Azizi v Council of the City of Ryde; Alnox Pty Ltd v Council of the City of Ryde

Land and Environment Court (NSW)|2022-04-21|Before: Moore J

Table of Contents Introduction The matters determined in the substantive proceedings My determinations on the substantive issues Costs of the principal proceedings A costs' decision based on written submissions The Council's submissions The Azizi interests' submissions The Council's submissions in reply Consideration Costs of the costs' contest Orders

Introduction

This decision determines costs issues arising from my substantive decision in two appeals (heard together) against determinations by the Valuer General of the compensation to be paid pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) for the compulsory acquisition by Council of the City of Ryde (the Council) of three contiguous allotments of land at North Ryde.

The matters determined in the substantive proceedings

Three matters required to be determined in the substantive proceedings. These were: 1. What was the appropriate hypothetical development potential for the site (the expert valuers engaged by the parties having agreed on a range of valuation outcomes, with the relevant outcome to be applied to what I concluded was the correct development potential multiplier arising from the town planning evidence). The contest was not merely whether the compensation determination by the Valuer General, based on that officer's determination of the development potential, was correct or not (the Azizi interests proposing that it was too low and should be increased), but also determination of the position adopted by the Council that the compensation determination was too high and should be reduced. The Council's position was that there was no possibility of hypothetical upzoning being established and that, hence, the compensation determination reached by the Valuer General should be reduced. In the eventuality that the Council's position prevailed, given the advance payments made to the Azizi interests of 90% of the Valuer General's compensation determination, the nature of the orders to be made to require repayment to the Council of the extent of any resulting overpayment also arose. The Council contended that the Valuer General's compensation determination, based on a hypothetical development potential greater than that which would arise from the R2 Low Density residential development zoning applicable to the site as at the date of acquisition, was incorrect; 1. Whether Mr Azizi was entitled to a stamp duty equivalent payment pursuant to s 59(1)(d) of the Land Acquisition Act on the basis that he would need to acquire a new residence (although, as at the date of my reserving my decision, he had not done so); and 2. Whether Mr Azizi should be awarded the maximum amount of compensation available pursuant to s 60 of the Land Acquisition Act to compensate him for "disadvantage resulting from relocation".

My determinations on the substantive issues

At [514] of my substantive decision, I summarised the outcomes I had determined were appropriate on the contested issues set out above. I said: 514 In summary, I have concluded that: (1) The appropriate underlying development potential for the site owned by the Azizi interests as at the date of acquisition was as a site zoned R3 Medium Density Residential resulting in the development yield to be derived as set out at line 6 of Annexure A to this judgement; (2) Mr Azizi is entitled to compensation of the relevant maximum amount for "Disadvantage resulting from relocation" pursuant to s 60 of the Land Acquisition Act; (3) Mr Azizi is not entitled to a stamp duty compensation payment pursuant to s 59(1)(d) of the Land Acquisition Act as a consequence of the operation of s 61(b) of the Act. However, if I am wrong in this conclusion and he is so entitled, such a payment would be calculated on the basis of the sum representing the complete quantum of his portion of the market value compensation to which the Azizi interests are entitled; (4) Any obligation pursuant to s 48 of the Land Acquisition Act on Mr Azizi and/or Alnox to repay any portion of the 90% advance payments already made is to be addressed in the overall orders to be settled by the parties' legal representatives pursuant to the directions made below for the finalisation of these proceedings; and

Costs of the principal proceedings

In my substantive decision, also at [514], I said the following with respect to costs of the proceedings: (5) The Council is to pay the costs of the proceedings for Mr Azizi and for Alnox unless it wishes to contend for some alternative costs order.
Unsurprisingly, the Azizi interests did not evince any intention to seek an alternative costs' outcome. However, the Council's legal representatives indicated that they did wish to seek a different costs' outcome based on an apportionment of the costs of the substantive proceedings, with that apportionment reflecting what the Council considered was the appropriate balancing of the degrees of success of the parties on the contested issues earlier outlined.

A costs' decision based on written submissions

Although there were several mentions of the matter after the giving of my decision on the substantive issues (to enable agreement to be reached between the parties on calculations to be incorporated in orders in each of the proceedings to reflect the necessary monetary amounts to be incorporated in those orders), there was agreement that the contest that had arisen concerning the appropriate costs' outcome should be determined on the basis of written submissions without the necessity for any further hearing. On 15 February 2022, I formalised a timetable which had been agreed to by the parties for the provision of those submissions.

