Victorian Civil and Administrative Tribunal|2003-07-24|Before: Mr P

Delacom Pty Ltd v Greater Geelong City Council [2003] VCAT 1485 (24 July 2003)

Land Valuation List - referral of objection to valuation of land for municipal rating purposes - valuation issues resolved by parties - applications for costs - consideration of conduct of parties before and during proceeding on question of costs - section 25 Valuation of Land Act 1960

The Joined Party pay the Applicant's and the Respondent's costs of the proceeding, including all reserved costs, in accordance with Scale D of the Rules of the County Court to be assessed by the Principal Registrar in default of agreement.

Applicant: Mr C Wren of Counsel, instructed by Tolhurst Druce & Emmerson, Solicitors

Respondent: Mr P Connor of Counsel, instructed by Victorian Government Solicitor

Joined Party: Mr W Nelson, Solicitor, Harwood Andrews, Solicitors

1. The following orders were made by the Tribunal in this proceeding on 18 June 2003 -

"1. By consent, the following valuations shall be applicable to the subject land as at 1 January 2000 -

2. This proceeding was initiated by Delacom Pty Ltd (the Applicant) requiring the Greater Geelong City Council (the Joined Party), to refer to the Tribunal under section 22 of the Valuation of Land Act 1960 (the VL Act) a decision made by the valuer-general, as referred to in section 3 of the VL Act (the Respondent).

3. The background to the Respondent's decision may briefly be summarised as follows. The Applicant, by Objection Notice dated 10 October 2001, objected to the assessment of the capital improved value (CIV), site value (SV) and net annual value (NAV) of 325 Old Boundary Road, Anakie (the subject land). The objection was further to valuations as notified to the Applicant in a Valuation and Rate Notice issued 30 August 2001 by the Joined Party, with the prescribed date of valuation being 1 January 2000. The valuer for the Joined Party, having considered the objection, by "Recommendation Notice To Valuer-General" dated 24 January 2002 set out the original valuation details, namely CIV $1,840,000, SV $1,100,000 and NAV $184,000, and recommended the following adjusted valuation details to the Respondent, namely CIV $1,840,000, SV $350,000 and NAV $184,000. The reason stated in the recommendation notice was "Adjustment to site value to allow for no site improvements". By "Disallowance Notice By Valuer-General" dated 29 April 2002, the Respondent disallowed the recommended adjustment, stating that the Respondent was "of the opinion that the recommended adjustment would substantially affect the general uniformity of the valuation or its general trueness and correctness". The ground for disallowance was stated to be "Basis for valuation reduction unsound".

4. Ultimately, the parties resolved the valuation issues in the proceeding as detailed in Order 1 of the orders of 18 June 2003. The question of costs was not resolved between the parties. That matter was the subject of submissions on 18 June 2003 and is the subject of the order made this day and these reasons.

5. At the outset of the hearing Mr Wren of Counsel who appeared for the Applicant, informed us that the Applicant sought an order for its costs. Mr Connor of Counsel, who appeared for the Respondent, stated that the Respondent sought an order for his costs. Mr Nelson, solicitor, who appeared for the Joined Party, stated that the Joined Party was prepared to bear its own costs, and submitted that in the circumstances each party should bear their own costs.

6. Mr Wren submitted that the relevant provision in relation to costs was section 25 of the VL Act, and that the Applicant was, in the words of paragraph (a) of sub-section (2), a "party in whose favour the proceedings are determined". He based this submission on the fact that by the consent order made on 18 June 2003 the CIV had been reduced by $840,000 and the SV by $600,000.

7. Mr Wren referred us to Esso Exploration & Production Australia Inc and Another v President Councillors and Ratepayers of The Shire Of Morwell [1986] VicRp 29; [1986] VR 289. That decision in part concerned the court's discretion as to costs under the then section 43 of the VL Act. That section, and the present section 25 of the VL Act, in part provide a discretion to award costs "to the party in whose favour" the proceeding is determined.

