Blacktown City Council v Concato

Supreme Court of NSW|2020-02-28|Before: Campbell J, Payne J

Judgment

HIS HONOUR: On 17 January 2020 I handed down my principal judgment, Blacktown City Council v Concato (No. 4) [2020] NSWSC 9. I declared that both a determination of compensation dated 17 June 2018 and a re-determination of that compensation made on 27 February 2009 both under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("Just Terms Act") were void and of no effect. I also ordered the third defendant, the Valuer General, to determine the amount of compensation in accordance with the legislation.
I made the following order as to costs (order (4)): Unless any party makes application for a different or special order as to costs in writing within 14 days order the first and second defendants to pay the plaintiff's costs of the proceedings. I also made contingent directions for making and responding to any application. I made those orders for reasons I expressed at [147] as follows: I am conscious that in [Council for the City of Ryde v] Azizi ([2019] NSWSC 1605) Payne J made a special order as to costs. I am also conscious that in their written submissions of 20 December 2019, the former owners make a qualified application for the same order. The errors I have found do not conform with the condition contemplated by counsel for the former owners. I propose to make the usual order as to costs, but I will reserve liberty to all parties to apply for any variation for which they wish to contend.
In accordance with order (4) and the directions I made, the former owners of the acquired land made application for "a different order as to costs" by lodging a Notice of Motion dated 30 January 2020, an affidavit in support made on the same day; and written submissions also on the same day lodged with my chambers electronically as permissible under the directions I made.
The former owners seek an order setting aside the costs order and ancillary orders, I made on 17 January 2020 and instead an order that the plaintiff, the Council, pay 40 percent of the former owners' costs.

The former owners' argument

By reference to the affidavit of their solicitor sworn on 30 January 2020, the former owners argue that there were three groups of issues ventilated during the hearing of the application for judicial review of the Valuer General's determination of compensation under the Just Terms Act. They were: the market value issues; the disturbance issues; and the amendment issues. Of these, so it was put, the Council was successful on only the disturbance issues. Of the Council's success, I said the following (at [144]): It is obvious that Council has enjoyed success in respect of two discrete allowances only: relocation costs and stamp duty. Together these items total $292,490.00 [out of a total determination of $16,634,381]. This is not an insignificant sum in absolute terms, but it represents only 1.8% of the total determination; a very small proportion of the total compensation indeed. This statement proceeds on the basis that the former owners tacitly conceded a third allowance, as I point out below, relating to their costs of the original hardship application initiating the process by which the land was acquired by the Council.
The former owners invoke the reasoning of Payne J in Azizi at [176]-[181] to contend that although the orders favour the Council, the costs discretion conferred on the Court by s 98 of the Civil Procedure Act 2005 (NSW) has been engaged in the circumstances of this case. They argue that the successful party should be denied its costs in accordance with the general rule created by r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and that I should otherwise order that the Council pay the unsuccessful defendants a portion of their costs, namely 40 percent
In support of this proposition, as I said, the former owners argue that the Council was only successful on the second of the three groups of issues. The analysis of the evidence, argument and hearing time undertaken by the former owner's solicitor, which was very detailed, establishes that the market value issues and the amendment issues on which the Council was unsuccessful, and the former owners successful, accounted for "some 80 percent of the evidence, submissions and oral argument" (affidavit in support at [16]) involved in the hearing.

The Council's argument

The Council argued that it succeeded in establishing jurisdictional error resulting in the orders it sought being made and the matter being remitted to the Valuer General for redetermination in accordance with the law. This was the event referred to in the general rule established by UCPR r 42.1, that costs follow the event. The Council submitted that there were no issues or groups of issues that were clearly dominant or separable. Rather, the issues and arguments were complex and inter-related. No circumstance had been demonstrated which warranted the Court departing from the usual rule.
The Council also argued that the first and second defendants' argument that it should pay 40 per cent of their costs is no more than arbitrary.
It was submitted that the grounds on which the Council sought to impugn the Valuer General's determination of compensation were "sufficiently linked" to render any question of apportionment inappropriate: James & Ors v Surf Road Nominees Pty Ltd & Ors (No 2) [2005] NSWCA 296 at [34]. In any event the costs discretion should not be exercised so as to dissuade parties from canvassing all issues which might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 16; Hughes v Western Australian Cricket Association (Inc) (1986) 8 ATPR 40-748 at p 48,136; NRMA Ltd & Ors v Morgan & Ors (No 3) [1999] NSWSC 768.
Importantly, reference was made to the principle discussed by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-98 that a successful party ought not to be deprived of his, her or its costs or, "at any rate made to pay the costs of the other side unless guilty of misconduct" in relation to the litigation. The Council argued that the consideration that it had been unsuccessful in propounding certain submissions did not, by any stretch, amount to misconduct.

