Ray Fitzpatrick Pty Limited v Minister for Planning (No.5)

[2008] NSWLEC 183

Land and Environment Court

of New South Wales

CITATION:

Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183

PARTIES:

APPLICANT
Ray Fitzpatrick Pty Limited
RESPONDENT
Minister for Planning

FILE NUMBER(S):

30627 of 2006

CORAM:

Sheahan J - Sheehan AC

KEY ISSUES:

Compulsory Acquisition of Land :- payment or cancellation of interest;
Practice and Procedure: Further and final orders;
Costs: Liability for costs, "abandonment" of proceedings, indemnity costs, amendment of pleadings, specific events, "disentitling" or "unreasonable" conduct.

LEGISLATION CITED:

Civil Procedure Act 2005, s.69(2)
Land Acquisition (Just Terms Compensation) Act 1991
Land and Environment Court Act 1979, s.22, s.23, s.24
Uniform Civil Procedure Rules, Part 42
Ritchie’s Uniform Civil Procedure NSW

CASES CITED:

Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365
Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536
Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225
Geoffrey v Roads and Traffic Authority of NSW [2007] NSWLEC 405
Evagelakos v Roads and Traffic Authority of New South Wales [2006] NSWLEC 514
Fordyce v Fordham and Another (2006) 67 NSWLR 497
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants (1988) 81 ALR 397
Hague v Lake Macquarie City Council (1994) 83 LGERA 40
Harvey v Burwood Municipal Council (1993) 83 LGERA 102
Kiama Council v Grant (2006) 143 LGERA 441
Lactos Fresh Pty Ltd (No.2) v Finishing Services Pty Ltd [2006] FCA 748
Latoudis v Casey (1990) 170 CLR 534
Leichhardt Municipal Council v Green [2004] NSWCA 341
Luka v Lake Macquarie City Council [2001] NSWLEC 251
Manly Council v Byrne and Anor (No.2) [2004] NSWCA 227
McKerlie v State of New South Wales (No.2) [2000] NSWSC 1159
Niezabitowski and Another v Roads and Traffic Authority (NSW) (2006) 147 LGERA 417
One.Tel Ltd and Others v Deputy Commissioner of Taxation (2000) 101 FCR 548
Oshlack v Richmond River Council (1998) 193 CLR 72
Parnell v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 261
Ray Fitzpatrick Pty Ltd v Minister for Planning (2007) 157 LGERA 100
Ray Fitzpatrick Pty Ltd (in members voluntary liquidation) v Minister for Planning [2007] NSWLEC 833
Ray Fitzpatrick Pty Ltd v Minister for Planning (No.3) [2008] NSWLEC117
Ray Fitzpatrick Pty Ltd v Minister for Planning (No.4) [2008] NSWLEC 161
Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622
South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2
Stewart v North Metropolitan Tramways Co (1886) 16 QBD 556
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No.2) (2006) 151 LGERA 186
The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No.2) (2006) 67 NSWLR 706
Townsend v Townsend (No.2) [2001] NSWCA 145
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 82 ALJR 489

DATES OF HEARING:

5 May 2008, 12 May 2008, 13 May 2008, 22-23 May 2008 (written submissions)

 
DATE OF JUDGMENT: 

6 June 2008

LEGAL REPRESENTATIVES:

APPLICANT
Mr B Coles QC
with Mr R Beasley
SOLICITORS
Minter Ellison

RESPONDENT
Mr J Webster, SC
with Mr M Seymour
SOLICITORS
Hunt and Hunt

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

30627 of 2006 RAY FITZPATRICK PTY LIMITED v MINISTER FOR PLANNING (No.5)

JUDGMENT

Introduction

1 His Honour: This judgment deals with the three outstanding questions in this case, which involves proceedings in Class 3 of the Court’s jurisdiction under the Land Acquisition (Just Terms Compensation) Act 1991 (“the JTC Act”), commenced on 19 July 2006:

(i) What further/final orders should be made?

(ii) Should interest on compensation be cancelled?

(iii) What orders for costs (if any) should be made?

2 This is my third judgment in this matter:

(a) In Judgment No.3 on 17 March 2008 – [2008] NSWLEC 117 – I granted leave for the Respondent to further amend its defence to plead the impact on the Applicant’s case of the High Court’s then recent decision in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 82 ALJR 489 (“ Walker ”). The amendment was strongly opposed by the Applicant, and the Applicant now contends that my decision to allow the amendment (i) led the Applicant to decide to accept the Minister’s statutory offer of compensation, and (ii) was of such moment that it should ground an order that the Respondent pay the Applicant’s costs of the proceedings.
(b) In Judgment No.4 on 29 April 2008 – [2008] NSWLEC 161 – I upheld the right of the Applicant to accept the Minister’s statutory offer of compensation immediately prior to the hearing by this Court of the Applicant’s objection to it, and the Respondent now contends that I should (i) determine the amount of compensation in that sum, and (ii) cancel or reduce the Applicant’s right to interest on it.

3 Although both of those judgments were attacked in submissions on the three outstanding questions, I see no need to depart from anything I said in either of them, and I will adopt, but not repeat here, those parts of them which inform what follows in this third judgment, particularly my outline of the statutory compensation scheme (Judgment No.4 at pars [12]-[30], [70]-[73] and [77]), and my chronology of relevant events (Judgment No.4 at pars [33]-[45]).

