Regan, Ross River Distributors Pty Ltd & Tropic Distributors Pty Ltd v Chief Executive, Department of Main Roads

[2000] QLC 25

[2000] QLC 25

 

LAND COURT

BRISBANE

12APRIL 2000

Re:     A98-24

Determination of Compensation -

Resumption by the Chief Executive,

Department of Main Roads

Acquisition of Land Act 1967 and the

Planning and Coordination Act 1994

Jeffrey G and Leoni M Regan

Ross River Distributors Pty Ltd and

Tropic Distributors Pty Ltd

v.

Chief Executive, Department of Main Roads

APPLICATION FOR COSTS

D E C I S I O N

1. Compensation flowing from the resumption of land owned by Mr and Mrs Regan, and on which the claimant companies conducted businesses, was determined in reasons published on 3 April 2000.  The claim for compensation, which was amended with the leave of the Court, included:

   Land and improvements  $640,000.00
              Costs of notional acquisition of replacement
                land and buildings  $38,344.00
              Removal, relocation and re-establishment costs
                for businesses  $41,032.56
              Valuation and legal fees incurred in preparation
                of claim  $14,750.00

Total  $734,126.58

Claim rounded to   $735,000.00

1. Subsequent to the amendment of the claim the claimants acknowledged an error of fact which was relevant to their valuation (see paragraphs 150 to 152 of reasons of 3 April 2000), with the result that the land and improvements figure was reduced to $590,000.  There were consequential reductions to the costs of the notional acquisition of the replacement land and buildings.  Leave was not, however, sought to amend the claim for compensation to the new figure.  It was simply a matter that submissions were made in support of the new and lower figure. 

2. The subject of costs in proceedings for compensation for the acquisition of land is dealt with in s.27 of the Acquisition of Land Act 1967, which for present purposes relevantly provides:

   "     27.           (1)  Subject to this section, the costs of and incidental to the hearing and determination by the Land Court of a claim for compensation under this Act shall be in the discretion of that court.

(2)  If the amount of compensation as determined is the amount finally claimed by the claimant in the proceedings or is nearer to that amount than to the amount of the valuation finally put in evidence by the constructing authority, costs,  (if any) shall be awarded to the claimant, otherwise costs (if any) shall be awarded to the constructing authority."

1. Counsel for the claimants suggested that on the authority of "Buckler" (Commissioner for Railways v.Buckler (1996) 1 Qd.R 18) just as it is "the amount of the valuation finally put in evidence by the constructing authority" which is to be employed in finding the midway point required in the application of s.27(2), it is the figure of $590,000 and the lower notional costs that should be included as the relevant figure from the claimants' side. That submission does not accord with my understanding of s.27(2) nor with what McPherson JA said in Buckler at pp/23-24:

   "          Stated in general terms, what the court is now required to do in fixing the incidence of costs under this rule is look to the final positions taken up by the parties.  In the case of the claimant, it is the quantum of compensation last claimed.  Theoretically at least, its amount might not be known until the final address of counsel for the claimant.  In practice, however, s.24(2A) furnishes a disincentive against conduct like that.  It does so by restricting the right to amend a claim once it has been filed in accordance with s.24(2A) of the Act.  Thereafter an amendment may be allowed; but on terms including payment of costs: see s.24(3).

   On the other hand, there seems to be no comparable restriction preventing the constructing authority from deferring disclosure of its final position until a late stage of the proceedings.  It will be discoverable only from 'the amount of the valuation finally put in evidence by the constructing authority', which means that it cannot with confidence be known what the amount of it is until the constructing authority closes its case."

1. I should therefore direct my mind to the last claim for compensation amended with leave of the Court in calculating the point at which the arithmetic trigger implicit in s.27(2) is to be found. This does not mean that I cannot take into account the later submissions which, in effect, involved a concession and resulted in the practical reduction of the amount sought for land and buildings to $590,000 and for consequential reductions I have mentioned earlier.

