Dillon, Kevin & Anor v Gosford City Council

Land and Environment Court (NSW)|2010-06-18|Before: Sheahan J, Mr P

CITATION : Dillon, Kevin & Anor v Gosford City Council (No.3) [2010] NSWLEC 168

APPLICANTS PARTIES : Kevin and Kerry Dillon RESPONDENT Gosford City Council

KEY ISSUES: COMPULSORY ACQUISITION OF LAND :- outstanding claim for a Disturbance item (scour protection works) quantified, discretion exercised to allow some claims for ancillary costs of those works, apportionment as between parties, offers of compromise, Calderbank principles, remaining costs issues also determined, consolidation of orders in the substantive proceedings

LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 Banno v Commonwealth (1993) 45 FCR 32; 81 LGERA 34 BMP Manufacturing Pty Ltd v Roads and Traffic Authority of New South Wales (No.2) [2009] NSWLEC 41 Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586 Dillon, Kevin & Anor v Gosford City Council (No.1) [2008] NSWLEC 186 CASES CITED: Dillon, Kevin & Anor v Gosford City Council (No.2) [2010] NSWLEC 44 Fitzpatrick Investments Pty Ltd v Blacktown Council (No.2) [2000] NSWLEC 139; 108 LGERA 417 Latoudis v Casey [1990] HCA 59; 170 CLR 534 Monaghan v Holroyd City Council [2009] NSWLEC 112; 167 LGERA 321 Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 209; 110 LGERA 223 Ray Fitzpatrick Pty Ltd v Minister for Planning (No.5) [2008] NSWLEC 183 Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153

APPLICANTS Mr K Dillon (in person)

LEGAL REPRESENTATIVES: RESPONDENT Mr P Tomasetti SC SOLICITORS Storey & Gough

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30157 of 2007 Dillon, Kevin & Anor v Gosford City Council (No.3)

JUDGMENT Introduction and Background 1 His Honour: This is the third judgment delivered by the court in these class 3 compensation proceedings, which concerned acquisition of an easement over part of the applicants' lands, and it deals with the only two outstanding issues - one compensation item, and costs.

2 The background to the litigation and its history are set out in detail in the two earlier judgments - Dillon (No.1) [2008] NSWLEC 186, delivered on 6 June 2008, and Dillon (No.2) [2010] NSWLEC 44, delivered on 31 March 2010 - and need not be repeated here.

3 Again I gratefully acknowledge the assistance provided by Acting Commissioner Craig Miller.

4 Proceedings under the Land Acquisition (Just Terms Compensation) Act 1991 ("JTC Act") are designed to arrive at a "just" order for compensation, on a "once and for all" basis. The only exception is where, as in Fitzpatrick Investments Pty Ltd v Blacktown Council (No.2) [2000] NSWLEC 139; 108 LGERA 417, and also in this case, the court, when deciding the substantive matter, makes a finding in favour of an award of compensation, and grants liberty to the applicant to return to court, when certain work is done (or at least when prices for it have been ascertained, and the parties are happy to finalise the claimed item), in order for the award to be quantified in an order for "Disturbance" compensation.

5 Most of the issues in this litigation, apart from costs, were disposed of in a "final" way by my judgment in Dillon (No.1) on 6 June 2008, save for the need for the applicant to do or price "scouring control measures" (see pars [73], 89 regarding the Fitzpatrick order in that regard).

6 The respondent Council granted development consent for appropriate scour protection works in September 2008, but subsequently agreed not to insist upon their completion prior to payment of its share of their cost. Continued attempts have been made by the Council and the court to settle upon the actual cost involved, and arrive at an apportionment of it as between the parties.

7 In Dillon (No.2) on 31 March 2010, I dismissed a Notice of Motion in which the applicants sought to reopen the proceedings to claim additional items of compensation. I listed the matter before the Registrar on Friday 23 April 2010 for directions, and the allocation of a further hearing date, with a view to finalising the two remaining issues - (A) scour protection works compensation, and (B) the costs of the proceedings.