4 The Applicant asks the Court to make the following notation and orders regarding payment:

“1. Notes that on 18 April 2008 the applicant accepted, pursuant to s 44(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Act”), the offer made by the respondent on 24 April 2006 pursuant to s 42(2) of the Act.
2. Orders that the respondent pay to the applicant the sum of $8,366,000.00 on or before 21 May 2008.
3. Orders that the respondent pay the applicant $1,368,326.92 as interest for the period 19 May 2006 to 21 May 2008 on $8,366,000.00 pursuant to section 49 of the Act.
4. Orders that the respondent pay the Applicant $1,691.35 between 19 May 2006 and 9 June 2006 as interest on $557,822.49 paid to the Applicant on 9 June 2006.”

5 Further the Applicant seeks the following costs orders, in the alternative:

Either
“5 . Orders that the respondent pay the applicant’s costs of and incidental to the proceedings as agreed or assessed.”
or
“5. Orders that the respondent pay the applicant’s costs as agreed or as assessed:
(i) of and incidental to the Notice of Motion filed on 25 June 2007;
(ii) thrown away as a result of the amendment of the Respondent’s Points of Defence dated 6 July 2007;
(iii) of and incidental to the trial of the separate questions on 28 November 2007;
(iv) of and incidental to the Notice of Motion filed by the Respondent on 26 October 2007;
(v) of and incidental to the Notice of Motion filed by the Applicant on 16 November 2007 (as amended on 22 November 2007);
(vi) thrown away as a result of the amendment allowed on 17 March 2008;
(vii) of and incidental to the trial of the ‘separate question’ on 23 April 2008; and
(viii) of and incidental to the hearing on costs and interest on 12 and 13 May 2008.
6. Orders that subject to the orders in 5 above, each party bear their own costs of the proceedings.”

6 Finally, the Applicant seeks an order “that the proceedings otherwise be dismissed”.

7 On the other hand the Respondent seeks the following orders:

“ 1. The compensation pursuant to the Lands Acquisition (Just Terms Compensation) Act 1991 for the acquisition of Lot 4 DP 262213 is determined in the sum of $83,660,000;
2. Order that pursuant to s 66(4) of the Lands Acquisition (Just Terms Compensation) Act 1991, the payment of interest in respect of the compensation payable under order (1) herein is cancelled.
3. Order that pursuant to s 48 of the Lands Acquisition (Just Terms Compensation) Act 1991, the Applicant is to pay to the Respondent the sum of $4,044,092.31 being the interest paid to the Applicant on 12 May 2006 ($3,486,269.82) and 3 June 2006 ($577,822.49).
4. The Applicant is to pay interest on the amount in order 3.

8 In respect of costs, the Respondent seeks the following orders:

5. Orders for costs made on 6 July 2007 and 12 December 2007 be vacated.
6. The Applicant is to pay the costs of the Respondent of these proceedings to 21 May 2007 on a party/party basis and thereafter on an indemnity basis including the costs of the Respondent’s Notice of Motion heard on 29 June 2007.”

(The document from which the contents of pars [7] and [8] are drawn was what I took to be the latest of several versions of what the Respondent is seeking. The version in the Respondent’s written submissions, however, added to Order 5, as quoted in this paragraph, the order for costs made on 20 November 2007. An earlier set of Draft Orders added to Order 6, as quoted in this paragraph, the words “ but excluding the costs of the Notice of Motion heard on 23 April 2008 ”).

Further or Final Orders?

9 In Judgment No.4 I answered a “separate question” concerning the purported acceptance by the Applicant of the original statutory offer of compensation based upon a determination of the Valuer General. Effectively, the Court’s answer to the separate question endorsed the contention of the Applicant that the statutory offer remained open and available for acceptance by the person with the statutory entitlement to compensation, at any time up to the delivery of judgment by the judicial valuer (determining a value which could be different from that determined at the outset by the Valuer General).

10 As a consequence of that question being answered in that way, the determination of compensation, the central issue in these proceedings, no longer requires adjudication. It is not so much a matter of the case being settled; the simple outcome is that the parties’ dispute about the amount of compensation to be paid has been resolved, with the consequence that the substantive issue at the heart of the proceedings is no longer before the Court for decision. Had it been simply an agreement, negotiated between the parties in the normal way of settling litigation, to the effect that an order should be made, by consent, that the Respondent pay the Applicant a specified amount of compensation, an order in the form of a determination may have been needed or appropriate.

11 However, as I noted in Judgment No.4, the JTC Act is a code, and the agreement constituted under s.44 by virtue of the acceptance of the statutory offer takes effect outside of, and independently of, the proceedings. It amounts to a withdrawal of the objection at the centre of the proceedings. The sole purpose of the proceedings is to have a Judge of this Court rule on the objection, by determining compensation, if the objection is maintained. Nothing in the Land and Environment Court Act 1979 (“the Court Act”) (e.g. s.22, 23 or 24) requires me to make a determination in the current circumstances. Nor am I persuaded by the reasoning of Bignold J in the final chapter of the quite unique case Luka v Lake Macquarie City Council [2001] NSWLEC 251 that such an order is called for.

12 I, therefore, have determined that I should simply make a notation along the lines of No.1 sought by the Applicant (see par [4]), rather than Order No.1 sought by the Respondent (see par [7]).

13 The question then arises as to whether I need to make an order requiring the Respondent to pay the agreed compensation to the Applicant.

