Ashfield Municipal Council v RTA of NSW

Mr Ayling argues that the costs question should be determined by an analysis of the issues traversed at the hearing, and the overall interests of justice. He submits that in this case the Council launched an "ambit" or "outrageously overstated" claim, which the respondent on the State's behalf had a duty to resist. In any event, the road, as well as the land, remain vested in the Council, which recovered only about one-ninth of what it had claimed in terms of the land's market value. As the applicant made, and vigorously pursued, a very substantial claim, which did not really succeed, and as the respondent succeeded in avoiding liability to pay any compensation at all for 40% of the land acquired, each party should pay its own costs.

Mr Webster, in response, pointed out that North Albury was decided under the old Public Works Act, where the costs regime required the court to compare outcomes. The JTC Act was designed to go beyond those parameters, and the court has moved away from that approach to costs. The applicant here recovered five times what it was offered. No such offer of compromise was made; indeed, the respondent argued at the trial for less than the original amount it had offered. Accordingly, there are no special circumstances in this case to warrant any order other than for 100% of the applicant's party/party costs to be paid by the respondent.

Mr Webster noted that the respondent lost the easement and land classification points, but the latter had little impact on the outcome. Further, although the respondent was successful in having the court apply to the easement the principles in Rogerson v The Minister (1968) 16 LGRA 400, the court was more generous than the respondent's valuer. The conservative valuation arrived at by the court still effected a 75% moderation of the compensation, from a claim of $60,000 to an award of $15,509.

Although Mr Ayling acknowledges that this case is not quite like Maloney v Cowra Shire Council ("Maloney") [2000] NSWLEC 107, where the most important and time consuming issue in the case, separately argued and decided, was completely lost by the applicant, there were serious issues here of general import, which were resolved entirely in the respondent's favour.

In par 28 of his written submissions, Mr Ayling argues that "justice to both parties demands that the extent of the respondent's success be reflected in an adjustment of the cost burden it must shoulder". While he submits that the proper outcome would be that each party be ordered to pay its own costs, if the respondent is ordered to pay any of the applicant's costs, he contends that it should pay no more than 40% - that number is not arrived at by a mathematical calculation such as in Maloney, but 40% of the land the subject of the claim in this case did not fall within the scope of the court's order.

Mr Ayling concludes his submissions (p10) with the following: … the applicant was a public authority under the constraint that it should not, by taking and pursuing an unrealistic claim, risk its ratepayers' cash assets. The respondent, and the Court, are not in the business of indemnifying councils against the consequences of unwise decisions at the cost of the public of the State generally.

The court believes that that submission has to be assessed against the general principle in Latoudis v Casey (1990) 170 CLR 534, that costs are compensatory and not punitive in character. However, the fact remains that the applicant on behalf of its ratepayers, sought and obtained far more than was offered and argued by the respondent. The Council was acting in the public interest, not just as a corporation in its own right, and, as a trustee pursuing the interests of the public, Mr Webster says it should not be disadvantaged.

In Rukavina and Robertson v Wagga Wagga City Council (1993) 80 LGERA 8, the first applicant was successful in his claim, but lost some of his major arguments, and Pearlman J made an order for two-thirds of his costs to be paid by the Council.

The Chief Judge surveyed the authorities, and commented: It is clear from these cases that, although costs in compensation proceedings normally follow the event, the Court in the exercise of its discretion may make a special order if it is found to be warranted, and may do so even though the taxing officer has a discretion to make allowances as appropriate ….

Her Honour considered a special order appropriate in Rukavina, in view of the fact that the findings she had made cumulatively had the effect of very substantially reducing the award below that for which the applicant had contended.

In Banno & Anor v Commonwealth of Australia & Anor (1993) 81 LGERA 34, Wilcox J said (at 53): 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 a 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.

In Overton Investments Pty Ltd v The Minister (No.3) (30178 of 1995, 24 December 1998), the site acquired was unusual, and its history complex.

The applicant failed badly in its market value claim, but substantially succeeded in its disturbance claim. When the question of costs came before the court, Overton sought an order that the respondent pay its costs, and the respondent sought an order for indemnity costs. As in this present case, the respondent regarded Overton's claim as "extravagant" and "wildly speculative".

I accepted the respondent's submission that the issues on which Overton succeeded were subsidiary to the larger issue in respect of which it failed, namely whether the notional retirement village concept could be properly regarded by the court as the highest and best use of the acquired land.

In the end result, I found the approach advanced by Overton to be unrealistic, but not insincere, or mischievous, or otherwise improperly advanced. Overton maintained its position and was entitled to have the matter determined judicially, and it was, therefore, appropriate that each party should pay its own costs.

In Maloney, Talbot J had to determine claims that the applicant should receive a very large sum representing the value of a Council road built on land decades before the acquisition, together with a sum for adjoining owner influence and compensation for the cost of replacing existing fencing along the road. The applicant had modest success on these issues but, as two-thirds of the hearing time had been taken up with the principal issue, on which the applicant largely failed, Talbot J agreed that it would be unjust to burden the respondent with the full costs of that issue. He referred to North Albury and Rukavina, and concluded that, as the applicant's claim had been rejected by applying established principle to the facts of the instant case, the costs should be apportioned.