The Council's submissions

The Council's submissions were received on 11 March 2022. They were concise, reflecting the position agreed between the parties on 15 February 2022. It is appropriate to reproduce them in full: 1. The principles applicable to costs in Class 3 of this Court's jurisdiction in proceedings under the Just Terms Act are well settled, and unlikely to be controversial. 2. The Court has an unfettered discretion. In particular, the non-application of UCPR Rule 42.1 means that there is no statutory presumption that costs must follow the event. As a general principle "the claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense" (Dillon v Gosford City Council (2011) 184 LGERA 179 at [70]). 3. That general principle is tempered by a number of considerations which can lead to departure from it. The first is the final outcome of the proceedings. Has the plaintiff has achieved a result no better than the compensation assessed by the Valuer General? A second is the raising by the Applicant of issues capable of significantly affecting the amount of compensation ordered, and upon which the Applicant has failed: Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279 at [67]. Of course, issues at trial upon which the Applicant has succeeded are also relevant. The unnecessary multiplication of interlocutory hearings can be relevant: Dillon at [76(a)]. So too can settlement offers: Croghan v Blacktown City Council (2019) 100 NSWLR 757. The list of factors which can be taken into account is not closed. 4. While it may require an extreme case for the Court to order that an Applicant under the Just Terms Act pay the respondent's costs, the factors identified above (and other similar factors) can more readily lead to the Applicant being denied some or all of his costs. 5. In the current proceedings the Council submits that the factors of primary relevance are the ultimate result, in which the Applicants achieved compensation on par with that proposed by the Valuer General and below the amount already paid in advance, and the fact that the Applicants failed on a number of discrete issues which were capable of significantly affecting the compensation, and which occupied significant time at the hearing. Those factors warrant a significant reduction in the costs to be recovered by the Applicants. It is not suggested that they warrant a reversal of the usual position or that the Council should recover any part of its costs: rather, the Council submits that it should pay a proportion, but a significantly reduced proportion, of the Applicants' costs. 6. It proposed in the Short Minutes submitted to the Court after publication of reasons for decision, that that proportion should be 25%. The Valuer General and the ultimate result 7. The amounts of compensation assessed by the Valuer General, and the amounts ordered by the Court, are as follows: VG determination Compensation ordered Applicant Difference Mr Azizi market value $3,864,458 $3,927,330 +$62,872 Mr Azizi - disturbance $116,727 $128,039 +$11,312 Mr Azizi total $3,981,185 $4,055,368.89 +$74,184 Alnox - Lots D & E combined market value $5,935,542 $6,039,000 +$103,458 Alnox - disturbance $58,896 $69,753.48 +$10,857.48 Alnox total $5,994,438 $6,108,753.48 +$114,315.48