14 In Harvey v Burwood Municipal Council (1993) 83 LGERA 102 and Hague v Lake Macquarie City Council (1994) 83 LGERA 40, Bignold J and Stein J (respectively) held that this Court has the power to order the payment of the amount of compensation it determines in objection proceedings. In Bignold J’s words that power either is given by s.22 or s.23 of the Court Act, or is an inherent or implied incidental power “to do all that is necessary to enable it to act effectively within its jurisdiction”.

15 While a similar power might well be asserted to arise in cases where the statutory offer is accepted and no determination is required, the JTC Act makes specific provision in s.44(2) for securing the payment of the offered amount – a specific order of the Court is not provided for in the JTC Act, and should never be necessary. Section 44 (2) requires the Applicant to do certain specific things following acceptance – apparently done in this case on 22 April 2008 – and provides that when they are done the obligation falls on the “authority of the State” to pay the compensation within 28 days. Section 68(1) requires the payment of “agreed” compensation without need for any specific court order to pay.

16 I propose, therefore, to add to the notation to which I have referred in par [12] a further notation to that effect.

17 Subject then to my coming to some conclusion on the remaining issues of interest and costs, the only other question before me is whether to “otherwise dismiss the proceedings”, or grant leave to the Applicant to discontinue them.

18 The Applicant has asked the Court to dismiss them. That was the course preferred by Biscoe J in the analogous cases of Niezabitowski and Another v Roads and Traffic Authority (NSW) (2006) 147 LGERA 417 (“Niezabitowski”), where the Applicant had invalidly purported to discontinue them five days before the hearing, and also in Evagelakos v Roads and Traffic Authority of New South Wales [2006] NSWLEC 514 (“Evagelakos”), where the offer was accepted during the hearing and the parties apparently agreed the proceedings should be dismissed, consistent with His Honour’s decision in Niezabitowski.

19 I consider that dismissal of the proceedings is the appropriate course for me to follow in this case as well.

Payment or cancellation of interest?

20 The Respondent seeks orders (Nos.2, 3 and 4 in par [7] above) cancelling interest, and requiring it to be paid back, with interest.

21 Section 66(4) of the JTC Act provides in this regard:

“ (4) If the Land and Environment Court decides that the amount of compensation payable (without the addition of interest) does not exceed by more than 10% the amount of compensation offered by the authority of the State, the Court may cancel or reduce the amount of interest that has accrued under this Act in respect of the compensation since the institution of the proceedings”.

I see s.66(4) as an incentive for the offeree in an acquisition situation to decide quickly whether to accept the statutory offer or file an objection, and then to be resolute and clear about fighting on as each stage of the proceedings unfolds and the pressure mounts for the offeree to reconsider.

22 As there has been in these proceedings no decision (or determination) by the Court as judicial valuer, the power in s.66(4) is simply not enlivened. Acceptance of the statutory offer is not agreement as to the value of the subject land, only agreement to take the amount offered under the code. The Court has decided only that the statutory offer could be validly accepted.

23 I reject the Respondent’s submission that the Court should fashion its orders so as to impose a penalty on the Applicant (whether it be loss of interest, and/or an order for costs) for the delay caused by pursuing an “unmeritorious case”.

24 I decline to make the orders sought by the Respondent in regard to interest.

25 It is clear from the JTC Act that interest is payable on the compensation, and it is also clear, from argument, that there is some lingering dispute between the parties about precisely what interest is (or was) payable on the amount of compensation either already part-paid pursuant to s.68(2), or now accepted by the Applicant pursuant to s.44. The JTC Act sets the rate of interest, and the amounts should be capable of negotiation outside this Court. The Court relies on the NSW Government to honour its statutory obligations in full, and, if it does not, the Applicant has remedies available to it.

Costs
The Agenda of Costs Issues

26 As can be seen from pars [5] and [8] there are before the Court several competing motions regarding the costs of proceedings, both generally and in respect of specific events, and the Respondent is seeking an order for costs on an indemnity basis after 21 May 2007, the date on which it purported to make a formal “offer of compromise”. The Applicant did not accept it, but now says it was not an effective/valid “offer of compromise” in any event.

27 Several orders have already been made regarding the costs of these proceedings, and the Respondent now wants them vacated (see par [8] above):

(i) On 6 July 2007, when Jagot J granted the Respondent leave to amend its defence to assert a rural zoning for the subject land, Her Honour made an order for the Respondent to pay the Applicant’s costs of the notice of motion and any of the Applicant’s costs thrown away as a result of the amendment, as agreed or assessed.
(ii) On 20 November 2007 Lloyd J delivered the first published judgment in this matter ([2007] NSWLEC 833), concerning a subpoena, and ordered that the Applicant’s notice of motion (filed 13 November 2007) be dismissed, with the costs of the motion to be “ costs in the cause ”.
(iii) On 12 December 2007, following her judgment delivered 29 November 2007 (the second published judgment in the matter – (2007) 157 LGERA 100), concerning “ separate questions ” on the admissibility of certain expert evidence, Jagot J ordered the Respondent to pay the Applicant’s costs of that hearing and of the notices of motion so dealt with (filed 26 October 2007, and 16 November 2007 as amended 22 November 2007), as agreed or assessed.

28 In Judgment No.3 on 17 March 2008 I granted leave for the Respondent to make a further amendment to its defence (see par [2(a)] above), and formally reserved the costs of the notice of motion.