Consideration (provisional views only)

These reasons assume familiarity with the principal judgment. I am satisfied that the former owners' assessment of the division of concentration of forensic effort and time amongst the three issues is broadly correct. But it needs to be borne in mind that what the former owners have described as the "amendment issues" which would have been decided in their favour masked an issue which, but for the amended determination, the former owners would have been forced to concede. This was the issue about the allowance for the legal costs associated with their hardship application as part of disturbance costs contrary to the decision of the Court of Appeal in Hoy v Coffs Harbour City Council [2016] NSWCA 296; 218 LGERA 411 at [59]. The practical effect of the amended determination was to deduct that allowance from the compensation originally determined. This involved an amount of $41,000.
True it is, I held that the Valuer General, in certain circumstances, which it is unnecessary to expand upon for present purposes, had the power to amend a determination of compensation. But the effect of my decision was that the Council was entitled, in this case, to have the amended determination set aside because it, like the original determination, was vitiated by jurisdictional error involving the misapplication of the governing legislation in relation to the allowance of disturbance costs referrable to relocation and stamp duty.
Having said that, it remains that the principal issues which occupied most of the parties' time and effort both in preparation and at hearing were the market value issues which may be summarised as an asserted ground of jurisdictional error that the Valuer General acted irrationally, unreasonably and contrary to correct valuation principles in the application of the comparative sales method of valuation to determine the market value of the acquired land.
As the Hoy issue was, at least tacitly, conceded from the outset by the former owners (see principal judgment [51]), counting the amendment issue in favour of Council adds only little to its account, notwithstanding its success on the broader disturbance costs issue. The Council was unsuccessful on the question of whether the Valuer General had the power to amend in the circumstances of this case, but this in the end was not a dispositive issue.
As I have recorded, Payne J explained the principles informing the exercise of a discretion to depart from the general rule that costs follow the event when there has been a mixed outcome in relation to clearly several issues in Azizi at [176]-[177] in the following terms: Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), the general rule is that the Court is to order that costs follow the event. The "event" may be characterised in more than one way. Generally the "event" refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. The relevant principles for the determination of costs on an issue-by-issue basis were stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA: "•Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). •In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Ltd (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. •If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. •Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). •A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. •Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2) , citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272."
Applying the principles discussed in Liddiard (No 2) in the present case, I direct myself that usually unless a particular group of issues is clearly dominant or separable, it is appropriate to award the costs of first instance proceedings to the successful party, without attempting to differentiate between those particular issues on which it was successful and those on which it was not. It may be appropriate to deprive a successful party of costs or a portion of them if the matters upon which the generally successful party was unsuccessful took up a significant part of the trial either by way of evidence or argument. Whether an order contrary to the general rule should be made depends in all the circumstances of the case assessed by reference to matters of impression and evaluation.
If any comparison with the circumstances of Azizi is apposite, which I doubt, it must be said that the Council in this case enjoyed a somewhat greater measure of success than the Council there. There the only success related to the Hoy issue. Here Council succeeded on each of the separate disturbance issues and indeed established an "entitlement" to have both the determination and the amended determination set aside and the matter remitted to the Valuer General for redetermination. That those jurisdictional errors involved an extremely slight proportion of the overall compensation determined did not deprive the Council of its entitlement to the principal relief sought and cannot be determinative of this question.
However, this is a case where the separate and severable issues relating to the market value question took up a very significant part of the hearing, both by way evidence and argument. Having said that, a special order for costs which the Court considered may be justified in Liddard (No 2) was an order depriving the successful party of the costs of that issue: see the reference to Sydney City Council v Geftlick & Ors (No 2).
As the Council argued in Oshlack at 97-98: The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd , Devlin J formulated the relevant principle as follows: "No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct." "Misconduct" in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. This is clearly an important principle to be borne firmly in mind. As I say below, the approach of Payne J in Azzizi does not offend this principle. His Honour took the approach of setting off the issues to arrive at his decision. I am prepared to accept that may be an appropriate approach in some cases. However, the exercise of the cost discretion is fact sensitive. In my view it will rarely be appropriate, absent misconduct, which is not present here, to entirely deprive the successful party of his, her or its costs entirely let alone require him, her or it to pay the costs of the unsuccessful party or even a portion of them.
It is true taking the approach adopted by Payne J in Azzizi it can be said that the former owners have been successful on 80% of the severable issues in the case. His Honour then set-off, not precisely, but in general, impressionistic terms the consideration that the Council had enjoyed corresponding success on the severable issues.
If it is permissible to adopt this set-off approach, an order like that sought by the former owners may be appropriate. However, to my mind it is necessary to also factor in the circumstances that the Council's overall success in the orders made means it will be afforded another opportunity to obtain a more favourable determination than the determinations set aside.
For the reasons I have given I do not think it appropriate to deprive the Council of the entirety of its costs or to require it to pay the costs of the unsuccessful party. However some adjustment should be made for its loss of the market valuation issues which were clearly dominant and severable and took up so much of the forensic time and effort involved in the proceedings. Taking a broad and impressionistic approach I would allow the Council 50% of its costs.
I vary the orders pronounced on 17 January 2020 by revoking Order 4 and substituting the following: (4) The first and second defendants to pay 50 percent of the plaintiff's costs of the proceedings.

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: 28 February 2020

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