Dibb v Transport for NSW

Issue: Whether Respondent's costs of Applicants' Amendment Motion should be paid?

Applicants acted unreasonably

1. Ms Appleby deposed the late filing and subsequent abandonment of the Amendment Motion caused real prejudice to the Respondent, as inter alia: 1. The Amendment Motion was served at 3:44pm on the last working day before the hearing, Friday 26 May 2023, and required the Respondent's team to divert its resources away from general hearing preparation to focus on the claim as amended; 2. The late filing of the Amendment Motion required the Respondent to undertake urgent research to understand the basis for the Applicants' amended claim which significantly increased their claim for market value compensation from approximately $4.5 million to an upper limit of $10.4 million or $4.7 million in the alternative; 3. The Respondent was required to urgently consider whether notices to produce, subpoenas or further evidence would be required in order to respond to the Applicants' claim as amended; and 4. The Respondent was required to prepare the Vacation Motion and supporting affidavit seeking to vacate the hearing dates and leave to file an Amended Points of Defence, assuming that leave was granted to the Amendment Motion that was subsequently abandoned.

Quantum of costs

1. Ms Appleby stated that the total costs incurred by the Respondent in respect of the Applicants' Motion is $16,451.70 excluding GST. She provided the following tables generally setting out the costs: Table 1 - Legal Fees Date Fee earner Summary of work performed Collated units Amount 26 May 2023 Georgia Appleby Considering Notice of Motion, drafting reply to schedule of losses, attendance at meetings with TfNSW and Counsel regarding same 1.5 $648 26 May 2023 Patrick Ibbotson Considering Notice of Motion, attendance at meetings with TfNSW and Counsel regarding same 1.5 $756 27 May 2023 Georgia Appleby Drafting Amended Points of Defence and Notice of Motion and affidavit in support 2.6 $1,123.20 28 May 2023 Georgia Appleby Further drafting of the Notice of Motion, Amended Points of Defence, and Affidavit in support 1.2 $518.40 28 May 2023 Patrick Ibbotson Considering next steps regarding vacation of hearing due to Amended Points of Claim, and correspondence with client and Counsel regarding same 3.2 $1,612.80 29 May 2023 Patrick Ibbotson Finalising Notice of Motion and Amended Points of Defence, including meetings with client regarding same 0.5 $252 29 May 2023 Georgia Appleby Half day attendance at Court for hearing of the Applicants' Notice of Motion 3.0 $1 ,296 29 May 2023 Clara Fernandez Half day attendance at Court for hearing of the Applicants' Notice of Motion 3.0 $855 TOTAL $7,061.40

Table 2 - Counsel disbursements Date Fee earner Summary of work performed Collated units Amount 27 May 2023 Harrison Grace Considering Notice of Motion and relevant case law Just under half day $1,103.90 28 May 2023 Harrison Grace Considering Notice of Motion and relevant case law Just under half day $1 ,103.90 28 May 2023 Janet McKelvey Considering Notice of Motion and relevant case law and preparation for hearing of Motion Full day $4,000 29 May 2023 Harrison Grace Half day attendance at Court for hearing of the Applicants' Notice of Motion Half day $1,182.50 29 May 2023 Janet McKelvey Half day attendance at Court for hearing of the Applicants' Notice of Motion Half day $2,000 TOTAL $9,390.30

1. Ms Appleby noted in calculating this figure, she applied an apportionment to account for: 1. One day preparation for Ms McKelvey of counsel on 28 May 2023, noting that other time incurred by her over that weekend may have been attributable to general hearing preparation; and 2. Half day attendance at court for the hearing of the Amendment Motion, although the submissions began at the commencement of the hearing (at 10:00am) and proceeded until sometime after the luncheon adjournment.

Indemnity costs

1. Ms Appleby set out communications between the parties from 31 October 2023 to 16 November 2023 seeking to negotiate costs for the Amendment Motion prior to the Respondent's filing of the Costs Motion. She deposed the following offers of compromise were made: 1. On 2 November 2023 in an email to the Applicants' solicitor the Respondent's solicitor stated it would accept $13,600 plus GST in satisfaction of the Respondent's costs for the Amendment Motion (Respondent's first offer). The offer was open for a 10 day period from the date of the email. The email advised that the Respondent would seek indemnity costs if it was required to put on an application for the costs of the Amendment Motion (Appleby Affidavit, tab 11). 2. On 15 November 2023 the Applicants' solicitor sent an email to the Respondent's solicitor in which the Applicants offered $5,500 inclusive of GST (Applicants' offer) (Appleby Affidavit, tab 22). 3. At 9:55am on 16 November 2023 the Respondent sent an email to the Applicants' solicitor offering to accept $9,500 plus GST (Respondent's second offer). The offer was open until midday the same day. It was rejected by the Applicants at 11:55am on 16 November 2023 (Appleby Affidavit, tab 26).

Costs should follow the event for interlocutory matters in compulsory acquisition proceedings

1. Compulsory acquisition cases are not considered to be 'ordinary' litigation: Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248 (Croghan) at [19]. The Respondent submitted that the authorities that govern the overall costs outcome of these kinds of proceedings (which establish a presumption that costs do not follow the event) do not apply generally to interlocutory steps. The Respondent is not aware of any authority to say that the presumption is to be so applied. Costs ought to follow the event in respect of the Amendment Motion.

Applicants acted unreasonably

1. Alternatively, if the Court considers that the presumption in Class 3 compulsory acquisition proceedings that costs do not follow the event also applies to interlocutory matters, the Respondent submitted that the Applicants behaved unreasonably in seeking to rely on the Drivas Paragraphs and, on that basis, costs should follow the event. The Applicants lost the argument to include the Drivas Paragraphs by capitulating and withdrawing their application to rely on them. They did so only in circumstances when it had become clear that there would be a consequence for them that they did not want, being the vacation of the hearing.
2. Costs ought to be awarded to the Respondent in respect of the Amendment Motion for two substantive reasons: 1. there were costs associated with diversion of resources during hearing preparation given the lateness of the filing of the Amendment Motion; and 2. the Respondent had to prepare and file the Vacation Motion in response.
3. The Respondent did not have any notice until 3:44pm the afternoon before the hearing was to commence (excluding the weekend) regarding the proposed change to the Applicants' case in reliance on Drivas. This required urgent research to be undertaken (including the close reading of the lengthy decision of Drivas) and to consider the strategic consequences of the proposed change including whether subpoenas and notices to produce would be required or whether further expert evidence would be needed.
4. When it had been concluded that the Respondent would be severely prejudiced if the Drivas Paragraphs were permitted, the Vacation Motion (and accompanying affidavit) was then prepared and filed. The supporting affidavit to the Vacation Motion makes plain that the inclusion of the Drivas Paragraphs would require: 1. additional expert evidence to be prepared so as to assess the likelihood of a development consent being granted for subdivision at an earlier point in time than had been otherwise considered in the evidence; and 2. the issuing of notices to produce and subpoenas.
5. The hearing of the motions on 29 May 2023 then used half of the first day of the hearing. The Court accepted the Respondent's submissions that it ought to have the opportunity to put on additional expert evidence and that it could not be done in the time allocated for the hearing. It being evident that the Court would vacate the hearing if the Drivas Paragraphs were pressed, the application to rely on those paragraphs was withdrawn.
6. It would be unfair to the Respondent to have to bear its own costs of the Amendment Motion or the Vacation Motion in these circumstances. Further, when the consequences of the Drivas Paragraphs would so obviously prejudice the Respondent, it was unreasonable of the Applicants to raise the point so late in the proceedings. Accordingly, the general costs order in the Applicants' favour for the proceedings ought to be offset by the Respondent's costs of the Amendment Motion.

