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[2007] WASAT 89
State Administrative Tribunal (WA)
2007-04-23
Original judgment source is linked above.
The applicant's position in relation to market value
32 The applicant contends that the value of the private ROW at the date of taking was $825 000.
33 In so contending, the applicant relies on the expert valuation evidence of Mr Dix who, in turn, relies on the expert planning advice of Mr KA Adam, town planner and architect, to the effect that the private ROW could be closed and redeveloped, using the Naturaliste Terrace frontage, for the construction of a "landmark" building as proposed in the Townscape Plan_._
34 In Mr Dix's valuation, at pages 12-13 under the heading "Development Options", Mr Dix concludes as follows:
"It is our view that the comments of Mr Adam are critical to our assessment of the value of the land as it is likely that the development rationale he has adopted and the underlying intention of Council that this site (as well as Lot 13) has a special potential unavailable to the balance of the land in the CBD [of Dunsborough].
In our opinion the landmark development would attract premium rentals and although more expensive to develop would have a greater floor area than would otherwise be the case."
35 Put directly, the applicant's claim concerning value is made on the basis that:
36 The applicant's approach to valuation therefore depends on the resolution of the same three matters identified by the Shire as requiring resolution, namely:
37 Each of these matters will now be considered in turn.
38 Mr Dix's valuation evidence proceeded from the assumption, which he took from the planning advice of Mr Adam, that there was no real impediment to the redevelopment of the private ROW. In effect, Mr Dix treated the private ROW as if it were an unencumbered estate in fee simple which was or could readily be zoned for the commercial purposes of shops, offices and restaurants.
39 However, for there to be any possibility of the private ROW being put to such higher and better uses, the easements over it in favour of Lots 1, 8 and 7, and possibly 14, would need to be modified in such a way as to permit the contemplated development.
40 In this regard it is useful at this point to deal with the question whether the undoubted easements in favour of Lots 1, 8 and 7 also benefit Lot 14.
41 The Shire contends that the Certificate of Title for Lot 14 clearly includes the benefit of an easement over the private ROW, which is conclusive evidence of that easement under s 64 of the Transfer of Land Act 1893.
42 Lot 14 is the subject of Certificate of Title Vol 1539 Folio 893. The land referred to in that Certificate of Title is described as:
"estate in fee simple in portion of Sussex Location 536 and being Lot 14 on Diagram 53982, delineated and coloured green in the Third Schedule hereto."
43 The map in the third schedule shows appurtenant to it the commencement of a "R.O.W." and the further marking "DIA 29927". Next to the scale map the following notation appears:
"ROW created on DIA 29927 appurtenant only to the land formerly contained in Diagram 29927"
44 Section 64 of the Transfer of Land Act 1893 relevantly provides that whenever any certificate of title, either already registered or issued, shall contain any statement to the effect that the person named in the certificate is entitled to any easement therein specified, such statement shall be received in all courts of law and equity as conclusive evidence that he or she is so entitled. For the present purposes there is little doubt that the reference to "all courts of law and equity" would include the State Administrative Tribunal in determining a land valuation question under the Land Administration Act 1997. No party suggested otherwise.
45 The question that is raised by the notation on the title is whether the Certificate of Title actually contains a statement that the registered proprietor of Lot 14 is entitled to the ROW created on Diagram 29927.
47 It is difficult to unravel the precise land tenure history relating to Lot 14 from the documents in evidence. However, reference to Diagram 29927 (which appears as Document 17 in Vol 1 of the agreed bundle of documents, Exhibit 1 in the proceedings) on the face of it seems to bear out what the applicant contends. If, prior to the creation of Lot 14 out of portion of Lot 3 and some of the right of way then appurtenant to Lot 3, the right of way (or rights of way) depicted on Diagram 29927 by reference to Diagram 53982 and Diagram 53983 was closed (as Diagram 29927 suggests by reference to Application B766552), then it appears difficult to see how it can be said with any degree of certainty that Lot 14, as depicted on Diagram 53982 (which is the subject of Certificate of Title Vol 1539 Folio 893) can be said to be "land formerly contained in Diagram 29927" to which the "ROW created on DIA 29927" was appurtenant. The notation in the third schedule of the Certificate of Title for Lot 14 seems only to extend the benefit of the right of way on Diagram 29927 to that land formerly contained in Diagram 29927 which was appurtenant to the right of way.
48 All in all, I am not satisfied from the title and tenure history that Lot 14 at material times had the benefit of the private ROW.
49 However, a conclusion on the material before me to this effect does not bind those with interests in Lot 14 and they would be at liberty to vindicate any claimed rights to such an easement in the Supreme Court of Western Australia.
50 Notwithstanding my views, the simple fact remains that for there to be any possibility of the private ROW being put to a higher and better use of the type Mr Dix has assumed in his valuation evidence, the undoubted easements in favour of Lots 1, 8 and 7 would need to be modified in such a way as to permit development of the sort contemplated by Mr Dix on the planning advice of Mr Adam. Additionally, the hypothetical purchaser would need to consider the possibility of the interest holders in Lot 14 litigating in respect of a claimed easement.
51 In considering the likelihood of the proprietors of Lots 1, 8 and 7 consenting to the modifications of their undoubted easements, it is important to understand the functioning of the private ROW. The private ROW at material times was used by Lots 1 (the subject of three commercial tenancies), 8 and 7 for rear servicing by large vehicles, including for rubbish collection and deliveries.
52 Lot 14 - the bakery premises - also at material times appears to have used at least portions of the private ROW for deliveries.
53 Much evidence was given about the extent to which large service vehicles were able to turn around within either another laneway from Dunn Bay Road through to the private ROW, or in the private ROW itself. It appears that many of these large service vehicles were able to find their way from Dunn Bay Road through to the private ROW at the rear of the commercial tenancies and then continue on through Lot 13 (which is adjacent to the private ROW adjacent to Lot 1) and then egress onto Naturaliste Terrace.
54 At material times it also seems, on the evidence, that customers of the fishing shop, then located within the tenancy on Lot 1, utilised the opportunity to park on the private ROW parallel to the wall of the building on Lot 1. This was particularly convenient for vehicles towing boats on trailers. While it is said that the easements over the private ROW did not provide for vehicles to park in it, the fact of the matter is that vehicles with boats on trailers did in fact do this without any apparent objection, so far as the evidence shows, from the proprietors or tenants of Lots 1, 8 or 7. Presumably this was so because vehicles and trailers parked in this way did not interfere with ingress and egress along the private ROW.
55 To a large extent, the case of the applicant concerning determination of the value of the private ROW depends on the assertion that there was no reason why the easement holders would not have consented, at material times, to the closure of the private ROW. I accept the submissions made on behalf of the Shire that this assertion is in effect speculative. In order to understand why that is the case, it is first necessary briefly to explain the planning advice from Mr Adam upon which Mr Dix relied and which Mr Adam developed in his own evidence to the Tribunal.
56 Mr Adam contemplated that the private ROW would effectively be closed from the frontage with Naturaliste Terrace to a point adjacent to the rear of the existing shop structures on Lots 1, 8 and 7. This would effectively reduce the private ROW to a back lane behind the shops and would permit the applicant to redevelop the new lot - the narrow strip of land immediately adjacent to Lot 1. The effect of such a closure would, as Mr Adam recognised, make it very difficult for access for vehicles entering the "back lane" from Dunn Bay Road, through the other access area, if there were no capacity to egress from the "back lane" through Lot 13 and out onto Naturaliste Terrace. However, Mr Adam believed that the persons with interests in Lot 13 would readily see the good sense of providing such ingress and egress so that traffic using the back lane behind Lots 1, 8 and 7 and the newly created lot would be able to pass through Lot 13.