In Nevitoro Investments Pty Ltd v Hawkesbury City Council [2000] NSWLEC 151 ("Nevitoro"), the applicant had succeeded in recovering compensation, but the Council wanted the costs apportioned on the basis that at a particular date (24 February 1998) it wrote a formal letter offering to settle the matter. Council sought no order as to costs prior to that date, but a special order that the applicant pay the Council's costs after that date.

The inclusive nature of the offers made did not allow the applicant to determine the appropriate amount to attribute to its claim, certain elements of which the respondent continued to dispute. The "genuine offer" was not accepted by the applicant, and, just prior to the hearing, but after the expert evidence was in, the respondent's valuer became aware of an additional sale on which he then proposed to rely. The new evidence proved critical to the court's determination.

Talbot J concluded that it was fair and reasonable to recognise that the applicant succeeded in recovering compensation in excess of the amount otherwise available. However, it was also fair and just that the court recognise the applicant's failure on a claim under s 55(f) of the JTC Act, an issue which was clearly defined and the subject of specific evidence taking up significant time. His Honour, therefore, made a special order and ordered the respondent to pay the applicant's costs, except for those relevant to the s 55(f) claim.

In Pastrello v Roads and Traffic Authority of New South Wales (2000) 110 LGERA 223 ("Pastrello"), the major difference between the parties at the trial was an assertion that the relevant roadworks detrimentally affected the conduct of the applicant's business and constrained the site's future potential uses. Talbot J accepted evidence from the respondent that there would be no impact upon the viability of existing business, but the applicant still succeeded in recovering substantially more than it was offered. His Honour said (par 12): It is quite apparent to me that the applicants would have foregone a significant amount of compensation to which I held they were entitled as disturbance items if they had not litigated the claims. I see no reason to apportion the costs in respect of the disturbance claim .

His Honour referred to Rukavina, Maloney and Nevitoro, but distinguished them. He commented (at pars 17-20): 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.

An order for costs against the interests of the applicants in this case would clearly have a significant impact on the ultimate amount to be recovered by the applicants.

I agree with Mr Webster that the applicants were entitled to investigate the impact that the acquisition had on the market value of the land and to put forward cogent arguments for compensation. The arguments presented by the applicants' experts and by the applicants themselves were not frivolous and fell within the contemplation of the relevant legislation.

This is not a case where there should be a special order for costs.

In Johnston v Roads and Traffic Authority of New South Wales [2000] NSWLEC 226 ("Johnston"), Cowdroy J considered Rukavina and Pastrello. The applicant had claimed a total of $971,000 and the respondent had offered $438,000. The court determined compensation of $464,000 plus disturbance of $149,000. The respondent was prepared to pay 20% of the applicant's costs.

Cowdroy J said (at par 9): The claim for compensation in respect of the subject land was formulated by the applicant on a basis which was unsuccessful. However during the hearing the respondent conceded that adjustments needed to be made to its own assessment of the value of such land. In this respect the applicant's claim could not be said to have been wholly unsuccessful, for without it, the respondent would not have increased its compensation payment. Further, the mere fact that the Court did not adopt the method of calculation proposed by the applicant does not lead to the conclusion that the claim was baseless. The applicant was entitled to have its claim considered and the conduct of the applicant was not unreasonable.

In Goodman v Roads and Traffic Authority of New South Wales [2000] NSWLEC 261 ("Goodman") the applicant had requested the respondent to acquire the property on the grounds of hardship. During the litigation the claim went up and the offer down. An offer of settlement was made just prior to the hearing, and the respondent submitted that, because of a less favourable outcome than the offer, in circumstances where the respondent was forced to prepare to meet "groundless claims", it was entitled to the payment of its costs after the date of the offer.

The applicant complained that the offer was delivered to his solicitors on the last business day before the hearing and was open only until 9.30am on the day of the hearing, causing difficulty in obtaining proper instructions at such short notice over a weekend. Also, it was only in the last few days prior to the hearing that the applicant's solicitors received from the solicitors for the respondent a reply to a letter sent two months before seeking further and better particulars of the respondent's valuation evidence.

Talbot J placed considerable weight on the lateness of the offer and the limited time for its acceptance. The offer had lapsed by the time the hearing commenced, but, had it been accepted, the applicant would have received a greater amount than the sum awarded by the court and the costs of the hearing would have been saved. The applicant's costs had already been incurred before the offer was made at the last moment and he was advised that he had a real prospect of recovering a greater sum by proceeding with the litigation. His case was not "vexatious, dishonest or grossly exaggerated", and he was entitled to pursue his claim to the full extent that the law allowed. His Honour concluded (par 27): On balance, the actions of the applicant do not provide sufficient justification for eroding the benefit of the just compensation recovered by the making of a costs order against him.

I agree with the principles expressed and adopted by the court in Pastrello, Johnston and Goodman.

A private applicant, in the circumstances of this case, could expect the application of those principles to result in a favourable order for costs.

The Council was entitled to bring these proceedings on behalf of its community.

As the proceedings resulted in a substantially higher award of compensation than was offered, and argued for, by the RTA, Council's ratepayers should not see the award from which they can expect to benefit reduced by an unfair burden of costs.

I have concluded that the respondent should pay the applicant's costs of both the substantive proceedings, and of this motion, and the court so orders.

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