29 In Judgment No.4 on 29 April 2008, answering the separate question (generally before the Court on 18, 21, and especially 23 April) regarding the Applicant’s entitlement at that stage to accept the statutory offer (see par [2(b)] above), I did not make any costs order, nor formally reserve the costs involved, but I set down for 5 May this latest hearing to deal with costs and other remaining issues.

30 One version of the Respondent’s suggested Order No.6 (par [8] above) mentions the hearing on 23 April 2008, and also mentions a notice of motion “heard” on 29 June 2007. From examination of the court’s file records that would appear to refer to the notice of motion determined by Jagot J on 6 July 2007.

General Principles and Rules

31 Section 98 of the Civil Procedure Act 2005 (replacing s.69(2) of the Court Act), Part 42 of the Uniform Civil Procedure Rules (“UCPR”), and various Rules of Court (including rules of this court) make specific provision for costs orders, and there is much authority from appellate and superior trial courts on the principles which are to be applied when various different circumstances pertain.

32 The principal relevant decisions of the High Court on the question of costs in relatively recent years are Latoudis v Casey (1990) 170 CLR 534 (“Latoudis”), Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622 (“Lai Qin”), and Oshlack v Richmond River Council (1998) 193 CLR 72 (“Oshlack”).

33 In the Federal Court of Australia, the decisions of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants (1988) 81 ALR 397 (“Fountain”); Sheppard J in Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225 (“Colgate”); and Burchett J in One.Tel Ltd and Others v Commissioner of Taxation (2000) 101 FCR 548 (“One.Tel”) are often useful, and I have also had regard to that of Weinberg J in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No.2) [2006] FCA 748 (“Lactos”).

34 In the NSW Court of Appeal, learned judgments on costs have been written in recent years by Basten JA in The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No.2) (2006) 67 NSWLR 706 (“Tynan”); Santow JA in Leichhardt Municipal Council v Green [2004] NSWCA 341 (“Green”); Hunt AJA in South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2 (“King”); Giles JA in Townsend v Townsend (No.2) [2001] NSWCA 145, McColl JA in Fordyce v Fordham and Another (2006) 67 NSWLR 497 (“Fordyce”); Campbell J in Manly Council v Byrne and Anor (No.2) [2004] NSWCA 227 (“Byrne”); and Bryson JA in Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 (“Australiawide”).

35 At the trial level of the Supreme Court, Dunford J has authored several learned, but regrettably unreported, judgments concerning costs issues, including that in McKerlie v State of New South Wales (No.2) [2000] NSWSC 1159 (“McKerlie”).

36 In this Court the learned present Chief Judge endeavoured to collect the key costs principles in his judgment in Kiama Council v Grant (2006) 143 LGERA 441 (“Grant”) (a case in Class 4 of the Court’s jurisdiction). I have also had regard to Bignold J’s decision in Parnell v Roads and Traffic Authority of New South Wales (1995) 88 LGERA 261 (“Parnell”); Lloyd J’s decision in Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536 (“Canterbury”); Biscoe J’s judgments in Niezabitowski and Evagelakos; and Talbot J’s decision in Geoffrey v Roads and Traffic Authority of NSW [2007] NSWLEC 405 (“Geoffrey”), all five of which were JTC Act cases.

37 All courts follow the Latoudis principle that costs orders are designed to “compensate” the beneficiary of the order for its costs reasonably incurred in the conduct of the litigation, rather than “punish” the other party (see Latoudis at 566-7). Costs are in the discretion of the Court, and do not always fall on the unsuccessful party to the advantage of the successful party, however one defines “success” in the particular case at hand.

38 As Bryson JA noted in Australiawide (at par [46]), Oshlack confirms that “[c]osts discretions are truly discretionary and are not closely confined by appellate authority”. His Honour quoted from Burchett J’s judgment in One.Tel (at 553, par [6]):

[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs by the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.

39 Bryson JA also observed that the law had moved away from “the prescriptive view taken in an earlier age”. Each case is determined on its own facts and merits. There is no absolute rule or irrefutable presumption. What may be seen as a “usual” position is not an “invariable” position. The now prevailing “rule” is that “costs follow the event” unless, in its discretion, the court concludes that it should “otherwise order”. The “event” has been defined as “the practical result of a particular claim”, and the costs discretion must always be exercised judicially, to achieve an outcome which is “just” in all the circumstances. The conduct of the litigation by and on behalf of all parties must be examined to find “entitling” or “disentitling” conduct. The “reasonableness” of their behaviour at each stage must be assessed, in order to decide if costs are to be ordered, and, if so, whether on a party-party or indemnity basis. There is no absolute rule that, in the absence of “disentitling” conduct, a party seen as “successful” in the proceedings will necessarily be compensated for its costs by the unsuccessful party (see Oshlack and Fordyce).

Application of these principles to JTC Act cases, including this case

40 Most of the above-referenced decisions of courts other than the Land & Environment Court concern the classic litigation scenario of a plaintiff seeking to establish, from a zero starting-point, an entitlement to some relief from the court against, or at the expense of, the defendant. Many of them involve damages actions concerning personal injuries. In many of them, special costs considerations arise from settlement attempts, because of the existence of a Calderbank letter (putting the offeree on notice that the offeror will use it on the question of costs if the offer is not accepted and the offeree does no better at trial), or resort to an official “offer of compromise” procedure (which may trigger specific costs penalty provisions) – see now UCPR 20.26ff and 42.13ff, which apply to JTC Act proceedings. See also Ritchie’s “Uniform Civil Procedure NSW” (“Ritchie”) at 8777ff.

