Ward Richard Geoffrey v Roads and Traffic Authority of NSW

[2007] NSWLEC 405

Land and Environment Court

of New South Wales

CITATION:

Ward Richard Geoffrey v Roads and Traffic Authority of NSW [2007] NSWLEC 405
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES:

APPLICANT
Ward Richard Geoffrey

RESPONDENT
Roads Traffic Authority of NSW

FILE NUMBER(S):

30604 of 2006

CORAM:

Talbot J

KEY ISSUES:

Costs :- Notice of Discontinuance filed following acceptance of statutory offer of compensation extant prior to commencement of proceedings.

LEGISLATION CITED:

Supreme Court Rules Part 22

CASES CITED:

Evagelekos v Roads and Traffic Authority NSW [2006] NSWLEC 514 ;
Manly Wharf in Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219 ;
Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245 ;
Menangle Sand and Soil Pty Ltd v Wingecarribbee Shire Council and Ors (2000) 108 LGERA 209 ;
Niezabitowski and Anor v Roads and Traffic Authority NSW (2006) 147 LGERA 417

DATES OF HEARING:

20 June 2007

 
DATE OF JUDGMENT: 

6 July 2007

LEGAL REPRESENTATIVES:

APPLICANT
Mr Webster SC
SOLICITORS
Russell McLelland Brown Lawyers

RESPONDENT
Mr R.P Lancaster
SOLICITORS
Corrs Chambers Westgarth

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Talbot J

6 July 2007

30604 of 2006 Ward Richard Geoffrey v Roads and Traffic Authority of New South Wales

JUDGMENT

1 Talbot J: By Notice of Motion 1 June 2007 returnable 15 June 2007 the applicant moves the Court for an order that the respondent pay its costs of the proceedings up to 18 December 2006 and on an indemnity basis from 18 December 2006. Conversely by Notice of Motion 15 June 2007 returnable 20 June 2007 the respondent moves the Court for an order that the applicant pay the respondent’s costs of the proceedings and of the Notice of Motion.

2 The applicant discontinued the proceedings by filing a Notice of Discontinuance in Court on 15 June 2007.

3 The matter had been previously listed for mention before Biscoe J as List Judge on 18 May 2007 when His Honour noted that an acceptance of the statutory offer had been forwarded to the respondent by the applicant and that consequently the applicant intended to discontinue the proceedings. The matter was stood over to 25 May 2007 with a direction that any application for costs should be made returnable on that day.

4 On 25 May 2007 Justice Jagot as List Judge made orders by consent that any Notice of Discontinuance be filed by 8 June 2007 and that the respondent file and serve any Notice of Motion and supporting affidavit in respect of costs relating to any Notice of Discontinuance by 13 June 2007 returnable on 15 June 2007.

5 The applicant’s Notice of Motion was listed before me on 15 June 2007 when the respondent advised the Court that it would be seeking an order that the applicant pay its costs of the proceedings. I thereupon made an order that the respondent file and serve any notice of motion upon which it proposed to rely in relation to costs together with any supporting affidavit by 4:00pm on that day and stood the proceedings over to Wednesday 20 June 2007. Mr To who appeared for the respondent on 15 June noted that until 9:10am on that day his instructing solicitors were not aware of any Notice of Discontinuance or that the offer made by the respondent had been accepted by the applicant.

6 There are conflicting submissions as to the manner in which the compromise reflected in a final settlement was reached.

History

7 On 26 July 2005 the respondent wrote to the applicant setting out an offer of compensation in an amount of $800,000 based upon the Valuer General’s assessment dated 25 July 2005 comprising a market value of $579,500 together with compensation for severance in the sum of $200,000 and disturbance of $20,500.

8 The proceedings were subsequently commenced on 6 July 2006 pursuant to leave to extend the time for filing. Under its Points of Claim the applicant’s claim was $1,383,142 comprising market value of $1,298,603 and disturbance of $84,539.

9 The respondent’s Points of Defence set compensation in an amount of $670,500 comprising a stated market value of $650,000 and disturbance in the sum of $20,500.

