Springfield Land Corporation v The State
[2003] QLC 51
•25 July 2003
LAND COURT OF QUEENSLAND
CITATION: Springfield Land Corporation v The State [2003] QLC 0051 PARTIES: The State
(applicant)v. Springfield Land Corporation (No 2) Pty Ltd
(respondent)FILE NO: A2001/0606 DIVISION: Land Court of Queensland PROCEEDING: An application for the costs of and incidental to the hearing and determination of a claim for compensation under the Acquisition of Land Act 1967 DELIVERED ON: 25 July 2003 DELIVERED AT: Brisbane MEMBER Mr RE Wenck ORDERS: (1) The application by the State for its costs is disallowed and no order is made as to the costs of the hearing and determination.
(2) It is ordered that the State pay the respondent's costs of this application.
CATCHWORDS: Costs - Section 27 Acquisition of Land Act 1967 - Effects of the making of an exorbitant claim - "Half-way mark" - Whether either party forced into litigation SUBMISSIONS: Mr T Quinn and Mr J O'Rourke for the applicant
Freehills, Solicitors, for the respondentSOLICITORS: Legal Counsel, Legal Services, Department of Natural Resources and Mines for the applicant
Freehills, for the respondent
In a judgment delivered on 13 June 2003 compensation for the taking (by agreement) of land by the State for school purposes from the Springfield Land Corporation (No 2) Pty Ltd ("SLC") was determined in the amount of $2,050,000. The amount finally claimed by SLC was $4,865,000. The amount of the valuation finally put in evidence by the State was $1,100,000.
Section 27 of the Acquisition of Land Act 1967 (the Act) relevantly provides:
"(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.
(3) ... "
The amount of compensation determined is nearer to the amount of the valuation finally put in evidence by the State. Costs are in the discretion of the Court, subject to the fetter imposed by s.27(2) of the Act, the consequence of which in this matter is that costs (if any) shall be awarded to the State.
The State has made application for its costs by way of a written submission to which a written response has been filed by the claimant with a reply to that response now also filed.
In support of its application, the State submits that the following "features" in the circumstances of the case indicate that an order for costs in its favour ought be made:
(a)Springfield Land Corporation not an unwilling resumee with no interest in the resumption;
(b)Springfield Land Corporation claim "exorbitant";
(c)Unsatisfactory aspects of promotion of Springfield Land Corporation claim.
Feature (a) - "Springfield Land Corporation Not a Hapless Resumee with No Interest in the Resumption"
In summary, the State submitted that the use of the land for school purposes had been promoted by SLC to serve its commercial interests as the developer of the large Springfield residential project. That development generated the need for considerable social infrastructure, including the provision of schools. As a consequence, it is submitted, SLC could not be characterised as having been placed in an unfortunate position as is usually the case of the resumee who has unwillingly suffered an invasion of property rights and whose prima facie right to continue to enjoy the property in question has been extinguished. The State perceives that "some tenderness" towards the usual position of resumees, creates an impediment to orders for costs in favour of the State. However, in this case, it is submitted that a characterisation is available which weighs in favour of an order for costs to the State.
It was further submitted that "There is in broad terms an element of enhancement of the value of the balance lands of Springfield Land Corporation which may be considered, in a general sense, as moderating the ordinary feelings of sympathy which advantage a claimant in a resumption case".
SLC's response was that this first feature is emotive and entirely irrelevant or at least is not a factor which has any weight, and the exercise of the discretion as to costs is not concerned with any of the matters raised by the State under this heading.
SLC submits that certain of the propositions summarised by the Land Appeal Court in Yalgan Investments Pty Ltd v Albert Shire Council (1998) 17 QLCR 401 at 406-408 namely propositions (e) and (f) are relevant with regard to this aspect of the State's submission and (j) and (k) in other aspects.
SLC says that there is no basis for the reference to enhancement of the balance land, the State not having put forward a case for enhancement during the hearing. In reply the State sees it as "a self-evident fact" that a new high school is a significant service or facility which will enhance the value of Springfield's remaining land. The State says that "No case for enhancement was available because the Springfield land, the value of which was enhanced by the establishment of the school, was not land 'adjoining the land taken or severed therefrom' within the meaning of subsection 20(3) of the Act ... But that is not to say that the fact that other land of Springfield was enhanced is not one of a range of matters that might be taken into consideration in deciding how to exercise the discretion to award costs to the State."