Quantum of costs

1. The Motion seeks costs in a fixed sum of $16,451.70 excluding GST. The basis of the quantum of costs claim is set out above in [12]. The costs may be summarised as essentially 1.5 days of the Respondent's two junior counsel and the costs of a senior associate and partner of the Respondent's solicitors. The costs include the preparation of the Vacation Motion which was necessitated by the Amendment Motion. These costs are a genuine estimate of the costs attributable to the Amendment Motion given that preparation for the hearing was ongoing at the same time.
2. The Court is as well placed as anyone to determine whether the quantum claimed is appropriate in the circumstances. By making a costs order in a particular amount, the parties will avoid the potential for further dispute over the quantum. If an order for costs were made in the Respondent's favour, it would be proposed that they be set off against the costs to be paid by the Respondent to the Applicant in general for the proceedings.

Respondent's submissions in reply

1. The Respondent addressed several grounds arising from the Applicants' submissions.
2. The first ground, that the Applicants were not advised that there was a risk of such a costs order, the legal advice that the Applicants received was a matter for them and does not in any way limit the ability of the Respondent to seek costs for the abandoned Amendment Motion. The asserted facts as stated would be a matter between the Applicants and their legal team.
3. The second ground, that the Amended Motion was served at 3:44pm on Friday 26 May 2023 not 6:17pm, is irrelevant. In both scenarios the Amended Motion was served late on the last working day before the hearing.
4. The third ground, that the Vacation Motion was unnecessary, the Amendment Motion was served late on the last working day before the hearing and sought a substantial amendment to the Points of Claim. The Respondent was left with no choice but to prepare to rebut the Amendment Motion and to be ready to assist the Court understand the issues that arose from the Amendment Motion.
5. The proposed amendment changed the quantum of the claim from approximately $4.5 million to $10.4 million based on new legal arguments that had not been raised in the unamended Points of Claim. In these circumstances the Respondent had no option other than to prepare its response and an application to have the hearing vacated if the Amendment Motion was successful. At best, this could have resulted in an adjournment and potential vacation of the hearing dates (an outcome that the parties sought to avoid during the morning of 29 May 2023).
6. The Applicants' submissions questioned why the Respondent would prepare Amended Points of Defence. It was necessary to do so in order to minimise the risk of the hearing being delayed and to minimise the risk to the Respondent had the Amendment Motion been successful. The Applicants' submissions misapprehended the relevant court processes. Having been served with the Amendment Motion it was the normal and proper course for the Respondent to file and serve the Vacation Motion so that the relevant applications were before the Court.
7. The fourth ground, that the work was excessive, was on the basis that the Applicants sought to characterise the Amendment Motion as merely adjusting legal arguments for which further evidence would not be required. The change to adopt the valuation methodology applied in Drivas would have meant that the evidence would need to consider: 1. the stage of development of the acquired land that would have been reached absent the public purpose; 2. the detailed design of that development; 3. the timing and likely cost of the works to realise the anticipated redevelopment; and 4. a discounted cash flow methodology or residual land value methodology.
8. Additional evidence would have been required. It was necessary for the Respondent to prepare to address and rebut the Amendment Motion including properly considering the case law (including the careful review of the lengthy decision in Drivas) and the impacts on evidence required. The amount claimed for costs is justified and properly described in the invoices provided.
9. The Respondent denies the allegations of mala fide conduct made by the Applicants.

Applicants not liable for costs

1. The Applicants submitted the Respondent inconsistently identified the time at which the Amendment Motion was served on the Respondent in the Affidavit of Ms Appleby that supported the Vacation Motion affirmed 29 May 2023 (6:17pm) and the Affidavit of Ms Appleby affirmed 16 November 2023 for the Costs Motion (3:44pm). I do not need to resolve the inconsistency as to the precise time the Amendment Motion was served on the Respondent as the service was clearly late on Friday 26 May 2023 and the inconsistency is immaterial to the arguments made.
2. The Applicants submitted the Vacation Motion was unnecessary [footnotes omitted] because: [13] Putting aside any potential end of month office gatherings that may have occurred, the Respondent's legal team would have been reasonably expected to complete last minute preparations for the commencement of the Hearing on Monday, 29 May 2023. [14] It is difficult to comprehend how the Respondent's legal team would have found the necessity to give priority to a Motion that was in breach of r 18.4 of the UCPR, plainly because it did not provide 3 working days' notice. [15] The Respondent's Vacation Motion and its accompanying Amended Points of Defence that were filed on 29/05/23 were premature, because had the Respondent believed it was caught by surprise and had insufficient time to adjust its defence, it should have reasonably expected that the Court would have allowed it with appropriate time to amend its points of defence. [16] Ms Appleby stated that she prepared the Respondent's Vacation Motion and the 1st Appleby Affidavit on 27 & 28 May 2023, and in that affidavit she deposed: "I anticipate being instructed to oppose the Applicants' Motion." [17] As the 1st Appleby Affidavit was sworn on 29 May 2023, it is open to conclude that, at the time of filing, Ms Appleby had not been instructed by the Respondent to oppose the Amendment Motion, meaning that the work Ms Appleby, Mr Ibbotson, Mr Grace, Ms McKelvey and Ms Fernandez all purported to undertake were in the absence of instructions by the Respondent. [18] Given the last-minute preparations for the Hearing, it is curious that the Respondent's legal team would prepare Amended Points of Defence as well as a Vacation Motion on behalf of the Respondent, when the Respondent had not provided instructions to do so, and particularly when there was no compulsion to do so. [19] The Amendment Motion could only be decided upon after all parties have been heard, so the Respondent's filing of the Vacation Motion was hasty because the arguments to support the Amendment Motion had not yet been heard.
3. The Applicants alleged mala fide conduct by the Respondent referring to events beyond those relevant to the two motions heard on 29 May 2023. As these events are irrelevant to my consideration of this costs application they are not referred to. The Applicants also submitted the Respondent breached the Model Litigation Policy for Civil Litigation (I infer this to be M2016-03 Model Litigant Policy for Civil Litigation (NSW Government, 29 June 2016)). I note that these submissions are irrelevant as they refer to events outside the scope of this costs application. No criticism of the Applicants is intended by these observations. I am clarifying what matters I can and cannot consider in this costs application.
4. The payment of costs cannot be imposed as a punishment. The Applicants submitted the Respondent's conduct in pursuing costs amounts to punishment.
5. The Applicants acted reasonably at all times and understood they would not incur any adverse cost orders if they did so. The Court did not find the Applicants pursued a vexatious, dishonest or grossly exaggerated claim. I note that as these submissions relate to the conduct of the substantive proceeding they are irrelevant to the limited events relevant to this costs motion.
6. The Applicants agreed to the proposal made by their senior counsel to amend their claim to rely on Drivas. The Applicants had understood that the Amended Points of Claim would be filed as a matter of right. At no time were the Applicants advised that the Amended Points of Claim would be subject to a successfully argued notice of motion. The Applicants' opening submissions included paragraphs referring to Drivas, reinforcing the Applicants' understanding that the Amended Points of Claim would be filed as a matter of right. The Applicants submitted they are risk adverse and would have taken issue about any exposure to costs had they been informed the motion had cost consequences.
7. The Applicants first learned about the Amendment Motion at the commencement of the hearing on 29 May 2023. The Applicants submitted they had no prior knowledge of the Amendment Motion, nor gave consent to its filing. Instead, this Costs Motion should be directed to the Applicants' legal team who made the decision to file the Amendment Motion. Regardless, the Applicants do not believe their legal team should be liable for the purported costs due to the conduct of the Respondent.
8. Both parties prepared and filed documents late exposing them to the Court granting extensions of time and the postponement of a hearing day. I note that as these submissions relate to the conduct of the substantive proceeding they are irrelevant to the limited events relevant to this costs motion.
9. The Applicants submitted the Respondent was not prejudiced by the Drivas Paragraphs, making extensive submissions on their interpretation of that judgment. I have not set these out as I did not resolve finally (or at all) the application of Drivas during the hearing of the Amendment Motion on 29 May 2023. I do not do so now for the purposes of this costs application mindful that a determination of costs does not require that an outstanding substantive issue be determined in order to rule on whether to make a costs order: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at 624-625 (McHugh J).
10. Compulsory acquisition cases are not ordinary litigation, as they represent a unilateral exercise of executive power against the property rights of citizens: Banno v Commonwealth (1993) 45 FCR 32 at 51. The discretion with respect to costs is a broad one that must be exercised judicially having regard to all of the relevant circumstances: Serbian Cultural Club 'St Sava' Inc & Serbian Cultural Club Limited v RTA of New South Wales (No 2) (2008) NSWLEC 78 at [16]. As a general principle, dispossessed landowners should be able to pursue their case for fair compensation without being deterred by any potential costs order so long as they act reasonably: Taylor v Port Macquarie-Hastings Council (2010) 175 LGERA 189; [2010] NSWLEC 153 at [20], citing Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2010] NSWLEC 27 at [35]. There needs to be special circumstances for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination: Minister for the Environment v Florence (1979) 21 SASR 108 at 134-135.
11. The default position with the Land and Environment Court is not to order any payment of costs against land acquisition applicants unless the Court considers it to be fair and reasonable in the circumstances. What is 'fair and reasonable' depends on the circumstances of each individual case.
12. The Applicants chose not to press the Drivas Paragraphs in the Amendment Motion with great prejudice due to the following risks: • 8 of the 10 scheduled hearing dates be vacated; • The Applicants to pay for the Respondent's cost thrown away for the vacated days; • The Applicants pay the Respondent's cost for additional evidence; • Rescheduling of the hearing would be potentially many months away; • The disclosure made by Ms McKelvey that the Drivas decision (which involved the Respondent's Metro entity) did not have final orders and that it was about to be appealed.
13. The Respondent overstated the prejudice it presumed to suffer because of the Amendment Motion and overreached in seeking a vacation of the scheduled hearing days. Paragraph 59 of the Practice Note for Class 3 Compensation Claims states: Proceedings usually will not be adjourned because of failure to comply with this practice note or directions or because of lack of preparedness for any attendance before the Court.
14. The Applicants submitted that it is extraordinary for the Respondent's legal team to purport to have incurred $18,096.87 inclusive of GST in costs for work that:

• was unnecessary;
• it has been unable to conclusively prove was undertaken;
• the Respondent had not instructed to undertake; and
• the Applicants' legal team was not advised of beforehand, in a jurisdiction that promotes the just, quick and cheap resolution of Class 3 Compensation Claims.

Quantum of costs disputed

1. The Applicants disputed the quantum of costs claimed by the Respondent as follows [footnotes omitted]: [21] A total of $6,207.80 is being claimed for 'Considering Notice of Motion and relevant case law.' Yet, at the Hearing, no case law was referred to in the Respondent's submissions on the day, other than a brief general mention of the Drivas case, which, respectfully, both Counsels for the Respondent did not appear to have sufficient knowledge about, as is explained below. [22] In answer to the Respondent's submission at [24] that the hearing of the motions took half of the first day of the Hearing, the day's transcript for the Hearing on 29 May 2023 comprised of 33,307 words. The Drivas related discussion time by Mr Hemmings was 6,920 words, which represented about 21% of that day's transcript. The word count for Ms McKelvey in this respect was 1,785 words, which was about 5.5% of the total word count. [23] The Respondent's supporting material for this Motion is silent as to whether Mr Grace and Ms McKelvey were paid the full day for attending the 29 May Hearing proper, that being for the opening submissions for both sides and for dealing with the timetable and processes for the balance of the Hearing. [24] In the 2nd Appleby Affidavit [dated 16 November 2023], it was deposed: "In my opinion, this is a reasonable apportionment which is reflective of the work performed, as I recollect it." [Note: bold is by Applicants] [25] Respectfully, there should not be a necessity to 'recollect' if accurate records were made at the time the purported work was performed. [26] In the 2nd Appleby Affidavit [dated 16 November 2023], it was deposed: "I am instructed and verily believe that the Respondent incurred costs over 3 days in considering and responding to the Applicant's motion." [27] The wording of the above statement is peculiar insofar as it implies that Ms Appleby does not have first-hand knowledge of the purported costs incurred and was directed to pursue such narrative. The above statement also breaches the hearsay rule of evidence as it does not adduce evidence of its source. [28] No tangible evidence was presented by the Respondent to show that the purported work was performed, other than what the Applicants assert was the premature preparation of a Vacation Motion and an Amended Points of Defence. [29] As stated at [31] below, the Applicants assert that this has been an exceptionally adversarial matter, hence they say it would have been reasonable and appropriate for the Respondent to have provided proof of the work that was purported to be performed beyond mere words and a 'generally' set out tabled summary breakdown. [30] Disclosure of time sheets detailing the work performed and copies of redacted output documents and notes would have been appropriate in the circumstances.
2. The Applicants submitted as the Amendment Motion was heard as part of the substantive hearing, the Respondent did not incur additional costs other than the costs for that day's hearing which it was to incur in any event.

Applicant must pay Respondent's costs

1. Costs awards are compensatory not punitive: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at 543 (per Mason CJ). The exercise of the Court's discretion in relation to costs in compulsory acquisition cases is wide given the application of s 98 of the CPA. There are no applicable court rules.

Should costs follow the event?

1. As identified in the parties' submissions the general approach to costs in substantive compulsory acquisition cases is that regardless of outcome applicants for compensation will not generally be liable for the legal costs of a respondent unless there is unreasonable behaviour on their part: see Croghan at [13]-[20]. The authorities cited by the Applicants in their submissions, as set out above in [42] are to similar effect. The Respondent submits this approach should be varied in the case of interlocutory proceedings so that the 'usual' approach, meaning a presumption of how costs should apply, should be that costs follow the event.
2. No other case has apparently had to consider this issue before. The reasons of the Court of Appeal in relation to the nature of compulsory acquisition cases in Croghan and Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 at [70]-[71] suggests the same approach is warranted in relation to interlocutory matters. A costs presumption does not apply in substantive compulsory acquisition proceedings. The same approach should also apply in relation to interlocutory proceedings in compulsory acquisition cases. This essentially means the particular circumstances of a costs claim by a respondent will need to be considered, as occurs in the next section.

Should the Respondent's costs be paid in light of the Applicants' behaviour?

1. Alternatively the Respondent submits that the Applicants' behaviour through their legal representatives in making such a late application at the end of the last working day before the substantive hearing commenced, the nature of the application requiring urgent consideration of a large and complex judgment, the reasonable preparation of the Vacation Motion and an amended defence justifies an order for costs. I agree the circumstances justify an order for costs in the Respondent's favour.
2. The scope of the Applicants' claim would have expanded markedly if the amendment sought was allowed at the outset of the first day of the substantive hearing. The Applicants' submissions fail to have sufficient regard to the extremely late service of the application to amend their claim on a substantial basis, about which there was no effective notice to the Respondent. The Respondent's legal representatives had to prepare over the weekend to respond to the very late foreshadowed application at the commencement of the substantive hearing in a matter set down for 10 days of hearing. The steps taken as identified in the affidavit of Ms Appleby summarised above in [12]-[13] of reviewing the lengthy Drivas judgment, preparation of the Vacation Motion and draft Amended Defence were all warranted in the circumstance of the substantive hearing commencing on Monday 29 May 2023 and the Respondent needing to respond at the outset of the hearing. The amount of work carried out was not excessive. That the work was done in anticipation of receiving appropriate instructions reflects the urgency of the situation the Respondent's lawyers were facing. The Applicants' application was unreasonable in terms of its lateness and the Respondent's costs ought be paid as a result.
3. That the Applicant understood the application was able to be made as of right and was not aware it would be made by way of notice of motion with potential costs consequences is irrelevant to my consideration of whether the Respondent's costs ought be paid. Such an application to amend the Applicants' claim, which had to be by notice of motion as the correct procedural vehicle, would always have required leave of the Court given the time at which it was made. There was no obligation placed on the Respondent's legal team to advise the Applicants of the amount of legal costs being incurred in order to respond to the Applicants' foreshadowed late application.
4. That the Applicants considered they should not ultimately press the Drivas paragraphs as that would result in the vacation of the substantive hearing, described as causing prejudice to them, is immaterial to whether the Respondent should get its costs responding to a very late application by the Applicants through their legal representatives.
5. The Respondent should receive its costs of the Amendment Motion, subject to any finding below.