Differences in relation to disturbance losses in the table above should be given little weight. There was no contest as to disturbance so no hearing time was devoted to it, and parts of the increase over the V-G assessment arise from costs incurred after the date of the V-G assessment. 9. The overall result is that the Applicants have failed to make any significant progress against the amounts available to them had they accepted the Valuer General's offer and because a first round of advanced payments in March 2019 were based on an earlier, higher determination subsequently set aside by the Supreme Court, and because both rounds of advance payment included interest, the Applicants have in fact been awarded less compensation than the amounts already paid. Further interest will tip the balance of accounts very slightly in their favour so that there will be a small further sum payable, but the result is that the Applicants would have been at least as well off accepting the Valuer General's offer when it was made. Discrete issues upon which the Applicants were unsuccessful 10. There were two major issues upon which the Applicants were unsuccessful at hearing, and which occupied substantially the whole of the hearing time required. These were the contentions for an underlying zoning of R4 with consequent FSR of 2.8:1 and permissible building height of 25m would have applied to the land but for the public purpose; and the related but separate proposition that the public purpose, and therefore the statutory disregard, arose at a much earlier date than the Council contended, the town planning expert of the Applicants accepted and the Court concluded. 11. Without suggesting that the process of assessment is mechanical or arithmetical, the Court may be assisted in considering the significance of those issues by recalling: a. The proportion of the (already voluminous) tender bundle made up of historic strategic planning documents, included by the Applicants and referred to only in respect of these two issues; b. Their dominance of the Applicants' opening written submissions (roughly 6 of 13 pages) and oral closing submissions. 12. The Court itself identified four primary issues at [53] relevant to market value, and two subsidiary ones relevant to disturbance at [55]. Those issues, and the result achieved were: (1) Would high density development on the land have been permitted? The Council's contentions were upheld and the Applicants' were rejected. (2) Would medium density have been permitted? Neither party contended for this result as its primary position but both addressed it as their second-best option if their primary position was rejected. Therefore, on issue (2) there was no winner and no loser. (3) What would be the applicable controls? On this the Council's submissions were largely, although not entirely, successful and the Applicants' submissions failed entirely. In the R3 scenario Council contended for an FSR of 0.5:1 and a building height of 11.5m. The Applicants contended for an FSR of 2.48:1 and a building height of 17 metres. The Court determined an FSR of 1.5:1 and a maximum applicable building height of 11 metres. (4) What compensation should be awarded? Again, neither side succeeded entirely but the Applicants failed by far the larger margin. 13. Of the two issues identified as requiring determination under the claim for disturbance losses, honours were roughly even. The Council was entirely successful in the argument regarding stamp duty, Mr Azizi succeeded in his claim for loss occasioned by re-location. Settlement offers 14. Given the result reached, no Calderbank offer made by either party is relevant. Interlocutory Application 15. Council does not suggest that the Court would vary or reduce the costs order made in favour of the Applicants on the motion regarding advanced payments. Those costs will be paid in full. That ends any relevance that issue might otherwise have had to the question of costs of the hearing. Conclusions 16. The Court should conclude that in all the circumstances of the current case it would be unjust for the people of Ryde to pay the whole of the Applicants' costs of both proceedings in circumstances where those costs have been very significantly increased by the Applicants advancing an over-ambitious claim which has failed and pursuing additional legal issues which have been determined against them. There is no science to the degree of reduction in recovered costs appropriate to reflect that and it is a matter for robust judicial estimation. 17. The Court's task is to reflect fairly the one-sided result in terms of discrete issues determined and the distinctly modest degree of success achieved by the Applicants in the ultimate result, without departing unfairly from the proposition that a dispossessed owner is entitled to access the Court and have the compensation determined. 18. In all those circumstances, the respondent submits that Alnox could not fairly recover more than 25% of its costs incurred in the proceedings.