2. The respondent's figure for the purpose of considering s.27(2) is $171,000 for land and improvements, plus appropriate professional fees incurred in the preparation of the claim for compensation and costs associated with the "relocation of the service station operation" (see paragraph 6. of reasons of 3 April 2000). Professional fees were, in the end, settled between the parties at $12,000. Additional amounts suggested by the respondent with respect to the other items of special value/disturbance contended for by the claimant amounted to $8,144.89 (opening day expenses $2,900; removal of bowsers $289.30; wages/customer retention $1,568.80; wages for relocation $,3,386.79). The total figure for the respondent was therefore $191,144.89:

   Land improvements  $171,000.00
              Professional fees  $12,000.00
              Relocation expenses  $8,144.89

   $191,144.89

3. Counsel for the claimants suggested that the respondent had effectively submitted that compensation for relocation expenses should be a nil figure, however, that is not my understanding of the manner in which the respondent treated that topic during the hearing of the substantive matter.  The respondent submitted that there would be an inconsistency involved in the determination of compensation for relocation of the businesses conducted on the resumed land and the valuation of that land on the basis of a service station there enjoying a particular market share.  It was the respondent's view that this suggested inconsistency ought to be resolved by valuing the resumed land as if there was no market share, not by determining compensation for relocation expenses at a nil figure. 

4. If I apply the language of s.27(2) to the above figures then the midway point for the purpose of considering costs is $4,630.72.44.
              My determination of compensation was as follows:

   Land and improvements  $370,000.00

Costs of notional acquisition of land buildings  Nil

Removal, relocation and re-establishment costs
             for businesses  $28,027.09

Legal and valuation fees incurred in preparation of the
             claim for compensation  $12,000.00

Total rounded to  $410,030.00

1. Accordingly, it is the respondent only who has the right to apply for costs.  Such an application was made.  Counsel for the respondent drew my attention to three instances which demonstrate that costs may be awarded in cases where neither party is entirely successful (Yalgan Investments Pty Ltd v. Council of the Shire of Albert (1997) 17 QLCR 401; Shellray Pty Ltd v. Commissioner of Main Roads (unreported Land Court 21 December 1999); and Boral Bricks (Qld)Ltd v. Director-General, Department of Main Roads (unreported Land Court 4 June 1999)).  It was not suggested that these authorities would require that I determine the cost application in favour of the respondent, but rather that such a conclusion is open and, given other submissions, which I will come to shortly, a similar conclusion should be drawn in favour of the respondent in the present case.

2. The Legislative policy/strategy of section 27(2) was explained by McPherson JA in. Buckler at 23:

   "In ordinary legal proceedings in the courts the general rule is that costs follow the event.  To apply that rule in an unqualified way in compensation cases would in practice enable the claimant to contest the amount of compensation with more or less complete impunity as to costs.  It is rare for no compensation at all to be awarded in such cases.

   Various devices have been tried with a view to encouraging early settlement and discouraging exorbitant claims in compensation cases.  The method adopted in s.23(7) of the Public Works Resumption Act 1906 was to limit the general discretion of the Land Court as to costs by making it subject to a rule in effect that costs, if any, were to be awarded to the constructing authority unless the amount of compensation finally determined by the Court was the amount claimed by the claimant or was nearer to it than to the amount offered by the authority, in which case costs, if any, were to be awarded to the claimant.

   Section 23(7) was introduced into the Act of 1906 by an amendment (15 Geo. 6 No. 11, s.36) to the Land Act in 1951.  The formula was retained when a new s.23(7) was substituted in 1954 by 4 Eliz. 2 No. 48, s. 8(iii).  At that time the legislation seems to have contemplated that an offer would ordinarily be made by the constructing authority within a stipulated time after receiving the claimant's claim and particulars, which themselves had to be furnished within a limited period.  The only difference made by the amendment in 1954 was that the authority's offer could be used as evidence of the amount of that offer irrespective of when the offer had been made.  The result no doubt was to give the constructing authority an advantage not shared by the claimant.  Obstinately refusing until the last moment to agree on reasonable compensation is not something that is necessarily confined to claimants.