Quantum of costs

1. The Respondent relies on the Appleby affidavit in identifying its claim of $16,451.70 excluding GST. This is summarised above in [12]-[13], with the two tables enumerating the costs incurred and therefore claimed set out. The Applicants dispute the amount of costs claimed.
2. Numerous criticisms of the affidavit are made by the Applicants to the effect that its contents fail to establish that this amount of costs has been incurred. Ms Appleby is an officer of the court and an experienced solicitor. The form of the affidavit referring to 'in her opinion' is acceptable for such an application, balancing up the need to keep the costs of such a costs application to a reasonable level. The use of the language 'being instructed' and 'belief' is also acceptable in this context. Provision of timesheets and redacted output documents are not required to establish the amount claimed. The amount of time spent by the Respondent's solicitors and junior and senior counsel appears reasonable.
3. An element of judgment is required in determining how much of the first day of the substantive hearing was taken up with argument on the Amendment Motion. Ms Appleby has claimed costs for half a day. Approximately a third of the transcript (24 out of 72 pages) from day one of the hearing concerned the Amendment and Vacation Motions and argument was heard on and off over half a day. Additional time before court is very likely to have been spent by the Respondent's legal team in preparation for the hearing.
4. That the full argument about whether Drivas could apply was not heard on the Amendment Motion is irrelevant to whether costs ought to be awarded. The Respondent's lawyers were justified in considering caselaw in order to determine the appropriate response to the Amendment Motion.
5. The costs identified in the tables of costs incurred appear reasonable in the circumstances.
6. The Respondent should receive the amount of costs it is seeking in its Costs Motion. The usual meaning of such an order is that costs are payable on a party-party basis.

Issue: Whether any costs payable on indemnity basis?

1. The Respondent has been successful in having a costs order made in its favour. The Respondent seeks an order for indemnity costs of the Costs Motion.
2. Without prejudice communications between the parties seeking to resolve the Respondent's costs of the Amendment Motion without the need for the Respondent to file the Costs Motion is set out above in [14]. The Respondent's first offer of $13,600 plus GST on 2 November 2023 was open for 10 days and refused by the Applicants on 15 November 2023, who provided a counter-offer of $5,500 inclusive of GST. The Respondent's second offer expressly referring to the principles in Calderbank v Calderbank [1975] 3 WLR 586 (Calderbank) on 16 November 2023 of $9,500 plus GST was open for 2.5 hours and was also refused by the Applicants, who maintained their offer made on 15 November 2023.

Respondent's submissions

1. Genuine attempts have been made by the Respondent to settle the matter and the Respondent only filed the Costs Motion because of the Court deadline to file any motion about costs by 16 November 2023 and the failure of the parties to reach resolution by that time. Further, the Applicants were put on notice that the Respondent would seek its costs of any costs motion on an indemnity basis.
2. The Applicants' refusal of reasonable offers to resolve the costs of the Amendment Motion are sufficient to warrant an indemnity order. The Respondent simply should not have been put to the costs that it has been in the circumstances.

Applicants' submissions

1. The Respondent's second offer of compromise was open for only a short time, two hours and five minutes, a harsh approach. The Respondent's success on an application for indemnity costs following a Calderbank offer depends upon whether its offer was a genuine offer of compromise and whether the Applicants acted unreasonably in all the circumstances in refusing the offer, tested as at the time the offer was made and not with the benefit of hindsight resulting from a known outcome recorded in a judgment: see Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [8], [11]; Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 at [217]. The Respondent bears the onus of demonstrating that the Applicants' failure to accept a Calderbank offer was unreasonable in all the circumstances.

Indemnity costs not payable

1. I recently considered the principles of Calderbank offers in Tweed Shire Council v Cooke (No 2) [2023] NSWLEC 98 at [53] as follows: [53] The Court of Appeal in Commonwealth of Australia v Gretton [2008] NSWCA 117 considered the principles governing Calderbank offers at [38]-[46] and it is useful to set out some of these paragraphs: [41] There are public policy considerations that underpin the making of favourable costs orders where a Calderbank offer has been made. In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA said at [14]: "… the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants." See also Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322. [42] The public policy in encouraging settlement also finds statutory encouragement: see the Civil Procedure Act, s 56. Section 131 of the Evidence Act 1995 also provides statutory acknowledgment that Calderbank offers may be received into evidence. [43] The making of a Calderbank offer does not automatically result in a favourable costs order, notwithstanding that the judgment is more favourable to the party making the offer than the terms of the offer. Rather, as Giles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]: "…the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure …" [emphasis added] See also Jones v Bradley (No 2) at [8]. [44] Two general 'rules' have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]-[5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the 'common law principles' that have been developed in relation to costs "operate merely as guides to how the discretion might appropriately be exercised". The principles or rules to which I have just referred fall within that category. [45] The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]: "There is little appreciable difference between saying that an offer should not in the court's discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim." [46] The onus is on the party making a Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour: see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61.
2. In Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 Ward CJ at Eq (as Her Honour then was) stated: [28] Relevantly, it should be noted that while the rejection of a Calderbank offer, in circumstances (where it transpires that the final result in the proceeding is less favourable to the offeree) enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 192 at [9]). Rather, in order to warrant the making of a special (indemnity) costs order, it is clear that the offer must "constitute a genuine offer of compromise, which it was unreasonable for the [unsuccessful party] not to accept" (Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] per Handley, Basten and Beazley JJA, as Her Excellency then was; see also Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 at [8] per Santow and Basten JJA and Young CJ in Eq; Leichhardt Municipal Council v Green [2004] NSWCA 341 (Leichhardt Municipal Council) at [23] per Santow JA with whom Bryson JA and Stein AJA agreed). Further; where the offer is a Calderbank offer, the onus to demonstrate that it was unreasonable to reject it is on the party seeking to rely on the making of the offer (see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]) ... [29] The factors to which a Court will have regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 (Hazeldene's Chicken Farm) at [25]; Miwa at [12]).
3. The Applicants' summary of Calderbank principles above in [67] are to similar effect.
4. The first offer of compromise was not expressed as being made pursuant to Calderbank. In that absence, it should not be considered as such an offer: Davies v Sydney Water Corporation (No 2) [2012] NSWLEC 150 at [47]-[49]. The second offer of $9,500 plus GST (reduced from $13,600 plus GST) sent on 16 November 2023 was open for a very short time, within which time it was rejected by the Applicants. In all the circumstances of the matter an award of costs on an indemnity basis is not justified as I do not consider it was so unreasonable of the Applicants not to accept the second offer.
5. The Respondent has been successful in obtaining a costs order. It submitted any order for costs made in the Respondent's favour should be set off against the costs to be paid by the Respondent to the Applicant in general for the proceedings, as ordered in Dibb No 1. It is a reasonable submission and such a provision will be included in the orders that I make.

Orders

1. The Court orders: 1. The Applicants must pay the Respondent's costs of the Applicants' Notice of Motion filed on 26 May 2023 in the amount of $16,451.70 excluding GST. 2. The amount of costs payable under order 1 is to be offset against the costs otherwise payable to the Applicants as ordered in Dibb v Transport for NSW [2023] NSWLEC 114.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 February 2024

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

1. The Respondent relied on the affidavit of Ms Appleby its solicitor affirmed 16 November 2023 (Appleby Affidavit). Ms Appleby attests to the following events:

(1) The hearing of the substantive proceedings was scheduled to commence at 10:00am on Monday 29 May 2023.

(2) The Applicants filed a motion (Amendment Motion) and served it on the Respondent at 3:44pm on Friday 26 May 2023. The Amendment Motion sought the following order:

1. Leave is granted to the Applicants to amend their Points of Claim in accordance with the draft Amended Points of Claim attached hereto as Annexure A. [Annexure A omitted]

(3) At 9:58am on 29 May 2023 the Respondent served a motion (Vacation Motion) on the Applicants and handed it up in Court. The Vacation Motion sought the following orders:

(a) leave to amend its Points of Defence if the Applicants' Amendment Motion was successful;

(b) to vacate the hearing (prayer 2); and

(c) to adduce additional expert evidence (prayer 3).