8 The matter came back before the court for that further hearing on 17 and 18 June 2010, and this judgment deals with those two outstanding matters in a final way.

9 Meanwhile, on 29 June 2010, the applicants lodged an appeal in the Court of Appeal against my decisions of 6 June 2008 and 31 March 2010.

10 The applicants told the court on 17 February 2010 that their outstanding claim in respect of scour protection rested on a quotation from Central Coast Civil ('CCC') in the sum of $175,156 for the works as approved by Council. Dr Ian Joliffe had been retained by the applicants in August or September 2009 as their water engineering expert, and he agreed with Council's expert, John Tilley, in their joint report of 25 September 2009, on apportionment of the cost of the works on the basis 53% by the applicants/47% by Council.

11 On 17 February 2010, the Council accepted the jointly recommended 53/47% apportionment, but wanted to test the quotation, while, on the other hand, the applicants wanted further expert advice before committing to any apportionment.

12 On 23 April 2010, very clear directions were made and recorded - inter alia, the applicants were to file their evidence on the "cost of scour protection work" by 27 April 2010, and the respondent its evidence on that matter by 7 May 2010 - and both parties were directed to file written submissions prior to the hearing.

13 On 5 May 2010, the applicants filed a revised CCC quotation ($197,556), and a "claim" for "additional project costs" of $27,500. Neither figure was presented in acceptable form, in terms of the court's rules, practices, and procedures. The respondent Council filed on the same day an expert report, in proper form, from Quantity Surveyor Paul Elphick, who costed the approved scour protection works at $171,600.

14 On 1 June 2010, the applicants filed two "submissions" documents - one on the outstanding Disturbance claim, and one on the appropriate costs order(s).

15 Attached to the "Disturbance" submission was a further lengthy "report" from Dr Joliffe, dated 31 May 2010, revisiting both his earlier evidence, and his agreement on apportionment of the costs of the scour protection works. It is fair to observe that the 31 May report not only made a dramatic change on the apportionment question (now suggesting applicants 18.5%/Council 81.5%), but also seriously broadened the substance of the technical debate on the scour protection issue.

16 On 17 June 2010, as Acting Commissioner Miller and I came into court for the appointed hearing, we were handed a further report by Dr Joliffe, dated 16 June and filed earlier on 17 June, dealing specifically with the cost of the Council-approved scour protection works. In that report, Dr Joliffe estimated the cost of work at $285,000, including $21,900 in "additional" costs.

17 Understandably, the very late service of Dr Joliffe's new material was of great concern to the Council, which has remained anxious to conclude the litigation. Mr Tilley had not had adequate opportunity to consider the 31 May report, nor Mr Elphick the 16 June report. Mr Tomasetti, Senior Counsel for the Council throughout the case, told the court that both witnesses had concerns they would hope to "work through" with Dr Joliffe.

18 It was also of concern to the Council and the court that the revised CCC quote was also not in appropriate form, and that no other providers had quoted on the job, despite council's and the court's expectation that three quotes would be obtained.

19 I made clear to Mr Dillon, representing both applicants, that their delay in crystallising their position (at least from 17 February 2010 to 16 June 2010, one day before the resumed hearing) was completely unacceptable. If both the quantum and the apportionment were to be litigated, the Council's experts had to have adequate opportunity to review the new evidence, and there had to be joint conferencing in accordance with the court's prescribed procedures.

20 As the High Court's decision in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 indicated that the applicants' delay could lead to the rejection of their new evidence altogether, I invited the parties - again, as I had on 17 February 2010 - to make an effort to resolve their remaining differences in the time the court had set aside for what was intended to be the final hearing in the litigation.

21 After an extended morning tea adjournment to enable such efforts to be pursued, Mr Dillon agreed not to seek the court's leave to rely on Dr Joliffe's 31 May report, and indicated that: (1) he would accept Mr Elphick's estimate of the cost of the scour protection works; (2) he pressed the applicants' claim for "additional costs " (either the $27,500 in his document, or the $21,900 estimated by Dr Joliffe - see [13] and [16] above); and (3) he wished to cross-examine Mr Tilley on the apportionment question, as the applicants still contended that Council should pay the whole of the cost.