   Section 27(2) of the Acquisition of Land Act 1967 is thus the third in this line of attempts to resolve the question by means of a statutory provision governing costs. It preserves the device used in the earlier two provisions of treating nearness to the amount awarded as decisive, but does so with two changes. One is that, in deciding the question, it is not the first amount but the 'final' amount claimed by the claimant that is relevant; the other is that it is not the amount of any offer made by the constructing authority but 'the amount of the valuation finally put in evidence by the constructing authority' that matters."

1. The reference to "exorbitant claims" takes me to Moyses & Ors v. Townsville City Council (1979) 6 QLCR 271 which was approved of and summarised recently by the Land Appeal Court in Yalgan Investments Pty Ltd v. Council of the Shire of Albert (1997) 17 QLCR 401 at 408:-

   "Where the Land Court is considering whether it should award costs to a constructing authority, it could be wrong to have regard merely to the amounts of the claim and of the award and of the value put in evidence by the authority.  Usually it would be more relevant to enquire whether the conduct of the claimant (such as, for example, making an exorbitant claim) has been such as to force the authority, unreasonably and unnecessarily, into litigation (Moyses at p. 274) or whether the claimant has pursued a vexatious, dishonest or grossly exaggerated claim or presented his case in such a way as to impose unnecessary burdens on the constructing authority or the Court." (Banno and Another v. Commonwealth of Australia (1993) 81 LGERA 34 ).

2. It was submitted for the respondent that the claim for land and improvements figure of $640,000 could only be described as exorbitant when compared with the amount determined of $370,000.  I acknowledge that the figure is high, however, I draw attention to the words of Justice of Appeal McPherson in Buckler who said that not only has the legislation historically attempted to discourage "exorbitant claims", but is also concerned with "encouraging early settlement".  In the instant case settlement could not reasonably have been anticipated given the different positions adopted by the parties with respect to the question as to whether the resumed land ought to be valued on the basis that it enjoyed a market share in the fuel market in Charters Towers.  Importantly, I should add that the respondent was unsuccessful on that critical point.  Moreover, the respondent contended for a valuation figure for the land which was almost $200,000 below the figure finally determined.  The claimants therefore enjoyed a measure of success.

3. The respondent contrasted the total amount awarded for disturbance and special value ($40,030) with that claimed ($94,126.56) and the amount finally contended for by the respondent ($20,144.89) suggesting that these figures point to the lack of success for the claimants in that part of the matter.  These figures need, however, to be further considered in my view.  I note first of all the parties' agreement concerning valuation and legal fees.  If I deduct from the claimants' figures the amount for legal and valuation fees ($14,750), the claim for special value/disturbance becomes $79,376.56.  Similarly, a deduction of $12,000 from the respondent's figure would reduce that side's estimate of special value/disturbance to $8,144.89.  Now a large part ($38,344) of the claimant's figure is made up of the costs of the notional acquisition of replacement land and buildings, a claim which I rejected as a question of law.  If I put that figure aside for present purposes, the net figure being contended for by the claimants becomes $41,032.  This is not to say that the claimants did not contend for the costs of notional acquisition, but that the award of compensation for that item turned on a conclusion of law in favour of the claimants:  a conclusion which in the end involved what I think could be described as a refined consideration of legal principle.  Once I deduct the figure of $12,000 for legal and valuation fees from the amount finally determined by me, ($40,030-$12,000 = $28,030) the figures that can be compared with that are $41,032 for the claimants and $8,144.89 for the respondent. 

4. That analysis suggests to me that the claim for special value/disturbance does not merit description as "exorbitant" a term that seems to me to be concerned with a figure without merit or foundation.

5. In the result, I think it would be inappropriate to award costs against the claimants.  Accordingly, the application is refused and I order that each party bear their own costs.

RP SCOTT

MEMBER OF THE LAND COURT