57 For my part, it is entirely speculative whether the persons with interests in Lots 1, 8 and 7 would ever have acceded to the closure of the private ROW and the creation of the new freehold lot fronting Naturaliste Terrace, without there being a guaranteed right of ingress and egress both ways along the back lane, in the same way as they were then entitled to enjoy their easements travelling both ways along the existing private ROW off Naturaliste Terrace. To give up the comprehensive rights under the easements as they existed at all material times in favour of giving, in effect, a freehold title to the applicant and constraining their own future access entitlements, would, at the very least, be extremely uncertain, and not something that one would expect a fully informed person with proprietary interests in Lots 1, 8 or 7 to do in pursuit of their own interests.
58 While Mr Adam also suggested that some additional land might be taken from the "rear lane" and added to the titles of Lots 1, 8 and 7 as some form of recompense, it is difficult to comprehend how that consideration would necessarily result in those persons supporting the closure proposal of the applicant, in all the circumstances.
59 Mr Dix in his evidence readily accepted, as indeed did Mr Adam, that the closure and redevelopment proposal put forward by Mr Adam would require negotiation between the applicant and the easement holders and that some financial consideration would also need to pass from the applicant to those easement holders for it to have any prospect of success. Mr Dix did not however suggest any quantum for that consideration and had not taken the payment of any such consideration into account in making his assessment of the value of the private ROW at the date of taking. Indeed, Mr Dix, in his oral evidence, said that if someone came to him and sought his advice in respect of the private ROW on the market for $825 000 he would recommend they talk to the easement holders first.
60 I accept the submission made on behalf of the Shire that the benefits asserted by the applicant as likely to accrue to the easement holders are particularly limited. The applicant's proposition that a proposal to close the leg of the private ROW that runs off Naturaliste Terrace would result in a rationalisation of access and continued adequate rear servicing of Lots 1, 8 and 7 is speculation, and not something that a hypothetical prudent purchaser would seriously countenance as a basis for the easement holders giving up their existing rights. The benefits alleged are far outweighed by the reasons why the easement holders would not consent to the closure of the private ROW. I accept the Shire's submissions that these reasons include the following:
61 It is also reasonable to suggest, as the Shire contends, that the fact that the easement holders did not object to a reasonably contemporaneous proposal of the Shire to dedicate the private ROW as a road tends to support the view that they were content at all material times with the then use of the private ROW.
62 Accordingly, a hypothetical purchaser interested in purchasing the private ROW as at the date of taking would have been presented with the following:
63 The applicant further contends, in effect, that the easement holders could not exercise any right of veto in this regard because the applicant or a registered proprietor of the private ROW could apply to the Supreme Court under s 129C of the Transfer of Land Act 1893 for the discharge or modification of the easements, on the basis either that there was a changing landscape in the neighbourhood or, more importantly, that those entitled to the benefit were not having their interests substantially diminished. In that regard the applicant contends that Mr Adam's proposal would not interfere with the rights of the easement holders to access both Naturaliste Terrace and Dunn Bay Road, nor their parking rights, nor their delivery rights, nor their garbage collection rights. In fact, it is contended, the proposal provides additional benefits to them over and above those currently enjoyed.
64 To this contention, the Shire submits that the likelihood that the easements could be removed or modified in this way seems very remote if the easement holders were to object, given an assumed desire to continue use of the whole of the private ROW.
65 I accept the submission of the Shire in this regard. The likelihood that a hypothetical purchaser could gain any real comfort from the possibility of successfully applying under s 129C of the Transfer of Land Act 1893 is seriously to be doubted. The most that could be said by way of advice to the hypothetical purchaser is that, speculatively, such an application could be made, but there is absolutely no guarantee of success. Indeed, the court might well take the view that any encroachment on the existing right of access would be an end to the likelihood of such a proposal being adopted. Again, the complete uncertainty - if not improbability - of the persons with interests in Lot 13 agreeing to their car park being used for the purposes of ingress and egress to the private ROW would figure large in any such determination. At best, the hypothetical purchaser would have to be advised that there was a highly speculative possibility that the court might agree to modify the existing easements but that in all likelihood, the application would fail unless supported by all the easement holders, and there was clear evidence that Lot 13 owners also supported the proposal.
66 In my view, the likelihood of closure of the private ROW in the face of the Lots 1, 8 and 7 easement holders - and the possibility that the persons with interests in Lot 14 might also sue to vindicate easements over the private ROW - is entirely speculative and would significantly affect the value that a hypothetical purchaser would pay in the market for the private ROW. In short, the hypothetical purchaser would not pay the price that would be fetched for that land if it were truly unencumbered freehold land zoned under the relevant town planning scheme for commercial uses such as shop, offices and restaurants.
67 The next issue that arises is whether, even if the easement holders were prepared to consent to the closure and redevelopment proposal put forward by Mr Adam, the local planning and development authority - the Shire of Busselton - would have been likely to take the relevant measures and grant the necessary approvals to permit such a form of development.
68 In this regard, the applicant called Mr Adam, a very experienced planner and architect, to explain why his proposed form of development of the private ROW would have received the support of the Council of the Shire.
69 In his evidence, Mr Adam explored the planning and development history of the Dunsborough CBD area and emphasised the following aspects:
(a) purchase of Lot 104 Dunn Bay Road as the connection into Dunn Bay Road; or
(b) the alteration of Hannay Lane, which would connect into Dunn Bay Road between the town centre roundabout and Seymour Boulevard.
It says that the connection point for the second option into Naturaliste Terrace, that is via Lot 13, is the same as the original proposition. Page 51 goes on to say that whilst there would be benefits in constructing a link road through Lot 104, the cost was constraining and therefore Hannay Lane was the preferred option; that is, through Lot 13;
70 Accordingly, Mr Adam expressed the view that a standalone development could have been built in the north west leg of the private ROW fronting onto Naturaliste Terrace. He considered that with some car park "tweaking", the development would comply with the Shire's town planning scheme and that no serious objection would be forthcoming from the Shire.
71 Mr Adam considered that, in all likelihood, what would have occurred is that the proponent of the proposal would have engaged in negotiations with adjoining owners to obtain a way forward. In all likelihood, the access way through Lot 13 would have been maintained but the threat of closure, which would seriously disadvantage the commercial development on Lot 13, would have brought the Lot 13 interests "to the party". The Shire would welcome resolution of a number of long running problems to do with the access way, as revealed in the 2002 Plan.
72 It went without saying, in Mr Adam's view, that the fact that the private ROW was not zoned at material times would, in the circumstances, be no impediment to the land being appropriately zoned to permit its redevelopment for the contemplated commercial purposes.
73 The Shire called Ms AM Satre, who at various times since January 2004 has served as a planning officer with the Shire. By comparison with Mr Adam, she is inexperienced in planning and development matters, having only recently completed her planning qualifications. Her understanding of the practices of the Council of the Shire at the date of taking and earlier were necessarily informed by her own enquiry and appreciation of historic events and documentation, as she had not been with the Shire at those material times.
74 In the end, while the opinions expressed by the planners are helpful, most of the planning documents tended to speak for themselves.
75 The Shire contends that the form of development proposed by Mr Adam would obviously remove access to Naturaliste Terrace via the private ROW. The rear servicing of Lots 1, 8 and 7 (and 14) was necessary and could only be achieved via that access way. Access to and from Naturaliste Terrace through the private car park on Lot 13 would not have been physically possible and in any event totally unacceptable. Lot 13 was owned and developed and the use of its car park as a thoroughfare for service vehicles would have involved traffic and safety issues. Additionally, the owners of Lot 13 jealously guarded their proprietary rights.
76 The Shire points out that in August 1996 the Council of the Shire decided that access between Naturaliste Terrace and Dunn Bay Road would be via the then private and public rights of way. If the private ROW had not been compulsorily acquired, it would have remained unzoned and undeveloped as a private ROW.
77 As to the Guide Plan relied upon by Mr Adam as indicating that access off Naturaliste Terrace through Lot 13 was something that the Council would have supported, the Shire says it is important to bear in mind that, as of March 2003, the Guide Plan was not an adopted planning policy of the Shire listed under Schedule 10 of DTPS 20, nor does it depict any development on the private ROW.