41 Actions in this court under the JTC code are of a different character. There remains always in the background (as determined by Biscoe J in Niezabitowski, and myself in Judgment No.4) the entitlement of the Applicant to take from the table the statutory offer. The Respondent can defend that offer, or contend in the proceedings that the court should determine a lower figure, and the Applicant can choose to take the offer, or persist with its pursuit of a higher figure. Pronouncements of courts on costs consequences of either a Calderbank letter or a trial’s vindication of the amount in an offer of compromise have to be viewed in the light of the different character of JTC Act proceedings when deciding if they apply.

42 While Latoudis and Oshlack retain their authority, some more recent judgments put into a stricter context some of the often-quoted comments made by McHugh J in Lai Qin (at 625), to the effect that when “both parties have acted reasonably … until the litigation was settled or its further prosecution became futile .. usually … the court will make no order as to the cost of the proceedings”. (See Bryson JA in Australiawide at [48]). McHugh J was adjudicating the costs application in Lai Qin, sitting at first instance, and on the basis of a quite specific High Court Rule, and the case turns on its own facts.

43 However the discretionary matters which McHugh J considered as relevant (in Lai Qin) are still apposite (see McColl JA in Fordyce at [87]), and all courts continue to endorse His Honour’s fundamental principle (from Lai Qin) that, in adjudicating the question of costs, the court must not hypothetically try the substantive proceedings.

44 Notwithstanding that principle, on the one hand the Respondent in this case wishes the Court to hold a mini-trial on the applicability of the Walker litigation, and maintains its submission that, on the evidence available to this costs hearing, it is clear that the Applicant “had no case right from the very start, … should have known that, and did know it” (T12.5.2008, p4). Mr Webster SC based that submission on the reputation of the Fitzpatrick group of companies as land dealers and land developers in the relevant district, and on his stated view that some of the work of the Applicant’s chosen valuer (Mr Large) was “entirely without merit”. Mr Webster described the Fitzpatrick interests as “well versed with the value of land”, “fully aware of the sale of the land next door” (T13.5.2008, p12 L30ff) (which was the principal comparable sale relied upon by the valuers), and “movers and dealers” (T13.5.2008, p14 L1), and would obviously have challenged the Applicant’s valuation evidence most strongly had the objection gone to trial.

45 On the other hand, the Applicant sought to influence the Court’s adjudication on costs by informing the Court of the emotional response of one of the company’s shareholders to the various events along the way (see par 39 of the Applicant’s written submissions) – Mrs Cottle is said to have been variously “shocked”, “astounded”, “concerned” and “unsettled” by the decisions made by Jagot J and myself on the amendments to the Points of Defence, and by various legal opinions provided to her.

46 The Respondent’s general proposition that the Applicant pursued its objection to the very door of the courtroom, knowing it had no case, was put to the liquidator in searching cross-examination aimed (as Mr Coles put it – T12.5.08, p65 L12-14) at making good the Respondent’s submission that these “proceedings were recklessly or relentlessly pursued with no proper basis”. I am, however, satisfied from Mr Gibbons’ affidavit and his oral evidence that he acted very professionally at all times, performing his statutory duties diligently, and relying at every stage on what he saw as extremely professional valuation, town planning, and legal advice, in all of which he had confidence, and taking care at the same time to keep the affected shareholders of the company informed, in depth, of the current situation with the proceedings.

47 Looking back on the proceedings as a whole, the short story of them is that, when the statutory offer (based upon the Valuer General’s determination) was originally made to the Applicant, the Applicant had advice that the land was worth possibly 50% more than the Minister’s figure ($120M cf $83.6M). It decided to object to the amount of the offer by filing these proceedings as required by the JTC Act. Objection proceedings are designed to replace the Valuer General with the judicial valuer, but the statutory offer remains available to the Applicant until judgment is delivered (see Niezabitowski, and Judgment No.4). At the end of the day, just before the trial began, the Applicant decided to accept the statutory offer, and so withdraw its objection to it. In doing so, the Applicant effectively “abandoned” the objection proceedings, or at least withdrew from those proceedings their major substantive issue, leaving only those issues to which the Court’s attention is now being given.

48 In some of the cases such conduct is described as “effective surrender”, or “capitulation”, on the part of the protagonist in the proceedings. I do not see it as a “supervening event” (see Lai Qin, or One.Tel), but an “effective surrender” brings into play the general principles set out in Grant and cases like Australiawide.

49 The abandonment of like proceedings in this way led, in Niezabitowski and Evagelakos, to orders that the Applicants should pay the Respondent’s costs. Biscoe J held that costs followed the “event”, namely the abandonment of the proceedings, and were not to be imposed as a punishment of the Applicant for bringing them in the first place. See also Geoffrey, where Talbot J said acceptance of the statutory offer made the Respondent the successful party, as the “proceedings were to no avail” thereafter.

50 On the basis of that line of authority, I am disposed towards making an order that in general terms the Applicant should pay the Respondent’s costs. Before concluding that view, and deciding whether any such order should be on a party-party or indemnity basis, I need to proceed to some analysis of the behaviour of the Applicant and the Respondent, to assess their conduct in terms of “reasonableness”, or its “entitling” cf “disentitling” character.

