AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation

Land and Environment Court (NSW)|2007-10-25|Before: Pain J, Mr J

CITATION : AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation (No 3) [2007] NSWLEC 724

APPLICANTS AMP Capital Investors Limited PARTIES : AMP Macquarie Pty Limited RESPONDENT Transport Infrastructure Development Corporation

KEY ISSUES: Compulsory Acquisition of Land - Costs :- exercise of discretion to award costs in compulsory acquisition where nil compensation awarded

AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation [2007] NSWLEC 397; Banno v Commonwealth (1993) 81 LGERA 34; Farah v Warringah Council [2006] NSWLEC 544; McDonalds Australia Ltd v Transport Infrastructure Development Corporation (No 2) [2007] NSWLEC 147; Maloney v Cowra Shire Council [2000] NSWLEC 107; Murdesk Investments Pty Limited v Roads Corporation [2007] VSC 175; CASES CITED: Nevitoro Investments v Hawkesbury City Council [2000] NSWLEC 151; Niezabitowski v Roads and Traffic Authority (NSW) (2006) 147 LGERA 417; Overton Investments Pty Limited v Minister (2001) 113 LGERA 439; Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223; Rukavina v Wagga Wagga City Council (1993) 80 LGERA 8; Wollong Pty Limited v Shoalhaven City Council (2002) 122 LGERA 331; Yakas v Roads and Traffic Authority (NSW) (No 2) (2004) 139 LGERA 116

APPLICANTS Mr M Craig QC with Mr A Galasso SC SOLICITORS LEGAL REPRESENTATIVES: Mallesons Stephen Jaques RESPONDENT Mr T Hale SC with Mr J Maston SOLICITORS Australian Government Solicitor

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30966 of 2003 AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation (No 3)

JUDGMENT ON COSTS 1 Her Honour: The Applicants commenced these proceedings under the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act) seeking compensation for the compulsory acquisition of two interests in land (being two leasehold interests) which were part of the Macquarie Centre for the Parramatta Rail Link (PRL). In my judgment AMP Capital Investors Limited and Anor v Transport Infrastructure Development Corporation [2007] NSWLEC 397 (AMP v TIDC) I held that nil compensation was payable because the betterment resulting to the Applicants' land adjoining the acquired leasehold land (the Macquarie Centre) from the public purpose of the acquisition, the PRL, was greater than the compensation for market value and disturbance which I held the Applicants were entitled to under s 55(a) of the Just Terms Act. This judgment concerns costs. The circumstances of this case are unusual because I found that betterment substantially exceeded the compensable items (market value and disturbance). 2 The Transport Infrastructure Development Corporation (TIDC) acquired a leasehold interest in the terms set out in Lease Memorandum No 8708752B, in the lands known as Lot 3 in Deposited Plan 1047085 and Lot 12 in Deposited Plan 1047085. The acquisition was pursuant to the Transport Administration Act 1988. Both lots were created as a result of the acquisition notice which was published in the NSW Government Gazette on 11 April 2003. The two lots and the leasehold interests in these lots were created at the same time by virtue of the notice of acquisition. Part of the PRL project is the construction of a railway station at Macquarie Park next to the Macquarie Centre on Lot 12. 3 Lot 3 is a stratum of air 3m above the existing slab above part of the emergency exits from the cinemas which form part of the Macquarie Centre and has an area of 528m2. Lot 12 comprises land used for the railway station on the corner of Herring Road and Waterloo Road, and is 1797m2 in area. At the time of the acquisition 14 car parking spaces (out of the 4100 spaces in the Macquarie Centre) and landscaping were located on it. Respondent's submissions 4 The Respondent argued that all its costs should be paid by the Applicants as it was clearly successful. While accepting that in Class 3 compulsory acquisition matters there was case law concerning the different considerations that could apply in relation to costs (see Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223, Overton Investments Pty Limited v Minister (2001) 113 LGERA 439), the Applicants had unreasonably pursued the appeal when they should have known it to be hopeless because the benefits of the PRL to the Macquarie Centre at the compulsory acquisition date were so obvious. 5 The Respondent contended that under s 55(f) there was an increase in value of the Macquarie Centre by reason of the public purpose and that even if the market value of the acquired leasehold interest was as contended for by the Applicants, namely $2.3 million, that sum together with a disturbance figure of $5.7 million would be "swamped" by the increase in the value of the Macquarie Centre. 6 Whether or not the increased value of the Macquarie Centre did "swamp" the claim for market value and disturbance became the primary or fundamental issue in the proceedings. If determined in favour of the Respondent it would not be necessary to determine the precise market value of the acquired interest. Looking realistically at the litigation the primary issue was not the market value of the resumed land. The primary issue was the extent of the announcement and implementation of the PRL and the Macquarie Station. 7 Here the PRL and the Macquarie Station was, according to Mr Wood, valuer, as noted in AMP v TIDC at [98]: A windfall for the owners of the Macquarie Centre partly because it would lead to increased patronage of the Macquarie Centre and therefore turnover.