1. The Amendment Motion sought to add pars 17-24 to the Amended Points of Claim to contend the acquired land should be valued on its potential for subdivision (seeking a market value of $10.4 million or $4.7 million in the alternative) relying on the decision in G&J Drivas v Sydney Metro [2023] NSWLEC 20 (Drivas) (the Drivas Paragraphs). The amount of compensation claimed by the Applicant up to this point was approximately $4.5 million. The matter of controversy between the parties in relation the Amendment Motion was the proposed inclusion of the Drivas Paragraphs.
2. The Amendment Motion and the Vacation Motion were argued on the first day of the hearing on 29 May 2023. The Court indicated that it intended to make prayers 2 and 3 in the Vacation Motion. The Drivas Paragraphs were not then pressed by the Applicants. The following orders in relation to the Amendment Motion were made on 29 May 2023:

(1) Applicant granted leave to rely on Amended Points of Claim dated 26 May 2023; and

(2) Respondent's application for costs thrown away as a result of Applicants' notice of motion dated 26 May 2023 reserved.

1. No orders were made in relation to the Vacation Motion. The substantive hearing then continued for several days.

Issue: Whether Respondent's costs of Applicants' Amendment Motion should be paid?

1. Ms Appleby deposed the late filing and subsequent abandonment of the Amendment Motion caused real prejudice to the Respondent, as inter alia:

(1) The Amendment Motion was served at 3:44pm on the last working day before the hearing, Friday 26 May 2023, and required the Respondent's team to divert its resources away from general hearing preparation to focus on the claim as amended;

(2) The late filing of the Amendment Motion required the Respondent to undertake urgent research to understand the basis for the Applicants' amended claim which significantly increased their claim for market value compensation from approximately $4.5 million to an upper limit of $10.4 million or $4.7 million in the alternative;

(3) The Respondent was required to urgently consider whether notices to produce, subpoenas or further evidence would be required in order to respond to the Applicants' claim as amended; and

(4) The Respondent was required to prepare the Vacation Motion and supporting affidavit seeking to vacate the hearing dates and leave to file an Amended Points of Defence, assuming that leave was granted to the Amendment Motion that was subsequently abandoned.

1. Ms Appleby stated that the total costs incurred by the Respondent in respect of the Applicants' Motion is $16,451.70 excluding GST. She provided the following tables generally setting out the costs:

Considering Notice of Motion, drafting reply to schedule of losses, attendance at meetings with TfNSW and Counsel regarding same

Considering Notice of Motion, attendance at meetings with TfNSW and Counsel regarding same

Drafting Amended Points of Defence and Notice of Motion and affidavit in support

Further drafting of the Notice of Motion, Amended Points of Defence, and Affidavit in support

Considering next steps regarding vacation of hearing due to Amended Points of Claim, and correspondence with client and Counsel regarding same

Finalising Notice of Motion and Amended Points of Defence, including meetings with client regarding same

Half day attendance at Court for hearing of the Applicants' Notice of Motion

Half day attendance at Court for hearing of the Applicants' Notice of Motion

Considering Notice of Motion and relevant case law and preparation for hearing of Motion

Half day attendance at Court for hearing of the Applicants' Notice of Motion

Half day attendance at Court for hearing of the Applicants' Notice of Motion

1. Ms Appleby noted in calculating this figure, she applied an apportionment to account for:

(1) One day preparation for Ms McKelvey of counsel on 28 May 2023, noting that other time incurred by her over that weekend may have been attributable to general hearing preparation; and

(2) Half day attendance at court for the hearing of the Amendment Motion, although the submissions began at the commencement of the hearing (at 10:00am) and proceeded until sometime after the luncheon adjournment.

1. Ms Appleby set out communications between the parties from 31 October 2023 to 16 November 2023 seeking to negotiate costs for the Amendment Motion prior to the Respondent's filing of the Costs Motion. She deposed the following offers of compromise were made:

(1) On 2 November 2023 in an email to the Applicants' solicitor the Respondent's solicitor stated it would accept $13,600 plus GST in satisfaction of the Respondent's costs for the Amendment Motion (Respondent's first offer). The offer was open for a 10 day period from the date of the email. The email advised that the Respondent would seek indemnity costs if it was required to put on an application for the costs of the Amendment Motion (Appleby Affidavit, tab 11).

(2) On 15 November 2023 the Applicants' solicitor sent an email to the Respondent's solicitor in which the Applicants offered $5,500 inclusive of GST (Applicants' offer) (Appleby Affidavit, tab 22).

(3) At 9:55am on 16 November 2023 the Respondent sent an email to the Applicants' solicitor offering to accept $9,500 plus GST (Respondent's second offer). The offer was open until midday the same day. It was rejected by the Applicants at 11:55am on 16 November 2023 (Appleby Affidavit, tab 26).

Costs should follow the event for interlocutory matters in compulsory acquisition proceedings

1. Compulsory acquisition cases are not considered to be 'ordinary' litigation: Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248 (Croghan) at [19]. The Respondent submitted that the authorities that govern the overall costs outcome of these kinds of proceedings (which establish a presumption that costs do not follow the event) do not apply generally to interlocutory steps. The Respondent is not aware of any authority to say that the presumption is to be so applied. Costs ought to follow the event in respect of the Amendment Motion.

1. Alternatively, if the Court considers that the presumption in Class 3 compulsory acquisition proceedings that costs do not follow the event also applies to interlocutory matters, the Respondent submitted that the Applicants behaved unreasonably in seeking to rely on the Drivas Paragraphs and, on that basis, costs should follow the event. The Applicants lost the argument to include the Drivas Paragraphs by capitulating and withdrawing their application to rely on them. They did so only in circumstances when it had become clear that there would be a consequence for them that they did not want, being the vacation of the hearing.
2. Costs ought to be awarded to the Respondent in respect of the Amendment Motion for two substantive reasons:

(1) there were costs associated with diversion of resources during hearing preparation given the lateness of the filing of the Amendment Motion; and

(2) the Respondent had to prepare and file the Vacation Motion in response.

1. The Respondent did not have any notice until 3:44pm the afternoon before the hearing was to commence (excluding the weekend) regarding the proposed change to the Applicants' case in reliance on Drivas. This required urgent research to be undertaken (including the close reading of the lengthy decision of Drivas) and to consider the strategic consequences of the proposed change including whether subpoenas and notices to produce would be required or whether further expert evidence would be needed.
2. When it had been concluded that the Respondent would be severely prejudiced if the Drivas Paragraphs were permitted, the Vacation Motion (and accompanying affidavit) was then prepared and filed. The supporting affidavit to the Vacation Motion makes plain that the inclusion of the Drivas Paragraphs would require:

(1) additional expert evidence to be prepared so as to assess the likelihood of a development consent being granted for subdivision at an earlier point in time than had been otherwise considered in the evidence; and

(2) the issuing of notices to produce and subpoenas.

1. The hearing of the motions on 29 May 2023 then used half of the first day of the hearing. The Court accepted the Respondent's submissions that it ought to have the opportunity to put on additional expert evidence and that it could not be done in the time allocated for the hearing. It being evident that the Court would vacate the hearing if the Drivas Paragraphs were pressed, the application to rely on those paragraphs was withdrawn.
2. It would be unfair to the Respondent to have to bear its own costs of the Amendment Motion or the Vacation Motion in these circumstances. Further, when the consequences of the Drivas Paragraphs would so obviously prejudice the Respondent, it was unreasonable of the Applicants to raise the point so late in the proceedings. Accordingly, the general costs order in the Applicants' favour for the proceedings ought to be offset by the Respondent's costs of the Amendment Motion.

