Victorian Civil and Administrative Tribunal|2010-08-04

The Applicant Mr Cole must make a $25,000.00 contribution towards the costs incurred by Mornington Peninsula Shire Council in this proceeding.
The timing of the payment of these costs must be as follows:
- the initial $10,000.00 must be paid by no later than 30 September 2010;
- the next $10,000.00 must be paid by no later than 30 November 2010;
- the final $5,000.00 must be paid by no later than 23 December 2010.

Mr Craig Porter of Counsel. At the primary hearing Mr Porter called expert valuation evidence from Mr Rann (consulting valuer). He also called lay evidence from Ms Lattimore.

To avoid duplication, we referred to:
- our primary orders in this matter dated 14 October 2009; and
- our procedural orders dated 18 February 2010 setting out the process by which a further hearing would occur to deal with the question of costs (noting that we had reserved the costs of the proceeding in our primary orders).
The further hearing to deal with costs submissions was originally scheduled for 17 February 2010, but was adjourned due to problems associated with the timing of Councils provision of its costs information (the costs associated with that adjournment was separately reserved).
In relation to the re-scheduled costs hearing on 23 April 2010, this was adjourned at the request of Mr Cole and again costs were separately reserved. We were told by Mr Porter at this hearing that he had instructions from Mr Cole to initiate a Supreme Court appeal challenging what Mr Cole regarded as a legal flaw in the manner in which we had prepared our decision. Mr Porter indicated on 23 April 2010 that he expected this legal challenge could be initiated fairly quickly and that it would be known within a reasonable timeframe whether or not leave would be granted by the Supreme Court. We issued our Further Interim Orders allowing the adjournment the same day ie 23 April 2010.
The costs hearing finally went ahead on 13 July 2010, at which time both advocates spoke to the relevant written costs submissions.
We also acknowledge for completeness that Maddocks lawyers provided us under cover of their letter of 25 June 2010 with an updated "Summary of legal costs incurred by Council", being a form of Schedule of Costs set out in column format.
We have taken the Schedule of Costs, the submissions made to us on 13 July 2010 and the other related submissions/correspondence into account in making our findings below.

In summary, when broken down into different components, the costs claim by Council is as follows:

in relation to the period August 2008 through to 27 March 2009, the Schedule of Costs indicates that Council's relevant costs were $12,003.30, of which Council is actually claiming $8,000.00 on a party/party basis;
over the following period 28 March 2009 through to 31 August 2009, Council's relevant costs (having made a calderbank offer at the beginning of this period that was rejected by Mr Cole) were $23,566.00, with Council seeking payment of $20,000 of these costs on a solicitor-client basis;
with respect to the period from 1 September 2009 through to and including the costs hearing on 13 July 2010, Council's relevant costs incurred were in the order of $12-15,000, in relation to which Council is claiming a $3,000.00 contribution.

The overall position is that Council is making a $31,000 costs claim against Mr Cole.

The balance of this decision will deal with:
- several preliminary comments;
- the issue of whether any costs order should be made at all; and
- if so, what the appropriate quantum of costs should be.

Before setting out our main findings, we make the following preliminary comments.
First, we note that the purpose of the 13July 2010 hearing was not for either party to express disappointment with or to seek to re-argue the fundamental aspects of this valuation dispute which we have already decided in our primary orders. The purpose of the 13 July 2010 hearing was nothing more or less than dealing with Council's costs claim. At times during Mr Porter's submission on 13 July, it was not obvious that he grasped this distinction. If either he or Mr Cole had a strong view that we had made any errors of law in our primary orders, then these orders could have been appealed within 28 days of us handing them down (which did not occur).
Secondly, in relation to the two earlier scheduled costs hearing dates that ended up being adjourned, Mr Cantor conceded that the separately reserved costs involved in each may well cancel each out other (and Mr Porter did not actively contest this suggestion). We think this is a fair appraisal of the situation with these two dates.
Thirdly, there was considerable discussion at the 13 July 2010 hearing regarding the Maddocks letter of offer to Mr Cole dated 31 March 2009 (a copy of which was provided to us).
In the first part of this letter, the following offer of compromise was made:
- the Site Value and the Capital Improved Value of the subject land would be reduced to $1,700,000 as at 1 January 2006;
- the Net Annual Value of the property as at 1 January 2006 be reduced to $85,000; and
- each party to bear its own costs of the proceeding.
Near the end of this letter the following statement is made:

In the event of this offer is not accepted and you ultimately obtain an order no more favourable than this proposal, we intend to produce this letter to the Tribunal on the question of costs and seek an order that you pay our client's costs on a full indemnity basis from the date of this letter (pursuant to the Victorian Civil and Administrative Tribunal Act 1998 and the principles in Calderbank -v- Calderbank [1975] 3 All ER 333, Cutt -v- Head [1983] EWCA Civ 8; [1984] All ER 597 and adopted in an unreported decision of the Honourable Mr Justice Byrne in the Supreme Court of Victoria on 28 April 1993 in Mutual Community Limited -v- Lorden Holdings Pty Ltd & Ors).

As the parties are already aware, the key statutory provision we are working from in dealing with this costs claim is Section 26 of the Valuation of Land Act 1960. Section 26(2) of that Act sets out the factors which VCAT or the Courts "... must take into consideration ... as appropriate", which includes at sub-clause (b) - "... any offer, whether or not made without prejudice, by a party in respect of the valuation".
It is common ground that in our primary orders we made a finding more favourable than the $1.7 million calderbank offer ie we confirmed that the 1 January 2006 valuation was $1.93 million.
In summary, we are satisfied that:
- a calderbank offer was made by Council on 31 March 2009, with the Tribunals' later findings being more favourable to Council than this offer;
- Section 26(2)(b) confirms that the Tribunal can have regard to this type of offer as one of the factors in dealing with this type of costs claim; and
- whilst we are not strictly bound by the terms of the calderbank offer (ie we have a fundamental discretion under Section 26(2) regarding what (if any) costs order it is appropriate to make), it is appropriate that we give substantial weight to the 31 March 2009 calderbank offer.
Fourthly, we have considered the various cases provided by the parties and consider that none of them have any particular bearing on our decision. We note that most of these cases occurred before Section 26(2) became the applicable statutory benchmark. However we do note that the circumstances before us clearly can be distinguished from those involved in ISPT Ltd v City of Melbourne [2007] VCAT 652, which was a "test case" having implications for a substantial number of Melbourne CBD valuations.

In resolving whether any costs order should be made at all, we must have regard (as appropriate) to the seven factors set out at Section 26(2) of the Valuation of Land Act 1960. We have done this below, setting out in turn each factor, with our comments underneath in italics.

(a) the desirability of minimising the overall level of legal and valuation costs

Comment: We are satisfied that the decision by the Applicant for Mr Porter and Mr Rann to primarily base their submissions/evidence on a "two title valuation" substantially complicated and lengthened the hearing process associated with our primary orders. Arising out of the compulsory conference, Member Brown had ordered that the valuation reports prepared for the main hearing should be based on three titles in one occupancy. It remains unclear to us why the Applicant did not comply with this requirement and our findings in our primary orders included affirming that Member Brown's order was correct. We consider that the hearing could have been significantly shorter had the Tribunal not needed to deal with this "two titles compared to three titles" issue.

(b) any offer, whether or not made without prejudice, by a party in respect of the valuation

Comment: We are satisfied that it is a strong feature of Council's costs claim that it made a calderbank offer of $1.7 million on 31 March 2009, in a situation where in our primary orders we affirmed a 1 January 2006 valuation of over $200,000 higher ie $1.93 million.

Comment: It is also a strong aspect of Council's costs claim that our primary orders dated 20 October 2009 did not make any adjustment to the contested valuation figure, but rather simply affirmed Council's valuation as at 1 January 2006 of $1.93 million.