The windfall to the owners included: (a) a likely annual increase in turnover of $25 million in relation to the annual turnover of $500 million; and (b) an increase in the value of the Macquarie Centre of $15 million to $25 million on the value of the Macquarie Centre of $750 million; AMP v TIDC at [121]) 8 Against this was the acquisition for six years of 14 car parking spaces at the extremity of the car park out of 4,100 car parking spaces together with some air space. The market value of the leasehold interest found by the Court as $1,115,000 is less than 0.15 per cent of the value of the Macquarie Centre. Even small percentage increases in the value of the Macquarie Centre as a result of the PRL would swamp the value of the leasehold interest acquired. Further, the Applicants' claim that the PRL would diminish the value of the Macquarie Centre by $13 million was speculative to say the least.

9 The Respondent relied on Niezabitowski v Roads and Traffic Authority (NSW) (2006) 147 LGERA 417 as an example of another unusual case where costs in Class 3 proceedings were awarded against an applicant.

10 In opposing the Applicants' arguments that apportionment of their costs on the basis that 50 per cent should be paid by the Respondent, it argued there were two issues to be determined at the hearing: (a) the market value of the leasehold interest acquired; (b) whether under s 55(f) there had been an increase or decrease in the value of the Macquarie Centre by reason of the carrying out of the public purpose, namely the PRL. 11 Market value was connected with the s 55(f) claim. However, if the increased value of the Macquarie Centre by reason of carrying out the public purpose "swamped" any claim by the Applicants as to the market value of the leasehold interest then it would be unnecessary to actually determine that market value. The costs incurred by the Respondent on the whole issue of market value of the acquired interest were wasted costs having regard to the Court's finding in relation to s 55(b). 12 As to the s 55(f) issue, the Respondent submitted it only needed to establish that the increase in value of the Macquarie Centre would be more than any compensation to which the Applicants would otherwise be entitled or could be entitled. The Respondent succeeded in doing so. No question of apportionment can arise consistent with the authorities.

Applicants' submissions 13 The Applicants argued that Class 3 compensation matters are different in nature to other civil proceedings. The circumstances of this case suggest that each party should pay its own costs. The Applicants had to commence these proceedings if they wished to overturn the valuation of market value of the Valuer-General ($675,000). They were successful in doing so by a substantial amount as I awarded $1,115,000 for market value. The Applicants were successful in their arguments on several issues apart from market value. They successfully opposed the Respondent's claim based on planning "uplift", arguing that was not part of the public purpose. The Applicants' case was not vexatious or unfounded nor was there disentitling conduct such as wasting time or delay. 14 Alternatively, the Respondent should pay 50 per cent of the Applicants' costs because the Applicants were successful on numerous issues which took up a substantial amount of the court hearing. An affidavit of Mr Causer, sworn 19 September 2007, which was admitted on the basis it was to be treated as a submission, identified which issues occupied what amount of hearing time during the ten days of hearing. 15 In Farah v Warringah Council [2006] NSWLEC 544 Talbot J, in Class 4 proceedings in which the Applicants were unsuccessful on the majority of claims in a judicial review, but ultimately successful on one claim raised late in the proceedings but sufficient to effect a result of the setting aside of a grant of development consent, noted at [4]: There is a stream of authorities supporting the proposition that a successful party who has failed on certain issues may not only be deprived of its own costs in respect of those issues but could be made the subject to an order to pay its opponents costs [and see the authorities referred to within] 16 In Pastrello at [16] Talbot J referred to the "instances where the court has been prepared to make a special order as to costs in the exercise of its discretion", referring to Rukavina v Wagga Wagga City Council (1993) 80 LGERA 8 at 9, Maloney v Cowra Shire Council [2000] NSWLEC 107, and Nevitoro Investments v Hawkesbury City Council [2000] NSWLEC 151. 17 The appropriate approach to costs in the circumstances where the acquiring authority has acquired rights over private land and succeeds in proceedings which determined that overall there is no compensation to be paid is that there should be no award of costs in favour of the Respondent, but there should be an award of costs in favour of the Applicants for those parts of the case on which they succeeded.