22 The court agreed to proceed on that basis. (See T 17.6.10, p15, L49- p19, L5). Mr Elphick and Dr Joliffe were excused, and Mr Tilley was cross-examined for the rest of that hearing day.

23 So far as documentary evidence was concerned, the joint Tilley/Joliffe report of 25 September 2009 became Exhibit C1; Mr Tilley's two earlier reports (October/November 2007, and January 2009) became, respectively, Exhibits C2 and C3; Mr Elphick's report was accepted into evidence as Exhibit C4; Mr Tilley prepared two relevant drawings (Exhibits D1 and D2) during his oral evidence; and Mr Dillon tendered next day some other documents (Exhibit D3) to assist in the court's understanding of his submissions regarding Mr Tilley's evidence.

24 All of these documents were admitted without objection, but neither Dr Joliffe's 31 May 2010 report ([15] above), nor CCC's later quotation ([13] above), came into evidence before the court.

25 In his 2007 report (Exhibit C2), Mr Tilley reviewed earlier flood studies leading up to the design and construction of the levee on the Dillon land, and explained his flood modelling. He concluded (par 3.9) that the combination of the levee and the channel works downstream of Manns Road slightly reduced the flood risk applicable to the Dillon land. He further concluded (par 3.12) that the June 2007 flooding was not exacerbated by the levee and that estimated small increases in flood velocity towards the northern end of the levee were insignificant in respect of scour. He paid particular attention, however, to the scour potential at the southern end of the levee (par 6.4ff), and concluded (at pars 6.13, 6.14, 7.1 and 7.2) that "the potential depth and extent of scour has been increased slightly" in that area, and that scour countering measures were indicated.

26 In his report of January 2009 (Exhibit C3), Mr Tilley reviewed the proposed scour protection works, and made a preliminary estimate of their cost. He conducted further modelling and calculated that the "percentage of flow obstructed by levee" in the 100 year event was 35.2%. Accordingly, he recommended that Council should contribute 35.2% of the total cost of the proposed works, then thought to be about $130,000.

27 When Mr Tilley conferred with Dr Joliffe, and prepared the joint report of 25 September 2009 (now Exhibit C1), they agreed to compromise their respective recommended apportionments, and (Exhibit C1, pars 18-23) that 47% of the cost should be contributed by Council.

28 After lengthy and close cross-examination by Mr Dillon, who is not without some expertise in this area (T 17.6.10, pp22-59), Mr Tilley was unshaken in his adherence to his reports (T p59, LL22-31), and to his decision to revise his apportionment (upwards from 35.2%) to 47%, to reflect the risk that his individual assessment might prove conservative (T p59, L38 - p60, L24), but Mr Dillon again asserted in his final submissions that errors were made by Mr Tilley in his basic opinions.

29 Nothing in the 17-18 June hearing or transcript persuades Commissioner Miller and myself that the court should depart from either (1) Mr Elphick's cost estimate of $171,600 for the approved scour protection works, and/or (2) the conclusion reached in the joint Tilley/Joliffe report as to cost apportionment of the works (53% payable by the applicants and 47% by the Council).

30 Apart from the capital cost involved, Mr Dillon, drawing on his expertise and experience, prepared written submissions identifying (1) risks to which he and his wife would be exposed in arranging for the works to be carried out, and their cost, and, separately, (2) additional outgoings which he claimed they would incur (see 21 above).

31 It is true that the amounts claimed were not the subject of strict proof by these self-represented applicants, and that Council argued strongly (see T 18.6.10, p28, L31-p29, L21, and p38, LL29-35) against allowing any of them, given that Mr Elphick had allowed for some contingency on account of some such items. However, the court relies on its experience of such matters, takes judicial notice of the need to incur some such expenses as part of such a project, and will exercise its discretion to allow some of them as "reasonable", in all the circumstances of the case.

