The Applicant seeks compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of its interest in land in 37 Bligh Street Sydney by Sydney Metro the Respondent. This Class 3 proceeding was commenced on 10 March 2023.
On 19 July 2023 the Applicant filed and served two notices to produce on Sydney Metro the Respondent seeking a number of categories of documents.
On 2 August 2023 the Respondent filed a notice of motion seeking to set aside both notices to produce. The Applicant opposed the notice of motion. The notice of motion was to be heard on 19 March 2024. The parties agreed on revised terms of the notices to produce making it unnecessary to hear and determine the notice of motion. By consent, the Court made orders varying the terms of the notices to produce and other consequential orders.
The parties are in dispute about the appropriate costs order in relation to the Respondent's notice of motion. The Respondent submits that the Court should order that each party is to pay its own costs of the motion. The Applicant submits that the appropriate costs order for the motion is costs in the cause.
The parties agree that a compromise was reached in the relation to the notices to produce the subject of the notice of motion and the Court does not need to further consider the events after the notice of motion was filed. As the argument developed in the course of the hearing, the focus of the Respondent's position was the negotiations between the parties' solicitors as reflected in correspondence before the notices to produce were filed in court by the Applicant following which the Respondent then filed its notice of motion as follows.
The circumstances leading to the filing of the notice of motion included:
1. Initial draft notice to produce sent to the Respondent on 16 June 2023 by the Applicant.
2. In a letter dated 30 June 2023 from Ashurst to Speed and Stracey, the Respondent objected to the draft notice to produce on a number of bases including lacking legitimate forensic purpose, oppression, uncertainty and prematurity. The Respondent agreed to voluntarily produce a limited number of documents.
3. A letter dated 4 July 2023 from Speed and Stracey to Ashurst:
1. Disagreed with the matters raised by Ashurst asserting that the documents sought did serve a legitimate forensic purpose inter alia;
2. Noted that Speed and Stracey was willing to discuss how categories might be reduced; and
3. Pressed for the production of all documents by 7 July 2023 (then in three days' time and after the notices to produce had been with the Respondent for three weeks) and rejected the limited offer for voluntary production.
1. A letter dated 7 July 2023 from Ashurst to Speed and Stracey stated the Respondent intended to file a notice of motion to have the notices to produce set aside if pressed in the current form.
2. On 10 July 2023 the Respondent voluntarily produced about 289 documents which production by the Respondent was said to substantially address paragraphs 3, 4, 5, 12, 13 and 14 of the notices to produce.
3. A letter from Speed and Stracey to Ashurst dated 19 July 2023 stated that the Applicant was not satisfied with the documents produced by the Respondent, continued to press for the production of each of the remaining categories of documents (1-15) referred to in the notices to produce and noted that paragraph 12 could be limited and paragraphs 8 and 9 would not be further pressed if an admission was provided by the Respondent. Notices to produce filed in the Court the same day were attached to the letter.
4. The Respondent's notice of motion to set aside the notices to produce was filed on 2 August 2023.
5. A s 34 conference was held on 8 August 2023.
[3]
Submissions
The Applicant submits that in circumstances where the Applicant acted reasonably in issuing the notices to produce (and there is no evidence or submission to the contrary) before the Court, it is not appropriate to depart from the presumptive position in a Class 3 compensation claim or to require the Applicant to be responsible for its own costs of the notice of motion. In the circumstances, there is no reason to depart from the usual costs rule in Class 3 proceedings identified in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon) and Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248 (Croghan). The Applicant bears the onus of establishing legitimate forensic purpose and no criticism of the drafting of the notices to produce has been made in argument before the Court. The onus for establishing oppression lies with the Respondent.
An applicant in compulsory acquisition proceedings should be able to avail themselves of court processes such as issuing notices to produce without running the risk of cost penalties including having to pay their own costs of utilising such processes.
The Applicant did not act too hastily in filing the notices to produce in the Court on 19 July 2023 following the correspondence between the parties' solicitors. It was seeking documents to assist in the s 34 conference set down for 8 August 2023. For that reason it split the request for documents into two notices to produce one returnable on 1 August 2023 and the other on 22 August 2023. The continuing dispute about the scope of the notices to produce continued after the filling of the Respondent's notice of motion through the respective parties' affidavits, resulting ultimately in a compromise agreement. This process did not cause unnecessary expense or delay.