8. Mr Wren adopted the reasoning behind the Full Court decision. The following is taken from the Judgment of Kaye and O'Bryan JJ at page 300 - 301 -

"In Commissioner of Valuation v. Jamaica Gypsum Ltd. (1971) 14 R. R. C. 4 (Rydges Rating Cases), the Privy Council was concerned with a statutory provision allowing a Board, upon a valuation appeal, to review the valuation and to make such order as it deemed fit with respect to costs. In the course of his speech Lord Wilberforce, (at p. 11), said: "In principle their Lordships consider that a person who successfully secures a reduction in the valuation, unless this is of a minimal amount, should be entitled to his costs, and that, unless by doing so he has added to the length or expense of the proceedings, the fact that he has supported a figure which turns out to be less than that finally accepted should not be to his detriment. It is a matter of experience that there are not many cases where a valuation body, after the full enquiry which it is duty bound to make, accepts a figure which is necessarily put forward before all the relevant factors have been ascertained and weighed: to confine the right to recover full costs to such cases would bear hardly on individuals."

The principle as to costs described by his Lordship applies to an appeal under s. 43 of the Land Valuation Act, save that the Court's discretion thereunder may be exercised only for the benefit of the party in whose favour the valuation is made; and whether it awards that party full or only a portion of those costs is within its discretion."

9. Mr Wren submitted that the objection that had initiated this proceeding was to the CIV, SV and NAV on the ground that the valuations were too high. He contended that based upon the agreement reached, the Applicant had obtained a substantial reduction and was entitled to its costs. He further submitted that those costs ought be ordered against both the Respondent and the Joined Party jointly and severally. He contended that, having regard to the quantum, the costs should be allowed on the Supreme Court scale to be taxed in default of agreement.

10. Mr Connor submitted that the Respondent was a party in whose favour the proceedings had been determined for the purposes of section 25(2) of the VL Act.

11. Mr Connor referred to section 21(3) of the VL Act. In this context he observed that the valuer for the Joined Party had considered that an adjustment was justified and had made a recommendation under section 21(3)(b)(i) of the VL Act. The original valuation had provided for CIV $1,840,000, SV $1,100,000 and NAV $184,000. The recommended adjustment reduced the SV to $350,000.

12. Mr Connor submitted that the Respondent had very limited powers in relation to these matters, such powers being confined by section 21(4) of the VL Act. Section 21(4) is in the following terms -

"The valuer-general, after consultation if practical with the valuer, must determine the objection as follows -

(a) the valuer-general may disallow the recommended adjustment in whole or part if in his or her opinion the general uniformity of the valuation or the general trueness and correctness of the valuation will be substantially affected by the adjustment; or

(b) in any other case, the valuer-general must confirm the recommended adjustment."

13. Mr Connor submitted that in accordance with the above-quoted provision there had been consultation by the Respondent with the Joined Party's valuer. He referred specifically to a memorandum dated 19 March 2002 from the Joined Party's valuer to Mr T Maguire of the Respondent's office. He also referred to a letter dated 18 October 2001 from C J Ham & Murray Pty Ltd to the Joined Party's valuer, and to a memorandum dated 1 February 2002 from the valuer to an officer of the Joined Party, copied to Mr McGuire. He stated that a section of the last mentioned memorandum had "caused some alarm to the valuer-general". The following passage is taken from the memorandum -

"For your records we have attached 2 submissions received from Robin Hocking acting on behalf of the owner. You will note from the submission that Robin Hocking's submission suggest a value of $415,000 for the site and after negotiation $1 million for the CIV. Further discussions with Robin Hocking we were able to negotiate figures which were both considered within a fair value range CIV would remain at $1.8million and we adjusted the SV to $300,000 in an effort to settle this matter reducing the possibility of a lengthy appeal hearing in regard to the valuation of the Quarry".

14. In this context Mr Connor referred to a letter dated 30 November 2001 from C J Ham & Murray Pty Ltd to the Joined Party's valuer which suggests a SV of $415,000 for the subject land.

15. Mr Connor submitted, in effect, that to preserve its rate income from the subject land, the Joined Party suggested to the Applicant that the SV be assessed at $350,000 notwithstanding the Applicant's valuer valuing the SV at $415,000.00, with the CIV being maintained at $1,800,000. The CIV was the valuation upon which the Joined Party assessed its rates.