78 The Shire says that a proper and complete understanding of the Guide Plan and surrounding circumstances leads to the following conclusions in respect of the access off Naturaliste Terrace shown on the Guide Plan:
79 The Shire thus says that the applicant's assertion that the Guide Plan only provides for access off Naturaliste Terrace through the existing car park on Lot 13 cannot be sustained. The Guide Plan indicates an access from Naturaliste Terrace to Dunn Bay Road but not its exact location. Furthermore, the access chosen by the Council using the existing rights of way between Naturaliste Terrace and Dunn Bay Road is consistent with, not contrary to, the Guide Plan, even though the Guide Plan was adopted after the access was selected.
80 As to the Townscape Plan, the Shire says it is important to note and keep in mind that the resolution of the Council at its meeting on 16 October 2002 was to "agree in principle" to the Dunsborough Townscape Plan (Preliminary Final) dated March 2002, subject to a number of deletions and modifications to the individual issues listed. The Shire says that it is also important to note and keep in mind that the Townscape Plan is not a planning policy under DTPS 20.
81 The Shire says a proper and complete understanding of the Townscape Plan and surrounding circumstances leads to the conclusion that, insofar as the Townscape Plan identifies access off Naturaliste Terrace and through the existing car park on Lot 13, it is, like the Guide Plan - indicative and not intended to provide an exact location for that access.
82 The Shire submits that there are good reasons for so concluding, including the following:
83 In these circumstances, the Shire contends that the taking of the private ROW by the Shire was consistent with the Townscape Plan.
84 The Shire further contends that, even if it were the case that the access off Naturaliste Terrace as depicted on the Townscape Plan was intended to be precise as to location with no flexibility, then:
85 Thus the Shire further contends that a proper and complete understanding of the Townscape Plan and surrounding circumstances leads to the following conclusions in respect of the extent to which the Townscape Plan deals with the development of the private ROW:
86 In support of these contentions, the Shire says:
87 In general terms I consider there is much force in the Shire's analysis of the planning history. Undoubtedly there was an historic local government desire to provide an access way from Naturaliste Terrace through to Dunn Bay Road in the vicinity of Lot 13. It was not initially intended to provide access through the area of the private ROW. Opposition to the acquisition of land and opposition from the persons with interests in Lot 13 put paid to the broader idea. The initial proposals would have been too difficult and too costly to implement. In my view, the 2002 Townscape Plan, while showing some reasonably detailed CBD redevelopment ideas, was not intended to be a detailed land use and design plan, but was mostly indicative or conceptual.
88 Certainly I do not accept that, to the extent it can be suggested that the 2002 Plan positively encapsulated a development proposal that would see an access road running through Lot 13, it was anything more than encouragement for the idea that there should be, one way or the other, an access way in that locality. Absent some more detailed redevelopment proposal of land in the vicinity of the private ROW, I do not think it can be said with any degree of confidence that, faced with a proposal for the closure of the private ROW in the manner suggested by Mr Adam, the Council would have "jumped at" the proposal because it seemed to involve the implementation of an aspect of the 2002 Townscape Plan.
89 Similarly, while there is some evidence to suggest that the "landmark" building site had been the subject of some reasonably careful consideration in the preparation and adoption of the Plan, in broad terms it too appears to be conceptual in nature. I do not accept at all that the indication of a "landmark" building on or near to the private ROW where it fronts Naturaliste Terrace, was a considered land use decision on the part of the Council that indicated that it wanted a "landmark" building on that precise site. What one draws from the Townscape Plan is that, at various appropriate locations - not too close to each other - the Council would like to encourage the construction of "landmark" buildings. But to suggest that a two or three storey commercial structure on a lot with a narrow (8 metre) frontage where the private ROW met Naturaliste Terrace would have been a particular "landmark" building site that the Council had in mind when adopting the Townscape Plan is, I consider, highly unlikely.
90 What one can say from the Townscape Plan and the planning documents that preceded it, is that the Council had not given up on the idea of a link road from Naturaliste Terrace to Dunn Bay Road. There is, however, force in what the Shire says to the effect that at about that time and indeed prior to it, the Council had settled upon the acquisition of land to create the road incorporating the private ROW.
91 Certainly, in my view, there is much to be said for the view that the 2002 Townscape Plan was not a land use control tool, in the sense that the planning officers of the Council would have looked at it as a rule to decide what form of development should be approved in the face of a development proposal such as that envisaged by Mr Adam. Nor would the Council simply have looked at the Townscape Plan with a view to its direct implementation. All that means that I do not accept that the Council would have approved the proposed development suggested by Mr Adam, thereby closing off the front part of the private ROW with a view to forcing access through Lot 13. In the light of the Council's knowledge of the non-supportive approach of the owners of Lot 13, it would be surprising if any other position were to be adopted.
92 When one takes into account the speculative notion that the easement holders would "come to the party" and support Mr Adam's development idea, and adds to it the conceptual nature of planning proposals concerning an access way between Naturaliste Terrace and Dunn Bay Road, I consider the notion that in valuing the private ROW taken, one should treat the submission that the subject land with all its potentialities was ripe for development for commercial uses as proposed by Mr Adam, with considerable scepticism.
93 As noted above, the parties each called an expert valuer at the hearing to give evidence on the value of the private ROW. Initially, the Shire proposed to call two valuers but, in the end, only one was called - Mr Hughes. However, the report of the other, Mr PWD Lewis, was received on account of the formal documentation attached to it.
94 The valuers, Mr Dix and Mr Hughes, gave evidence in accordance with the Tribunal's concurrent expert witness practices. Prior to the hearing, they met (with Mr Lewis) and prepared a joint statement. At the hearing they gave their evidence concurrently, that is to say they sat in the witness box together and initially responded to questions put to them by the President before answering questions from counsel for the parties.
95 This is a case where the methodology adopted by the two valuers is quite at odds. Mr Hughes, called by the Shire, was of the opinion that the prime methodology is evidence provided by sales of comparable properties. However Mr Dix was of the opinion that the use of comparable sales is inappropriate in this case because the sales quoted by Mr Hughes did not exhibit the development potential of the subject land.
96 As a result, Mr Dix was of the view that the development proposal for the nearby Caltex site (Sale 2 on the list of sales in his valuation) provided a method of comparison of gross leaseable area (GLA) possible on that site, with a similar analysis of the private ROW. In utilising the evidence of the sale of the Caltex site, Mr Dix considered it was possible to determine a "purchase price" per unit of GLA which could then be applied to a proposed development on the subject land. Mr Hughes considered the methodology adopted by Mr Dix not to be accepted, sound valuation practice.
97 As a starting point, the valuers agreed that the private ROW needed to be valued in the condition in which it existed as at 13 March 2003, the taking date. They also agreed that the highest and best use of the land is the starting point and "is a reflection of the planning and legal outcomes".
98 So far as physical impediments to development of the private ROW were concerned, Mr Hughes was of the view that the sewer under the ground on the land is part of the bundle of rights forming the right of way and that these rights are both "positive and negative and have been taken into consideration". Mr Dix also took into consideration the impact of the sewer but accepted the advice of Mr Adam, the planner and architect, that it would only have a minor impact on the development potential of the land.
99 So far as the sewer is concerned, I generally accept, on the basis of the evidence by Mr GE Crowd of the Water Corporation, Mr Adam and Mr Dix that the cost of either encasing the sewer in its present general location, or in relocating it, was likely to be relatively modest and not so great as to have been a serious impediment to a physical redevelopment on that land.
100 The applicant attacked the comparable sales approach adopted by Mr Hughes on the basis that there are no comparable sales and therefore it is important to adopt an alternative methodology.
101 The Shire attacked the alternative approach adopted by Mr Dix because it effectively proceeds on the basis that matters that are serious constraints, such as the absence of zoning and the existence of easements, are not taken into account in valuing the private ROW.