The Azizi interests' submissions

The submissions on behalf of the Azizi interests were also concise, equally reflective of the agreed position on 15 February 2022. It is also appropriate to reproduce these submissions in full: Introduction 1. On 21 January 2022, judgment in Azizi v Council of the City of Ryde; Alnox Pty Limited v Council of the City of Ryde (No 2) [2022] NSWLEC 3 (Judgment) was published, but final orders were not made. 2. The parties were directed to agree on settled orders (if possible): Judgment at [515]. The parties agreed on all orders, but for the orders on costs. 3. In its Outline of Submissions dated 9 March 2022 (RS), the Respondent contends that the Applicants are only entitled to 25% of their costs of the proceedings. 4. For the reasons set out below, the Applicants submit that the Court should make the usual costs order requiring the Respondent to pay the Applicants' costs of the proceedings, as agreed or assessed, and the costs of the argument on costs. Statutory framework and principles 5. The general rule that costs follow the event set out in r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) does not apply to Class 3 proceedings: UCPR, r 1.5 and Sch 1. 6. As such, the Court has broad discretion in relation to costs pursuant to s 98 of the Civil Procedure Act 2005 (NSW). 7. In Dillon v Gosford City Council [2011] NSWCA 328; (2011) 184 LGERA 267 (Dillon), Basten JA (with whom Macfarlan JA and Handley AJA agreed) made the following observations about the principles applicable to the exercise of that discretion in compulsory acquisition proceedings (at [70]-[72]): "70 In other respects, however, the appellants' propositions may be accepted. They support the proposition that a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense. 71 That approach is also consistent with the absence of any general presumption that costs should follow the event: the owner who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered. 72 Whether steps taken in maintaining proceedings are reasonable will depend upon the circumstances of the particular case. These may include a comparison between the positions adopted by the parties at the commencement of proceedings and the final outcome. To the extent that a claimant obtains less than the valuation provided by the Valuer General, the claimant has been unsuccessful in the litigation. That will be a factor to be taken into account, but the weight given to that factor may depend upon the extent of the failure. The Court may also take into account the time and expense incurred in relation to specific items. Beyond such general statements, it is unhelpful to go, lest the very generality of the discretion be thought to be fettered in some way. In short, the purpose of an award of costs must be taken into account, namely to compensate the party for expenditure incurred in the course of litigation; the nature of the litigation and the reasonableness of the conduct of the litigation are central considerations." 8. The approach in Dillon was followed in Brock v Roads and Maritime Services [2012] NSWCA 404; (2012) 191 LGERA 267, where Tobias AJA (with whom Beazley and Meagher JJA agreed) observed (at [95]‑[99]): "95 As was noted by Basten JA in Dillon at [71], an owner of land who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the court in respect of the adequacy of any compensation offered. The appellant took such steps and there was no suggestion that in so doing she acted unreasonably. Although in one sense she was unsuccessful in the litigation in that she obtained less than the statutory offer and accepting that that is a factor to take into account, on the other hand at trial she obtained an award of compensation which, with respect to market value, exceeded the amount contended for by the respondent by $117,087. In other words, at trial the respondent contended that apart from disturbance the amount which should be awarded to the appellant for the market value of the land as well as injurious affection and severance was $320,000. His Honour found that the proper amount was $437,087. To that extent she had a victory at trial. 96 As Basten JA concluded at [72] in Dillon, the purpose of an award of costs, being to compensate the party for expenditure incurred in the course of litigation, must be taken into account although the nature of the litigation and the reasonableness of the conduct of the litigation by the claimant are central considerations. 97 The nature of the litigation is, as Wilcox J observed in Banno, that it is not "ordinary litigation". Furthermore, as I have already noted, there was no finding by the primary judge that the appellant had acted in any way unreasonably in conducting the litigation. Finally, there was no finding by the primary judge that the appellant had pursued a vexatious, dishonest or grossly exaggerated claim. 98 It follows from the foregoing that, given the findings to which I have referred, it is apparent that his Honour's order that the appellant should bear her own costs of the proceedings was inconsistent with the application of the correct principles. That inconsistency involved an implicit erroneous decision as to correct principle and thus gave rise to a question of law. 99 In my opinion, the appellant succeeds in her appeal in respect of the order for costs made by the primary judge in the costs judgment. She is therefore entitled to an order that the respondent pay the costs of the proceedings." The Respondent's submissions 9. It is appropriate, before turning to the judgment, to make some specific comments in relation to the Respondent's submissions. 10. Other than making some very general comments in relation to the exercise of the cost power, no proper foundation, based upon authority, is identified for departing from the normal order that the Respondent pay the whole of the Applicants' costs. 11. At paragraph [3] there is reference to the Court of Appeal's decision in United. What the submissions do not address is the actual costs orders made in the Land and Environment Court and maintained in the Court of Appeal. 12. In those proceedings, United had succeeded at first instance and, by Order 4, obtained an Order that the Respondent pay its costs. On appeal the determination of the Land and Environment Court was set aside. The consequence of the appeal was that United received no compensation. Nevertheless, and after considering the authorities, the Court maintained the order for costs in the Land and Environment Court. That is, having been entirely unsuccessful (after appeal), the Respondent was nevertheless ordered to pay the Applicants' costs. 13. Similarly, no reference is made to the recent decision of Justice Duggan in Olde English Tiles. In those proceedings, Duggan J found that notwithstanding the determination of compensation by the Valuer General, Olde English Tiles had no interest in the land. As a result, Olde English Tiles received no compensation. Nevertheless, and consistent with the authorities, Duggan J ordered the Respondent to pay the whole of the Applicants' costs. 14. Next, it appears to be suggested through the Respondent's submissions that there was something unreasonable in the Applicants pressing for the zoning uplift. No such conclusion could be drawn generally from the conduct of the proceedings before this Court. Specifically, having regard to the very troubled history of these proceedings, no such conclusion is available. 15. That troubled history includes the Council's proceedings in the Supreme Court, before Payne JA (sitting at first instance) to set aside the Compensation Notice. As can be seen from the decision of Payne J, one of the - unsuccessful - grounds of challenge was the unreasonableness of the Valuer General's conclusion, ultimately, of an underlying zoning of R3 with a 23m height and a 1.7:1 maximum floor space ratio. 16. As can be seen from the decision of Payne J, prior to the final determination of the Valuer General (the subject of the proceedings before Payne J) the underlying zoning had been reviewed by planners on five different occasions. That was by two planners for the Applicants, once by the Council and three times, by two different planners, for the Valuer General. Those conclusions can be set out in tabular form as follows: No. Date Report Zoning Max Height Max FSR
Mar 17 Think Planners R4 25m 2.5-2.8:1
Aug 18 Turnbull Planning R4 25m 2.5:1
07 Nov 18 Ingham Planning (peer review) R4 25m 2.8:1
31 Oct 18 Planning Ingenuity R2 N/A N/A
12 Dec 18 Turnbull Planning (supplementary R4 7 storeys 2.5:1
21 Dec 18 Ethos Urban (peer review) R3 23m 1.7:1