Feature (b) - Exorbitant Claim
The State considers that it is open for the claim in the amount of $4.864M to be characterised as exorbitant given the determination of compensation in the amount of $2.05M. It gains support for that contention from the view expressed by the Land Appeal Court in Chief Executive, Department of Transport v Nadco Pty Ltd (1998) 18 QLCR 408 at 418 that "It would not be unreasonable" to describe a claim of $1,193,593 as exorbitant, "since it exceeded the sum arrived at by the member" ($710,036, excluding disturbance) "by such a large amount."
The State submits that there had been no mitigating circumstances for the making by SLC of the claim in the amount which it did.
In its response SLC made references to the differences between the finding in Nadco and the circumstances in this matter. The SLC claim did not force the State unnecessarily or unreasonably into litigation. The Land Court accepted the claimant's position as to the potential of the land and rejected the State's position. If anything, SLC submits, the State forced the claimant into Court to substantiate its position as to the potential of the land.
SLC saw propositions (j) and (k) from Yalgan as interrelated, while the State's submission is "simplistic, inconsistent with proposition (j) and the first part of proposition (k) and ignores the last part of proposition (k)."
Feature (c) - "Unsatisfactory Features of the Promotion of the Claim"
The State refers to the Land Court's recognition in the reasons for judgment that SLC's valuer had been provided with "exaggerated misinformation" and also saw the provision of that as sitting uncomfortably with the fact that SLC had consulted an expert in relation to commercial potential, but chose not to put any evidence from that expert before the Court.
SLC's response was that the reference to the provision of "exaggerated misinformation" in the reasons, had been overstated in the State's submission but, in any event, that provision had not influenced the valuer's opinion as to highest and best use of the land.
The second allegation by the State under this heading was that a " veil" had been drawn over advice "apparently obtained" in the first instance from another valuer for the purpose of compilation of the original claim for compensation. That claim included an amount for the particular valuer's fees. The valuer had not been called to give evidence. The State saw it as seemingly "reasonable to infer in favour of the claimant" that the claim for fees "was made bona fide, as opposed to being a fraudulent claim". However it also saw that the inference could be drawn that evidence to support the claim for the fees would not, overall, have assisted SLC's case.
SLC's response to the second allegation was that it was wholly irrelevant as the Court was advised at the commencement of the hearing that no claim was then being made for valuation fees or any other disturbance item.
Third the State referred to "the somewhat sharp practice" of SLC "in attempting to produce a contract in relation to the subject land during a period in which it was still attempting to have the State take the land for a school."
SLC responded to the effect that the alleged "sharp practice" was nothing more than a legitimate attempt to realise the potential of the land.
In summary SLC observed that "Nowhere does the State suggest that what it describes as 'unsatisfactory features' had any cost implications of the kind referred to in paragraph (k) of Yalgan. This third feature seems to be nothing more than gratuitous and irrelevant criticism of the claimant or its advisors."
Findings
The leading decisions on the scope and exercise of the Land Court's discretionary power were considered by the Land Appeal Court in Yalgan. The propositions for which those judgments and s.27 of the Act stand were stated in summary form by the Land Appeal Court as (a) to (k) inclusive at pp.406-408. The propositions (e), (f), (j) and (k) as referred to by SLC are set out in full as follows:
"(e)Compulsory acquisition cases differ from ordinary claims in the significant respect that the claimant, unlike the ordinary plaintiff, had no choice whether to make a claim or not. The mere acquisition by compulsory process gave the claimant a claim to compensation which he or she could hardly be expected to renounce (Florence at p.149, Banno at p.53)" (Minister for the Environment v Florence (1980-81) 45 L.G.R.A. 127 and Banno & Anor v Commonwealth of Australia (1993) 81 L.G.E.R.A. 34).
"(f) The discretion whether to award costs may not be exercised in an arbitrary manner but must be exercised on principled grounds (Banno at p.53) or judicially, that is, for reasons that can be considered and justified (Wyatt at p.489) by reference to relevant considerations (Moyses at p.273)" (Wyatt v Albert Shire Council [1987] 1 Qd.R 486 and Moyses & Ors v Townsville City Council (1979) 6 QLCR 271).
"(j)Section 27(2) of the Acquisition of Land Act 1967 should not be regarded as a legislative suggestion that, where the claim is substantially more than the amount awarded, and the amount put in evidence by the constructing authority is not substantially less than the amount awarded, the Court should not merely refrain from awarding any costs to the claimant but should award costs to the authority (Moyses at p.274)."