102 The Shire submits that Sale 2 relied upon by Mr Dix as providing a basis for valuing the private ROW - the Caltex site - so lacks comparability that the transference of a rate per square metre directly across Naturaliste Terrace to the private ROW is flawed and provides no basis for the valuation of the private ROW. The Shire submits that the differences between the private ROW and Sale 2 are so many that the approach adopted by Mr Dix cannot be relied on.
103 In the result, I do not think it is appropriate in this case to abandon the comparable sales approach in favour of some alternative form of assessment along the lines of that adopted by Mr Dix. Mr Dix's valuation was conducted on the basis of the planning advice he received from Mr Adam: that there was no significant impediment to a commercial redevelopment of the site. In effect, Mr Dix treated the private ROW as if it were unencumbered freehold land zoned for commercial uses such as shops, offices and restaurants. However, as discussed in various contexts above, that was far from the case. Indeed, at all material times:
104 It is, in those circumstances, unrealistic to adopt the valuation approach adopted by Mr Dix. To take the Caltex site, look at its purchase price, calculate a rate per square metre GLA, and then apply that rate across the road on the subject land, and also to treat the subject land as a premium site with "landmark building" potential, is in all the circumstances impermissible.
105 While Mr Dix eschewed the proposition that he was valuing a hypothetical development, in many respects to undertake a valuation of the private ROW on this basis is to engage in a hypothetical exercise.
106 Mr Dix explained that the reason he had adopted this approach was because he saw no real alternative; because he understood from the planning advice of Mr Adam that such a commercial development would be quite likely.
107 In my view, the private ROW should be valued as a private ROW and whatever guidance can be obtained from comparable sales of private ROWs must be turned to. I accept the evidence of Mr Hughes that, while there are a number of features to distinguish it from the private ROW here in question, the private ROW known as Ned Higgins Lane in the South West town of Margaret River, further to the south of Dunsborough, provides a relevant comparable sale upon which reliance can be placed. However, Mr Hughes also looked at a number of sales of private ROWs in the Perth CBD, Perth metropolitan area, and some country town settings in the South West.
108 The evidence of Mr Hughes makes it clear - not something that Mr Dix necessarily disputed - that private ROWs generally change hands for what can only be considered nominal amounts, unless there is something in the circumstances to suggest a greater value. An example of a right of way considered to have greater value because of the particular development circumstances in which it was located was the Bennett Street, Perth, right of way. Mr Hughes identified how the acquisition of that right of way provided significant development benefits for the owner of adjacent land that caused that owner to pay much more than a nominal sum for the right of way. No such benefit was indicated in the case of the private ROW valuation question here.
109 The applicant contends, by reference to Crompton v Commissioner of Highways (1973) 32 LGRA 8 at 23 - 24 and Wong v Minister of Water Resources (1985) 55 LGRA 431, that there are well understood reasons why one sale may not be considered comparable with another. So far as the sale of the Ned Higgins Lane right of way in Margaret River is concerned, the applicant says this was a sale to a government statutory body in a South West town quite some distance from the private ROW in question, with quite different physical attributes.
110 Mr Hughes was pressed in his evidence concerning the comparability of the Ned Higgins sale. Overall, he considered it relevant for these reasons:
111 The applicant suggested that a number of the comparable sales relied on by or referred to by Mr Hughes were not clearly comparable or could not be relied on. It was said that some, if not all, were not arm's length sales, and that most were sales to or from statutory bodies (not only Ned Higgins Lane, but Howard Street, Grand Lane, Campsie Street and Moore Place). Further, it was said that some had been acquired from a public authority in a pre-resumption situation (William Street). The only one not in such a situation was Bennett Street, and Mr Dix's view was that this was a distressed sale.
112 Mr Hughes dealt with all of these observations in some detail. As to Howard Street, Mr Hughes confirmed that he did not rely heavily on the sale. In any event, it was a rate of $0.54 per square metre versus $4.62 per square metre that he had allowed for the private ROW in question. He noted that nevertheless it was a sale of a right of way in a sample or spectrum of evidence and that he had obtained information about the sale from a valuer at the Perth City Council who negotiated the transaction. He said the initial expectations for the sale were very high and they plummeted.
113 As to Grand Lane, Mr Hughes explained that this land was in an area of the Perth CBD undergoing significant redevelopment at the time. That and other factors were reflected in the sale price. The sale price was for $148 per square metre versus the $4.62 applied in the case of the private ROW in question.
114 Mr Hughes referred again to the Bennett Street right of way which sold at the rate of $158 per square metre. He explained the full development potential of the right of way had been assessed. He did not accept it was a distressed sale. It was a private sale to the owner of the adjacent land with development potential. He said that the development potential was then fully exploited. Mr Hughes made reference to a comment by Mr Dix concerning a sale to the City of Perth of $100 000 after capitalising benefits inherent in Bennett Street was simply wrong. The land had not been sold. The owner had instead fully exploited the benefits.
115 As to the William Street sale, he rejected the inference that the transaction was not a market one. He said it had been fully tested in the market at $176 per metre for a central Perth CBD property. He said there were many valuers involved on both sides of the negotiations and it was a negotiated outcome and clearly a market one.
116 As to Laroche Lane in North Perth, comments made by Mr Dix were rejected by Mr Hughes. Mr Hughes said the sale was not made by the developer of the land after taking advantage of the access provided to develop the adjoining land. There was no process of stripping out value before it was sold to the Town of Vincent for one dollar. The facts were that the small lot subdivision opened up by purchase of the remnant right of way enabled the Town of Vincent to develop its former depot site, which is now Toorak Rise. The Council purchased part of the right of way, widened it slightly and created Toorak Rise and achieved a small lot subdivision. Mr Hughes said that if anything, the sellers of the right of way could have endeavoured to receive a higher price because the land was critical to the new subdivision, but they did not. On the contrary, when the Council approached the sellers and a number of other holders of rights of way, the Council eventually purchased all for a token consideration.
117 As to Moore Place in Bridgetown, Mr Hughes considered it would appear that the acquisition was an exercise in formalising a development condition relating to a subdivision from 1953. He considered the circumstances were not unlike that of the private ROW in question here. An adjoining Lot 13 had been sold as vacant land in October 2003 for $37 000, which appeared to have triggered the formal transfer of Lot 123 - the ROW - to the Shire.
118 Mr Hughes explained, and I accept, that he did not rely on any of these sales heavily, although he considered each of them had a circumstance that was similar and relevant in relation to the valuation to be conducted here. In the end, as noted, Mr Hughes relied on Ned Higgins Lane as the most comparable sale. Ned Higgins Lane sold for $3.08 per square metre. In the case of the private ROW in question, Mr Hughes assessed a value of $4.62 per square metre.
119 I generally accept Mr Hughes' evidence putting those sales, apart from Ned Higgins Lane, into context.
120 It follows, in my view, that the methodology adopted by Mr Dix in valuing the private ROW is inappropriate in the circumstances of this case. In short, Mr Dix proceeded to conduct a valuation on the basis that the subject land was unencumbered freehold land which could be developed without any serious impediment for the commercial uses of shops, offices and restaurants. Having regard to all the evidence, as set out above, the assumption made by Mr Dix is incorrectly made, and the private ROW should be valued, as Mr Hughes has suggested, as a private ROW with limited development potential and by reference to the most appropriate comparable sales. Sales of private ROWs, as the valuation evidence of Mr Hughes discloses, are mostly for relatively nominal sums, unless there is some particular benefit to a purchaser, such as the example of the Bennett Street, Perth, transaction, which was not indicated here.
121 Mr Hughes considered the appropriate value of the subject property to be $3250, rounded down to $3000, as of 13 March 2003, the date of taking. In the circumstances I see no reason to adopt any assessment of value other than that suggested by Mr Hughes. However, I do not think, in the case of such a relatively small sum as $3250, that there is any justification to round it down to a lesser sum.