Obviously, the Applicants do not cavil with this Court's determination on underlying zoning and the relevantly applicable development standards. However, in the circumstance of that history, any suggestion of unreasonableness in their conduct of these proceedings would simply be rejected. 18. Finally, it is appropriate to note the cost orders ultimately made by Payne J in the Supreme Court. Perhaps, it is those cost orders, which motivate the Council to now seek a cost order in these proceedings which is entirely unsupported by authority. 19. In the Supreme Court proceedings, Payne J did make an issues-based cost order. In fact, in proceedings where the Council had been successful in setting aside the determination, as that success had only been in relation to a relatively minor component of the pre-acquisition costs, the result was an Order that the Council pay 30% of Alnox and Azizi's costs. 20. Of course, any costs decision in those proceedings was not to be guided by the well- established rules relevant to the determination of costs in Class 3 compensation matters in this Court. His Honour's principled approach to the making of an issues- based costs order in those proceedings simply has nothing to do with the making of any cost orders in these. The Judgment 21. In Azizi v Council of the City of Ryde; Alnox Pty Limited v Council of the City of Ryde (No 2) [2022] NSWLEC 3, Justice Moore made the following observations on the question of costs (at [505]-[510]): "505 The decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno) that compulsory acquisition of private real property, when subject to curial proceedings to determine the quantum of compensation to be paid to the dispossessed owner, will usually be followed by a costs order in favour of the dispossessed owner has been adopted as applicable in this jurisdiction pursuant to the Land Acquisition Act by the Court of Appeal in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon) at [70] to [72]. 506 Even in circumstances where the result is a mixed one, where a dispossessed owner does not achieve complete success, but only succeeds on some elements, nonetheless, it is appropriate to make a costs order in favour of the dispossessed owner (Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404). 507 Here, although the Azizi interests have only partially succeeded (as their claim for R4 High Density Residential zoning has not been successful), nonetheless, they have, collectively, succeeded to the extent that I have not upheld the Council's position that the R2 Low Density Residential zoning as at the date of acquisition should be sustained. 508 However, Mr Azizi has not succeeded on the contested position arising from his stamp duty equivalent compensation payment claim but has on his claim pursuant to s 60 of the Land Acquisition Act. 509 Although the positions of Mr Azizi and Alnox differ in their individual outcomes, it seems to me that the effective overall result of the proceedings (being heard, together with evidence in one being evidence in the other as relevant) should result in a common costs position arising in each instance. 510 As a consequence, unless the Council wishes to contend for some alternative position in Mr Azizi's and/or Alnox's proceedings, I am satisfied that the appropriate order should be, in each matter, that the Council pays the cost of the dispossessed owner." 22. Relevantly, there was no finding in the Judgment that the Applicants had acted in any way unreasonably in conducting the litigation or pursued a vexatious, dishonest or grossly exaggerated claim. The Applicants are entitled to usual costs order 23. The Applicants are entitled to the usual order requiring the Respondent to pay the Applicants' costs, as agreed or assessed. Overall, the Applicants were successful in the proceedings obtaining more compensation than the amount determined by the Valuer General as reflected in the summary table at [7] of RS. The table omits that Mr Azizi was also entirely successful in respect of his claim for disadvantage resulting from relocation under s 55(e) of the Just Terms Act - which had been contested by the Respondent. 24. The failure of the Applicants in their R4 claim does not disentitle them to the usual costs order - they had a right to test this claim. It is to be remembered that the Council was also unsuccessful in its R2 claim. Further, if the Court is looking at respective parties success or failure, the absence of the Council's position in the table at [7] of its submissions is telling. Council ultimately sought $2.1m in Azizi and $2.5m in Alnox. It was plainly, and significantly, unsuccessful. 25. The Respondent contends that the ultimate result is "below the amount already paid in advance": RS at [5]. This is patently incorrect. Looked at most simply, the total amount of compensation determined by the Court is greater than the total amount of compensation determined by the Valuer General and offered in the Compensation Notice. Plainly, in those circumstances, the ultimate result cannot be below the amount already paid in advance. Perhaps the Council is confusing its obligation to pay statutory interest with its obligation to pay compensation? 26. The Council has paid Alnox $5,994,438 in two tranches being $3,000,000 (as a condition of the stay in the Supreme Court proceedings) and $2,994,438 pursuant to Orders in this Court (following the unsuccessful appeal). In a strange twist of fate, by those payments, Council in fact paid 100% of the (second) Valuer General's determination. Interest on those amounts have also been paid. This Court determined Alnox's compensation in the amount of $6,108,753.48. That is, Council still owes Alnox $114,315.48 plus statutory interest. 27. Council paid Azizi $3,981,185. Those payments similarly were in two tranches of $2,000,000 and $1,981,185. Again, that was a payment of 100% of the (second) Valuer General's determination. This Court determined compensation for Azizi in the amount of $4,133,750. As a result, Council still owes Azizi $152,565 plus interest. 28. Far from any overpayment, Council still owes the Applicants $266,880.48 plus interest. It is to be remembered that the second tranche of payments was only made following the Applicants' successful motion for mandamus in this Court and the Respondent's unsuccessful appeal to the NSW Court of Appeal. It is also relevant to recall that, in the earlier proceedings before Payne J, the Council's success was only in relation to a relatively small component of the s 59(1)(a) costs. It was unsuccessful in relation to all other challenges. Although that resulted in the determinations being set aside, when they were reissued, they were for identical amounts, other than the s 59(1)(a) costs (which now, consistent with Hoy appropriately excluded the costs incurred in negotiating for the hardship acquisition). 29. Mr Azizi was unsuccessful in relation to his claim for stamp duty by operation of s 61(b) of the Just Terms Act. However, this matter was not pleaded by the Respondent and only arose at the eleventh hour in Closing Submissions. 30. The factors relied on by the Respondent do not warrant a "significant reduction" in the costs to be recovered by the Applicants: RS at [5]. The Respondent readily accepts there is "no science to the degree of reduction" and, therefore, it follows that there is no basis for the reduction of 75% of the Applicants' entitlement to costs having regard to the history and circumstances of this case.

