CITY OF WANNEROO -v- BAKOTA [2023] WASCA 61 (17 April 2023)

(s 241(2) LAA)

(s 241(6)(b) LAA)

1. As can be seen from the above table, most of the compensation was constituted by the award of $2,836,872 in 'severance'. This award was made under s 241(7) of the Land Administration Act, which relevantly provides:

If the fee simple in land is taken from a person who is also the holder in fee simple of adjoining land, regard is to be had to the amount of any damage suffered by the claimant -

(a) due to the severing of the land taken from that adjoining land; or

(b) due to a reduction of the value of that adjoining land[.]

1. The precise means by which the trial judge calculated the severance damage of $2,836,872 is not easy to discern from the written reasons. It appears that the trial judge valued Lot 9003 as being affected by the taking at $26/m2.[2] This was essentially on the basis that Lot 9003 cannot be subdivided due to its inadequate street frontage for a subdivision road, so that its highest and best use is as a market garden. The trial judge effectively described the land as being 'landlocked'.[3] It appears that the trial judge valued Lot 3 as not being affected by the taking at $110/m2. This was essentially on the basis that Lot 9003 formed part of Lot 3, with its large street frontage, on which subdivisional development could have been undertaken within 5 ‑ 7 years from the valuation date of 23 January 2012.[4] The severance value was assessed by reference to the difference between the unaffected and affected value of Lot 9003. Counsel for both parties agreed that this was the methodology adopted by the trial judge.
2. On 23 December 2022, the trial judge gave judgment for the respondents in the sum of $2,950,857.66 (being the award of compensation of $4,107,707.67 less the advance payment of $1,156,850.07). His Honour also ordered the appellant to pay the respondents pre-judgment interest in the sum of $1,928,154.34. The appellant's counterclaim was dismissed, and the appellant was generally ordered to pay the respondents' trial costs.[5]
3. The appellant appeals against the primary orders on the basis that the trial judge erred in his calculation of severance allowance. In broad summary, the grounds of appeal contend that the trial judge erred in:
   1. finding that the deferral period for a subdivision of Lot 9003 in the unaffected scenario was 5 - 7 years from 23 January 2012;
   2. valuing Lot 9003 in the affected scenario at a rural value of $26/m2 on the basis that a hypothetical purchaser would not be able to secure subdivision in the near or medium term;
   3. failing to have regard to the potential for sale of Lot 9003 to the owner of adjacent land and development of Lot 9003 in conjunction with adjacent land;
   4. failing to properly consider the evidence and/or the law on certain matters and instead uncritically adopting the respondents' submissions on those matters; and
   5. dismissing the appellant's counterclaim on the basis of the above errors.
4. The appellant seeks an order suspending the enforcement of the orders awarding the respondents compensation, interest and costs pending the determination of the appeal.

1. This court has power to grant an interim order suspending the enforcement of a judgment under s 15 of the Civil Judgments Enforcement Act 2004 (WA) if there are 'special circumstances' that justify doing so. For that purpose, ordinarily the applicant will need to show, among other things, that a suspension order is reasonably necessary to prevent the appeal being rendered nugatory, or that refusal of a suspension order could create practical difficulties in respect of the relief which may be granted on appeal.
2. In Tradesman Technologies Pty Ltd v Ameduri,[6] Pullin JA summarised the general principles governing the grant of a stay or the grant of a suspension order under s 15 of the Act:

(a) The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
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> (b) It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement.
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> (c) The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
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> (d) If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
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> (e) Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.

3. One common way in which an appeal might be rendered nugatory if a stay or suspension order is not granted is where it can be demonstrated that there is a real prospect that, if the judgment sum is paid and the appeal succeeds, the respondent will not have the capacity to comply, or for some other reason might not comply, with an order requiring repayment of the judgment sum paid by the appellant.[7]
4. While those principles provide guidance in the exercise of the discretion, they are not inflexible or exhaustive, and at all times the ultimate question must be whether there are special circumstances to justify the court to order a suspension.[8]