16. Mr Connor referred to the following passage in the memorandum dated 19 March 2002 from the Joined Party's valuer to the Respondent's office, stating that the following paragraph, being paragraph 4 of the memorandum, was "of great concern" in this case -

"As discussed earlier our primary concern in the valuation is the capital improved value as this is Councils rating base. Delacom's original advice indicated that the CIV was approximately $600,000 and then was amended to $1 million. Site value has been assessed at $415,000. Mr Hocking who has prepared this advice is a creditable valuer with expertise well recognised in value of extractive industry properties."

17. Mr Connor contended that the Respondent was faced with the Joined Party's valuer very frankly saying that they did not agree with the site value they were recommending, and the recommended adjustment being put was part of an arrangement to preserve the Joined Party's rating base, and that the recommended figure of $350,000 did not represent the SV of the subject land. Faced with the clear purpose and objective of the recommended adjustment, and the sheer gulf between $1,840,000 CIV and $350,000 SV, Mr Connor contended that in all the circumstances it was entirely appropriate and proper for the Respondent to take the only action available to him under the confined powers of section 21(4) of the VL Act and disallow the recommended adjustment. He submitted that the recommended adjustment to the site value was a figure for which the ratepayer had not contended.

18. He further submitted that, in circumstances where the disallowance had effectively been upheld by the consent of the parties, the consent order being to a site value in excess of $350,000, the Respondent had been successful as a party. He contended that it was entirely appropriate for a disallowance of this kind to be made in circumstance where "a deal has been done" between the Joined Party and the ratepayer which disregarded the valuation advice provided to both those parties.

19. Mr Connor stated that the Respondent sought an order for costs in the same form as that sought by the Applicant. Such order to be against both the Applicant and the Joined Party on Supreme Court scale to be taxed in default of agreement.

20. Mr Nelson submitted that the Tribunal was not in a position to determine what the true position was in relation to the different values of the subject land. He submitted that the Joined Party did not resile from the position that it had at all stages endeavoured to reach a compromise in relation to the dispute on value. He referred to the various valuations, including the recent valuation evidence filed by the Respondent which assessed the CIV at $1,600,000. Mr Nelson submitted that the parties had taken a commonsense view of the matter and reached a compromise.

21. Mr Nelson further submitted that the Tribunal was now unable to determine what the valuation principles were that applied to the figures now accepted by all the parties. Specifically, the Tribunal had not determined the validity of the valuation approaches that were contained in the valuations, or the validity of the approach indicated by the Joined Party's valuer in his communication with the parties. He submitted that in the resolution of the Tribunal proceeding the 3 parties had accepted a compromise based on the same sort of "horse trading" that the Joined Party's valuer was condemned for by the Respondent in 2001.

22. Mr Nelson contended that the Tribunal, applying the principles that govern its power to order costs, should conclude in the exercise of its discretion that each party should bear its own costs. If a costs order was to be made, the proceeding did not justify costs on the Supreme Court scale. A middle range County Court scale would be more appropriate. The issue had not been argued or determined, with everything that had been done being in the nature of preliminary matters.

23. It is clear, in our view, from the terms of clause 99 of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act), that the costs provision in the VCAT Act, namely section 109, does not apply to a proceeding under the VL Act, and that section 25(2) of the VL Act applies in this proceeding.

24. Both Mr Wren and Mr Connor submitted that, as a consequence of the Orders of 18 June 2003, their clients were in the context of section 25(2) of the VL Act, parties in whose favour the proceedings were determined.

25. We are satisfied that this proceeding is one in which the Applicant and the Respondent may properly be described for the purposes of section 25(2) of the VL Act as being parties "in whose favour the proceedings are determined". The fact that the decision of the Tribunal was an order by consent is not in our view determinative. Insofar as the Applicant is concerned, it has benefited from a reduction in the CIV of $840,000, in the SV of $600,000 and the NAV of $134,000. Insofar as the Respondent is concerned the decision to disallow the recommended adjustment of the SV from $1,100,000 to $350,000.00 has been affirmed to the extent that the amount ordered by consent on 18 June 2003 was $500,000.