51 It is trite to observe that the information base upon which litigants and their advisers consider issues arising in litigation, and make their decisions about them, shifts over time. What is required is that the Court look, on the question of costs, at all the circumstances pertaining at each particular stage of the proceedings (per Hunt AJA in King, and Santow JA in Green).

The Applicant’s Conduct of these Proceedings

52 The Respondent contends that the Applicant has been guilty of “disentitling” conduct throughout (i) its dealings with the subject land, (ii) the acquisition of the land by the Minister at the behest of the liquidator, and (iii) the conduct of these proceedings. I, therefore, need to survey its conduct in some detail, beyond what I have already said.

53 Mr Gibbons was appointed as liquidator of the Applicant company on 24 December 2002, and set about to realise upon its land assets, including the subject land and a neighbouring lot (Exhibit M1). He immediately sought valuation, town planning and legal advice (including from senior counsel) in order to consider his options. He put the neighbouring lot out to tender and reached agreement with a purchaser on the basis that that purchaser could on-sell to, or substitute as purchaser, a named party. At about the same time he decided to exercise his right to have the Minister acquire the subject land, and, when that occurred, he submitted a claim based on all the advice he had received. None of himself and the shareholders has valuation qualifications (see T12.5.2008, p33 L2, and p33 L50 to p34 L1).

54 Armed with advice that the Minister’s statutory offer, based on the Valuer General’s valuation, was too low, he embarked on these proceedings, seeking professional advice at every stage and striving for a better return acceptable to the shareholders. Ultimately, with their concurrence, after unsuccessful settlement negotiations in which the Minister refused to negotiate above the original figure, he opted to abandon these proceedings and accept the statutory offer.

55 I am satisfied that it was reasonable for the liquidator, acting on behalf of the company and its shareholders, to seek the Minister’s acquisition of the land, particularly when the liquidator entertained a fear that the law might be changed to preclude the exercise of such a right. It was then reasonable, when the Minister did not respond to the request, that the liquidator should commence Class 4 proceedings, which were subsequently settled and resulted in the acquisition. The law provided for such acquisition to be requested and made, and it matters not what information was in the public domain or the liquidator’s personal knowledge about the government’s intentions regarding the land and its environs.

56 It was then reasonable for the liquidator to bring these current proceedings when the Valuer General offered a figure approximately two-thirds of the valuation the liquidator had obtained. It would not be fair for the Court, on the facts, to accept the submission that these proceedings were “flawed or hopeless from the start”, simply on the basis that Mr Gibbons had sold the adjoining land for $81M to a particular purchaser to whom the Respondent appears (from Counsel’s cross-examination) to attach some odium.

57 In due course, when an offer of compromise was made by the Respondent, under which the Applicant would receive only the amount of the statutory offer, but also interest and its costs of the proceedings, it was reasonable for the Applicant to give serious consideration to the circumstances, and take appropriate professional advice (which indicated a settlement figure of $113M). Having done so – including being formally advised that to take the statutory offer at a later stage in the proceedings would put the Applicant at serious risk of a costs order – it was reasonable for the liquidator, after consulting the shareholders, one of whom was inclined to accept the offer of compromise (T12.5.08 p35 L1-5), to decide to continue to take the chance on the judicial valuer bringing in a result better in quantum than the statutory offer.

58 It was also reasonable for the liquidator to oppose, in turn, the two principal amendments sought by the Respondent in order to rely on additional points of defence. The Applicant had senior counsel’s advice dating from 1 December 2003 that there was some risk that an underlying rural zoning could be determined, but, when an amendment to that effect was allowed by Jagot J, the Applicant obtained further advice, which said that, on the evidence then available to the Applicant, the amendment approved should make very little difference to the quantum which the Applicant might expect to flow from the judicial proceedings. It was, therefore, reasonable for the Applicant to decide to continue with those proceedings.

59 As has been noted elsewhere, including in Judgments Nos. 3 and 4, minds differ strongly on the impact (if any) of Walker on the circumstances of this case. The Applicant has steadfastly contended that the High Court’s decision did not change the fact that the Court of Appeal’s decision in Walker (Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No.2) (2006) 151 LGERA 186) had little bearing on this case, while the Respondent has steadfastly contended that its impact on the Applicant’s case is catastrophic. I am not convinced by the over-simplicity of the Respondent’s submission (par 48 of submissions in reply) that the High Court would not have heard the appeal if it “had nothing to say beyond what the Court of Appeal had already said”.

60 There are now available to this Court four differing opinions from senior counsel on the Walker question. One of them provided to the Applicant specifically acknowledged that the full ramifications of the decision have yet to be tested. If the Respondent’s view of Walker, namely that the High Court significantly changed the relevant law on s.56(1)(a) of the JTC Act, were to prevail at the hearing of the substantive proceedings, the Applicant may have recovered far less than the statutory offer.

61 The Lai Qin principle means that the true impact of Walker on the facts of this case cannot now be adjudicated in these proceedings, nor can the Court usefully adjudicate on the contention of the Applicant that the Respondent should have amended its defence in December 2006 (after the Court of Appeal decision) if it wished to rely upon Walker.