32 While Mr Dillon identified three "cost risks" in the final version of his claim, I am prepared to allow two, namely "acid sulphate soil testing, assessment, processing and disposal" ($1,500), and "contractor supervision and administration" ($3,000), a total of $4,500. The court will not allow Mr Dillon's estimated claim for $4,000 for "latent conditions/variations - unknowns".

33 The "outgoings" claimed included design consultant's fees, fees payable to statutory authorities for necessary approvals and inspections, geotechnical evaluation costs, together with some other minor costs totalling $13,000, which the court believes it is reasonable to allow. Mr Dillon also claimed $6,000 for security bond interest which the court does not accept.

34 Accordingly, the court allows an additional $17,500 in respect of these items.

35 47% of Mr Elphick's cost estimate of $171,600 for the project is $80,652 (see Exhibit C4, par 5.1 and Annexure 'C', and [29] above), to which the court will now add the $17,500 determined above, making a total of $98,152 for the scour protection Disturbance claim. (B) Costs Issues 36 For the purpose of concluding the outstanding costs issues, this litigation can be considered in three phases: (i) The costs of the substantive proceedings , so far as they were concluded by the Dillon (No.1) judgment, delivered 6 June 2008, and the orders made thereunder on 22 July 2009, remain reserved. (ii) When the court dismissed the applicants' Notice of Motion in Dillon (No.2), on 31 March 2010, the applicants were ordered to pay the Council's costs " in respect of the Notice of Motion, as incurred on and since the filing of the original Notice of Motion on 10 August 2009 ". (iii) Consideration needs to be given to events after 22 July 2009 , which will include the costs of finally determining, in this present judgment, the compensation payable for the scour protection works . 37 The applicants have asked the court to revisit the order made against them on 31 March 2010 (see 36 above), and to otherwise order that the Council pay all their costs on an indemnity basis. They rely on comprehensive written submissions, and on rejection by the Council of an offer made on the applicants' behalf in December 2007.

38 Mr Tomasetti relied on written submissions, an affidavit from his instructing solicitor, Mr Pickup, sworn 11 June 2010 on the question of costs, and various items of correspondence concerning settlement of the scour protection aspect of the case (Exhibit C5). Mr Tomasetti says that no grounds have been advanced for any variation in the order made on 31 March 2010, that in respect of the primary hearing, each party should be ordered to pay its own costs, and that in respect of a late dispute regarding a Notice to Produce, the applicants should be ordered to pay the respondents' costs.

39 I turn now to address this last costs issue first. I will then review the order made in respect of the Notice of Motion, before considering the costs of each of the two phases of the substantive proceedings.

40 Mr Pickup's affidavit sets out the history of the Notice to Produce, and Mr Dillon has taken no issue with that evidence.

41 Despite being told by Council on 23 April 2010 that the documents he later sought by way of the Notice to Produce were not relevant to the issue before the court, Mr Dillon waited until 9.40pm on 20 May 2010 - the eve of its return before the Registrar, on which occasion its validity was to be challenged by the Council - to withdraw the notice. The next morning the Registrar had no personal knowledge of the withdrawal, but formally noted it, and reserved the costs "of today".

42 Mr Dillon conceded before me that he should pay at least for some appearance time in that respect. Clearly, the appropriate order in those circumstances is that the applicants pay the respondent's costs incurred in respect of the notice. The amount can be agreed, or the various elements of that particular dispute can be referred for assessment.

43 The costs order made on 31 March 2010 (see 36 above) requires the applicants to pay the respondent's costs in respect of the Notice of Motion "as incurred on and since the filing of the original Notice of Motion on 10 August 2009".

44 That order was entirely appropriate in the circumstances (see Dillon (No.2) at [81]-[87]), but Mr Dillon has asked the court to reconsider it.

45 "Compassionate grounds", based on the obvious emotional strain caused throughout the lengthy period the Dillons have been in dispute with Council about the levee, namely since 1995, would appear to be the only basis upon which the applicants seek such a reconsideration (see T 18.6.10, p31, LL46-50, and p41, LL45-47).