122 I should also add that, as to the reliance by Mr Dix on the Caltex site sale - referred to as Sale 2 in his valuation report - I have considerable difficulty in accepting that this may be used as a sale upon which a rate per GLA can be extracted and then applied without more to the subject private ROW. I accept the questioning analysis made by Mr Hughes of this methodology. Mr Hughes noted that there are aspects of Sale 2 that are not remotely comparable to the private ROW:
123 I also accept the more fundamental comment made by Mr Hughes on the methodology adopted by Mr Dix in this regard, which Mr Hughes expressed in the following way (Transcript of 8 February 2007 at 23):
"Now to come out with a GLA, a dollar rate per square metre of GLA, to directly transfer across the road, you need to conduct a detailed analysis and hypothetical development of both sites, compare all the costs, compare the rents, assess the gross income, assess the net income, capitalise that, deduct the development costs, building costs and all development costs, allow risk factors and come up with a rate per square metre of land. Now applying the same rate per square metre of GLA assumes that all of those things are equal. So in my view, the methodology is a half methodology ... Well, there are no substantiating facts, figures, costings, rents, capitalisation rates, risk rates anywhere to be seen in the report and I don't know how you can then draw a comparison between the two properties, if you haven't analysed them fully. For that matter, why don't you apply the $118 dollars a square metre of Sale 1? Why is there no focus on Sale 3? I don't know. That's not my methodology."
124 The applicant says that interest should be awarded on the compensation payable in accordance with s 241(11)(b) of the Act from 4 March 1997.
125 Section 241(11) of the Act relevantly provides that:
"If the interest in land taken does not produce any rents or profits, interest is to be paid at the rate payable in respect of judgment debts as determined under section 142 of the Supreme Court Act 1935 ruling as at the date of entry for construction or carrying out of the work or the date of registration of the taking order, whichever is earlier, and the interest is payable from -
(a) the date of the service of the claim on the acquiring authority; or
(b) the date of entry for construction or carrying out of the work,
(c) when the offer was served on the claimant, if the compensation awarded by the State Administrative Tribunal or the court of competent jurisdiction is not more than the amount offered by the acquiring authority; or
126 It is accepted by the parties that the interest taken in the land did not produce any rents or profits and therefore it should be paid at the rate identified in this provision as of the date of any entry for construction or carrying out of the work, or the date of registration of the taking order, whichever is the earlier, and payable from the relevant date. In this case the question is whether there was any prior entry for construction or carrying out of the work. If so, that will dictate the dates for calculation of interest.
127 The applicant says that entry for construction or carrying out of the work occurred on 4 March 1997.
128 The applicant draws attention to the evidence given by Mr SL Millen, a Council officer, that underground trenching work to provide underground power was carried out on the subject land in 1997 and that at least one street light was connected to that. He gave further evidence that work was carried out in 1999 which involved sealing and curbing the first leg of the subject land, marking spaces and repairing the other leg.
129 The applicant submits that the trenching work shows clearly the first road work carried out on the subject land by the Shire and therefore its first entry for the purposes of calculating interest on the claim. By reference to Shire documents the applicant identifies 4 March 1997 as the relevant date.
130 The applicant says the stated purpose of the taking is the creation of an under width road and the trenching works constitute a part of that work given the status quo, which is that it was already an access way. The applicant says Mr Millen said the work was done on the basis that the Shire considered that the road was theirs already and it was taking steps to acquire it.
131 The Shire says that the evidence of Mr Millen was that some time in 1999/2000 he was involved in fixing a pothole on the leg of the private ROW that runs into Naturaliste Terrace, as well as sealing approximately the first 30 metres of the private ROW, installing curbing and marking parking spaces. The Shire says the purpose of undertaking these works was because of concerns regarding public safety and liability and as the private ROW was going to be compulsorily taken.
132 The Shire accepts that prior to the undertaking of these works the Shire had undertaken works on the private ROW and charged the costs to those persons who had interests in it.
133 The Shire also accepts the works referred to carried out in 1999 were not paid for, however, by the registered proprietor or easement holders.
134 The Shire contends that the works carried out in 1999 do not constitute an "entry for construction or carrying out of" the creation of the under width public road for the purposes of s 241(11). What was done was simply the repair and upgrade of an existing facility to the benefit of those who used it and not adverse in any sense to those who had interests in the private ROW. The sealed access way already existed and the entry was not for the purpose of creating a work that did not already exist. Furthermore, the reasons for undertaking the works included issues of public liability and public safety.
135 The Shire says that any suggestion that work associated with the installation of underground power cables in 1997 constitutes an entry is erroneous. The work for which the private ROW was compulsorily acquired was that of an under width public road, not the installation of underground power cables. Furthermore, creation of the under width public road and the installation of underground power cables were unrelated, and the taking of the private ROW proceeded from the decision of the Council in August 1996 to create the road and the installation of the underground power was pursuant to the Guide Plan.
136 I generally accept the submissions made on behalf of the Shire. I do not consider that the trenching works of 1997 constitute "entry" for the purposes of s 241(11) of the Act. Nor do I consider that the work undertaken in 1999/2000 constitutes a relevant "entry". While there may have been some understanding on the part of junior officers of the Council that the private ROW was already under their control, it seems to me that properly understood the works then undertaken were not in pursuit of the work to which the taking related and were merely incidental to the general management of roads by the Shire in the vicinity of Dunsborough. The fact that prior to 1999/2000 works were undertaken and charged to persons who had interests in the private ROW supports this conclusion.
137 The 1997 work to do with the installation of underground power cables cannot be considered an "entry" for the purposes of s 241(11).
138 The repair and upgrading of the existing facilities in 1999/2000 was merely the repair and upgrading of an existing facility in respect of which one can understand that the Shire wanted to safeguard or facilitate public safety. It was not an unambiguous act of eminent domain.
139 As a result, I do not consider that in either 1997 or 1999/2000 there was any relevant entry for the purposes of s 241(11) of the Act.
140 In these circumstances, the applicant is only entitled to interest pursuant to s 241(11) of the Act as of the date of registration of the taking order and interest is payable from the date of the service of the claim on the acquiring authority to the date specified in s 241(11)(c), namely, when the offer was served on the claimant, if the compensation awarded by the State Administrative Tribunal is not more than the amount offered by the acquiring authority.
141 For the reasons given above, the Tribunal finds:
142 The Tribunal will invite the parties to bring forward an agreed minute of final orders to give effect to this decision.
I certify that this and the preceding [142] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
ACT : LAND ADMINISTRATION ACT 1997 (WA)
CITATION : CLIFFORD and SHIRE OF BUSSELTON [2007] WASAT 89 (S)
HEARD : 12 JUNE 2007 AND DECIDED ON THE DOCUMENTS
Compensation Taking of private right of way Settlement offers by respondent Costs of proceedings
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42
1 On 23 April 2007, the Tribunal assessed the compensation payable for the taking of a private right of way in the centre of Dunsborough in the sum of $3,250.
2 Between 12 August 2004 and 24 January 2007, each party offered to settle the proceedings. The Shire of Busselton in particular made a number of offers of settlement.
3 The Tribunal considered the statutory context of its discretion to award costs. The Tribunal then analysed each offer in light of the costs incurred by the applicant at the relevant date.
4 The Tribunal found that the Shire's offer of 17 July 2006 was more favourable than the Tribunal's order and ordered that the applicant pay the Shire's costs from 17 July 2006.
5 In Clifford and Shire of Busselton [2007] WASAT 89, the Tribunal assessed the compensation payable for the taking of a private right of way (ROW) in the centre of Dunsborough, for the purpose of creating an underwidth public road, in the sum of $3,250.
6 The Tribunal also found that there were no relevant entries onto the subject land prior to the taking, for the purposes of s 241(11), Land Administration Act 1997 (WA) (LA Act).
7 Following the giving of that decision, the Shire of Busselton applied for an order that the applicant pay the Shire's costs of the proceedings.
8 The issue currently for determination is whether the applicant is, in the circumstances of this case, obliged to meet the costs of the Shire and, if so, in what sum.