The Council's submissions in reply

The timetable agreed to on 15 February 2022 also permitted submissions in reply to be provided by the Council. These were received on 8 April 2022. The length of these submissions (being briefer than the primary costs' submissions for each party) were also concise. They are reproduced in full below: 1. This note does not canvass the many issues in the Applicants' submissions on costs over which the parties are at odds but to address two discrete errors. Alleged absence of precedent 2. The allegation that the Respondent's submissions were not supported by precedent (AS [10]) is mistaken. The precedents are set out in full in the submissions in chief and are largely the same ones relied upon by the Respondent. 3. The real complaint seems to be that the Respondent did not list examples of cases in which Judges have deprived the Applicant in Class 3 proceedings of some portion of their costs. That is not how precedents are usually deployed. But there are a significant number of such examples available. 4. They include BMP Manufacturing Pty Ltd v RTA (No 2) [2009] NSWLEC 41 (Shehan J) - each party to bear its own costs); Nevitoro Investments Pty Ltd v Hawkesbury City Council [2000] NSWLEC 151 (Talbot J) - Applicant not to recover any costs of a claim under s 55(f); Serbian Cultural Club 'St Sava' Inc v RTA [2008] NSWLEC 78 (Jagot J) - Respondent to pay 50% of the Applicant's costs; Rukavina v Wagga Wagga City Council (1993) 80 LGERA 8 (Pearlman J) - Respondent to pay two thirds of the Applicant's costs. 5. It is of course not denied that these cases are the exception rather than the rule. But the exception is by no means unprecedented. Advanced Payments 6. There is one factual matter put by the Applicants which the Respondent maintains is plainly wrong. At paragraphs 27 and 28 of the Alnox submissions and at paragraphs 26 and 27 of the Azizi submissions, they give figures for amounts already paid to the Applicants. Those figures are wrong. 7. It appears that once again the Applicants may have overlooked or omitted that as well as amounts paid in cash, further amounts were paid on behalf of the Applicants to discharge obligations attaching to the land including rates, rent and land tax. That was the very issue that vexed the question of the amount of advanced payment to be made in 2021. 8. The total of the figures acknowledged by the Applicants at the identified paragraphs is $9,975,623. In fact, the amount paid to the Respondent is at least $10,399,041.08. 9. Plainly it will not be practical for the Court to determine this factual issue as a subsidiary consideration in making a costs order. To do so would require detailed additional evidence and, it is respectfully submitted, would not be justified given the comparatively limited role the question is likely to play in determination of the costs orders. 10. The Respondent respectfully submits that the Court should approach this question on the basis that: (1) There is continuing disagreement between the parties as to the precise amounts already advanced and their relationship to the amount of compensation ordered. (2) On either parties' view the amounts are very close with only a minor balance in favour of or against either party. (3) Neither party can be said to have substantially over- or under-achieved in the ultimate result when compared to the amounts paid by the Respondent in advance. 11. Of course, if the Court is not persuaded to take that approach, the Respondent would be in a position to file evidence of the amounts actually paid, and to do so very quickly.