46 Those grounds are clearly not sufficient, and the order should stand in respect of the Notice of Motion.

47 I should note, however, that several listings in that period 10 August 2009 to 31 March 2010 concerned both the scour protection item and the Notice of Motion. In so far as Council's costs of those occasions can be apportioned as between those matters, those attributable to the Notice of Motion are covered by the 31 March order, and those properly attributable to scour protection issue, rather than the Notice of Motion, should be covered by my decision later in this judgment in respect of the costs incurred on that issue.

48 Before coming to the costs of that aspect of the case, I turn now to consider the costs of the substantive proceedings up to and including the making of formal orders on 22 July 2009.

Substantive Proceedings - Phase 1 (to 22 July 2009)

49 After the levee was constructed in about 1995, there were lengthy negotiations between the parties. Mr Dillon says that prior to the acquisition the Council's highest compensation offer was $20,000, as against the applicants' claim for $125,150 (applicants' submissions 1.6.10, par 4).

50 Ultimately, the Council embarked on the compulsory processes available under the JTC Act. The easement was acquired on 27 October 2006. The Dillons claimed $772,590 in compensation on 24 November 2006. The Valuer General assessed, and the Council offered, on 4 December 2006, compensation of $100,000 ($85,000 for Market Value, plus $15,000 for Disturbance).

51 As agreement was not then reached, the applicants commenced these proceedings on 27 February 2007.

52 The original Points of Claim sought a little more than $1M, but the eventual hearing was conducted, in December 2007 and March 2008, on the basis of a claim by the applicants for $375,108, being Market Value of $145,000, plus the following items by way of Disturbance: Removal and replacement of unsuitable fill $90,310 Rectification and establishment of a vegetation screen $4,798 Installation of scouring control measures to the creek $130,000 Legal, valuation and ancillary costs before acquisition (estimated) $5,000 Total $230,108 53 The Council's case asserted a Market Value of $45,000, and the parties agreed only on legal etc. Disturbance items totalling $5,000. On 20 December 2007, midway through the hearing, senior counsel for the applicants put to senior counsel for the Council an offer to accept $150,000 plus costs. The Council rejected that offer.

54 The Council's case on Market Value succeeded, as the applicants' argument on construction of the easement essentially failed. Also, apart from the agreed $5,000, all other Disturbance claims, except that for scour protection/control measures, were rejected by the court. That scouring related claim was the major Disturbance item claimed ($130,000 out of $230,108), and it has now been allowed at $98,152.

55 Accordingly, the applicant's total award of compensation is comprised thus: Market Value $45,000 Legal Valuation etc. $5,000 Scour Protection $98,152 Total $148,152

56 In so far as costs might follow the "event", as in "success" or otherwise in the proceedings, the applicants could be said to have succeeded in the proceedings in terms of their recovering (1) more than the Valuer General's determination ($148,152 cf. $100,000), (2) more than the claim originally put to the Council ($148,152 cf. $125,150), (3) much more than the amount argued by the Council at the hearing ($148,152 cf. $50,000), (4) much less than they had eventually claimed during the 1995-2006 negotiations ($148,152 cf. $375,108 or more), and (5) only a little less than they were prepared to accept during the hearing ($148,152 cf. $150,000).

57 Mr Dillon is very critical of Council for its conduct throughout the matter, commencing well before the litigation, using terms in respect of Council, such as "abject laziness", "sinister", "unscrupulous", "deceitful", "lousy", "covert", "deplorable abuse of process and power", "get off their butt", "total disregard for its statutory duty", etc. to encourage the court to find the Council's conduct "unreasonable" or "disentitling", to the degree necessary to found an award of costs on an indemnity basis.

58 Mr Tomasetti conceded (subs 11.6.10, par 38) that the court might well consider a partial costs order (say up to 50%) in favour of the applicants on the basis of "issues won and lost".