9 As noted, on the principal issue for determination in the main proceedings, the Tribunal determined that compensation for the taking of the private ROW should be assessed in the sum of $3,250.
10 The Shire filed a chronology of events pertaining to endeavours by the parties to settle the compensation proceedings without a final hearing, which endeavours it says bear on the question of costs.
11 The initial claim for compensation dated 10 January 2004, was for land value of $692,250, solatium of $69,225, as well as fees and interest.
12 By offer of the Shire dated 12 August 2004, the Shire offered to pay $1000 by way of compensation.
13 By further offer of the Shire dated 8 March 2005, the Shire offered to pay compensation of $2,500.
14 These offers were further increased by offer of the Shire dated 3 October 2005 of $2,750 plus interest. This was a formal offer made under the LA Act.
15 By offer dated 25 November 2005 the applicant then indicated she was prepared to settle the proceedings in the sum of $75,000 plus solatium, interest and costs.
16 The Shire by offer dated 17 July 2006 offered $40,000 inclusive of legal costs.
17 By offer dated 27 July 2006 the Shire increased that offer to $60,000 inclusive of costs.
18 By offer dated 8 January 2007, the Shire further increased its offer to $110,000 which was said to be "inclusive of all heads of compensation, interest, legal costs and disbursements, other fees and expenses or any other loss, damage or expense however arising in relation to the matters the subject of this application".
19 The Shire increased its offer by offer dated 19 January 2007 to $130,000 expressed in the same terms as the offer of 8 January 2007.
20 The applicant by offer dated 24 January 2007 indicated to the Shire she was prepared to settle the proceedings for approximately $231,000. This sum is estimated by reference to the express offer of the applicant to accept the sum of $150,000 plus costs as previously outlined in a letter by the applicant's solicitors to the Shire's solicitors dated 17 January 2007. This offer was made in full and final settlement of the claim.
21 At the hearing the applicant claimed a total of $907,500, being $825,000 compensation plus solatium of $92,500, plus interest since 4 March 1997, an amount calculated in total to be greater than $1,450,000.
22 In the event, the Tribunal assessed compensation in the sum of $3,250 which with interest from 10 January 2004 was calculated to be a sum less than $4,500 in total.
23 In short, the Shire contends that because the applicant failed to obtain an award of compensation greater than the offers it had made at material times in the course of proceedings the applicant should meet the Shire's costs of the proceedings.
24 Counsel for the Shire acknowledged that the starting point in relation to an application for costs by a party in the Tribunal is s 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Section 87(1) in effect provides a "no costs rule" in that unless otherwise specified in the SAT Act, the enabling Act in this case the LA Act or an order of the Tribunal under s 87, parties bear their own costs in a proceeding of the Tribunal.
25 However, counsel for the Shire also drew attention to s 87(2) which permits the Tribunal to make an order for the payment by a party of all or any of the costs of another party.
26 Counsel also drew attention to s 87(5) which provides:
"[t]he rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party."
27 Rule 40 and r 41 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) govern settlement offers and acceptance of settlement offers. Rule 42 provides that if a settlement offer made in accordance with the Rules is not accepted within the time the offer is open and in the opinion of the Tribunal the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer, then the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal's order. Rule 42(3) provides that in determining whether its orders are or are not more favourable to a party than an offer, the Tribunal
must take into account any costs it would have ordered on the date the offer was made; and
must disregard any costs it ordered in respect of any period after the date the offer was received."
28 The Shire contends that the offer made at relevant times was greater than the compensation ordered by the Tribunal. Counsel for the Shire submitted two alternative possibilities by way of a costs order:
That the Shire have all of its costs from 17 July 2006 when the Shire made the offer of $40,000 inclusive of costs.
That the Shire have all of its costs in respect of the conduct of the four-day hearing of the matter and its experts.
29 Counsel for the applicant produced a bundle of documents showing the applicant's professional costs incurred in prosecuting the claim for compensation up to 29 January 2007, that is, four days prior to the final hearing, which indicated that she had potentially incurred professional fees of $131,046.
30 Counsel for the applicant said none of the offers made met the costs incurred at relevant dates.
31 Counsel for the applicant submitted that the last offer of $130,000 inclusive of costs and expenses of 19 January 2007, was not an effective offer because r 41 was not complied with in that there were only 12 days' notice for acceptance prior to the hearing, not the 14 days specified in r 41(1) and r 41(2).
32 As to the Shire's offer dated 8 January 2007 of $110,000, counsel for the applicant submitted that that offer did not meet all of the costs that had been incurred by the applicant at that point, including professional fees, and it was not reasonable that the applicant should have accepted it.
33 In rejecting the $110,000 offer the solicitors for the applicant by letter dated 17 January 2007 made the following observation:
"Nevertheless costs have escalated alarmingly as a consequence of the complication of the issues. Our client's legal costs now stand somewhere in the region $40,000.00. The costs of Mr Adam currently stand at $21,000.00 and although we have not as yet asked our client's valuer Mr Dix what his costs may be, we imagine they will be similarly substantial. We therefore consider that the costs now stand at approximately $81,000.00 on a conservative basis which appears to completely negate the offer which you have made.
We have therefore had to inform our client that taking into account the deductions mentioned in your letter, this offer would only result in her costs to date being paid and no compensation at all accruing to her.
Our client has instructed us to reject this offer for the reasons set out above ..."
34 As to the 14day requirement for an offer mentioned in r 41(2), counsel for the Shire pointed out that under r 41(1) an offer must be open for acceptance until hearing or until the expiry of the specified period after the offer is made, whichever is the shorter period. It is suggested that means an offer can be left open until the hearing even if that is a shorter period than 14 days.
35 Counsel for the Shire submitted that in any event it is open to the Tribunal in the exercise of its discretion under s 87(2) to take into account the making of an offer whether or not it is made in compliance with r 40 and r 41 of the SAT Rules.
36 Counsel for the Shire also responded to the calculation as to the offer made in the applicant's solicitors' letter dated 17 January 2007, suggesting that the analysis provided there is wrong. Counsel submits that if $81,000 had already been incurred in costs then, given that the offer was for $110,000 at that time, $29,000 remained to meet solatium, any interest and the valuer's fees of $19,000, as well as the compensation award made by the Tribunal, because there would be in the region of $10,000 remaining once those professional and other costs were subtracted.
37 Subsequent to the making of submissions on costs, with the leave of the Tribunal, the solicitors for the applicant provided further material to the Tribunal that sought to identify the extent of legal costs and other professional costs incurred by the applicant at different periods during the course of getting up the application for compensation for hearing at the Tribunal.
38 The solicitors for the Shire also lodged further written submissions concerning those materials.
39 It is commonplace now to describe the State Administrative Tribunal as, on the face of it, a costsneutral tribunal. This has been explained in a number of decisions of the Tribunal: see Chew and Director General of the Department of Education and Training [2006] WASAT 248; Summerville and Department of Education and Training [2006] WASAT 368(S). This observation derives from two main sources. First, the Task Force report that informed the setting up of the Tribunal. And secondly, and more importantly, the express terms of the SAT Act in respect of costs.
"Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal."
This enshrines the philosophy that the Tribunal is costneutral. Ordinarily parties will bear their own costs and not obtain orders against other parties to meet their costs of proceedings.
"Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under section 35."
This means that the Tribunal has a discretion to order a party to pay the costs of another party in an appropriate case.
42 The circumstances in which the Tribunal will exercise its discretion to order that one party pay the costs of another party are being worked out over time. For example, in vocational regulation proceedings, the Tribunal has made it plain that a vocational body that succeeds on an application ordinarily will be entitled to an order for costs, effectively on the basis that costs follow the event, as it is stated in many courts.
43 However, the Tribunal has also made it clear that just because a vocational body is not successful does not necessarily mean it will be ordered to pay the costs of the affected party. This is because there is a public interest in the vocational body bringing proceedings: See Motor Vehicle Industry Board and Dawson [2006] WASAT 8.
