Applicant v Respondent

1 These two proceedings arise from the compulsory acquisition by the Roads Corporation (the Authority)[1] of land at 150-170 Old Dandenong Road, Heatherton (the site). Lantrak Developments Pty Ltd was the registered proprietor of the acquired land, which at the time of the acquisition, on 30 June 2014, was leased to and occupied by Lantrak South East Projects Pty Ltd. The first proceeding (Developments proceeding) concerns a dispute between Developments and the Authority about the compensation payable to Developments for the acquisition of its fee simple interest in the acquired land. In the second proceeding (Projects proceeding), Projects sought declarations to the effect that it was still within the time provided by the Land Acquisition and Compensation Act 1986 (Vic) (LAC Act) to make a claim for compensation for the acquisition of its interest, or alternatively an order extending that time.

2 On 25 November 2021, I published reasons for decision in both proceedings.[2] In the Developments proceeding, I determined that claims for disturbance losses made by Developments did not relate to the acquisition of Developments' interest in the acquired land, had no real prospect of success, and would be summarily dismissed. Developments now has an opportunity to reformulate its claim for compensation. In the Projects proceeding, I decided that the Authority is not obliged to make an offer to Projects under s 31(1) of the LAC Act, that time should not be extended for Projects to make a claim under s 37(1), and that the Projects proceeding would therefore be dismissed.

3 When I published my reasons, I indicated to the parties that I proposed to make the following orders:

(1) Pursuant to s 63 of the Civil Procedure Act 2010 (Vic) and r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), the claims made in paragraph 1 of Developments' further amended particulars of claim dated 24 May 2021 are summarily dismissed.

(2) By 25 February 2022, Developments is to file and serve second further amended particulars of claim.

(3) The proceeding will be listed for further directions on a date to be fixed in March 2022.

(4) Developments is to pay the Authority's costs of its summons filed 7 June 2021, including any reserved costs, on the standard basis, to be assessed by the Costs Court if not agreed.

(1) The proceeding is dismissed.

(2) Projects is to pay the Authority's costs of the proceeding, including any reserved costs, on the standard basis, to be assessed by the Costs Court if not agreed.

4 Any party that sought a different order as to costs was asked to file a short submission, by 2 December 2021, setting out the order sought and the reasons why it should be made. The other party was to file a submission in reply by 9 December 2021, which was later extended to 16 December 2021.

5 On 2 December 2021, the Authority filed a written submission seeking the following orders as to costs:

(1) Developments is to pay the Authority's costs of the summons, including any reserved costs, on an indemnity basis, to be assessed by the Costs Court if not agreed;

(2) Developments is to pay the Authority's costs thrown away arising from the claims in paragraph 1 of the Particulars of Claim filed 1 July 2020, the Amended Particulars of Claim filed 1 October 2020 and the Further Amended Particulars of Claim filed 24 May 2021, including any reserved costs, on an indemnity basis, to be assessed by the Costs Court if not agreed;

(3) Developments is to pay the Authority's costs thrown away by reason of the vacation of the trial, which was fixed to commence on 20 July 2021, and the costs of the hearing on 17 June 2021, including any reserved costs, on an indemnity basis, to be assessed by the Costs Court if not agreed; and

(4) The orders for costs in (1), (2) and (3) above, together with the orders for costs made by Clayton JR on 16 October 2019, Keith JR on 2 June 2020 and Richards J on 25 May 2021, may be assessed by the Costs Court immediately if not agreed.

(b) In the Projects proceeding, the Authority sought an order that Projects pay the Authority's costs of the proceeding, including any reserved costs, on an indemnity basis, to be assessed by the Costs Court if not agreed.

6 On 16 December 2021, Developments and Projects (together, the Claimants) filed written submissions opposing the costs orders sought by the Authority. They accepted that they should pay, respectively, the Authority's costs of its summons filed 7 June 2021 in the Developments proceeding and the Authority's costs of the Projects proceeding, on the standard basis. However, they opposed any indemnity costs order, said that no orders should be made in relation to costs thrown away, and argued that the costs to be paid by Developments should be assessed at the conclusion of the Developments proceeding.