62 After I granted the amendment allowing the Respondent to rely upon the High Court’s decision, the liquidator received some strong advice that the Respondent’s view would not prevail, but other senior counsel were less confident of that outcome. He admitted to some concern about the divergent views, and informed the shareholders in detail. It was reasonable for the Applicant to conclude at that late stage that it should take the statutory offer.

63 Mr Gibbons gave sworn oral evidence that, having accepted the statutory offer, he still believes the land is worth more than the amount he has now accepted (T12.5.08 p38 L1-3). He made his decisions to firstly reject the offer of compromise, and later to accept the statutory offer, on the basis of the best advice available to him, and with the concurrence of his shareholders, after his efforts to negotiate a settlement at a higher compromise figure ($105M) failed (T12.05.08 p38 L32-37).

64 I have concluded that the conduct of these proceedings by the Applicant was “reasonable”, and that none of its conduct should be seen as “disentitling”.

The conduct of the Respondent

65 By the same token, subject to comments I intend to make in the context of indemnity costs (see pars [73]&[74] below), I am not satisfied that the Respondent misled or trapped the Applicant in any way. It was perfectly entitled (i) to “play it hard” in resisting the Applicant’s claim, (ii) to move beyond the advice of experts upon whom it relied as at November 2006, (iii) to seek support from experts (such as Mr Rowan) for a case aimed at achieving at trial a compensation figure significantly lower than that advised to the Minister in the Valuer General’s determination, and (iv) to twice seek the indulgence of the Court to reframe its case on the basis, in the first instance, of fresh advice, and, in the second instance, of perceived changes in the applicable law.

66 I do not accept the Applicant’s contention that the “late” Walker amendment, which precipitated the Applicant’s decision to take the statutory offer was “disentitling” conduct by the Respondent. The lateness of that amendment was dealt with in Judgment No.3.

67 I can find no conduct by the Respondent which I could describe as “unreasonable” or “disentitling”.

A General Order for Costs

68 I have, therefore, concluded that the prevailing consideration must be that, in the end, the Applicant effectively abandoned its proceedings. Accordingly, I have firmed in my preliminary view that, in general terms, costs should be ordered in the Respondent’s favour.

69 It then remains for me to consider (i) whether any of the Respondent’s costs should be recovered from the Applicant on an indemnity basis, and (ii) what, if any, different orders should be made in respect of some specific events during the proceedings.

Indemnity Costs?

70 In Niezabitowski, Biscoe J had to deal with evidence which indicated that the Applicants had decided not to continue with the proceedings on 6 June 2006, filed its notice of discontinuance on 12 July 2006, and purported to accept the offer (made on 28 June 2004) in a letter dated 14 July 2006. His Honour found that the Applicants had continued to create the appearance of proceeding with their objection “in order to secure a technical advantage while endeavouring to negotiate a settlement with the Respondent”. As the Respondent incurred costs after 6 June as the result of the tactical position adopted by the Applicants, the principles of indemnity costs were found to apply (and His Honour explained them in pars [52]-[53]). His Honour found the conduct of the Applicants to have been “unreasonable conduct in the relevant sense”, and made his costs order apply on an indemnity basis from 6 June 2006.

71 Unlike Niezabitowski there is nothing in the behaviour of the Applicant in these proceedings which would require that any part of the order I propose to make against it for costs should be on the basis of indemnity costs.

72 Unlike some of the cases where indemnity costs are ordered, the Applicant in this case did not ignore the Respondent’s offer of compromise. The evidence suggests that the offer was given very serious consideration, at a time when the employment zoning of the subject land was, simultaneously, formally in issue in the proceedings, but taken as a “given” by all experts.

73 At the very time the Respondent had its offer of compromise on the table (mid 2007) it was shifting its ground in the proceedings to a harder stance, and setting itself up to make the amendment eventually approved by Jagot J, and to contend, for the first time, for a figure lower than the statutory offer. The force of that shift was not made readily apparent to the Applicant at the time. Mr Rowan (not listed as an expert in November 2006) was engaged in February 2007, but his opinions were not revealed to the Applicant until about June 2007, and their monetary implications were not clear until March 2008 when further Amended Points of Defence were filed following the Walker amendment.

74 All of that conduct on the Respondent’s part might be viewed by some as “disentitling”, if the Respondent were otherwise seen to be entitled to an order for indemnity costs against the Applicant. However, I do not see the Respondent as entitled to such an order, in any event.

75 “Compromise” is seen in the authorities as requiring the parties to “give something away”, and I do not accept the Applicant’s contention that the Respondent’s offer of compromise lacked any element of genuine compromise. True it is that it represented a result available to the Applicant at any time until the Court delivered judgment on the objection (a contention the Respondent resisted strongly once the statutory offer was taken), but it offered no challenge to the Applicant’s right to interest, and included an offer to pay costs. The Applicant saw the Respondent’s offer as requiring it to give away about $30M which it believed, on advice, that it could expect, in exchange for keeping its interest and getting its costs.

76 In all the circumstances the Applicant can be excused for not seeing it as a compromise which should be accepted, at least at that time, but I am satisfied that it received the Applicant’s genuine consideration. It was not until later in the proceedings that the Applicant saw the risk of gaining far less at trial – as noted in par [73], the valuation evidence firmed against the Applicant’s case only in March 2008.