Whether appeal will be rendered nugatory without a suspension order

1. The primary orders require the appellant to pay the respondents $4,879,012 (being $2,950,857.66 in additional compensation plus pre‑judgment interest of $1,928,154.34) as at the date of judgment. Post-judgment interest accrues at 6% pa.[9]
2. The respondents' principal assets are Lot 9003 (of which they are joint registered proprietors, and which is unencumbered) and bank deposits of approximately $500,000. The market garden business is operated by the Bakota Family Trust, which typically makes an annual profit of about $500,000 that is regularly distributed to the respondents and their daughter. The trust generally does not retain any significant net assets. The terms of the trust instrument are not before the court. Lot 9003 is used to operate the respondent's established market garden business which generates income for the respondents and their daughter.
3. The evidence is that the respondents live within their means and have no significant debts. They currently live in rented accommodation (having sold their previous residence to fund their legal costs of the primary proceedings). They have paid their solicitors' legal costs of the primary proceedings.
4. If the appellant was wholly successful on the appeal, no allowance would be made for severance in the table set out at [4] above. Therefore, the respondents' compensation would be reduced to $987,148.80 (being $897,408 plus 10% solatium). As this is less than the advance payment of $1,156,850.07 made on 4 September 2012, the respondents would not be entitled to any pre-judgment interest. Rather, the respondents would be liable to reimburse the appellant for the overpayment with pre-judgment interest. In that event, there would at least be a real prospect that the respondents would be ordered to pay at least part of the appellant's trial and appeal costs.
5. Therefore, if the appellant were to be wholly successful on the appeal, then the respondents may be liable to repay the judgment sum, any amount awarded on the appellant's counterclaim and the appellant's costs of trial and the appeal. Of course, a stay is not granted as security for recovery of amounts which may be awarded to the appellant if the appeal is successful. However, it appears that, if the appellant is wholly successful, the respondents may be liable to reimburse the appellant for the whole judgment sum of $4,879,012 if that amount is paid to them prior to the determination of the appeal.
6. The assets held by the respondents against which an order for restitution could be effectively enforced are currently their bank deposits of about $500,000 and Lot 9003. There is no evidence before us as to the current value of Lot 9003. Of course, the affected value of Lot 9003, as at the valuation date of 23 January 2012, was the principal issue at trial and is the principal issue on appeal. It appears that, if the appellant is wholly successful, that would be on the basis that the affected value of Lot 9003 in January 2012 was about $3.8 million. The oral submissions of both parties proceeded on the basis that, if the appellant is wholly successful in the appeal, it would be on the basis that the current value of Lot 9003 is in the order of $3.8 million.
7. The respondents current unencumbered assets of about $4.4 million would be added to the compensation payment of $4,879,012.
8. The risk that the appellant may be unable to effectively enforce an order for reimbursement of the judgment sum arises from the prospect that the respondents will deal with their cash assets (their existing $500,000 and the judgment sum of $4,879,012) in a way that would place those assets out of reach of the enforcement process. The respondents could lawfully transfer their cash assets to a third party without incurring any significant transaction costs. There is no evidence that the respondents propose to take this course, which would be inconsistent with their prior conduct of their financial affairs. However, the large amount of the judgment sum provides the respondents with an incentive to take that course if it were paid prior to the determination of the appeal. There is a real risk, pending the determination of the appeal, that they may conclude that it would be in their financial interests to pursue such a course. Also, there is no evidence disavowing an intention to deal with the funds in such a way. The respondents have not given an undertaking as to how they will deal with the funds. While enforcement could still be executed against Lot 9003, a substantial deficit in the repayable amount would remain if the cash assets were transferred.
9. While this is a marginal case, we are satisfied that there is a sufficient risk that the respondents might not comply with an order requiring repayment of the judgment sum paid by the appellant, so that there is a risk that the appeal will be rendered nugatory if suspension of enforcement of the judgment sum is not granted. This is on the basis that refusal of a suspension order could create practical difficulties in respect of the relief which may be granted on appeal.

1. Having considered the appellant's case and respondents' answer together with the oral and written submissions advanced in the current application, we are satisfied that the appeal has reasonable prospects of success in the relevant sense. That is not to say that the appeal will necessarily succeed.

1. In our view, the balance of convenience is firmly in favour of the grant of a suspension order pending the determination of the appeal.
2. There is no material risk that the judgment sum will not be paid by the appellant if the appeal is unsuccessful. The appellant is a local government. The risk that judgment being frustrated by insolvency, which may arise in the case of private entities, is not present. Post‑judgment interest is accruing at a rate of 6% pa, which well exceeds the return being achieved on the respondents' deposit bank accounts.
3. Against that, there is no evidence that the respondents have any pressing need for the funds. Preparation of the appeal is well advanced, with the appellant's case and respondents' answer having been filed. It seems likely that the appeal will be listed for hearing within the next 12 months. The respondents are no doubt frustrated by the lengthy litigation process which has followed the resumption of part of their land over a decade ago. However, there is no evidence that the respondents will suffer particular prejudice if payment of the judgment sum is deferred until the determination of the appeal.
4. It may also be noted that enforcement of any restitutionary order against Lot 9003 could cause practical difficulties for the respondents, given that the land is used to operate the market garden business which generates the respondents' income.

1. While the risk of the appeal being rendered nugatory is marginal, the appellant has an arguable case and the balance of convenience weighs heavily in favour of the grant of a suspension order. At the conclusion of the hearing on 17 April 2023, we were satisfied that this is a special case in which it is in the interests of justice to suspend enforcement of the primary orders requiring the appellant to pay the respondents $4,879,012 pending the determination of the appeal.
2. We were not persuaded that it was in the interests of justice to suspend enforcement of the costs orders made in the respondents' favour. The respondents' trial costs would need to be assessed before they become payable by the appellant, and it does not appear that any steps have been taken in that regard. While the respondents might consider it sensible to await the outcome of the appeal before taking steps to have their trial costs assessed, they should not be prevented from beginning the assessment process if they choose to do so. On any view, the current value of Lot 9003 is likely to exceed the amount at which costs might be assessed in the respondents' favour, so that an order for reimbursement of any sum paid pursuant to the costs order could be enforced against that land. We therefore were not prepared to order a stay of enforcement of the costs order made in favour of the respondents at this stage.
3. Counsel for both parties indicated that the appropriate costs order was that the costs of the appellant's application be in the cause of the appeal.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[2] Primary decision [301] - [303], [347].

[6] Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22], adopting Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9].

[7] Tradesman Technologies [24] - [26].

[8] Washburn Pty Ltd v Cardaci [2022] WASCA 43 [14].

[9] Under s 8 of the Civil Judgments Enforcement Act read with reg 4 of the Civil Judgments Enforcement Regulations 2005 (WA).