Finding 18 The Court's power to award costs in this type of Class 3 proceedings is as set out in s 69 of the Land and Environment Court Act 1979 (the Court Act). It provides wide discretion to the Court to award costs providing the exercise is done judicially. As identified by both parties there are several cases where the basis for awarding costs in Class 3 proceedings has been considered. These confirm that in compulsory acquisition matters the commonly applied rule that costs follow the event is not necessarily appropriate. These types of cases concern the compulsory acquisition of private property for a public purpose. While I have found in this case, unusually, that there is a substantial benefit to the adjoining land of the dispossessed owner, this case arises solely because of compulsory acquisition process is for the purposes of the PRL. The fact there is ultimately found to be a benefit to the Applicants resulting from the public purpose does not alter the circumstance that private land was compulsorily acquired for a public purpose.

19 In Banno v Commonwealth (1993) 81 LGERA 34 Wilcox J, considering the Lands Acquisition Act 1989 (Cth), held at 53: The Court has a general discretion as to costs, but the discretion must be exercised on principled grounds. The Commonwealth has succeeded on all issues. It would therefore seem difficult to justify ordering it to pay the applicants' costs. Moreover, if this was ordinary litigation, the Commonwealth might reasonably expect to obtain an order that the applicants pay its costs. But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of the unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position should be allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the Commonwealth's costs if their case proves unpersuasive. I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court. The present applicants' case was arguable. It was presented efficiently and economically … 20 In Pastrello Talbot J held at [17]: It has been said many times that the compulsory acquisition of land from an unwilling owner is a serious interference with that persons entitlement to quiet enjoyment and generally wide discretion to do with their own land as they see fit. It is a power of the state which is exercised for the public benefit. Very seldom does the resumption work to the benefit of the dispossessed owner. There needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case. 21 In Overton Stein JA (Powell JA and Ipp AJA concurring) held at [72]: Nor do I see that it is a simple matter of ascertaining who won or lost the litigation. Compensation determinations are not like awards of damages for personal injury. Obtaining an award of compensation of $100 does not necessarily mean that a landowner "wins" the litigation. A judge is entitled to look realistically at the litigation, the issues, the way it was conducted and the result, in order to assess who really succeeded and to what extent. These general approaches were applied by me in McDonalds Australia Ltd v Transport Infrastructure Development Corporation (No 2) [2007] NSWLEC 147 and Yakas v Roads and Traffic Authority (NSW) (No 2) (2004) 139 LGERA 116. Similar findings are also found in Wollong Pty Limited v Shoalhaven City Council (2002) 122 LGERA 331 per Talbot J at [39]-[42]. Similar findings were also made in Murdesk Investments Pty Limited v Roads Corporation [2007] VSC 175 at [24] - [25].

