State of Tasmania v Croft (No 2)
[2013] TASSC 41
•1 August 2013
[2013] TASSC 41
COURT: SUPREME COURT OF TASMANIA
CITATION: State of Tasmania v Croft (No 2) [2013] TASSC 41
PARTIES: STATE OF TASMANIA
v
CROFT, Terry Fortescue
FILE NO: 334/2012
DELIVERED ON: 1 August 2013
DELIVERED AT: Hobart
HEARING DATE: 27 June 2013
JUDGMENT OF: Blow CJ
CATCHWORDS:
Real Property – Compulsory acquisition of land – Proceedings for compensation – Tasmania – Costs – Award much less than sum offered – Unreasonable conduct of claimant – Small entitlement.
Land Acquisition Act 1993 (Tas), s60(1) and (2).
Sorell Council v Downie (No 2) [2005] TASSC 9, referred to.
Aust Dig Real Property [1755]
REPRESENTATION:
Counsel:
Applicant: P Turner
Respondent: In person
Solicitors:
Applicant: Director of Public Prosecutions
Respondent: In person
Judgment Number: [2013] TASSC 41
Number of paragraphs: 14
Serial No 41/2013
File No 334/2012
STATE OF TASMANIA v TERRY FORTESCUE CROFT
REASONS FOR JUDGMENT BLOW CJ
1 August 2013
Counsel for the State has applied for an order that the respondent, Terry Croft, pay the State's costs of an application for the assessment of compensation that was made under the provisions of the Land Acquisition Act 1993. The Crown had acquired the respondent's interest in some general law land that forms part of the Emu Bay Railway. He was the beneficial owner of some debenture stock once issued by the Emu Bay Railway Company Ltd. Its general law land had been mortgaged to secure the interests of debenture holders. On 17 June 2013 I assessed the compensation payable to him in the sum of $4,895.72: State of Tasmania v Croft [2013] TASSC 28.
I have the power to make an order for costs under s60(1) of the Land Acquisition Act. Section 60(2) sets out various matters that I must take into consideration when deciding whether to make a costs order. The two subsections read as follows:
"(1) The costs of, and incidental to, any arbitration or proceedings before the Court under this Act are in the discretion of the arbitrator or the Court.
(2) In exercising a discretion to award costs under subsection (1), the Court or arbitrator must take into consideration —
(a)where the subject matter of the proceedings or arbitration relates to the amount of compensation payable, the amount of compensation awarded as compared with the amount (if any) offered by the acquiring authority; and
(b)the extent to which the proceedings or arbitration has arisen from, or been affected by —
(i) unreasonable conduct on the part of the claimant or the acquiring authority; or
(ii) the failure of the claimant to give adequate particulars of the claim or supply supporting material when required to do so; or
(iii) an excessive claim by the claimant; or
(iv) an unduly depressed offer by the acquiring authority."
Section 60(2)(a) requires a comparison between the amount of compensation awarded and the amount, if any, offered by the State. As I have said, I awarded $4,895.72. The responsible Minister wrote to the respondent on 8 November 2010 offering him $10,000 plus statutory interest, plus reasonable professional costs. That offer was not accepted. A representative of the State wrote to the respondent on 23 February 2011 offering him $50,000. That offer was not accepted either. That sum was offered again on 6 June 2012. That was the final offer. It remained open until 14 June 2013, three days before the hearing of the assessment application. It was not accepted.
Counsel for the State relied on s60(2)(b)(iii). He argued that there had been an excessive claim by the respondent. The respondent wrote to the Minister on 26 May 2010 claiming $150,000 plus interest, plus legal costs. I was told that he indicated to counsel for the State on 27 February 2013 that he would be prepared to accept $62,500 by way of settlement.
Counsel for the State also relied on s60(2)(b)(i). He argued that there had been unreasonable conduct on the part of the respondent. The history of the matter can be summarised as follows:
· The Crown Solicitor wrote a long letter to the respondent on 4 September 2009 outlining the fact that he had recommended that legislation be enacted to resolve the problem that existed concerning the title to the railway land, the reasons for that proposal, and the proposal that debenture holders would be entitled to compensation.
· As I have said, the respondent wrote to the Minister on 26 May 2010 claiming $150,000 plus interest, plus costs.
· As I have said, the Minister wrote back on 8 November 2010 offering $10,000 plus interest, plus costs.
· As I have said, a representative of the State wrote to the respondent on 23 February 2011 offering $50,000.
· The State commenced these proceedings by filing an originating application on 3 May 2012.
· In June and July 2012 there was voluminous correspondence between the respondent and Mr Turner of the office of the Director of Public Prosecutions. It was Mr Turner who later appeared as counsel in the matter. In the course of this correspondence, the respondent advanced a number of misconceived arguments, and Mr Turner wrote back explaining their weaknesses, and explaining the State's contentions. It was in the course of that correspondence that the offer of $50,000 was repeated.