Consideration

In the context of what is set out above concerning the Council's summary of the financial outcome of my determination when compared to the determination made by the Valuer General for each of the Azizi interests, it is appropriate also to note the positions contended for by the Council in each of the proceedings.
The Council's position with respect to Mr Azizi's claim was set out in paragraph 6 of the Respondent's Outline of Opening Submissions. The Council's position was: 6. The Respondent's evidence and Schedule of Disturbance Losses in Reply filed in the Azizi proceedings contends that the compensation payable to the Applicant is as follows: Head of Compensation Respondent's Position s. 55(a) - Market value $2,100,000 s. 55(b) - Special value N/A s. 55(c) - Severance N/A s. 55(d) - Disturbance $36,162.56 + stamp duty on a replacement property to be quantified s. 55(e) - Disadvantage resulting from relocation $78,381 s. 55(f) - Betterment/IA N/A TOTAL $2,214,543.56 plus stamp duty

There are two matters to be observed with respect to the entries in the above table. First, as can be seen from the fourth item, the Council initially conceded that Mr Azizi should be entitled to a stamp duty equivalent payment for the purchase of a replacement property. This position was reversed during the course of the hearing and such a payment was (successfully) resisted by the Council, as can be seen from my substantive decision.
Second, as can be seen from the fifth item in the above table, the Council initially proposed that Mr Azizi should be paid the maximum amount of $78,381 for disadvantage resulting from relocation. During the course of the substantive hearing, the Council reversed this position and argued (unsuccessfully) for me to award a lower amount than the statutory maximum permitted under this head of compensation.
The position contended for by the Council concerning the claim advanced on behalf of the Company was set out in paragraph 8 of the Respondent's Outline of Opening Submissions. The Council's position was: 8. The Respondent's evidence and Schedule of Disturbance Losses in Reply filed in the Alnox proceedings contends that the compensation payable to the Applicant is as follows: Head of Compensation Respondent's Position s. 55(a) - Market value $2,450,000 s. 55(b) - Special value N/A s. 55(c) - Severance N/A s. 55(d) - Disturbance $55,667.20 s. 55(e) - Disadvantage resulting from relocation N/A s. 55(f) - Betterment/IA N/A TOTAL $2,505,67.20

The positions advanced by the Council on the site being appropriate to be valued as R2 Low Density Residential, as set out in the submissions quoted above, were reflected in the agreed position set out in the joint expert report of the valuers. They set out the value of each of the acquired lots if I was to conclude that the underlying zoning of the site was R2 Low Density Residential. The paragraph from the valuers' joint expert report was in the following terms: 5. Market Value But For The Public Purpose if R2 Zoned We agreed that, if the Court rules that the highest and best legally permissible use but for the public purpose acquisition is R2, that the values would be based on the values of the existing improvements to the land as follows:- Market Value But For The Public Purpose if Zoned R2 Component Description Area M2 Adopted Market Value Analysis ($/M2 Land) 86 Blenheim Road, North Ryde Double Storey Residence 796.4 $2,100,000 $2,637 12A Epping Road, North Ryde Single Storey Residence 613 $1,250,000 $2,039 14 Epping Road, North Ryde Single Storey Residence 613 $1,200,000 $1,958
Direct Comparison Summary Total Market Value 2022.4 $4,550,000 $2,250