(d) the degree of openness in sharing information between the parties-

Comment: We note at the 13 July 2010 costs hearing Mr Porter was critical of what the Applicant regards as Council's failure to be sufficient open in sharing information with Mr Cole and/or to provide an adequate explanation of Council's position during the initial meetings between Council and Mr Cole prior to Mr Cole's lodging of his Application for Review. This was disputed by Mr Cantor, who argued that due process had been followed. In terms of our own findings on this issue, we are unconvinced that any failure of due process occurred for the purposes of Section 26(2)(d) or (f) of the Valuation of Land Act 1960. In particular, whilst it may well be that the Council Valuer Mr Brown could have been more forthcoming in his discussions with Mr Cole regarding the relationship between the 2004 and 2006 valuation results, this is a quite different issue to whether Mr Brown failed to carry out his statutory duties at this point in the process. In summary, we consider there is insufficient evidence for us to find that any such breach by Mr Brown took place.

(e) any unreasonable conduct on the part of any party-

Comment: It was alleged by the Applicant that during the hearing days associated with our primary orders, Mr Cantor took up significantly more of the Tribunal's time, compared to Mr Porter. The inference here was that Mr Cantor's conduct was "unreasonable" for the purposes of this factor. A hand written alleged time keeping schedule apparently prepared by Mr Cole was provided to us at the 13 July 2010 hearing. Our finding here is that (in the absence of a comprehensive review of the full transcript of these hearing days) it would be inappropriate for us to give any significant weight to the hand written information provided by Mr Cole. Furthermore, we would be very cautious in any case to potentially make findings that the length of time taken by either advocate to run their case or cross examine witnesses was so unreasonable as to justify a costs order under this sub-clause (e).

(f) The failure of a party to give adequate information or supply supporting material when permitted or required to do so

Comment: See our comments in relation to sub-section (d) above.

(g) an excessively low value stated by the objector under section 24(2) or an excessively high value contended by the valuation authority, valuer or valuer-general (as the case requires)

Comment: At pages 19 and 20 of our primary orders, we summarised the case put forward by the Applicant. The Applicant's valuer was Mr Rann. Near the top of page 20 of our Reasons, we recorded that Mr Rann's two-title valuation of the subject land as at 1 January 2006 was $1,138,200.00. At paragraph 74 further below we confirmed that assuming three titles were involved, Mr Rann's revised valuation was $1,338,365.00. As mentioned, our overall finding in our primary orders was(assuming three titles) to affirm the Council valuation as at 1 January 2006 of $1.93 million. Applying the three title approach, the practical result is that this $1.93 million figure was almost $600,000 higher than Mr Rann's applicable valuation. We consider that this discrepancy of almost $600,000 is a strong factor in favour of Council's costs claim.

In summary, we accept it is fair and reasonable in all the circumstances to make some form of costs order in favour of Council, having regard to the various factors set out above.

What is the appropriate quantum of costs to be paid by Mr Cole?

As identified above, Council's total costs claim is $31,000.00, if one adds together the three components which we have explained above.
Bearing in mind that the awarding of costs is ultimately a discretionary power of the Tribunal, and taking into account all of the circumstances of the case (notably the relevant facts pursuant to Sections 26(2)(a), (b) and (c)), our conclusion is that the appropriate quantum of costs to be paid by Mr Cole in all the circumstances is $25,000.00.
We note that this $25,000.00 award constitutes roughly half of the real costs which Council has advised it incurred in dealing with this proceeding.
See our orders above, which set out the final position.

Cole v Mornington Peninsula SC (Land Valuation) [2010] VCAT 1266 (4 August 2010)

Cole v Mornington Peninsula SC

At a glance

Court

Decision date

Source

Judgment (29 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (1)

Cole v Mornington Peninsula SC (Land Valuation) [2010] VCAT 1266 (4 August 2010)