7 For the reasons that follow, I have decided that Developments should pay the Authority's costs of and incidental to the Authority's summons filed 7 June 2021 on an indemnity basis. It should also pay any costs of the Authority thrown away by reason of the vacation of the trial date in July 2021, on the standard basis. These costs orders should be assessed at the end of the proceeding. Projects should pay the Authority's costs of the Projects proceeding on the standard basis.

8 The parties were agreed that s 91 of the LAC Act applies to the question of costs in both proceedings. Section 91 provides:

Costs

(1) In any proceedings under this Part, the Tribunal or the Court (as the case requires) may award such costs as it thinks proper but in making an order for costs must, if the Tribunal or Court considers it appropriate to do so, take into consideration -

(a) the amount of compensation awarded by the Tribunal or Court as compared with the amount (if any) offered by the Authority; and

(b) the extent to which, in the opinion of the Tribunal or Court, the proceedings have arisen from, or been affected by -

(i) unreasonable conduct on the part of the claimant or the 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 Authority; and

(c) any other matters which under this Act are to be taken into account in determining the allocation of costs.

(2) The Court may make an order with respect to the assessment of costs in the same manner as it may in respect of any other matter before the Court.

9 As the Court of Appeal explained in Secretary to the Department of Transport v Provan's Timber Pty Ltd (No 2),[3] there is a long-standing recognition in Victoria of the difference between claimants under the LAC Act and ordinary litigants, and a corresponding 'tilt' in favour of claimants in the exercise of the Court's discretion to award costs.

10 However, the Court retains a wide discretion as to costs in proceedings under the LAC Act, including a discretion to award indemnity costs in an appropriate case.[4] Special or unusual circumstances in which the Court may order indemnity costs against a claimant include where the claimant has unreasonably refused an offer of compensation,[5] or where the claimant has 'pursue[d] a vexatious, dishonest or grossly exaggerated claim or present[ed] their case in such a way as to impose unnecessary burdens on the [acquiring authority] or the Court'.[6]

11 The Authority submitted that Developments should pay the Authority's costs of its summons filed 7 June 2021, and other costs thrown away by reason of Developments' failure to properly particularise its claim, on an indemnity basis. The Authority argued that the following special circumstances justified an award of indemnity costs:

(a) There was never a proper basis to make the claims in paragraph 1 of Developments' particulars of claim, given both Developments and its solicitors knew at all times from 2015 that Developments did not occupy the acquired land or suffer the losses claimed in paragraph 1. Both Developments and its solicitors were aware by February 2017 of the need for Projects to make those claims, and yet Developments persisted with the claims.

(b) The lack of any proper basis for Developments to maintain the claims in paragraph 1 was particularly clear after 24 May 2021, when Developments' application to join Projects as a party to the proceeding was refused, and the Court directed Developments to file amended particulars of claim omitting any claims that there was no proper basis for Developments to make.

(c) Developments did not respond to the Authority's request, in a solicitors' letter dated 28 May 2021, for an explanation of why it had maintained claims for losses apparently related to Projects' business, and not Developments' interest in the acquired land.

(d) After the Authority had filed its summons on 7 June 2021, Developments adduced no further evidence to establish a proper basis for the claims.

(e) The claims made by Developments in paragraph 1 of its particulars were maintained 'for the extraneous purpose of supporting a submission in the Projects proceeding that the claims Projects sought to make were the same as the claims Developments had made since 1 July 2020, and ought to be treated as one claim'.[7]

(f) Developments has to date failed to make any claims, other than for expenses, arising from the acquisition of its freehold interest in the land. This has caused substantial delay in the resolution of the Developments proceeding, commenced by the Authority in April 2019, including the adjournment of the trial that was listed to commence on 20 July 2021.

