Townsville City Council v Department of Main Roads
[2004] QLC 21
•26 March 2004
LAND COURT OF QUEENSLAND
CITATION: Townsville City Council & Anor v Department of Main Roads [2004] QLC 0021 PARTIES: Townsville City Council and Delfin Limited
(claimants)v. Chief Executive, Department of Main Roads
(respondent)FILE NO: A2002/0013 DIVISION: Land Court of Queensland PROCEEDING: Application for costs DELIVERED ON: 26 March 2004 DELIVERED AT: Brisbane HEARD AT: By written submissions MEMBER Mr RP Scott ORDER: I order that the respondent pay to the claimant or, at the election of the respondent in accordance with any direction of the claimant, 90% of the costs of and incidental to the hearing and determination of the claim for compensation. The amount of such costs shall be decided by the appropriate assessing officer of the Supreme Court under the scale of costs prescribed by law for proceedings in the Supreme Court. CATCHWORDS: Costs – Criteria for awarding partial costs – Complexity not relevant – Claimant substantially successful – But some costs not reasonably committed – Led to failure on issues and extension of Court time reduction in costs made – 90% awarded. APPEARANCES: Mr PJ Lyons QC with him Mr RM Needham for the claimants.
Mr MD Hinson SC with him Mr RS Jones for the respondent.SOLICITORS: Wilson Ryan and Grose for the claimants.
Crown Solicitor, Crown law for the respondent.
In reasons delivered on 10 October 2003 the Court determined compensation in this substantive matter in the amount of $5,377,898.09. The final claim was for $6,868,156.28 whilst the respondent contended for compensation at a nil figure.
In the published reasons I concluded at para [32] that “it has not been demonstrated that (the Court) has jurisdiction to determine any compensation in the name of Delfin in any of its three forms”. It follows that any costs order should be in favour of Townsville City Council only, whom I will refer to as the claimant from this point.
Costs are provided for in s.27 of the Acquisition of Land Act 1967 (the Act) which relevantly provides:
“Costs
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.”
Pursuant to s.27(2) the discretion as to costs is only exercisable in favour of the claimant who has applied for such an award.
The respondent submits that an appropriate exercise of discretion in the present case would be to order that the respondent pay 80% of the claimant’s costs only. That percentage represents the amount of the award expressed as a percentage of to the amount of the amended claim, with the percentage figure being rounded up.
Both parties referred me to Yalgan Investments Pty Ltd v Albert Shire Council (1998) 17 QLCR 401 which I think can fairly be described as the pre-eminent authority in Queensland on the question of costs under s.27 of the Act. The case was decided by the Land Appeal Court the claimant having appealed on the question of costs only. There was no appeal in the substantive matter. In that case at pp.406 to 408 the Land Appeal Court provided a summary of propositions extracted from the authorities identified there. I need refer to four only of those propositions which are relevant in the instant case:
“(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 (Minister for the Environment v. Florence (1908-81) 45 L.G.R.A. 127 at p. 149, Banno & Anor v. Commonwealth of Australia (1993) 81 L.G.E.R.A. at p. 53).
(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 v. Albert Shire Council [1987] 1 Qd.R. 486 at p. 489) by reference to relevant considerations (Moyses & Ors v. Townsville City Council (1979) 6 Q.L.C.R. 271 at p. 273).
(h) In general, a party who is wholly successful in litigation can expect an order for costs in his favour. Where compensation is awarded to one who had already been given, by statute, the right to receive it, it is just to say that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due. But costs are discretionary and no hard and fast rules will ever be allowed to occupy part of an area controlled by a discretion, however predictable the result of its exercise may be in certain sorts of cases. In some cases, the Land Court may consider that there are sufficient reasons for departing from the general rule (Moyses at p. 278, Florence at pp. 149-50).
(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 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 at p. 53).” (citations inserted)
In its submission the respondent relied directly on the facts of Yalgan where a partial award of costs was made in circumstances where the claimant was not wholly successful either in gaining the amount claimed or in convincing the Land Court to adopt the claimant’s methodology for assessing compensation. (See p.417).
Indeed the Land Court had concluded that neither the method put forward by the claimant nor the respondent should be accepted. The Court employed a composite method. Whilst the award of compensation was closer to the amount contended for by the claimant than that put forward by the respondent, the Court found in favour of the respondent on most factual issues.
A broad view was taken by the Land Appeal Court in determining what proportion of costs should be awarded. (See p.419). The apportionment was made on a time basis – the hearing extended over six days and the claimant was awarded costs for a three day hearing.
The circumstances which the respondent submits make it appropriate in the present case that the respondent pay part of the claimant’s costs rather than all of those costs are:
(i)that the claimant was not wholly successful, either as to amount or methodology;
(ii)that the matter was complex and was an appropriate one to be heard and determined by the Court;
(iii)that in circumstances where it was virtually inevitable that the claim would be the subject of a contested hearing, and the respondent was justified in contesting the claim in that the Court did not accept aspects of the claimant’s case and awarded compensation in a lesser amount than was claimed, the claimant should recover its costs to an extent proportionate with its overall degree of success, and the respondent should not be required to pay the claimant’s costs to any greater extent.