1. The Motion seeks costs in a fixed sum of $16,451.70 excluding GST. The basis of the quantum of costs claim is set out above in [12]. The costs may be summarised as essentially 1.5 days of the Respondent's two junior counsel and the costs of a senior associate and partner of the Respondent's solicitors. The costs include the preparation of the Vacation Motion which was necessitated by the Amendment Motion. These costs are a genuine estimate of the costs attributable to the Amendment Motion given that preparation for the hearing was ongoing at the same time.
2. The Court is as well placed as anyone to determine whether the quantum claimed is appropriate in the circumstances. By making a costs order in a particular amount, the parties will avoid the potential for further dispute over the quantum. If an order for costs were made in the Respondent's favour, it would be proposed that they be set off against the costs to be paid by the Respondent to the Applicant in general for the proceedings.

1. The Respondent addressed several grounds arising from the Applicants' submissions.
2. The first ground, that the Applicants were not advised that there was a risk of such a costs order, the legal advice that the Applicants received was a matter for them and does not in any way limit the ability of the Respondent to seek costs for the abandoned Amendment Motion. The asserted facts as stated would be a matter between the Applicants and their legal team.
3. The second ground, that the Amended Motion was served at 3:44pm on Friday 26 May 2023 not 6:17pm, is irrelevant. In both scenarios the Amended Motion was served late on the last working day before the hearing.
4. The third ground, that the Vacation Motion was unnecessary, the Amendment Motion was served late on the last working day before the hearing and sought a substantial amendment to the Points of Claim. The Respondent was left with no choice but to prepare to rebut the Amendment Motion and to be ready to assist the Court understand the issues that arose from the Amendment Motion.
5. The proposed amendment changed the quantum of the claim from approximately $4.5 million to $10.4 million based on new legal arguments that had not been raised in the unamended Points of Claim. In these circumstances the Respondent had no option other than to prepare its response and an application to have the hearing vacated if the Amendment Motion was successful. At best, this could have resulted in an adjournment and potential vacation of the hearing dates (an outcome that the parties sought to avoid during the morning of 29 May 2023).
6. The Applicants' submissions questioned why the Respondent would prepare Amended Points of Defence. It was necessary to do so in order to minimise the risk of the hearing being delayed and to minimise the risk to the Respondent had the Amendment Motion been successful. The Applicants' submissions misapprehended the relevant court processes. Having been served with the Amendment Motion it was the normal and proper course for the Respondent to file and serve the Vacation Motion so that the relevant applications were before the Court.
7. The fourth ground, that the work was excessive, was on the basis that the Applicants sought to characterise the Amendment Motion as merely adjusting legal arguments for which further evidence would not be required. The change to adopt the valuation methodology applied in Drivas would have meant that the evidence would need to consider:

(1) the stage of development of the acquired land that would have been reached absent the public purpose;

(2) the detailed design of that development;

(3) the timing and likely cost of the works to realise the anticipated redevelopment; and

(4) a discounted cash flow methodology or residual land value methodology.

1. Additional evidence would have been required. It was necessary for the Respondent to prepare to address and rebut the Amendment Motion including properly considering the case law (including the careful review of the lengthy decision in Drivas) and the impacts on evidence required. The amount claimed for costs is justified and properly described in the invoices provided.
2. The Respondent denies the allegations of mala fide conduct made by the Applicants.

1. The Applicants submitted the Respondent inconsistently identified the time at which the Amendment Motion was served on the Respondent in the Affidavit of Ms Appleby that supported the Vacation Motion affirmed 29 May 2023 (6:17pm) and the Affidavit of Ms Appleby affirmed 16 November 2023 for the Costs Motion (3:44pm). I do not need to resolve the inconsistency as to the precise time the Amendment Motion was served on the Respondent as the service was clearly late on Friday 26 May 2023 and the inconsistency is immaterial to the arguments made.
2. The Applicants submitted the Vacation Motion was unnecessary [footnotes omitted] because:

[13] Putting aside any potential end of month office gatherings that may have occurred, the Respondent's legal team would have been reasonably expected to complete last minute preparations for the commencement of the Hearing on Monday, 29 May 2023.

[14] It is difficult to comprehend how the Respondent's legal team would have found the necessity to give priority to a Motion that was in breach of r 18.4 of the UCPR, plainly because it did not provide 3 working days' notice.

[15] The Respondent's Vacation Motion and its accompanying Amended Points of Defence that were filed on 29/05/23 were premature, because had the Respondent believed it was caught by surprise and had insufficient time to adjust its defence, it should have reasonably expected that the Court would have allowed it with appropriate time to amend its points of defence.

[16] Ms Appleby stated that she prepared the Respondent's Vacation Motion and the 1st Appleby Affidavit on 27 & 28 May 2023, and in that affidavit she deposed:

"I anticipate being instructed to oppose the Applicants' Motion."

[17] As the 1st Appleby Affidavit was sworn on 29 May 2023, it is open to conclude that, at the time of filing, Ms Appleby had not been instructed by the Respondent to oppose the Amendment Motion, meaning that the work Ms Appleby, Mr Ibbotson, Mr Grace, Ms McKelvey and Ms Fernandez all purported to undertake were in the absence of instructions by the Respondent.

[18] Given the last-minute preparations for the Hearing, it is curious that the Respondent's legal team would prepare Amended Points of Defence as well as a Vacation Motion on behalf of the Respondent, when the Respondent had not provided instructions to do so, and particularly when there was no compulsion to do so.

[19] The Amendment Motion could only be decided upon after all parties have been heard, so the Respondent's filing of the Vacation Motion was hasty because the arguments to support the Amendment Motion had not yet been heard.

1. The Applicants alleged mala fide conduct by the Respondent referring to events beyond those relevant to the two motions heard on 29 May 2023. As these events are irrelevant to my consideration of this costs application they are not referred to. The Applicants also submitted the Respondent breached the Model Litigation Policy for Civil Litigation (I infer this to be M2016-03 Model Litigant Policy for Civil Litigation (NSW Government, 29 June 2016)). I note that these submissions are irrelevant as they refer to events outside the scope of this costs application. No criticism of the Applicants is intended by these observations. I am clarifying what matters I can and cannot consider in this costs application.
2. The payment of costs cannot be imposed as a punishment. The Applicants submitted the Respondent's conduct in pursuing costs amounts to punishment.
3. The Applicants acted reasonably at all times and understood they would not incur any adverse cost orders if they did so. The Court did not find the Applicants pursued a vexatious, dishonest or grossly exaggerated claim. I note that as these submissions relate to the conduct of the substantive proceeding they are irrelevant to the limited events relevant to this costs motion.
4. The Applicants agreed to the proposal made by their senior counsel to amend their claim to rely on Drivas. The Applicants had understood that the Amended Points of Claim would be filed as a matter of right. At no time were the Applicants advised that the Amended Points of Claim would be subject to a successfully argued notice of motion. The Applicants' opening submissions included paragraphs referring to Drivas, reinforcing the Applicants' understanding that the Amended Points of Claim would be filed as a matter of right. The Applicants submitted they are risk adverse and would have taken issue about any exposure to costs had they been informed the motion had cost consequences.
5. The Applicants first learned about the Amendment Motion at the commencement of the hearing on 29 May 2023. The Applicants submitted they had no prior knowledge of the Amendment Motion, nor gave consent to its filing. Instead, this Costs Motion should be directed to the Applicants' legal team who made the decision to file the Amendment Motion. Regardless, the Applicants do not believe their legal team should be liable for the purported costs due to the conduct of the Respondent.
6. Both parties prepared and filed documents late exposing them to the Court granting extensions of time and the postponement of a hearing day. I note that as these submissions relate to the conduct of the substantive proceeding they are irrelevant to the limited events relevant to this costs motion.
7. The Applicants submitted the Respondent was not prejudiced by the Drivas Paragraphs, making extensive submissions on their interpretation of that judgment. I have not set these out as I did not resolve finally (or at all) the application of Drivas during the hearing of the Amendment Motion on 29 May 2023. I do not do so now for the purposes of this costs application mindful that a determination of costs does not require that an outstanding substantive issue be determined in order to rule on whether to make a costs order: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at 624-625 (McHugh J).
8. Compulsory acquisition cases are not ordinary litigation, as they represent a unilateral exercise of executive power against the property rights of citizens: Banno v Commonwealth (1993) 45 FCR 32 at 51. The discretion with respect to costs is a broad one that must be exercised judicially having regard to all of the relevant circumstances: Serbian Cultural Club 'St Sava' Inc & Serbian Cultural Club Limited v RTA of New South Wales (No 2) (2008) NSWLEC 78 at [16]. As a general principle, dispossessed landowners should be able to pursue their case for fair compensation without being deterred by any potential costs order so long as they act reasonably: Taylor v Port Macquarie-Hastings Council (2010) 175 LGERA 189; [2010] NSWLEC 153 at [20], citing Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2010] NSWLEC 27 at [35]. There needs to be special circumstances for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination: Minister for the Environment v Florence (1979) 21 SASR 108 at 134-135.
9. The default position with the Land and Environment Court is not to order any payment of costs against land acquisition applicants unless the Court considers it to be fair and reasonable in the circumstances. What is 'fair and reasonable' depends on the circumstances of each individual case.
10. The Applicants chose not to press the Drivas Paragraphs in the Amendment Motion with great prejudice due to the following risks:

• 8 of the 10 scheduled hearing dates be vacated;

• The Applicants to pay for the Respondent's cost thrown away for the vacated days;

• The Applicants pay the Respondent's cost for additional evidence;

• Rescheduling of the hearing would be potentially many months away;

• The disclosure made by Ms McKelvey that the Drivas decision (which involved the Respondent's Metro entity) did not have final orders and that it was about to be appealed.

1. The Respondent overstated the prejudice it presumed to suffer because of the Amendment Motion and overreached in seeking a vacation of the scheduled hearing days. Paragraph 59 of the Practice Note for Class 3 Compensation Claims states:

Proceedings usually will not be adjourned because of failure to comply with this practice note or directions or because of lack of preparedness for any attendance before the Court.

1. The Applicants submitted that it is extraordinary for the Respondent's legal team to purport to have incurred $18,096.87 inclusive of GST in costs for work that:
   • was unnecessary;
   • it has been unable to conclusively prove was undertaken;
   • the Respondent had not instructed to undertake; and
   • the Applicants' legal team was not advised of beforehand,

in a jurisdiction that promotes the just, quick and cheap resolution of Class 3 Compensation Claims.

1. The Applicants disputed the quantum of costs claimed by the Respondent as follows [footnotes omitted]:

[21] A total of $6,207.80 is being claimed for 'Considering Notice of Motion and relevant case law.' Yet, at the Hearing, no case law was referred to in the Respondent's submissions on the day, other than a brief general mention of the Drivas case, which, respectfully, both Counsels for the Respondent did not appear to have sufficient knowledge about, as is explained below.

[22] In answer to the Respondent's submission at [24] that the hearing of the motions took half of the first day of the Hearing, the day's transcript for the Hearing on 29 May 2023 comprised of 33,307 words. The Drivas related discussion time by Mr Hemmings was 6,920 words, which represented about 21% of that day's transcript. The word count for Ms McKelvey in this respect was 1,785 words, which was about 5.5% of the total word count.

[23] The Respondent's supporting material for this Motion is silent as to whether Mr Grace and Ms McKelvey were paid the full day for attending the 29 May Hearing proper, that being for the opening submissions for both sides and for dealing with the timetable and processes for the balance of the Hearing.

[24] In the 2nd Appleby Affidavit [dated 16 November 2023], it was deposed:

"In my opinion, this is a reasonable apportionment which is reflective of the work performed, as I recollect it." [Note: bold is by Applicants]

[25] Respectfully, there should not be a necessity to 'recollect' if accurate records were made at the time the purported work was performed.

[26] In the 2nd Appleby Affidavit [dated 16 November 2023], it was deposed:

"I am instructed and verily believe that the Respondent incurred costs over 3 days in considering and responding to the Applicant's motion."

[27] The wording of the above statement is peculiar insofar as it implies that Ms Appleby does not have first-hand knowledge of the purported costs incurred and was directed to pursue such narrative. The above statement also breaches the hearsay rule of evidence as it does not adduce evidence of its source.

[28] No tangible evidence was presented by the Respondent to show that the purported work was performed, other than what the Applicants assert was the premature preparation of a Vacation Motion and an Amended Points of Defence.

[29] As stated at [31] below, the Applicants assert that this has been an exceptionally adversarial matter, hence they say it would have been reasonable and appropriate for the Respondent to have provided proof of the work that was purported to be performed beyond mere words and a 'generally' set out tabled summary breakdown.

[30] Disclosure of time sheets detailing the work performed and copies of redacted output documents and notes would have been appropriate in the circumstances.

1. The Applicants submitted as the Amendment Motion was heard as part of the substantive hearing, the Respondent did not incur additional costs other than the costs for that day's hearing which it was to incur in any event.

1. Costs awards are compensatory not punitive: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at 543 (per Mason CJ). The exercise of the Court's discretion in relation to costs in compulsory acquisition cases is wide given the application of s 98 of the CPA. There are no applicable court rules.

1. As identified in the parties' submissions the general approach to costs in substantive compulsory acquisition cases is that regardless of outcome applicants for compensation will not generally be liable for the legal costs of a respondent unless there is unreasonable behaviour on their part: see Croghan at [13]-[20]. The authorities cited by the Applicants in their submissions, as set out above in [42] are to similar effect. The Respondent submits this approach should be varied in the case of interlocutory proceedings so that the 'usual' approach, meaning a presumption of how costs should apply, should be that costs follow the event.
2. No other case has apparently had to consider this issue before. The reasons of the Court of Appeal in relation to the nature of compulsory acquisition cases in Croghan and Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 at [70]- [71] suggests the same approach is warranted in relation to interlocutory matters. A costs presumption does not apply in substantive compulsory acquisition proceedings. The same approach should also apply in relation to interlocutory proceedings in compulsory acquisition cases. This essentially means the particular circumstances of a costs claim by a respondent will need to be considered, as occurs in the next section.

Should the Respondent's costs be paid in light of the Applicants' behaviour?

1. Alternatively the Respondent submits that the Applicants' behaviour through their legal representatives in making such a late application at the end of the last working day before the substantive hearing commenced, the nature of the application requiring urgent consideration of a large and complex judgment, the reasonable preparation of the Vacation Motion and an amended defence justifies an order for costs. I agree the circumstances justify an order for costs in the Respondent's favour.
2. The scope of the Applicants' claim would have expanded markedly if the amendment sought was allowed at the outset of the first day of the substantive hearing. The Applicants' submissions fail to have sufficient regard to the extremely late service of the application to amend their claim on a substantial basis, about which there was no effective notice to the Respondent. The Respondent's legal representatives had to prepare over the weekend to respond to the very late foreshadowed application at the commencement of the substantive hearing in a matter set down for 10 days of hearing. The steps taken as identified in the affidavit of Ms Appleby summarised above in [12]-[13] of reviewing the lengthy Drivas judgment, preparation of the Vacation Motion and draft Amended Defence were all warranted in the circumstance of the substantive hearing commencing on Monday 29 May 2023 and the Respondent needing to respond at the outset of the hearing. The amount of work carried out was not excessive. That the work was done in anticipation of receiving appropriate instructions reflects the urgency of the situation the Respondent's lawyers were facing. The Applicants' application was unreasonable in terms of its lateness and the Respondent's costs ought be paid as a result.
3. That the Applicant understood the application was able to be made as of right and was not aware it would be made by way of notice of motion with potential costs consequences is irrelevant to my consideration of whether the Respondent's costs ought be paid. Such an application to amend the Applicants' claim, which had to be by notice of motion as the correct procedural vehicle, would always have required leave of the Court given the time at which it was made. There was no obligation placed on the Respondent's legal team to advise the Applicants of the amount of legal costs being incurred in order to respond to the Applicants' foreshadowed late application.
4. That the Applicants considered they should not ultimately press the Drivas paragraphs as that would result in the vacation of the substantive hearing, described as causing prejudice to them, is immaterial to whether the Respondent should get its costs responding to a very late application by the Applicants through their legal representatives.
5. The Respondent should receive its costs of the Amendment Motion, subject to any finding below.