"(k)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 inquire 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 at p.53)."
In terms of the State's submission proposition (i) from Yalgan may also have relevance:
"(i)Although the exercise of the power does not exclude resort to the 'settled practice' of a court where such a practice has evolved, a purported exercise of discretion which fails because the mind is closed to relevant considerations through a rigid adherence to preconceptions involves an error of law that is open to correction on appeal (Wyatt at p.489)".
While its submission did not go as far as to say it was the "settled practice" of this Court, the State seems to suggest that an impediment to it receiving orders for costs is that "some tenderness" is shown towards resumees in the normal set of resumption circumstances. The State should be aware however that in many cases it could also be argued conversely that while s.27(2) of the Act was clearly intended to discourage exorbitant claims, as recognised by the Land Appeal Court in Nadco, its consequence is that a resumee is disentitled to costs when the facts would suggest a claim has been successful, despite not having reached the "halfway mark". This could reasonably be seen as one such case, where, had it not been for the s.27(2) fetter, strong argument could have been advanced by the claimant in support of an order for costs against the State.
Nothing is seen to be served in revisiting the full history leading to the taking of the land by agreement. However, the respondent chose not to criticise the State's initial rejection of the site when it was offered at no cost. It would be expected that the State did not acquire the land for the purpose of enriching SLC but instead to provide a benefit to the Springfield (and neighbouring) community as a whole. The end result was that by agreement, the question of compensation was able to be determined in accordance with the Act, just as is the question of costs.
I see no justification for awarding costs to the State based on its submissions in relation to Feature (a).
Moving next to Feature (c) I again find no justification for awarding costs to the State based on its submissions under this heading. If it was the intention of the State's allegation of "unsatisfactory features of the promotion of the claim", to categorise the claim as vexatious or dishonest, or to suggest that the claimant presented its case in such a way as to impose unnecessary burdens on the State or the Court, then such categorisation or suggestion would not be accepted on the facts. A grossly exaggerated claim has been suggested under the "exorbitant" heading and that suggestion will be dealt with next. The State's advisers may be disappointed with the overall turn of events but in terms of the application for its costs, I am inclined to agree with the respondent's characterisation of Feature (c) as gratuitous and irrelevant criticism of the claimant or its advisors.
Feature (b) - Exorbitant Claim
Despite the finding that the potential of the land was generally in keeping with the case promoted by SLC, that potential was found to be futuristic rather than short term. That was one of the several reasons for the finding that the quantum of the valuation on which the claimant relied was not capable of evidential support. There is nothing to suggest that, from SLC's perspective the claim was exorbitant or its conduct in making the claim questionable. In hindsight, however, given the ordinary meaning of the word and as was the view of the Land Appeal Court in the Nadco matter, "it would not be unreasonable" to describe a claim of $4.865M as "exorbitant" or even "grossly exaggerated" since it exceeded the determination of $2.05M by such a large amount.
In Nadco the Land Appeal Court was not required to decide whether, in fact, the conduct of the claimant in making the exorbitant original claim, had been such as to force the resuming authority, unreasonably and unnecessarily, into litigation. The Land Appeal Court's task was to decide whether by making, with leave, a late amendment to the claim, and thereby avoiding an order for costs against it, the claimant Nadco was then entitled to an award of its costs, as had been the finding of the Land Court.
I agree that propositions (j) and (k) in Yalgan are, as SLC submits, relevant considerations when the costs consequences of the making of an exorbitant claim are being considered. I am not persuaded that, in this matter, the conduct of SLC was such as to have forced the State unreasonably and unnecessarily into litigation; that SLC pursued a vexatious or dishonest claim; or presented its case in such a way as to have imposed unnecessary burdens on the State. Instead it had been reasonable and necessary for SLC to pursue its claim in order to achieve compensation based on potentiality rejected by the State and significantly in excess of the State's final valuation.
One consequence of SLC having made an "exorbitant" or a "grossly exaggerated" claim, in light of the determination, is that it is disentitled to its costs and has permitted the State to avoid the possibility of an award against it.
Orders
(1)The application by the State for its costs is disallowed and no order is made as to the costs of the hearing and determination.
(2)It is ordered that the State pay the respondent's costs of this application.
RE WENCK
MEMBER OF THE LAND COURT