77 Had the Applicant foreseen the possible impact of the Walker amendment (as distinct from that amendment approved by Jagot J around the time of the offer of compromise) – and it must be remembered that the offer of compromise was on the table many months before the High Court’s decision in Walker – the Applicant may have seen the offer as “a real and genuine compromise” (per Santow JA in Green), and not merely a device to force the Applicant to abandon its claim “to avoid the risk of a costs order” (per Dunford J in McKerlie).

78 Rejection of an offer of compromise does not automatically expose the rejecting party to an order for indemnity costs. If it is ignored, or there is evidence to show a lack of genuine consideration of it, an order for indemnity costs might follow, but neither of those circumstances applies here.

79 To result in an order for indemnity costs the behaviour of the party concerned, whether generally or in regard to its rejection of an offer of compromise, must be found to be “imprudent”, “unreasonable”, or tainted by fraud, misconduct, an ulterior motive, wilful disregard for known facts or settled law, groundless contentions, “disentitling conduct”, “plainly unreasonable conduct”, or “relevant delinquency” (see Santow JA in Green, summarising various cases. See also Oshlack, Ritchie 8752, and Canterbury). Even so, as Lloyd J concluded in Canterbury, the rejection of a reasonable offer is but “one among many” factors to be considered.

80 I see no grounds for making any orders in this case that costs be paid on an indemnity basis.

Specific events

81 I turn, finally, to the specific events in the case, to which attention has been drawn.

82 It is a principle of long standing that a party granted an indulgence by a court should expect to be ordered to pay the costs consequentially occasioned to its opponent. See Stewart v North Metropolitan Tramways Co (1886) 16 QBD 556, and Ritchie at 2532.

83 The Respondent obtained from the court leave to make two substantial amendments to its Points of Defence. On the first occasion (6 July 2007) Jagot J made a costs order, and on the second occasion (17 March 2008) I reserved the question. Despite the revelation that there was an offer of compromise on the table at the time of Jagot J’s consideration of that first amendment, I can see no reason to vacate her costs order, and good reason to emulate it. The Respondent should pay the Applicant’s costs of the two amendments made to the Points of Defence and the costs thrown away by the Applicant as a result of the Respondent’s success in those two interlocutory proceedings.

84 I see no reason to vacate either the “costs in the cause” order made by Lloyd J on 20 November 2007, or the costs order made by Jagot J on 12 December 2007.

85 When the statutory offer was accepted late on Friday 18 April 2008, the Applicant sought unsuccessfully to get the Respondent before the court to vacate the hearing appointed for the morning of the next working day. I find no fault with the Respondent in this regard. The Applicant should pay its own costs of that day.

86 When the court then sat on Monday morning 21 April 2008 both sides put their views, in a preliminary way, on whether the Applicant’s acceptance of the statutory offer was valid or effective, and the “separate question” to be answered was variously formulated. Each party should pay its own costs of that day.

87 As there was clear authority in this court on that separate question, authority not challenged on appeal, but accepted and followed in subsequent cases, (and thought to be clearly correct, incidentally, by senior counsel consulted by the Applicant, other than Mr Coles), I believe that the Respondent should pay the Applicant’s costs of and incidental to the determination of that separate question by my judgment of 29 April 2008 (Judgment No.4).

88 In par [89] of Judgment No.4 I appointed 5 May for the hearing of the matters being determined in this present judgment. The Applicant was simply not ready to proceed on that day – and no satisfactory explanation has emerged – whereas the Respondent was ready. The Applicant should pay the Respondent’s costs of that day.

89 Each party should pay its own costs of the hearing of these concluding matters on 12 and 13 May.

Orders

90 Accordingly, the proceedings are to be finalised in the following way:

A. The Court notes that on 18 April 2008 the Applicant accepted, pursuant to s.44(1) of the Land Acquisition (Just Terms Compensation) Act 1991, the offer made by the Respondent on 24 April 2006, pursuant to s.42(2) of that Act, giving rise to a statutory obligation on the Respondent, under that Act, to pay the amount of compensation specified in that offer, as required by s.45(3) of that Act, to the Applicant, together with interest pursuant to s.49 of that Act, at the rate specified in s.50 of the Act.
B. The Court further notes the orders for costs made by Jagot J on 6 July 2007 and 12 December 2007, and by Lloyd J on 20 November 2007, and declines to vacate or vary them.
C. Except as provided by the orders referred to in Order 2, the Applicant is ordered to pay the Respondent’s costs of the proceedings on a party-party basis, as agreed or assessed according to law, subject to the following:
(a) The Respondent is to pay the Applicant’s costs of and incidental to:
(i) The Respondent’s Notice of Motion of 14 March 2008 and its further amendment of its Points of Defence filed on 19 March 2008, together with any of the Applicant’s costs thrown away as a result of that amendment; and
(ii) The determination of the separate question argued on 23 April 2008 and answered on 29 April 2008,

as agreed or assessed; and

(b) Each party is to pay its own costs of and incidental to the proceedings on 21 April 2008, 12 May 2008, and 13 May 2008.
D. These proceedings are otherwise dismissed .
E. The exhibits, including the confidential advices of counsel exhibited as “JRG2” to Mr Gibbons’ affidavit of 8 May 2008, together with the 14 volume “ agreed bundle ” for the substantive proceedings, may be returned, and the parties are granted leave to approach the Registrar to have returned to them any expert reports filed with the Court.

91 Formal Orders will issue to this effect.

92 I again acknowledge the assistance of Acting Commissioner Sheehan during these proceedings.