22 These cases suggest that in Class 3 matters I should consider the issues raised in, and the conduct of, the litigation mindful of the circumstances giving rise to it. The substantive issues raised in the first Points of Claim filed by the Applicants were under s 55(a), being a claim for market value and disturbance. The Applicants were successful in obtaining a large increase in market value, albeit not as much as claimed. Disturbance was ultimately agreed. 23 By Further Amended Points of Claim, the Applicants claimed under s 55(f) the loss of value of adjacent land (the Macquarie Centre) of approximately $13 million. In its Further Amended Points of Defence the Respondent continued to state that the market value was $100,000 and the increase in value of residual land exceeded the entirety of the Applicants' claim. The Respondent argued at the hearing that the adjacent land would benefit from the public purpose of the acquisition by over $80 million. This required the Court to determine: (i) What was the public purpose of the acquisition? The Applicants were successful in arguing that this did not include possible changes in planning controls to enable greater density of development on the Macquarie Centre land. This finding meant that the Respondent's argument that there was betterment in excess of $80 million was not able to be sustained. (ii) What was the extent, if any, of betterment as a result of the increased patronage of the PRL? The Respondent was successful in arguing that there would be a substantial increase in patronage of the Macquarie Centre from the PRL resulting in the betterment I found in AMP v TIDC of $15 million. (iii) What was the decrease in value, concerning whether there was a need for controlled parking to be introduced as a result of the PRL being built? This required the Court to determine if there would be a need for controlled parking and, if so, would a prudent hypothetical purchaser consider this would reduce the value of the Macquarie Centre? The Applicants succeeded in their argument that controlled parking would be considered necessary by a prudent hypothetical purchaser. I did not accept however that a prudent hypothetical purchaser would allow $13 million. Rather I found that a prudent hypothetical purchaser would allow $3 million. In the context of an asset worth $750 million I did not consider this to be significant and on one view the controlled parking would represent a capital improvement to the Macquarie Centre. 24 I do not agree with the Respondent's characterisation of the primary issue as being whether the betterment "swamped" the other compensable matters. That was one of several issues which occupied the hearing time. The summary of issues above at par 22 and 23 demonstrates that the Applicants were successful on a number of grounds including the issue on which the proceedings were first commenced, market value. Further the Applicants were successful in opposing the Respondent's argument that betterment should be based on the planning "uplift" likely to result from the PRL. The primary basis for the submission at the commencement of the hearing of the valuer, Mr Wood, called by the Respondent, was that the PRL would result in added value to the Macquarie Centre of more than $80 million as a result of the planning "uplift" (Supplementary Statement of Evidence prepared by Kent Wood, Exhibit 14 in the substantive proceedings). 25 I do not agree with the Respondent's argument that it was unnecessary to determine a precise figure for market value, or the amount of betterment. The Respondent did not succeed on its primary argument that betterment was in excess of $80 million. I determined a prudent hypothetical purchaser would be prepared to allow a lesser amount of $15 million. Given the extent of the Applicants' claim under s 55(f) of $13 million, taken in conjunction with market value and disturbance, it was clearly necessary for the Court to determine specific amounts for these compensable items. 26 The Applicants have had their land compulsorily acquired for a public purpose. They have had to carry out work constructing an access ramp as a result of the acquisition, which is reflected in the disturbance claim. While I have held that they will ultimately obtain a substantial benefit from the presence of the Macquarie station immediately adjacent to the Macquarie Centre, as I observe in AMP v TIDC at [120] this is the first occasion on which a railway station has come to a shopping centre. The circumstances are therefore unique and the betterment was not "obvious" as the Respondent's counsel claimed. The approach in the cases of Banno, Overton and Pastrello and others whereby the applicant is subject to compulsory acquisition processes suggesting that a costs order against it would further erode its position in a situation not of its making is appropriate to apply in this matter so that the Applicants' "neutral" position after the litigation is not further eroded. The circumstances of this case are quite unlike those in Niezabitowski which the Respondent relied on. In that case Biscoe J held at [49] - [50]: … where an applicant accepts a statutory offer after lodging an objection with the court and thereby abandons the proceedings which it commenced, there should usually be a costs order in favour of the respondent. In the present case there is an additional factor which, in my view, makes it just to order indemnity costs against the applicants after 6 June 2006. That was the date on which the applicants decided that they would not continue with the proceedings and ceased preparation for the hearing.

After they made their decision, the applicants continued to create the appearance that they were proceeding with their objection in order to secure a tactical advantage while endeavouring to negotiate a settlement with the respondent. In the meantime, the respondent continued to incur costs. 27 In my view a costs order in favour of the Respondent is not appropriate taking into account that these are compulsory acquisition proceedings and the Applicants were successful on several issues. There is no "disentitling" conduct by the Applicants (such as was considered in Niezabitowski) suggesting that such an order ought not be made.

Apportionment 28 The Applicants also argued in the alternative that a costs order based on apportionment should be made whereby 50 per cent of their costs are payable by the Respondent. They were successful on the substantive issue of market value and successfully opposed the planning "uplift" argument. They were partially successful on the s 55(f) claim in that I held that the cost of controlled parking would be taken into account by a prudent hypothetical purchaser but for a lesser sum than the Applicants contended for. 29 While the Applicants were successful on some matters the Respondent was also successful on some matters. I do not consider the approach advocated by the Applicants (see par 17), that in Class 3 matters where an applicant does not succeed overall the costs for those issues it does succeed on should be awarded, applies in this case, when the conduct of the whole case is considered. While I have been referred to several cases (Rukavina, Nevitoro) in argument where costs have been apportioned in Class 3 proceedings, each case must be considered on its own facts. 30 The appropriate costs order is that each party pay its own costs. 31 The Applicants sought their costs of the motion. They have been generally successful and should have their costs of this motion paid.

Orders 32 The Court makes the following orders: 1. Each party to pay its costs of the proceedings. 2. The Respondent must pay the Applicants' costs of this Notice of Motion dated 16 October 2007.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

(2006) 147 LGERA 417

(2001) 113 LGERA 439

(2000) 110 LGERA 223

(2002) 122 LGERA 331

(2004) 139 LGERA 116

At a glance

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Judgment (20 paragraphs)

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Legislation Cited (1)

Cases Cited (13)

Cited By (5)