10 On 7 December 2006 the expert valuers retained by the applicant and the respondent met and prepared a joint report which inter alia stated as follows on a without prejudice basis:-

The two Valuers had a protracted discussion in relation to the subject acquisition and each of the above items. They are now prepared to recommend to their respective clients, with a view to reaching an amicable settlement, and in order to avoid further costs, that each party accept compensation, encompassing Sections 55(a), 55(d) and 55(d)(sic) of the Land and Acquisition (Just Terms Compensation) Act, being the sum of $850,000 plus costs itemised under Disturbance (to be determined), plus the cost of “alternate access to the residue of the property and the re-organisation of the parking area” as described on page 13 of the Landmark White Report.

11 On 18 December 2006 the applicant’s solicitors wrote to the solicitors for the respondent making a without prejudice offer to settle as follows:

· Compensation encompassing heads of compensation under Section 55 of the Land Acquisition (Just Terms Compensation) Act other than specified below $850,000.00.

· Compensation for disturbance Section 55(d) to be agreed.

· Work in kind by the respondent “alternative access to the residue of the property and the reorganisation of the parking area” as described on page 13 of the Landmark White report.

· Usual reinstatement of services and fences by the respondent.

· Respondent to pay applicant’s costs as assessed or agreed.

12 The offer was confirmed in an open letter dated 19 December 2006.

13 The respondent’s solicitors rejected the offer by letter 16 January 2007 on the basis that it was not a “valid Calderbank Offer” because it failed to identify the actual total quantum of the offer and there was no indication of the basis upon which the respondent could ascertain the strengths of the applicant’s case or the weakness of its own in order to determine whether the offer represented a genuine compromise. These concerns were reiterated in a further letter dated 8 February 2007 from the respondent’s solicitors.

14 Further offers were made by the applicant “pursuant to Part 22 of the Supreme Court Rules” on 7 March 2007 and 22 March 2007 in identical terms as follows:-

1. Payment of compensation in the sum of $850,000.00 (as agreed by the respective valuers) plus costs.
2. Access to lot 4 DP 624800 and DP 1073151 will be via a cul-de-sac road to be created on land vested in the RTA and as described on page 15 of the report of P. Lyons dated 24 June 2005.
3. Access provided through lot 4 to the house on former lot 3 and provide access from a cul-de-sac created on the land south of the former lot 3 which will basically be an extension of Watts Lane, as more fully described on page 15 of the report of P Lyons dated 24 June 2005.

15 Both offers were made “without prejudice save as to the question of costs”.

16 Justice Biscoe made directions for filing and serving expert evidence on 5 April 2007. The respondent caused evidence of non-valuation experts to be filed, albeit out of time. No expert evidence has been filed on behalf of the applicant notwithstanding that the orders made by Justice Biscoe on 5 April were by consent. After several enquiries from the respondent’s solicitors the applicant’s solicitors advised that due to people being on leave or unavailable, the applicant’s experts have been delayed in the preparation of reports and that they will not be completed until the week after 7 May 2007. Following an e-court communication from the respondent’s solicitors the matter was listed for directions before the List Judge on 18 May 2007. (see [3] above).

17 By letter dated 21 May 2007 the applicant’s solicitors confirmed instructions to file a Notice of Discontinuance and that they were arranging for the applicant to execute a Deed of Release and Restriction on Use of Land. It was noted that as the documents must be executed by the mortgagee that could not be done before the next list date. The letter also advised that when the documents had been returned by the bank the solicitors would arrange for them to be delivered to the “Managers, Compulsory Acquisitions and Road Dedication, RTA NSW”. That was done on 5 June 2007.

18 Following telephone enquiries to the office of the RTA on 15 June 2007 the applicant’s solicitors obtained confirmation that the signed documents had been received although the compensation would not be paid until “the litigation has closed up”.

19 The Deed of Release and Indemnity executed by the applicant provided for the acceptance of “the sum of $800,000 compensation offered in the RTA’s compensation notice dated 26 July 2005, together with statutory interest”. There is no reference to the ancillary matters referred to in the offers of settlement made by the applicant’s solicitors in December 2006 or March 2007.

20 It is the applicant’s contention that by accepting the statutory determination and executing the Deed of Release, the applicant has chosen to accept the monetary compensation as determined and on the terms it was offered namely that it included the carrying out by the respondent of the so called “work in kind” and “usual re-instatement” of services and fences.