12 Developments disputed that an indemnity costs order might be made in a proceeding under the LAC Act only because a claim was made or continued without a proper basis. It sought to distinguish the authorities relied on by the Authority,[8] on the basis that they concerned a commercial dispute about trusts and a dispute about wills and estates.

13 Developments further submitted that the claims in paragraph 1 were not brought in wilful disregard of known facts, and were not dishonest, vexatious, or grossly exaggerated. It argued that there was a proper basis to make and maintain the claims, given that Projects' interest in the land was ephemeral and that the claim, although flawed, was not put in circumstances that warrant an award of indemnity costs. Developments said:[9]

The circumstances in which Developments found itself were complicated and difficult. It responded to the Authority's referral of the claim with a genuine statement of the losses caused to the Lantrak group. As the holder of the significant interest in the land, and where Projects' interest could terminate on short notice, Developments reasonably was concerned to identify the losses flowing from the acquisition. As the land owner, Developments has the obligation of rehabilitation, whether or not another entity is engaged from time to time to operate on the land.

...

Developments sought to deal with the issue of the correct claimant through its application to join Projects to the Developments proceeding. Upon the refusal of that application, the Projects proceeding was instituted. Developments was seeking to ensure that both Developments and Projects were before the Court in respect of the identified loss. The justification for this approach was set out in Developments' submissions to the Court of 12 August 2021. Although the Authority's application has succeeded, Developments' attempt to maintain the paragraph 1 particulars was for arguable and genuine purposes.

14 The Civil Procedure Act 2010 (Vic) applies to proceedings under the LAC Act, to claimants and acquiring authorities alike. The 'tilt' in favour of claimants whose land has been compulsorily acquired does not relieve them of their obligations under the Civil Procedure Act. Those obligations include the overarching obligation in s 18(d) not to make any claim in a civil proceeding that 'does not, on the factual and legal material available to the person at the time of making the claim ... have a proper basis'. An indemnity costs order may be an appropriate sanction where a party makes, and persists with, a claim that has no proper basis.[10]

15 It is now plain that there was never a proper basis for the claims made by Developments in paragraph 1 of its particulars of claim, first filed on 1 July 2020, amended on 1 October 2020, and further amended on 24 May 2021. They were claims for disturbance losses suffered by Projects, which occupied and conducted the landfill business on the site at the time of the acquisition. There was no confusion within the Lantrak group that Developments owned the land, and Projects occupied it and operated the landfill business on it.[11] By September 2015, the Lantrak group had provided clear instructions to that effect to its solicitors.

16 In Developments' favour, I accept that from February 2017 it and its legal advisers intended to make a joint claim on behalf of both Developments and Projects. In March 2017, the Authority agreed that the claims of the two companies could be joined and treated as a single claim. For reasons that have not been explained, no joint claim was made before the Authority referred Developments' disputed claim to the Court in April 2019. Two years later, in April 2021, Developments applied to join Projects as a party to the Developments proceeding. Up to that point, it may have been reasonable for Developments to particularise its claim as a claim for losses suffered jointly by it and Projects.

17 However, the joinder application was refused on the basis that Projects did not have a disputed claim that the Court had jurisdiction to determine.[12] From that time, it should have been clear to Developments that the proceeding did not concern a joint claim made by it and Projects, and that Projects was yet to make any claim. In relation to the disposition of Developments' joinder application, I said:[13]

The application to file and serve further amended particulars of claim was contingent on Projects becoming a respondent, and so I will not grant leave to file and serve a document in the form exhibited to Mr Lofting's affidavit. However, counsel for [Developments] indicated that there was one substantial head of claim to be deleted in any event. In addition, it appears that various claims made in the current version of the particulars of claim relate to the business conducted by Projects, and not [Developments'] interest in the acquired land. I will therefore make an order directing [Developments] to file and serve further amended particulars of claim deleting any head of claim that is no longer pressed, and omitting any claims that there is no proper basis for [Developments] to make.