On p.417 of Yalgan the Land Appeal Court said
“We have also concluded that, given the complexity of the case and the fact that the claimant was not wholly successful either in gaining the amount claimed or in convincing the Court to adopt the claimant’s methodology for calculating compensation, it is appropriate to make a partial award of costs.”
There might appear therefore from this quotation to have been three factual elements identified which led to the conclusion that a partial award of compensation was appropriate:
· the case was a complex one;
· the claimant was not wholly successful in gaining the amount claimed;
· or in convincing the Court to adopt the claimant’s methodology.
On p.419 the reasoning of the Court continued:
“The parties submitted and the Member’s reasons for decision on the award of compensation disclose that, although the award was nearer to the amount claimed by the claimant, the Member found in favour of the respondent on most factual issues. It was a complex case and there has been no challenge to the Member’s composite approach in determining the amount of compensation.”
I do not understand the matter of there being no challenge to the Member’s composite approach to be part of the Court’s reasoning in its decision to award partial costs. That is not a matter of relevance as to the conduct or to the success of the parties.
The point that the Member found in favour of the respondent on most factual issues does, however, appear to add a fourth factual element to the Court’s reasons though it may be seen as a subset of the element concerned with methodology. The complexity aspect is simply restated. It is this aspect that presently calls for closer consideration.
The parties do not dispute that the present case was a complex one.
At p.417 at Yalgan the Land Appeal Court found that “the matter was complex and appropriate matter to be heard and determined by the Land Court”. That would appear to me to be a finding that would not favour either party as it would have been the complexity that would have been one of the factors that would have justified each of the parties electing to have the matter contested in court. I therefore do not understand the complexity of the case to have been a reason for awarding partial instead of full costs. Rather I understand the reference of the Land Appeal Court to complexity to have been concerned with its conclusion that “it should not be assumed that the matter would have been settled” (p.417) and thus, in contrast to the costs order appealed from, an order for costs should be made – partial or otherwise.
I will now deal with the second factual element as to the amount. Whilst it is reasonably common for a claim to be lodged for an amount greater than finally determined by the court the Yalgan decision authorises a consideration of success in that respect as a relevant consideration as to whether a partial costs order should be made.
The failure to be awarded the actual figure claimed cannot I think be described as a complete lack of success in the present case in which the award was almost $5,400,000 above the amount contended for by the respondent; about $1,490,000 below the amount finally claimed; and almost $2,000,000 more than the half way figure provided for in s.27(2) of the Act.
In Yalgan the award was $969,000 less than the amount of $5,192,671.30 finally claimed; $1,473,671.30 more than the final figure contended for by the constructing authority; and $890,500 above the half way figure. The claimant in the present case was comparatively more successful, in my opinion.
It will be convenient to deal together with the respondent’s point (i) as it relates to methodology and point (iii) concerning proportionate costs. (See para [10]).
The claimant submits that whilst in Yalgan the Court rejected the claimant’s primary methodology it did accept the claimant’s primary methodology in the present case. That is not a matter of much moment however as each parties’ primary methodology was the same.
What was different in the present case was Mr Eales’ use of the Discounted Cash Flow (DCF) method, a method held to be “not suited to the facts of the case” in para [387] of the reasons in the substantive matter. There are numerous examples of a court preferring sales evidence, for example, to a residual value method because of the inherent unreliability of such methods; however, that was not the case here. In this case the Court found, in effect, that the DCF method ought not to have been employed.
The Court also found that the claimant’s layouts relied upon in the DCF approach were over-prepared.
A large part of the trial was devoted to consideration of Mr Eales’ DCF valuation. The claimant submits, in effect, that use of the DCF method is justified given the complexities of the case. I do not accept that submission. The unsuitability of the method arose from one factor alone and that was the large area of Parcel B that was required as a buffer. Given that, it cannot be said that the method could be of assistance in an already complicated set of facts and issues.
The respondent submitted that the Court accepted or preferred the respondent’s evidence on a number of issues and provided a list of examples. I will not set them out but observe that the list is not challenged by the claimant.
The respondent also submitted that it was successful and the claimant failed on a number of discrete issues including:
· additional intersection costs in the before and after cases for Parcel B (paras 681-686)
· the claim for additional water costs (paras 713-732)
· the claim for Delfin employees’ remuneration (para 756)
· the claim for $164,399 for temporary road works (see para 23) which was abandoned (para 307).
It was submitted that these issues occupied court time and caused the parties to incur costs in dealing with them. This is so except for the issue of temporary road works which was abandoned early in the proceedings. I note also that the additional intersection cost issues occupied little court time and that the issue of employees’ remuneration is one yet to mature into a fully understood item of claim given that it was recognised only recently in Heavey Lex No. 64 Pty Ltd & Anor v Chief Executive, Department of Transport (unreported Land Appeal Court 22 February 2001) and has yet to be the subject of an award of compensation, according to my researches. Nevertheless, the evidence in support of that item of claim was clearly deficient.