44 Section 87(3) specially empowers the Tribunal to make an order for the payment of an amount to compensate a person in certain circumstances. This is over and above the costs of the proceedings to which s 87(1) and s 87(2) refer.
45 Section 87(4) sets out some factors to be considered by the Tribunal where a party applies for costs in relation to a proceeding in the Tribunal's review jurisdiction. If the order is sought against a party which is the decision-maker, a relevant question is whether the decision-maker genuinely attempted to make a decision on its merits. If the party against whom costs is sought is the applicant, a relevant question is whether that party genuinely attempted to enable and assist the decision-maker to make a decision on its merits.
46 Section 87(5) goes further and provides that the rules of the Tribunal may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party.
47 The SAT Rules in Div 5 and Div 6 deal with settlements. Rule 40 governs settlement offers, r 41 governs acceptance of settlement offers, r 42 deals with orders for costs if settlement offer is rejected.
48 The SAT Act therefore, through s 87(5) and the rules referred to, reveals parliamentary support for the idea that, where possible, parties to proceedings should endeavour to consider settlement. This intent is evident elsewhere in the SAT Act. For example, s 9(b) makes it one of the main objectives of the Tribunal to act as speedily and with as little formality and technicality as is practicable, and minimise the cost to parties. Section 52 encourages the use of compulsory conference as an alternative to a final adversarial hearing. Section 54 encourages mediation as an alternative to final adversarial hearing. Importantly, s 56 expressly deals with settlement and enables the Tribunal to make an order giving effect to a written settlement of the parties. In this statutory context then, the rules providing for the making and acceptance of the settlement offers and for the making of an order for costs in the event that a settlement offer is rejected, or at least setting out factors to be considered in relation to an application for an order for costs in some circumstances, are important.
49 Rule 42(2) makes it clear that where that rule applies, the Tribunal "is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal's order".
"In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal -
must take into account any costs it would have ordered on the date the offer was made; and
must disregard any costs it ordered in respect of any period after the date the offer was received."
51 These settlement rules are capable of applying to a range of disputes coming to the Tribunal for resolution, but will often be particularly relevant to proceedings in which parties are in dispute about financial matters.
52 Under the LA Act, the Tribunal has the jurisdiction to assess the compensation payable to a person for taking of land, where an offer of compensation has been rejected.
53 The jurisdiction of the Tribunal in relation to the assessment of compensation is in the original jurisdiction of the Tribunal. This does not involve the review of any decision already made, although in some respects it does involve a review of the offer of compensation put forward by the resuming authority. Nonetheless, it is strictly speaking a proceeding in the original jurisdiction of the Tribunal.
54 Ordinarily, where a citizen feels obliged to commence a proceeding in the Tribunal for compensation under the LA Act they are dissatisfied with and have rejected an offer of compensation made by a resuming authority. If they succeed in their claim in the Tribunal, it would seem fair and reasonable that the Tribunal should ordinarily exercise its discretion under s 87(2) and award the applicant the costs of those proceedings. This is because, putting it simply, ordinarily if the applicant succeeds, it will have been demonstrated to the Tribunal that the applicant was not offered fair compensation by the resuming authority and was obliged to commence and maintain the proceedings in order to gain justice. It would seem unreasonable for an applicant to have to fight to gain fair compensation only to have to deduct from the compensation the costs incurred in obtaining the award.
55 Of course what should be recognised as "success" in every case requires some further consideration. If the applicant does not succeed in obtaining a compensation award following a hearing that betters the original compensation offer made by the resuming authority, it can hardly be said that the applicant was successful in the proceedings. Indeed it could be said in such a case that the applicant has maintained an unjustified proceeding and so should have to pay the respondent its costs for the trouble and expense of defending the claim.
56 Either way it really is a question of fairness: on the one hand, in the case of a successful applicant it is fair that they should ordinarily receive their costs when they are put to the trouble and expense of proving that their claim is right, over the reticence of the resuming authority to recognise the rightness of the claim; on the other hand, it is fair that an applicant who does not establish that a resuming authority's offer was not right, should have to pay the resuming authority's costs given the trouble and expense to which they have put the resuming authority.
57 It should also be said that an award of costs in such circumstances will have the beneficial effect of discouraging unjustified proceedings.
58 The settlement rules fit into this regime very neatly. For example, they enable a resuming authority defending a compensation claim to make offers of settlement through the course of the proceedings. They indeed also enable an applicant, despite their initial claim for compensation, to make amended offers to settle proceedings.
59 The ultimate significance of the settlement rules as set out in r 42, is that if a party does not do better than what the other party offered, then they may be exposed to an order for costs. The settlement rules are designed to work with the cost regime to encourage parties to settle proceedings. If they do not and are shown, in that sense, to have acted unreasonably, then they may be exposed to a costs order.
60 However, nothing in the settlement rules themselves says how the costs discretion of the Tribunal is to be exercised. Rather, the settlement rules establish a basis for the Tribunal exercising its discretion to order costs. The SAT Rules do not require the costs discretion to be exercised one way or the other.
61 Nonetheless, there is an expectation in the context of the SAT Act provisions referred to earlier, and these settlement rules, that where a party did not accept an offer more favourable than the Tribunal's final order, then that party will ordinarily be liable to meet the other party's costs.
62 In the context of a compensation claim under the LA Act, offers to settle made by a resuming authority or an applicant will also ordinarily take into account costs and fees reasonably incurred.
63 In the final result, however, the Tribunal maintains a discretion to award or to not award costs notwithstanding the making of settlement offers and the rejection of settlement offers. This enables the Tribunal to take into account all the circumstances of the particular case.
64 It should be added that the settlement rules ordinarily will govern the making of settlement offers in the Tribunal. Rule 41(2) specifies that the minimum period that can be specified in an offer is 14 days. It should be noted in passing that this does not apply where the offer is made prior to the hearing where there is necessarily a shorter period than 14 days left before the hearing. The provision of the 14day period evinces an intention that a party should have a reasonable opportunity to take advice and consider the offer made. It should not be rushed into making an offer.
65 If an offer is made outside the SAT Rules it will not automatically be irrelevant to the question of the costs discretion under s 87(2) of the SAT Act, but it does mean that it is much more unlikely to enliven the exercise of that discretion.
66 Similarly, if a settlement offer is made a very short time before a hearing is due to commence, the fact that a party is not properly able to take advice and consider the offer may also lead to the view that a rejection of the offer will not have consequences in costs for that party.
67 For those reasons, parties are well advised to ensure that settlement offers made comply with the settlement rules laid down in the SAT Rules so that r 42 applies and governs the exercise of the Tribunal's discretion to award costs or to not award costs under s 87(2) of the SAT Act.
68 In this case, it is plain that the Shire sought to settle the applicant's compensation proceedings by making a formal offer under the SAT Rules. In my view, the offer made on 19 January 2007 complied with r 41. Rule 41(1) enables an offer to be made and remain open for acceptance "until the commencement of the hearing or until the expiry of a specified period". Only where a period is "specified" does the 14day minimum period provided for in r 41(2) apply. Where the offer is open until the date of the hearing, the period in question may be less than 14 days. In this case the offer until hearing was for a period of 12 days. In those circumstances, r 42 applies.
69 The orders made by the Tribunal in the proceeding concerning the assessment of compensation are not more favourable to the applicant than the offer made. As a consequence the Tribunal, in determining the costs that may be awarded, must take into account that the party did not accept an offer more favourable than the Tribunal's order.
70 In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal must take into account any costs it would have ordered on the date the offer was made and must disregard any costs it ordered in respect of any period after the date the offer was received. In this case the Tribunal did not order any costs in respect of any period after the date the offer was received. It must then take into account any costs it would have made on the date the offer was made.
71 In the circumstances, while the applicant appears to have incurred or nominally incurred reasonably substantial legal costs, and other professional consultants' fees, in the course of preparing her claim, under the fee arrangements made with her solicitors, when a number of relevant offers were made it was not reasonably open to the applicant to reject each offer on the basis it would be insufficient to meet her claim and her expenses. In this regard I accept the Shire's submissions concerning the relevant offers as follows.