The Respondent submits that as the usual position is that the acquiring authority (the Respondent) will be ordered to pay the costs of the dispossessed landowner (the Applicant) the Respondent will likely be required to pay the Applicant's costs of the notice of motion if the order that costs are in the cause is made. Applying Dillon at [70] (Basten JA with Macfarlan JA and Handley AJA agreeing), the Applicant has conducted the proceeding in a manner that has given rise to unnecessary delay and expense by serving a draft notice to produce in June 2023 which failed to demonstrate legitimate forensic purpose, was oppressive, unclear and premature. The parties embarked on negotiation as can be seen in the solicitors' correspondence whereby the Respondent provided some 289 documents to the Applicant. Instead of filing the notices to produce in court on 19 July 2023 the Applicant should have continued negotiating as that action required the Respondent to file its notice of motion seeking to set aside the notices to produce in order to achieve an appropriate outcome and the Respondent incurred unnecessary costs in doing so. In these circumstances the appropriate order is that each party pay its own costs.
[4]
Costs principles
The general rule that costs follow the event under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) does not apply in these Class 3 proceedings, Sch 1 to the UCPR. The presumption that the Court is not to make an order for the payment of costs in r 3.7 of the Land and Environment Court Rules 2007 (NSW) (LEC Rules) also does not apply to these Class 3 proceedings, LEC Rules, r 3.7(1)(c).
The accepted position in respect of Class 3 compensation claims was identified by Basten JA in Dillon at [70]-[71]. His Honour said:
[70] …a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense.
[71] That approach is also consistent with the absence of any general presumption the costs should follow the event: the owner who is being compulsory dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered.
Meagher JA with McCallum JA and Simpson AJA agreeing expressed a similar conclusion in Croghan at [15] citing Wells J in Minister for Environment v Florence (1979) 21 SASR 108 at 134:
Upon a claim for compensation for land compulsory acquired, it is not, generally speaking, appropriate to speak of one party has having won; compensation is awarded to one who has already been given, by statute, the right to receive it. It is therefore as just to say of the latter sort of case that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due, as it is to say of the former sort of case that prima facie costs follow the event in favour of the party who has won.
Dillon at [70]-[71] and Croghan at [15]-[18] considered costs at the conclusion of compulsory acquisition proceedings.
Cases on costs disputes in relation to interlocutory aspects of compulsory acquisition cases are few. In Dibb v Transport for NSW (No 2) [2024] NSWLEC 11 I had to consider, for the first time so far as I am aware, if costs of a respondent acquiring authority in having to respond to the very late amendment of pleadings by an applicant ultimately not pressed should be ordered to be paid by the applicant to the acquiring authority. I held that costs should not follow the event, that the principles in Dillon ought apply and that in the circumstances a costs order was warranted because of the applicant's behaviour. Similar principles apply here.
In relation to the Applicant's submission that it should be able to avail itself of court processes without risk of a cost penalty (meaning that the accepted approach to costs in Class 3 cases is not taken), I observe that the Applicant was able to avail itself of the notice to produce mechanism provided by the court rules. If it had done so with notices to produce that were not disputed by the recipient or were able to be successfully compromised without a notice of motion to dismiss being filed no issue of whether costs have been unnecessarily incurred would arise.
Consideration in this matter arises from the correspondence leading up to 19 July 2023 when the notices to produce were filed in the Court. The Respondent had advised the Applicant of major difficulties with meeting the draft notices to produce as initially drafted on four bases (lack of forensic purpose, oppression, uncertainty and prematurity) in a letter dated 30 June 2023. The further correspondence thereafter leading up to the filing of the notices on 19 July 2023 identifies ongoing negotiation (including the production of some documents voluntarily) which demonstrates that the negotiation was essentially incomplete as at 19 July 2023.
The issue has crystalised in these particular circumstances as, in light of the correspondence between the parties identified above in [6], did the filing of the Applicant's notices to produce in court on 19 July 2023 which led inevitably to the Respondent's notice of motion seeking to set these aside filed on 2 August 2023 occasion unnecessary delay or expense to the Respondent?