· The respondent made an unsuccessful application for discovery in respect of an opinion provided by the Crown Solicitor. The application was heard by Holt AsJ on 27 February 2013. It failed because the document was the subject of legal professional privilege. The hearing on 27 February took nearly three hours.
· The hearing of the originating application was subsequently listed for 17 June 2013. On 3 June 2013, Holt AsJ dealt with an application by the respondent for that hearing date to be vacated. His application was unsuccessful.
· On 12 June 2013 the respondent appealed from the decision not to vacate the hearing date. He also filed an interlocutory application seeking a stay of the assessment proceedings pending the hearing of his appeal. When the matter came before me on 17 June, I heard and dismissed the stay application. That application had no merit at all. Essentially the respondent sought to delay the proceedings in the hope that he would be able to find a lawyer who would act for him on a pro bono basis – something that he had not managed to do in the period that the proceedings had been pending. The hearing of his stay application took two hours.
The respondent has made oral submissions and two written submissions in response to the costs application. In many respects, he has sought to persuade me as to the merits of arguments that I rejected when assessing the compensation payable to him. I have not changed my mind in relation to any of those issues. My views in relation to them can be found in the reasons that I published when I assessed compensation.
The respondent made a number of submissions to the effect that the State, through Mr Turner as its representative, did not behave as a model litigant should. I disagree. Mr Turner did the respondent the courtesy of writing to him and explaining the Crown's contentions, as well as the Crown's arguments in relation to his own misconceived contentions. The State adduced appropriate evidence, did not keep anything back inappropriately, and relied on sound contentions as to the quantum of compensation. It did not dispute the respondent's assertions as to unpaid debenture interest. It was by no means niggardly in conceding that the respondent should receive $3,000 by way of compensation for his time pursuant to s27(1)(g) of the Land Acquisition Act. The positions adopted by the State in the proceedings before Holt AsJ and myself were entirely appropriate.
The respondent relied on cl 4.3 of the Business Sale Agreement pursuant to which the State purchased the railway. Under cl 4.3(f), all reasonable and documented legal costs and other expenses incurred, paid or payable by the State in connection with a claim for compensation by a debenture holder were to be reimbursed to the State from a compensation fund established by the companies that sold the railway to the State. If I were to order the respondent to pay some of those costs, that order would benefit the vendor companies, not the State, since cl 4.10(b) of the agreement provides in effect that surplus monies in the compensation fund are to be paid back to those companies. However, if it is just as between the parties that an order for costs be made against the respondent, I think I should ignore the State's right of reimbursement, just as I would ignore a right to reimbursement by an insurer.
Another relevant factor is that, because a compensation claimant has been deprived of property, and has no choice but to pursue a claim for compensation, it is ordinarily reasonable for an acquiring authority to meet a claimant's costs of doing so: Sorell Council v Downie (No 2) [2005] TASSC 9 at par[2].
If a hypothetical claimant in the respondent's position had taken the view that he or she would accept no offers, spend no money on getting advice over such a small claim, and leave it to the Court to assess the amount of compensation, the costs of the proceedings would have been quite significant, and it is most unlikely that the claimant would have been ordered to pay any of them. It was necessary in this case for the State to prepare and file some affidavits with voluminous annexures so that the Court had evidence concerning the title to the general law land and the Business Sale Agreement. By taking a more active role than the hypothetical passive claimant, the respondent caused the costs of these proceedings to be increased substantially.
Having regard to all the circumstances, particularly to the disparity between the $50,000 offered and the sum assessed, and to the conduct of the respondent in relation to the discovery and stay applications, I think that he should be ordered to pay part of the State's costs of the proceedings.
I am conscious that the costs of and incidental to the application probably exceed the amount that I assessed by way of compensation, namely $4,895.72. In my view it would be unjust if the respondent were required to pay so much by way of costs that he was left with no compensation at all. However I also regard it as significant that $3,000 of the assessed compensation is attributable to the time spent by the respondent in preparing his claim. I think I should be less hesitant about making an order for costs that would have an impact on that component of his compensation than I should be about making an order that might have an impact on the compensation for the property acquired from him.
When orders for costs are made in proceedings that concern a small money claim, the costs recoverable by successful litigants from their opponents are often much less than their lawyers would be entitled to charge them. For example, if a claim for $50,000 or less is pursued in an action in this Court, the applicable scale of fees is that which applies in the Magistrates Court: Supreme Court Rules 2000, r837(4) and Schedule 1, Part 2. In that court, when the amount at stake is under $10,000, the amount that can ordinarily be recovered in respect of counsel's fee for appearing on the first day of the trial of a routine action is $1,130: Magistrates Court (Civil Division) Rules 1998, Schedule 1, Part 1, Item 20(a). In deciding what order I should make as to costs, I think I should take into account in the respondent's favour the fact that this was a case about a small entitlement to compensation.
Having regard to all the circumstances, I have come to the conclusion that the respondent should be required to pay $1,000 of the State's costs. I order accordingly.
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