The applicant’s argument

21 According to Mr Webster SC, who appears for the applicant, it was reasonable to settle for a discounted amount where there was so little difference between compensation in the sum of $800,000 and $850,000 with the provision of alternative access arrangements.

22 Relying upon the observations made by Bignold J in Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245 at 249, Mr Webster submits that the Court should recognise that the discontinuance reflects, “not a total abandonment of the applicant’s claims, but a compromise or settlement of them, in which circumstances that may be just that there be no order as to costs following upon the discontinuance of the proceedings. Moreover, the party against whom the proceedings have been discontinued may forfeit its presumptive entitlement to costs if it has been guilty of any relevant misconduct in the litigation”. Bignold J reaffirmed what he said in Manly Wharf in Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219 at 224. Subsequent cases in the meantime show only that there could be reasonable conduct on behalf of the discontinuing party sufficient to negate the “ordinary” costs consequences of discontinuance.

23 In Menangle Sand and Soil Pty Ltd v Wingecarribbee Shire Council and Ors (2000) 108 LGERA 209 at 213, Lloyd J recognised that in the cases cited by him in which orders for costs were made against the discontinuing party the discontinuance had occurred well after the case had been set down for hearing and relatively shortly before hearing date. He further observed that it is self-evident that in those circumstances the other party to the litigation would have incurred substantial costs in its preparation for a hearing, which costs were necessarily wasted. Lloyd J identified the following general principle from the cases:-

(a) ….
(b) ….
(c) a relevant consideration in every case is whether the discontinuance was reasonable conduct on a part of the discontinuing party in the circumstances of the case, such as to negate the ordinary costs consequences of a discontinuance of the proceedings. Such conduct may be based on some action by the other party to the litigation or some supervening event beyond the parties' control.

24 Mr Webster relies on (c) above and submits that it was reasonable for his client to discontinue the proceedings where the valuers had reached an agreed figure and it is decided not to argue for the difference. The intention to discontinue based on a settlement was foreshadowed by the applicant prior to the respondent incurring the substantial costs in respect of the preparation of expert evidence for the hearing.

25 The difficulty with the submission by Mr Webster is that the respondent had incurred substantial costs in relation to the evidence (at least in respect of he non-valuation expert’s evidence served on 20 April 2007) before Justice Biscoe was advised on 18 May 2007 that the applicant intended to accept the statutory offer and to file a Notice of Discontinuance.

The respondent’s argument

26 Without necessarily accepting the decision by Biscoe J in Niezabitowski and Anor v Roads and Traffic AuthorityNSW (2006) 147 LGERA 417 (that the statutory offer remains open until the Court decides the case or the parties otherwise agree notwithstanding the commencement of the litigation (at 43)), Mr Lancaster who appears for the respondent relies on the determination of the question of costs in favour of the respondent in that matter where the applicant accepted the statutory offer after lodging an objection with the Court. In that case Biscoe J ordered indemnity costs against the applicants particularly as they continued to create the appearance that they were proceeding with their objection in order to secure a tactical advantage. The respondent does not seek indemnity costs in this case.

27 Evagelekos v Roads and Traffic Authority NSW [2006] NSWLEC 514 was a further decision by Biscoe J where the applicant accepted the statutory offer after the objection had been lodged with the Court. The respondent formally maintained its argument that the decision in Niezabitowski was in error. However, the question of costs was considered after the matter had proceeded for four days during which the applicant continued to contend for a much greater figure than the statutory offer, before accepting it. In awarding costs in favour of the respondent Biscoe J observed that the course taken by the applicant had resulted in an abandonment of the proceedings. The cost order was made, not for the purpose of penalising the applicants for doing that which was open to them to do, but to compensate the respondent as a party who had succeeded in the proceedings.

28 Mr Lancaster submits that all the applicant has done in this case is to accept the offer which was open to it since June 2005. So far as the formal proceedings in the Court are concerned the claim remained at $1.38 million at all times.