1. The Respondent relies on the Appleby affidavit in identifying its claim of $16,451.70 excluding GST. This is summarised above in [12]-[13], with the two tables enumerating the costs incurred and therefore claimed set out. The Applicants dispute the amount of costs claimed.
2. Numerous criticisms of the affidavit are made by the Applicants to the effect that its contents fail to establish that this amount of costs has been incurred. Ms Appleby is an officer of the court and an experienced solicitor. The form of the affidavit referring to 'in her opinion' is acceptable for such an application, balancing up the need to keep the costs of such a costs application to a reasonable level. The use of the language 'being instructed' and 'belief' is also acceptable in this context. Provision of timesheets and redacted output documents are not required to establish the amount claimed. The amount of time spent by the Respondent's solicitors and junior and senior counsel appears reasonable.
3. An element of judgment is required in determining how much of the first day of the substantive hearing was taken up with argument on the Amendment Motion. Ms Appleby has claimed costs for half a day. Approximately a third of the transcript (24 out of 72 pages) from day one of the hearing concerned the Amendment and Vacation Motions and argument was heard on and off over half a day. Additional time before court is very likely to have been spent by the Respondent's legal team in preparation for the hearing.
4. That the full argument about whether Drivas could apply was not heard on the Amendment Motion is irrelevant to whether costs ought to be awarded. The Respondent's lawyers were justified in considering caselaw in order to determine the appropriate response to the Amendment Motion.
5. The costs identified in the tables of costs incurred appear reasonable in the circumstances.
6. The Respondent should receive the amount of costs it is seeking in its Costs Motion. The usual meaning of such an order is that costs are payable on a party-party basis.

Issue: Whether any costs payable on indemnity basis?

1. The Respondent has been successful in having a costs order made in its favour. The Respondent seeks an order for indemnity costs of the Costs Motion.
2. Without prejudice communications between the parties seeking to resolve the Respondent's costs of the Amendment Motion without the need for the Respondent to file the Costs Motion is set out above in [14]. The Respondent's first offer of $13,600 plus GST on 2 November 2023 was open for 10 days and refused by the Applicants on 15 November 2023, who provided a counter-offer of $5,500 inclusive of GST. The Respondent's second offer expressly referring to the principles in Calderbank v Calderbank [1975] 3 WLR 586 (Calderbank) on 16 November 2023 of $9,500 plus GST was open for 2.5 hours and was also refused by the Applicants, who maintained their offer made on 15 November 2023.

1. Genuine attempts have been made by the Respondent to settle the matter and the Respondent only filed the Costs Motion because of the Court deadline to file any motion about costs by 16 November 2023 and the failure of the parties to reach resolution by that time. Further, the Applicants were put on notice that the Respondent would seek its costs of any costs motion on an indemnity basis.
2. The Applicants' refusal of reasonable offers to resolve the costs of the Amendment Motion are sufficient to warrant an indemnity order. The Respondent simply should not have been put to the costs that it has been in the circumstances.

1. The Respondent's second offer of compromise was open for only a short time, two hours and five minutes, a harsh approach. The Respondent's success on an application for indemnity costs following a Calderbank offer depends upon whether its offer was a genuine offer of compromise and whether the Applicants acted unreasonably in all the circumstances in refusing the offer, tested as at the time the offer was made and not with the benefit of hindsight resulting from a known outcome recorded in a judgment: see Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [8], [11]; Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 at [217]. The Respondent bears the onus of demonstrating that the Applicants' failure to accept a Calderbank offer was unreasonable in all the circumstances.

1. I recently considered the principles of Calderbank offers in Tweed Shire Council v Cooke (No 2) [2023] NSWLEC 98 at [53] as follows:

[53] The Court of Appeal in Commonwealth of Australia v Gretton [2008] NSWCA 117 considered the principles governing Calderbank offers at [38]-[46] and it is useful to set out some of these paragraphs:

[41] There are public policy considerations that underpin the making of favourable costs orders where a Calderbank offer has been made. In Leichhardt Municipal Council v Green [2004] NSWCA 341, Santow JA said at [14]:

"... the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants."

See also Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322.

[42] The public policy in encouraging settlement also finds statutory encouragement: see the Civil Procedure Act, s 56. Section 131 of the Evidence Act 1995 also provides statutory acknowledgment that Calderbank offers may be received into evidence.

[43] The making of a Calderbank offer does not automatically result in a favourable costs order, notwithstanding that the judgment is more favourable to the party making the offer than the terms of the offer. Rather, as Giles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]:

"...the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure ..." [emphasis added]

See also Jones v Bradley (No 2) at [8].

[44] Two general 'rules' have emerged relating to Calderbank offers, namely, that to justify the making of an order for costs on an indemnity basis, the offer must be a genuine offer of compromise, which it is unreasonable for the appellant not to accept: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4]- [5]; Leichhardt Municipal Council v Green at [21]-[24], [36]. However, as this Court (Santow, Bryson JJA, Stein AJA) pointed out in Leichhardt Municipal Council v Green at [8], the 'common law principles' that have been developed in relation to costs "operate merely as guides to how the discretion might appropriately be exercised". The principles or rules to which I have just referred fall within that category.

[45] The discretion is to be exercised having regard to all the relevant circumstances in the case. The question that had been raised in Leichhardt Municipal Council v Green was whether there had been a genuine offer of compromise. As the Court said at [21]:

"There is little appreciable difference between saying that an offer should not in the court's discretion attract costs sanctions in the circumstances and saying that an offer is not a genuine offer of compromise in the circumstances. Both depend upon a value judgment of the offer and the conduct of the parties in the circumstances of the claim."

[46] The onus is on the party making a Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour: see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61.

1. In Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 Ward CJ at Eq (as Her Honour then was) stated:

[28] Relevantly, it should be noted that while the rejection of a Calderbank offer, in circumstances (where it transpires that the final result in the proceeding is less favourable to the offeree) enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 192 at [9]). Rather, in order to warrant the making of a special (indemnity) costs order, it is clear that the offer must "constitute a genuine offer of compromise, which it was unreasonable for the [unsuccessful party] not to accept" (Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] per Handley, Basten and Beazley JJA, as Her Excellency then was; see also Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 at [8] per Santow and Basten JJA and Young CJ in Eq; Leichhardt Municipal Council v Green [2004] NSWCA 341 (Leichhardt Municipal Council) at [23] per Santow JA with whom Bryson JA and Stein AJA agreed). Further; where the offer is a Calderbank offer, the onus to demonstrate that it was unreasonable to reject it is on the party seeking to rely on the making of the offer (see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]) ...

[29] The factors to which a Court will have regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 (Hazeldene's Chicken Farm) at [25]; Miwa at [12]).

1. The Applicants' summary of Calderbank principles above in [67] are to similar effect.
2. The first offer of compromise was not expressed as being made pursuant to Calderbank. In that absence, it should not be considered as such an offer: Davies v Sydney Water Corporation (No 2) [2012] NSWLEC 150 at [47]- [49]. The second offer of $9,500 plus GST (reduced from $13,600 plus GST) sent on 16 November 2023 was open for a very short time, within which time it was rejected by the Applicants. In all the circumstances of the matter an award of costs on an indemnity basis is not justified as I do not consider it was so unreasonable of the Applicants not to accept the second offer.
3. The Respondent has been successful in obtaining a costs order. It submitted any order for costs made in the Respondent's favour should be set off against the costs to be paid by the Respondent to the Applicant in general for the proceedings, as ordered in Dibb No 1. It is a reasonable submission and such a provision will be included in the orders that I make.

(1) The Applicants must pay the Respondent's costs of the Applicants' Notice of Motion filed on 26 May 2023 in the amount of $16,451.70 excluding GST.

(2) The amount of costs payable under order 1 is to be offset against the costs otherwise payable to the Applicants as ordered in Dibb v Transport for NSW [2023] NSWLEC 114.