The claimant was derisive of the respondent’s attempts to “score” the claimant on the number of issues determined contrary to the claimant’s case.
Whilst I deal below with the issue of proportionate costs I need to emphasise that I understand that in its decision to award partial costs only in Yalgan the Land Appeal Court was influenced by the fact that the court had at first instance found in favour of the respondent there on most factual issues.
The claimant submits that there were many issues in which there was room for reasonable differences of opinion and the fact that a number of such issues were concluded in favour of the respondent does not constitute “exceptional circumstances” justifying a reduction in the award of costs.
In my view the claimant failed on many issues not simply because of a difference of opinion but because the claimant was wrong on principle or produced evidence which was deficient. It is not correct to merely consider whether this constitutes “exceptional circumstances”. Quotation (h) from Yalgan (see para [6] above) must be read in full with notice being taken that the claimant ought “in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due”. At p.417 the Land Appeal Court referred to “fair compensation”.
Although this is clearly a case in which the claimant found itself in court by virtue of the resumption and the complexities which the case threw up, I am of the view that the claimant unnecessarily extended the court time and the issues requiring the attention of the respondent and the court.
In my view some of the costs incurred by the claimant were not reasonably committed given that they led to failure and to the extension of court time. These are circumstances in which a reduction of costs ought to be made. The question I must now deal with is the extent of that reduction. The respondent referred me to Heavey Lex No 64 Pty Ltd & Anor v Chief Executive, Department of Transport (1999) 20 QLCR 296 at 435-436:
“The conclusions that I have drawn on this issue find some support in the manner in which a somewhat similar issue is dealt with in Alberta, Canada. Professional fees of the type under consideration in the present case are provided for in s.39(1) of the Expropriation Act 1980:
‘39(1) The reasonable legal, appraisal and other costs actually incurred by the owner for the purpose of determining the compensation payable shall be paid by the expropriating authority, unless the Board determines that special circumstances exist to justify the reduction or denial of costs.’
The leading case with respect to the application of this provision is Nissen v. City of Calgary (No. 3) (1983) 28 LCR 321, 51 AR 252, 29 Alta LR (2d) 345. The Alberta Court of Appeal in that case impliedly approved of certain principles enunciated by the Land Compensation Board in Amdue Holdings Ltd et. al. v. City of Calgary (No. 2) (1976) 11 LCR 370 15 AR 271. The Court of Appeal did not approve of one aspect of the Amdue decision, though that does not detract from those aspects on which I seek to rely. Four principles were stated in Amdue, however three, only, are of present interest:
‘1. Full costs of and incidental to an application properly made pursuant to the Act by the owner should be paid by the expropriating authority. The costs should however reflect such reasonable, economical and straightforward preparation and presentation as is necessary to properly present the owner's case to the Board.
2. The owner should not be allowed the cost of unnecessary work or other expenses or costs incurred through over-caution or over preparation.
3. The owner should not be allowed costs which are the result of misconduct, omission or neglect by the owner.’”
It is the first two principles which the respondent submits are relevant in the present case. It was submitted first that these principles are consistent with para (k) from Yalgan (see para [6] above).
Para (k), from Yalgan is not concerned with a principle that applies in the consideration of a costs application by a claimant but one that applies to such an application by a constructing authority. Having said that, I should also say that Moyses & Ors v Townsville City Council (1979) 6 QLCR 271 is, I think, authority for the proposition that it is appropriate, in considering an application for costs to have regard to what I would broadly refer to as the conduct of the parties.
The respondent also made reference to the Yalgan quotation in para [32] above, submitting that those words and the Amdue Holdings formulation lead to a conclusion that the claimant should receive the reasonable cost of obtaining the amount awarded rather than the costs of prosecuting the claimed figure. The respondent went further, suggesting that the awarded costs should be 80% of the claimant’s costs as it was, in effect, 80% successful in achieving the quantum of compensation finally awarded.
There are two things that I find unacceptable about this submission.
First, the Amdue Holdings formulation is to do with the assessment of both disturbance in the form of professional and associated fees and with costs of trial not with the exercise of a discretion to award costs.
Second, as an award of costs under s.27 comprises the exercise of judicial discretion it is not appropriate that it be bound by rigid adherence to any rule. See, for example, Wyatt v Albert Shire Council at pp. 486-489.
Whilst I have dwelt to some extent on the deficiencies in the claimant’s case in the substantive matter and the failures that attended those deficiencies, the claimant was successful in obtaining a substantial award of compensation. I am mindful of the counsel in Banno (at p.53) that the claimant ought not to be rendered timid by a fear of costs going against them; to which I would add – and by a fear of their own costs being heavily discounted. Nevertheless the claimant must act reasonably and not use court time and parties’ resources in leading evidence that has not been carefully and objectively evaluated and found to have merit.
The discount that should apply in the present case should not be high given all that I have said above. I will put it at 10%. The order is therefore that the respondent is to pay 90% of the claimant’s costs in the hearing of the claim for compensation.
RP SCOTT
MEMBER OF THE LAND COURT
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