29 In answer to the applicant’s submission to the effect that it was unreasonable for the respondent not to accept the offers made after the meeting of the valuers in December 2006, Mr Lancaster argues that there were unresolved issues including disturbance, alternative access, and the reorganisation of parking. It is the respondent’s case therefore that the offers made were neither settled nor specific. Accordingly they cannot be regarded as being a Calderbank offer.

30 Mr Lancaster maintains that the actions of the RTA following the meeting of the valuers and the offers that followed were reasonable. An offer to continue negotiations remained open. The so called agreement between the valuers did not amount to a settlement but merely constituted a joint recommendation that could form the basis for meaningful negotiations. In the circumstances it was not unreasonable for the respondent to continue with preparation for the hearing particularly following the orders made by Biscoe J by consent on 5 April 2007. The fact that the evidence was filed and served out of time is not a matter upon which the applicant can rely particularly as the applicant never produced any evidence.

31 Mr Lancaster further points out that it was not until the 18 May that the filing of a Notice of Discontinuance was foreshadowed and that this was not actually done until 15 June 2007. In the meantime, duly executed documents had been forwarded direct to the RTA by the applicant’s solicitors on 5 June 2007, whereby the applicant accepted that which was open to it at all times since June 2005. Thus, according to the respondent there is nothing unusual in the circumstances of this case that would take it outside the decisions by Biscoe J in Niezabitowski and Evagelakos.

32 Moreover, the applicant is not entitled to an award of costs in his favour where he is the discontinuing party in circumstances where no benefit has accrued as a consequence of the litigation.

Appropriate costs order

33 Not only was it open for the applicant to accept the statutory offer prior to commencing the proceedings but the objection was lodged out of time. Almost a further year elapsed after the commencement before the Notice of Discontinuance was filed following completion of settlement documents.

34 It is not feasible to regard the joint recommendation made by the valuers in December 2006 as a negotiated settlement. It remained for the parties to settle on a final figure for compensation and to resolve the extraneous matters outstanding between them, including any questions of costs. It is settled that an award of costs is not intended to penalise a losing party but to compensate a successful party unless there are unusual circumstances that justify a contrary order.

35 I do not regard the actions of the applicant as being conducive to achieving a result different to that which could have been achieved without the commencement of litigation. On the other hand, the respondent did not act unreasonably and continued to be responsive to settlement offers, which were by no means conclusive, and, until the statutory offer was accepted, left a number of matters unresolved.

36 If a determination is to be made based upon the outcome of the proceedings, then the respondent must be regarded as the successful party given that the amount offered in the statutory notice was ultimately accepted. The applicant allowed preparations for a hearing to continue to a point where costs were incurred in relation to the preparation of expert evidence before there was a confirmation that there was a real prospect of settlement.

37 Although there is a policy view that a land owner deprived of property as a consequence of compulsory acquisition is to obtain just and fair compensation and that where there is doubt it should be resolved in favour of the resumee, nevertheless the conduct of the applicant in this case has in my opinion been contrary to his own interest and the interest of the respondent to the extent that costs were incurred unreasonably. Firstly by the commencement of the proceedings at all and secondly by their continuation up to and including the filing of the Notice of Discontinuance on the 15 June 2007.

38 In the whole of the circumstances therefore, the applicant is not entitled to an order that the respondent pay his costs up to the 18 December 2006 and more particularly on an indemnity basis from the 18 December 2006. To the contrary, the respondent has incurred costs unnecessarily from the outset with no advantage accruing to the applicant by the conduct of the litigation.

39 Unfortunately the unusual circumstances in this case drive me to the conclusion that the applicant (notwithstanding his status as a dispossessed owner), should pay the costs of the respondent as in effect it was the successful party. The proceedings were to no avail. The subject of the objection was a dispute over the amount offered by the statutory notice based on the Valuer General’s valuation. That dispute was resolved in favour of the respondent.

40 The Court makes the following orders:

1. The applicant’s Notice of Motion 1 June 2007 is dismissed.
2. The applicant pay the respondent’s costs of the proceedings and the respondent’s Notice of Motion dated 15 June 2007 and the applicant’s Notice of Motion 1 June 2007.

3. Exhibit A may be returned.

13/07/2007 - Delivered date - Paragraph(s) cover sheet