72 The Shire submits that its various offers satisfy r 42.
73 As to the offer of 17 July 2006, the Shire says it was an allinclusive offer of $40,000. The applicant states that as at 17 July 2006 its untaxed costs were $48,972.81, made up of legal fees of $11,569.50 and expert valuation witness fees of $37,403.31.
74 Counsel for the Shire says the first point to note is that under r 42(3)(a) of the SAT Rules, in determining whether the Tribunal's orders are or are not more favourable to a party than the offer the Tribunal "must take into account any costs it would have ordered on the date the offer was made".
75 Thus the purpose of this exercise is not the gross figures that determine the costs as at 17 July 2006 but the amounts the Tribunal would have ordered as at that date.
76 Counsel for the Shire submits that the legal costs that would have been ordered by the Tribunal as at 17 July 2006 in favour of the applicant would have been less than that which were nominally charged to the applicant. The sum of $11,569.50 is an untaxed figure and represents simply the total amount of work done by the solicitors for the applicant at their chargeout rate. Additionally, the material provided to the Tribunal under cover of the applicant's solicitors' letter of 13 June 2007, discloses that the applicant was nominally being charged $395 per hour excluding GST when a Supreme Court determination rate for a senior practitioner at that time was $341 per hour including GST, prior to 1 July 2006 and $363 per hour including GST from 1 July 2006.
77 The Shire further submits that the expert valuation witness fees that would have been ordered by the Tribunal as at 17 July 2006 in favour of the applicant would have been well short of the claimed $37,403.31. Again that figure is untaxed and there is no time or rate breakdown provided to the Tribunal. The general comment is made that $37,403.31 is a large figure for that stage of the proceedings. The Shire draws attention to the fact that its expert witness charged $26,555.43 for his total involvement to the conclusion of the hearing.
78 Counsel for the Shire further submits that as at 17 July 2006 the value of the compensation ordered by the Tribunal would have been in the order of $4,120. This is the $3,575 plus 15.25 per cent (6 per cent per annum from 10 January 2004 to 17 July 2006).
79 The Tribunal would not have awarded the applicant costs of as much as $35,880, being the balance of the $40,000 offer after deducting the $4,120 set out.
80 Thus the Tribunal's order is not more favourable than the offer of 17 July 2006.
81 The Shire makes a further submission in relation to the offer it made of 27 July 2006. It says the applicant accepts that the Tribunal's order is not more favourable than that offer of $60,000 based on the untaxed amounts of legal and expert valuation fees at that time.
82 The Shire says that the points it makes in respect of the offer of 17 July 2006 apply equally to this offer. Additionally the Shire says the figure of $15,805 for legal fees at 27 July 2006 appears to be erroneous. The schedule to the applicant's solicitors' letter of 13 June 2007 reveals that sum is the sum of the accounts dated 20 December 2005, 31 January 2006, 28 February 2006, 31 March 2006, 31 May 2006 and 4 August 2006. It is said reference to the account at 4 August 2006 reveals that it includes three entries beyond 27 July 2006 which should not be included in the legal costs nominally charged as at 27 July 2006.
83 The Shire also says that the comparison at page 2 of the applicant's solicitors' letter of 19 June 2007 between the offer of 27 July 2006 and the applicant's untaxed legal and expert valuation witness costs at that time is erroneous. If the Tribunal were to determine that the costs it would have awarded as at 27 July 2006 are $53,523.51 then the Shire's offer exceeds that amount by $6,476.49. As at 27 July 2006 the value of the compensation awarded by the Tribunal would have been in the order of $4,130. Thus the respondent's offer of $60,000 dated 27 July 2006 is approximately $2,340 more than the applicant's untaxed legal and valuation costs as at that date.
84 The Shire says the applicant's error on page 2 of the solicitors' letter of 19 June 2007 is to remove solatium and interest from the balance between the offer and the applicant's untaxed costs as at 27 July 2006, but to include solatium and interest in the Tribunal's award for the purposes of comparison. Thus like is not compared with like. The Shire says the Tribunal's order is not more favourable than the offer of 27 July 2006.
85 The Shire also notes in its submissions about the all-inclusive offer of $110,000 made 8 January 2007.
86 The applicant states that as at 8 January 2007 its untaxed costs were $128,350.93 made up of legal fees of $47,328.10, expert valuation fees of $60,462.83 and expert planning witness fees of $20,560.
87 The Shire repeats its earlier submissions concerning the proper estimation of costs.
88 The Shire submits that the planning expert witness fees that would have been ordered as at 8 January 2007 would have been well short of the claimed $20,560, particularly considering that the Shire's expert charged only a little less than $10,000 to the conclusion of the hearing. Additionally and significantly, the Shire says, the solicitors' invoice to the applicant dated 28 February 2007 records as a disbursement the amount of $2,500 for the planner. The Shire says that the applicant is only able to claim that sum as at 8 January 2007, the result is that the applicant's untaxed fees as of that date are just over $110,000.
89 The Shire says that as at 8 January 2007 the value of the compensation awarded by the Tribunal would have been in the order of $4,220. The Tribunal would not have awarded the applicant costs as much as $105,780, being the balance of $110,000 after deducting the $4,220 as set out above.
90 On this basis the applicant says the Tribunal's order is not more favourable than the offer of 8 January 2007.
91 As to the Shire's offer of 19 January 2007, the Shire then made an all-inclusive offer of $130,000.
92 The applicant states that as at 19 January 2007 its untaxed costs were $130,378.64 made up of legal fees of $49,229.27, expert valuation fees of $60,511.23 and expert planning witness fees of $20,580.
93 The Shire repeats its earlier submissions concerning the appropriate estimation of costs.
94 The Shire also refers to the expert witness fees actually claimed as at 19 January 2007 of $2,500 and says the result is that the applicant's untaxed fees as at that date were only $112,240.50.
95 As at 19 January 2007 the value of the compensation awarded by the Tribunal would have been in the order of $4,230.
96 The Shire submits that as at that date the Tribunal would not have awarded the applicant costs as much as $125,770, being the balance of the $130,000 offer after deducting the compensation sum.
97 The Shire therefore submits that the Tribunal's order is not more favourable than the offer of 19 January 2007.
98 The Shire therefore maintains its primary submission that it should be granted an order that the applicant pay its costs of the entire proceedings.
99 The Shire's alternative submission is that it should be granted an order that the applicant pay its costs from 17 July 2006.
100 The Tribunal finds that as at 17 July 2006, the applicant did not accept an offer made by the Shire which offer was more favourable than the Tribunal's order. In doing so the Tribunal has regard to the notional costs incurred by the applicant with her solicitors and other professional consultants. Nonetheless, the Tribunal accepts the analysis made on behalf of the Shire that even if such costs had been taken into account at that point, the amount offered Having regard to the respondent's 'Draft Bill of costs from 17 July 2006' dated 26 June 2007, the President allows costs for all items, which includes the disbursements incurred in respect of the expert witnesses Ms Angela Satre and Mr Ross Hughes, making a total of $99,899.13. The costs should be paid within 180 days or such other time as the parties may agree or the Tribunal otherwise orders.
101 For the reasons set out above, the Tribunal makes the following order:
The applicant is to pay the costs of the Shire of Busselton in these proceedings incurred as and from 17 July 2006, including the costs of the expert planner and the expert valuer called by the Shire at the hearing of the proceedings, fixed in a total sum of $99,899.13 within 180 days or such other time as the parties may agree or the Tribunal otherwise orders.
I certify that this and the preceding [101] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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26 This definition of market value is set out in the Australian Property Institute (Inc), Code of Professional Practice, Deakin, 2002, at 26_._ It takes into account the concept of market value as defined in Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418, but bears in mind that the value of the land to the owner may, in some cases, also be relevant, as explained in Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; (1914) AC 1083.
(1907) 5 CLR 418