26. In Buller Ski Lifts Limited & Anor v Commissioner of State Revenue [2002] VCAT 259 (31 January 2002), the Tribunal made some observations about proceedings in which the Tribunal was required to determine a costs application in circumstances where it had not conducted a hearing in relation to the valuation issues in the proceeding. As in this proceeding, in that case the matter had settled, with the Tribunal making orders by consent giving effect to the settlement. The Tribunal expressed the view in that matter that such an outcome introduced additional difficulties for the Tribunal when considering an application for costs. The following passages are taken from the decision in Buller Ski Lifts -

"59. The additional difficulties arise because the Tribunal has not had the opportunity to hear all the evidence and make its own determination on the matters in dispute. We were referred to the decision in Buller Ski Lifts Ltd v Commissioner of State Revenue (Supreme Court of Victoria, unreported, Habersberger J, 30 August 2001, No. 6486 of 2000), a proceeding wherein the plaintiff had sought an order in the nature of mandamus against the Commissioner in relation to certain of the matters the subject of these proceedings before the Tribunal. We find the following paragraph from the judgment of Habersberger J concerning the question of costs in circumstances where there has been no hearing on the merits to be of assistance -

"4. Both parties agreed that in relation to a proceeding which has not received a hearing on the merits, the normal rule is that stated by McHugh, J. in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia: Ex parte Lai Qin (1997)186 C L R 622 at 624 -

"In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.... If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.""

27. As did the Tribunal in Buller Ski Lifts, we find the above quoted paragraph from the judgment of Habersberger J concerning the question of costs in circumstances where there has been no hearing on the merits to be of assistance. In our view in considering the question of costs in this proceeding we are entitled to have regard to the conduct of the parties both before and during the proceeding.

28. In considering the conduct of the Applicant, we accept the submission of Mr Wren that the Applicant has obtained a substantial reduction in the values assessed for the subject land. Faced with the disallowance of the Respondent, in our view, there can be no complaint about the action taken by the Applicant requiring the Joined Party to refer the matter to the Tribunal.

29. Whilst we have, of course, given consideration to the submissions of Mr Nelson we find that the conduct of the Joined Party before this proceeding commenced was not reasonable. Further to the submissions of Mr Connor, in our view, it was clearly open for the Respondent to conclude from the correspondence from the Joined Party's valuer that the valuer did not agree with the SV he was recommending.

30. Having regard to the information given to the Respondent by the Joined Party's valuer concerning the reduction in the site value, and also to the fact that the recommended figure as to the site value was a figure below that contended for by the Applicant's valuer, we find that the determination of the Respondent to wholly disallow the recommended adjustment was reasonable. It is apparent from the documentation to which we have referred that the Respondent consulted with the Joined Party's valuer before determining the objection. In our view the circumstances of the matter clearly warranted the Respondent's conclusion that the basis for the valuation reduction was unsound.

31. In the context of the question of costs, we have found the material available to us does not permit any useful conclusions to be made as to the reasonableness or otherwise of the actions of the parties during this proceeding.

32. We do not accept Mr Nelson's submission that the parties should each bear their own costs. In our view this proceeding was appropriately initiated by the Applicant further to the Respondent properly disallowing the Joined Party's valuer's recommended adjustment on the ground that it was unsound. Having regard to the submissions and material before us, together with our analysis of the conduct of the parties, we have concluded that there ought be an order that the Joined Party pay the Applicant's and the Respondent's costs of the proceeding.

33. We do not accept the submissions of Mr Wren and Mr Connor that such costs should be on the Supreme Court scale. In all the circumstances we consider the appropriate scale to be applied in this matter is Scale D of the County Court scale.

34. Accordingly, our order will be that the Joined Party pay the Applicant's and the Respondent's costs of the proceeding, including all reserved costs, in accordance with Scale D of the Rules of the County Court to be assessed by the Principal Registrar in default of agreement.

Civil and Administrative Tribunal Act 1998

Delacom Pty Ltd v Greater Geelong City Council [2003] VCAT 1485

At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)

Delacom Pty Ltd v Greater Geelong City Council [2003] VCAT 1485 (24 July 2003)

Parties

Legislation Cited (2)