18 Despite these observations, Developments filed and served further amended particulars of claim on 24 May 2021 that included all of the disturbance losses that Projects sought to claim. Developments persisted with these claims despite the Authority's queries, conveyed by its solicitors in their letter of 28 May 2021, and the Authority's summons filed 7 June 2021. It did not file any evidence that even arguably demonstrated that these losses were suffered by Developments rather than Projects. All of the evidence was to the contrary. The claims did not relate to 'the divesting or diminishing of Developments' freehold interest in the acquired land as at 30 June 2014', and could not be maintained.[14]

19 In my view, Developments' persistence with the claims for disturbance losses after 24 May 2021 was unreasonable conduct on the part of Developments, for the purposes of s 91(1)(b)(i) of the LAC Act. I consider that conduct warrants an order that Developments pay the Authority's costs of and incidental to the Authority's summons filed 7 June 2021 on an indemnity basis.

20 I can deal more briefly with the Authority's claims for further costs orders.

21 I do not consider that any further costs order should be made in relation to any costs thrown away arising from the claims made in paragraph 1 of Developments' particulars of claim. I have taken the view most favourable to Developments, that until 24 May 2021 it was not unreasonable for it to particularise its claim as a joint claim with Projects. The Authority has its costs of Developments' unsuccessful joinder application, and indemnity costs in respect of the Authority's summary dismissal application. Any additional costs will be costs in the proceeding.

22 On 17 June 2021, I made timetabling orders in relation to the Authority's summons and in relation to the Projects proceeding, and vacated the trial of the Developments proceeding fixed for 20 July 2021. I reserved the costs of that day, and any costs thrown away by reason of the vacation of the trial. The Authority now seeks an order that Developments pay those costs on an indemnity basis.

23 The costs of the hearing on 17 June 2021 are costs of and incidental to the Authority's summons filed 7 June 2021, and are covered by the indemnity costs order in relation to that summons. However, I consider that Developments should pay any costs thrown away by the Authority by reason of the vacation of the trial on the standard basis. That is because the unsatisfactory state of Developments' particulars of claim was not the only reason why the trial was vacated; another substantial reason was the commencement of the Projects proceeding the previous day. It was necessary to determine whether Projects could belatedly make a claim, before the trial of the Developments proceeding could take place.

Developments proceedings - costs to be assessed and paid immediately?

24 The Authority submitted that Developments' conduct in the proceeding had been so unsatisfactory that the costs ordered against it should be assessed and paid immediately. It relied on Developments' long history of dilatory conduct in the proceeding, and its persistence with claims for losses that it knew that it had not suffered.

25 While I acknowledge that the Authority has many reasons to be frustrated with Developments' conduct in relation to the proceeding, and beforehand, I am not persuaded that the costs orders against Developments should be assessed and paid immediately. The fact remains that Developments is a dispossessed landowner with a claim for compensation that is yet to be assessed. Section 91 of the LAC Act indicates that, in ordinary circumstances, the question of costs should be determined at the end of a proceeding, when 'the amount of compensation awarded' to the claimant is known and can be compared with any offer made by the authority.[15] The assessment of all costs orders made in the proceeding should appropriately be done once, at the conclusion of the proceeding.

26 The Authority submitted that Projects should pay the costs of the Projects proceeding, including any reserved costs, on an indemnity basis. It relied on the following matters:

(a) The voluminous materials filed by Projects in support of its application did not include any evidence from its current or former directors, and was uninformative about the reasons for Projects' delay in making a claim.

(b) The reason for the delay given by Projects' solicitor was not consistent with documents produced by Projects, which indicated that the Lantrak group had formulated the essential elements of the claim by March 2015, and understood by the end of 2015 that it was Projects that operated the landfill business on the site.

(c) These documents were not produced by Projects in answer to requests by the Authority's solicitors, made on 2 August 2021 and 12 August 2021, necessitating service of a notice to produce on 17 August 2021.

(d) If the materials relied on by Projects had been complete, and its explanation for its delay candid, the Authority's costs of defending the Projects proceeding would have been considerably less.

(e) Projects was involved in Developments' conduct of maintaining its claims in paragraph 1 of its particulars of claim.