During the course of the hearing, in resisting all potentiality for a higher zoning than that of R2 Low Density Residential, the primary position adopted by Mr Mead, the Council's town planning expert (and a position supported vigorously in the Council's written and oral closing submissions) was that there was no upzoning potential and that the existing R2 Low Density Residential zone remained appropriate with compensation to be determined on that basis.
The decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno) was one which confirmed that, in compulsory acquisition compensation cases, the dispossessed owner should ordinarily have their costs met by the acquiring authority unless the case pursued by the dispossessed owner was "a vexatious, dishonest or grossly exaggerated claim".
These propositions were cited with approval in Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 (Brock) at [82]. In doing so, Tobias AJA accepted the proposition that where there had been a reasonable pursuit of the claim, one which did not give rise to unnecessary delay or expense in its determination, the dispossessed owner should have their costs of the proceedings.
The Council's written submissions commenced by acknowledging that the general proposition was that a dispossessed owner, if acting reasonably in undertaking proceedings disputing the quantum of compensation to be paid, should have the acquiring authority pay costs of the proceedings provided that the dispossessed owner does not act in any disentitling fashion. Whether the dispossessed owner has undertaken the proceedings in a reasonable fashion requires assessment of the facts and circumstances of each individual case (citing Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon) at [70] to [72]). The submissions noted that the approach set out in Dillon had been followed in Brock.
The Council's submissions then cited further decisions confirming the general proposition that a dispossessed owner ought, ordinarily, recover the costs of the proceedings unless there was conduct on behalf of the dispossessed owner that warranted departure from such a position, even if the dispossessed owner was unsuccessful in the claim pursued.
The appropriate comparison is not between what the Azizi interests achieved and what had been the Valuer General's determination which they contested. The proper comparison is between what the Azizi's interests achieved (being, admittedly, only modestly better than the Valuer General's second determination), but how much more they achieved when compared to what the Council contended should be the outcome of the proceedings. In this regard, the position adopted by the Council (and pursued by its advocate in the hearing) was that the amount of compensation determined by the Valuer General should be significantly reduced to the market value shown at paragraphs [13] and [16] earlier, as setting out the Council's position at the commencement of the hearing before me.
The difference between the outcomes achieved by Mr Azizi and by the Company quite significantly exceeded that which were proposed by the Council. It is these differences that are, in my view, the appropriate measures of the success by the Azizi interests and the failure of the Council.
It is also appropriate to note that, despite the Council abandoning its originally set out position concerning Mr Azizi's quantum of compensation for disadvantage resulting from relocation, this reversal of position was unsuccessful and Mr Azizi was awarded the statutory maximum amount for this head of compensation.
With respect to the proposal that there be a differential costs order relating to one specific element of the bundle of claims on behalf of the Azizi interests overall, this being Mr Azizi's claim for a stamp duty equivalent payment, the Council's written submissions proposed that there was a specific reason why such a differential approach was appropriate, submitting in paragraph 10 (citing Qasabian Family Investments Pty Ltd v Roads and Maritime Services (No 2); Fishing Station Pty Ltd v Roads and Maritime Services (No 2) [2017] NSWLEC 179 (Qasabian No 2) at [54] to [56] and [61(1)]), that there was no proper foundation for this claim. This submission was that: However, where a claim is made that flies in the face of settled authority, such as the Applicants' claim for stamp duty, a costs order in favour of the First Respondent in relation to the claim under s 59(1)(d) should follow.
However, as earlier noted, as at the commencement of the proceedings the written opening submissions for the Council had proposed to concede that the claim for a stamp duty equivalent payment was appropriate.
Overall, despite the flaws which I held existed in the stamp duty equivalent payment compensation claims, I am satisfied that the broad approach taken by the Court of Appeal in Dillon should apply.
The presumption here is not that costs will follow the event (as r 42.1 of the UCPR and Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 would otherwise provide). In such cases, the "event" refers to the nature of the claim and the practical result of it: Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [39]. Generally, that means an unsuccessful party can be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [32]; Roads and Traffic Authority v McGregor & Anor (No 2) [2005] NSWCA 453 at [17].
Here, the general discretion in s 98 of the Civil Procedure Act 2005 applies.
The quite dramatic difference between what the Azizi interests actually achieved as the overall outcome of the proceedings, when compared to the position advanced by the Council (that a substantially lesser entitlement for market value compensation should be accorded to either Mr Azizi or to the Company - this being the dominant contested issue in the hearing), means that it is appropriate that the Council should pay the entirety of the costs of the Azizi interests of the substantive proceedings.

Costs of the costs' contest

Conventionally, the costs of costs' contests are paid by the party whose position has not prevailed in the costs' contest. There is no reason, in this instance, why that position should not apply. The Council is, therefore, to be ordered to pay the costs arising from this costs' contest.

Orders

The orders of the Court, therefore, are: 1. In Matters 168439 and 168457 of 2020, the Council of the City of Ryde is to pay the Applicants' costs of the proceedings; and 2. In Matters 168439 and 168457 of 2020, Council of the City of Ryde is to pay the Applicants' costs of the costs' proceedings.

Amendments 22 April 2022 - Changes to the Representation panel of the cover sheet. 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. Decision last updated: 22 April 2022

(2012) 191 LGERA 267

(2011) 184 LGERA 179

(2019) 100 NSWLR 757

(2011) 184 LGERA 267

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