The parties did not refer the Court in detail to the notices to produce (absolutely no criticism is intended by this observation) and I am not able, nor should I in the circumstance where the parties otherwise resolved the substantive issues between them, resolve whether the notices to produce lacked legitimate forensic purpose, were too wide and uncertain and therefore oppressive. No such consideration therefore informs my consideration of the parties' interactions.
Weighing up the circumstances which includes the Applicant's desire to have documents available to it for the s 34 conference, the course of the negotiation disclosed in the solicitors' correspondence which was inevitably going to have to continue whether without any notice of motion being filed by the Respondent or within the context of the notice of motion, I do not consider the Respondent has demonstrated that unnecessary delay or expense was occasioned in these particular circumstances. I would therefore make the order that costs be costs in the cause in relation to the Respondent's notice of motion.
[5]
ORDER
The Court orders:
1. In relation to the Respondent's notice of motion dated 2 August 2023 costs are in the cause.
[6]
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Decision last updated: 10 May 2024
[7]
Upon a claim for compensation for land compulsory acquired, it is not, generally speaking, appropriate to speak of one party has having won; compensation is awarded to one who has already been given, by statute, the right to receive it. It is therefore as just to say of the latter sort of case that the claimant ought, in the absence of special circumstances, to receive his reasonable costs of obtaining the compensation that is, ex hypothesi, his due, as it is to say of the former sort of case that prima facie costs follow the event in favour of the party who has won.
[8]
Dillon at [70]-[71] and Croghan at [15]-[18] considered costs at the conclusion of compulsory acquisition proceedings.
Cases on costs disputes in relation to interlocutory aspects of compulsory acquisition cases are few. In Dibb v Transport for NSW (No 2)[2024] NSWLEC 11 I had to consider, for the first time so far as I am aware, if costs of a respondent acquiring authority in having to respond to the very late amendment of pleadings by an applicant ultimately not pressed should be ordered to be paid by the applicant to the acquiring authority. I held that costs should not follow the event, that the principles in Dillon ought apply and that in the circumstances a costs order was warranted because of the applicant's behaviour. Similar principles apply here.
In relation to the Applicant's submission that it should be able to avail itself of court processes without risk of a cost penalty (meaning that the accepted approach to costs in Class 3 cases is not taken), I observe that the Applicant was able to avail itself of the notice to produce mechanism provided by the court rules. If it had done so with notices to produce that were not disputed by the recipient or were able to be successfully compromised without a notice of motion to dismiss being filed no issue of whether costs have been unnecessarily incurred would arise.
Consideration in this matter arises from the correspondence leading up to 19 July 2023 when the notices to produce were filed in the Court. The Respondent had advised the Applicant of major difficulties with meeting the draft notices to produce as initially drafted on four bases (lack of forensic purpose, oppression, uncertainty and prematurity) in a letter dated 30 June 2023. The further correspondence thereafter leading up to the filing of the notices on 19 July 2023 identifies ongoing negotiation (including the production of some documents voluntarily) which demonstrates that the negotiation was essentially incomplete as at 19 July 2023.
The issue has crystalised in these particular circumstances as, in light of the correspondence between the parties identified above in [6], did the filing of the Applicant's notices to produce in court on 19 July 2023 which led inevitably to the Respondent's notice of motion seeking to set these aside filed on 2 August 2023 occasion unnecessary delay or expense to the Respondent?
The parties did not refer the Court in detail to the notices to produce (absolutely no criticism is intended by this observation) and I am not able, nor should I in the circumstance where the parties otherwise resolved the substantive issues between them, resolve whether the notices to produce lacked legitimate forensic purpose, were too wide and uncertain and therefore oppressive. No such consideration therefore informs my consideration of the parties' interactions.
Weighing up the circumstances which includes the Applicant's desire to have documents available to it for the s 34 conference, the course of the negotiation disclosed in the solicitors' correspondence which was inevitably going to have to continue whether without any notice of motion being filed by the Respondent or within the context of the notice of motion, I do not consider the Respondent has demonstrated that unnecessary delay or expense was occasioned in these particular circumstances. I would therefore make the order that costs be costs in the cause in relation to the Respondent's notice of motion.
[9]
(1) In relation to the Respondent's notice of motion dated 2 August 2023 costs are in the cause.