(f) The commencement of the Projects proceeding on 16 June 2021 had the effect of derailing the trial of the Developments proceeding, which had been listed to start on 20 July 2021. Projects' delay in commencing the proceeding until then was inexplicable.

(g) Finally, Projects' claims were inherently weak.

27 Projects accepted that these matters justified a costs order, but not the further penalty of indemnity costs. It submitted that it 'did seek to set out the extensive circumstances leading up to the applications' and that, while its explanation was not accepted, 'it made a genuine attempt to provide an explanation'. It relied on the Authority's agreement, in March 2017, to Projects making a joint claim with Developments, when the two year time limit under s 37 of the LAC Act had already expired. Projects said that its reliance on that agreement was not unreasonable and ought to weigh against an order for indemnity costs.

28 While the matter is finely balanced, I have determined that Projects should be ordered to pay the Authority's costs of the proceeding on the standard basis. I was troubled by Projects' apparent lack of candour in explaining its delay, in particular the absence of evidence from either Mark Liemant or Gary Liemant, and the fact that the explanation given by Mr Lofting was at odds with documents produced in response to the Authority's notice to produce.[16] The delay in commencing the proceeding was long and remained unexplained. These were all matters that contributed to my conclusion that time should not be extended.

29 At the same time, Projects lost its interest in the acquired land, and the acquisition caused substantial disruption to Projects' business. Due to its delay in making a claim, it no longer has any claim for compensation for losses it has suffered as a consequence of the acquisition. Bearing in mind the 'tilt' towards a dispossessed occupier, I do not consider that Projects should be further penalised by an indemnity costs order.

30 I make the following orders in the Developments proceeding:

(1) Pursuant to s 63 of the Civil Procedure Act 2010 (Vic) and r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), the claims made in paragraph 1 of the respondent's further amended particulars of claim dated 24 May 2021 are summarily dismissed.

(2) By 25 February 2022, the respondent is to file and serve second further amended particulars of claim.

(3) The respondent is to pay the applicant's costs of and incidental to the applicant's summons filed 7 June 2021, including any reserved costs, on an indemnity basis, to be assessed by the Costs Court if not agreed.

(4) The respondent is to pay any costs of the applicant thrown away by reason of the vacation of the trial listed to commence on 20 July 2021, on the standard basis.

(5) The proceeding is listed for further directions before Judicial Registrar Keith on 23 March 2022.

(1) The proceeding is dismissed.

(2) The plaintiff is to pay the defendant's costs of the proceeding, including any reserved costs, on the standard basis, to be assessed by the Costs Court if not agreed.

[1] Roads Corporation, also known as VicRoads, has since been abolished and, relevantly here, replaced by a corporation sole titled 'Head, Transport for Victoria'.

[2] Head, Transport for Victoria v Lantrak Developments Pty Ltd (No 2) [2021] VSC 774 (Lantrak No 2).

[3] Secretary to the Department of Transport v Provan's Timber Pty Ltd (No 2) [2020] VSCA 258, [38]-[41] (Provan's No 2). See also Roads Corporation v Love (No 2) [2010] VSC 154; (2010) 31 VR 551 (Love No 2).

[5] Love No 2, [28]-[44]; Provan's No 2, [43]-[50].

[6] Banno v Commonwealth (1993) 45 FCR 32, 51, quoted in Provan's No 2, [41].

[7] Authority's submissions in respect of costs dated 2 December 2021, [14.6].

[8] Wilson v Waigani Pty Ltd [2020] VSCA 153, [14], [163]-[164]; Carroll v Goff [2021] VSCA 267, [138].

[9] Claimants' submissions in respect of costs dated 16 December 2021, [18], [20].

[10] Civil Procedure Act 2010 (Vic), s 29.

[12] Head, Transport for Victoria v Lantrak Developments Pty Ltd [2021] VSC 259 (Lantrak No 1), [33]-[36].

[15] Land Acquisition and Compensation Act 1986 (Vic), s 91(1)(a).