprise or business and cannot be separately disposed of.  It seems to me that in defining intangible improvements Parliament has, in the 'general scoping' provided, referred to intangible improvements that, with the possible exception of the Westfield name, are not severable from the type of property under consideration."

[8][2006] QLC 0068 at [550] – [568].

[9]Ibid at [559].

1. Finally, as to the third of the substantive issues raised before us, once the other two issues were decided in favour of the appellants it was virtually inevitable that the market evidence relied on by the respondent below (the Chermside sale and the Burwood valuation) would be rejected and the primary evidence relied on by the appellants (the Telstra sale) accepted as the best evidence of the unimproved value of the land.

1. The respondent also submits that in dollar terms the appellants were not entirely successful on appeal.  That is true in as much as the determination of this Court is materially higher than the $20,500,000 contended for by the appellants.  However, when looked at objectively it is difficult to contemplate how a reduction from $112,000,000 to $34,000,000 could be described as anything other than a successful appeal outcome.

The Conduct of the Parties

1. Except where referred to in these reasons, we do not consider that the conduct of either of the parties in the appeal to this Court or below is such as to either warrant costs orders being made or refused.

The Special Case Test

1. In Bowden, this Court expressed the view that in revenue appeals easy access to the courts by parties is desirable and that such access should be available without fear of unfavourable costs orders except in "special cases".[10]  Bowden has been followed in subsequent decisions of this Court.  In Hymix Industries Pty Ltd v Valuer‑General,[11] despite the appeal by the landowner being allowed, no costs orders were made in circumstances where the appeal was said to involve some complexities.  After quoting the above cited passage from Bowden, the Court observed that neither party approached the valuation in an arbitrary, frivolous or vexatious manner, or completely disregarded established principles which would, presumably, have militated against an order for costs. 

   [10]At 147.

   [11](1990-91) 13 QLCR 173 at 185 - 186.

1. Following Hymix and Bowden, this Court in Department of Lands v Juris Towers Pty Ltd,[12] set aside the decision of the Member below awarding costs in favour of the successful landowner.  The Court accepted the “special case” approach in Bowden, and endorsed the observations in Hymix suggesting that to be “special” a party against whom a costs order might be made should be found to have approached the valuation “in an arbitrary, frivolous or vexations manner or has completely disregarded principles …”[13]

   [12](1994-95) 15 QLCR 273 at 276.

   [13]At 276.

1. In Scougall v Department of Natural Resources this Court, after citing with approval the approach adopted in Bowden, observed: [14]

"Decisions by the Land Appeal Court in cases such as Santos Ltd v The Valuer-General (1989) 12 QLCR 231 and Hymix Industries Pty Ltd v The Valuer‑General (1990) 13 QLCR 173 support the conclusion of the former President of the Land Court 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.  (Queensland Landmark Developments Limited v Valuer‑General (1992) 14 QLCR 168 at 171”.

[14](1996–97) 16 QLCR 536 at 556.

1. It is essential that the words of the applicable legislation be kept firmly in mind when considering a costs application.  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.  Under the general law there was no power to award costs.[15]  The Land Court Act 2000 provides for the award of costs by the Court “as it considers appropriate”.[16]  However, the proceedings below and on this appeal, are governed by the VLA and its provisions about costs. Section 66 provides

   [15]Wyatt v Albert Shire Council [1987] 1 Qd R 486.

   [16]Land Court Act 2000 ss 34 and 72.

“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 deems fit with respect to the payment of costs.”

1. Section 70 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.”

1. The common law principle which has long dominated the exercise of the discretion to award costs that they “follow the event” has been incorporated into r 689 of the Uniform Civil Procedure Rules 1999 but is found neither in the VLA nor the Land Court Act.[17] In interpreting s 66 the Court should not therefore be bound by any presumptive rule or principle – the discretion is complete, but must be exercised judicially.

   [17]By virtue of the operation of r 4 of the Land Court Rules 2000, where those rules do not provide for a matter, the UCPR apply with necessary changes. It is, however, unnecessary to resort to r 4 for a construction of s 66 of the VLA which indicates the approach to costs under that Act.

1. There are, necessarily, factors which have appropriately informed the Court’s approach to exercising that discretion.  In Assignment Pty Ltd v Kirby,[18] Macrossan J (as he then was) considering an appeal in a licensing case where the Licensing Court had a full discretion about costs, warned against the consequence of a rigid adherence to preconceptions about when costs should be awarded.  On the other hand, the Full Court in Wyatt recognised that in exercising its discretion judicially a court is not precluded from resorting to “settled practice”, quoting Knight v Clifton.[19]  The settled practice there mentioned was that in an ordinary case a wholly successful defendant will not be ordered to pay the costs of an unsuccessful plaintiff. 

   [18][1981] Qd R 129 at 134.

   [19][1971] Ch 700.

1. There may be any number of factors which a court vested with a general jurisdiction to award costs might entertain.  One of those factors is the outcome of the litigation.[20]  Another might be the overall purpose of the legislation.  Contemporary legislation in Queensland tends to make express provision about costs if it is thought desirable that parties not be discouraged from seeking to assert rights by the fear of adverse costs orders.[21]

   [20]Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J at 97

   [21]For example, the Property Law Act 1974 in s 341 which provides that each party is to bear the party’s own costs unless there are circumstances which justify a different order. In considering the analogous provision in the Family Law Act 1975 (Cth) the High Court in Penfold v Penfold [1979-1980] 144 CLR 311 at 315 held that this did not mean that a costs order could only be made “in a clear case”. Similarly ss 70 and 71 of the Commercial and Consumer Tribunal Act 2003 provides that parties are to pay their own costs unless the interests of justice require otherwise.

1. It is with these considerations in mind that the observations in Bowden should be considered.  It is entirely in accordance with the proper exercise of the discretion granted to award costs to give effect to the matters expressed in Bowden, but 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 be exercised or declined to be exercised.  In our view, the observations in Scougall are expressed too broadly if they seek to confine the exercise of the discretion to the circumstances there mentioned.  As recognised in Bowden, a cautious approach to costs does not mean that in appropriate cases costs orders should not be made.[22] 

   [22]At 146.7.

1. Even if the observations made in Bowen are applied, the facts and circumstances surrounding the proceedings below and the appeal to this Court would comfortably satisfy the "special case" test.

1. The respondent correctly points out that ordinarily costs are not awarded to punish the unsuccessful party.  Costs are intended to be compensatory in that they are intended to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.[23]  In the circumstances of the appeal to this Court we can see no reason to deny the appellants appropriate compensation in the form of a costs order in their favour.

   [23]Oshlack v Richmond River Council (1998) 193 CLR 72; per Brennan CJ at 75 and McHugh J at 97; Latoudis v Casey (1990) 170 CLR 534, per McHugh J at 566 - 567.

The Land Court Proceedings

1. Section 70 of the VLA, in effect, provides a formula for determining which party may be entitled to costs upon the determination of a valuation appeal by the Land Court.  Because of this Court's determination of the unimproved value of the land only the appellants are entitled to a costs order in the proceedings below.  We agree with the observations of the learned Member that the valuations contended for by the parties at trial are relevant in considering the question of the success of the parties.[24]

   [24][2007] QLC 0046 at [10].

1. As a direct consequence of the way in which the respondent chose to run his case in the Land Court, the appellants were required to resist valuations of between $140,000,000 and $150,000,000 and not the valuation appealed against of $54,000,000.  Even in circumstances where the appellants were contending for a valuation in the order of $20,000,000, a result of $34,000,000 could not reasonably be seen as anything other than a significant commercial success.  This result is in itself strong support for a costs order in favour of the appellants.

1. The learned Member in his decision about costs considered that in the appeals before him the valuations could be broadly divided into two groups. The first being the valuations under s 3(1)(b) of the VLA and the other being the valuations under s 3(2).[25]

   [25]Ibid at [47].

1. As to the first of these matters, the construction of s 3(1)(b) and the application of the so-called "Nathan formulation" were, as the learned Member identified, "pivotal to the debate".[26]  We have decided both of those issues in favour of the appellants.

   [26]At [48].

1. As to the second matter which the learned Member considered consumed the bulk of the time and resources in the proceedings,[27] the respondent was not successful in having his s 3(2) methodology adopted.[28]  The learned Member in his decision on costs went so far as to say:[29]

"I do not intend turning this discussion into representing a 'score board' on the various points of debate which were ventilated in the s 3(2) topic – there were many more points than those discussed thus far. I have, however, reviewed the reasons for decision and, following that, formed the view that in this major part of the case it was the appellant in Chermside who dominated. It was the Chief Executive who was promoting the s 3(2) exercises as producing the preferred valuation figures in these cases. … Answers to interrogatories made it clear that the valuations appealed against where made using the s 3(2) method. Each appellant sought to identify a direct relationship between the respective s 3(1)(b) and the s 3(2) exercise such that the latter figure would buttress the former . That aspect was referred to by the respondent in submissions as somehow indicating the extensive reliance placed on s 3(2) by the appellants. I cannot accept that submission. …

It transpired that not only was an incursion into the s 3(2) method unnecessary, but much of the evidence need not have been called. I refer in particular to that of the quantity surveyors and of the two American experts called by the parties. In truth, neither party gave sufficient attention to the question of statutory construction that arose under the s 3(2) approach." (underlining added)

[27]At [47].

[28]At [63].

[29]At [65] – [66].

1. The respondent did not appeal the learned Member’s decision to reject his s 3(2) valuation exercises and it is our opinion that nothing dealt with and decided by this Court would materially affect those conclusions.

1. In our opinion, the appellants ought to have the benefit of a costs order in respect of the proceedings in the Land Court.  It is tolerably clear to us that had the proceedings in that Court been dealt with and decided according to law, the appellants would have been largely successful in principle and in commercial terms.

1. As discussed above, costs are not awarded to punish the respondent but, as far as they can, to compensate the appellants for their costs incurred in the litigation.  In this context we agree with the observations of Keane JA in Tamawood Limited v Paans,[30] where his Honour said, albeit in respect of different legislation:

"[30]     First, the Tribunal found that each party was justified in engaging the services of legal representatives to assist them in the conduct and defence of what the Tribunal recognized to be complex proceedings.  That finding alone could be, in my view, a sufficient basis to conclude that the interests of justice warranted the exercise of the discretion to award costs in favour of the successful party, at least in the absence of any countervailing consideration.  …

[32]       If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves.  Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal. 

[33]       …  In the absence of countervailing considerations, where a party has reasonably incurred the cost of legal representation, and has been successful before the Tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome.  …"

[30](2005) 2 QdR101 at [30], [32] and [33].

1. The appeal to this Court and the proceedings in the Land Court were complex proceedings and that will be one factor which a court will consider. But it is important not to lose sight of the nature of the discretion to award costs conferred by s 66. It is unconfined. If this court in Hymix[31] intended that such cases might not usually satisfy the test, we respectfully disagree.  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.

   [31]At 186.

1. It is ordered that:

1.          The respondent pay the appellants' costs of and incidental to the appeal to the Land Appeal Court.

2.          The respondent pay the appellants' costs of and incidental to the hearing of the proceedings in the Land Court.

WHITE J

JJ TRICKETT
PRESIDENT OF THE LAND COURT

RS JONES
MEMBER OF THE LAND COURT