59 The general principles to be applied are well known, and have been set out in many judgments of this court. I summarised them in Ray Fitzpatrick Pty Ltd v Minister for Planning (No.5) [2008] NSWLEC 183 at [31]-[45], and applied them in that case, and, e.g., in BMP Manufacturing Pty Ltd v Roads and Traffic Authority of New South Wales (No.2) ("BMP") [2009] NSWLEC 41. (See also the cases I reviewed in BMP, at [12]ff, and Biscoe J's recent second judgment in the Taylor litigation - Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153, especially at [16]-[22]).

60 They commence with the propositions that (1) costs are awarded by way of compensation and not punishment (Latoudis v Casey [1990] HCA 59; 170 CLR 534); (2) compulsory acquisition cases are not "ordinary litigation", concerning as they do a unilateral exercise of executive power against the property rights of citizens (Banno v Commonwealth (1993) 45 FCR 32; 81 LGERA 34); and (3) "there needs to be a strong justification for awarding costs against an applicant" (see Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 209; 110 LGERA 223).

61 Having again reviewed the history of this litigation, I can find no basis upon which to order either party to pay any costs of the other on an indemnity basis.

62 On an "issues won and lost" basis, an order in favour of the applicants for 50% (as conceded by Mr Tomasetti) may be appropriate. However, the respondent rejected what was clearly a reasonable offer made by the applicants during the trial to settle for much less than they were claiming, and very close to what they have ultimately been awarded.

63 I have concluded that the interests of justice are best served by my ordering the respondent to pay 75% of the applicants' costs of the proceedings up to and including the making of "final" orders on 22 July 2009, on a party-party basis.

Scour Protection Claim - Substantive Proceedings Phase 2 (after 22 July 2009)

64 As the order arrived at immediately above covers the period from commencement until 22 July 2009, and the order made on 31 March 2010 covers the costs incurred by Council, in the period on and from 10 August 2009 until 31 March 2010, in respect of the Notice of Motion to reopen the proceedings, I now turn, finally, to consider the costs incurred in regard to the determination, after a contested hearing on 17-18 June 2010, of the residual dispute between the parties over compensation for the scour protection works.

65 The dispute about that claim ran from delivery of the Dillon (No.1) judgment on 6 June 2008 until it was finally determined by this present judgment.

66 The liability for the costs of having and resolving the dispute has to be determined with reference to the way it was conducted, the attempts to resolve it, and the movements in the amount in contest.

67 Mr Tomasetti submits that the way Mr Dillon has conducted this last phase of the applicants' case, after his lawyers withdrew following the court's first judgment, "has resulted in more court appearances and further costs being generated by the respondent than would normally be the case". That would appear to be a well-founded submission, given that the parties appeared before the Commissioner and myself seven times between the delivery of judgment on 6 June 2008 and the hearing on 17-18 June 2010.

68 The original claim, made only when the proceedings were on foot (see [52]), was for an amount of $130,000, but it was later put at $175,156, and then $197,556. The Council's advice as the hearing approached was that the appropriate total cost was $171,600, and Mr Dillon abandoned any claim for more (other than by way of "additional" costs).

69 The experts engaged by the parties agreed that both parties should share in the cost. They were directed to confer, and reached the pragmatic 53/47% compromise, to which Mr Tilley adhered during searching cross-examination.

70 Council was prepared to accept that apportionment, but the applicants pressed on, seeking an order that the Council pay the total cost, and prevailing on their expert to resile from the agreement and to argue for a higher estimated cost.

71 The court has now adopted the Council's independent estimate of cost, the experts' agreed apportionment of that cost, and Mr Dillon's estimate of some additional costs, with the result that an amount of $98,152 will be awarded.

72 Just prior to the June 2010 hearing, the parties exchanged "offers of compromise", said to be made on both sides in accordance with the so-called Calderbank principles (see Calderbank v Calderbank [1975] 3 All ER 333; 3 WLR 586).

73 All those offers were limited to the scour protection issue, and expressed also to be "exclusive of costs". The exchanged correspondence is before the court (in Exhibit C5): Council's offer of 19 May 2010 was in the sum of $82,323.32 , being 47% of the applicants' CCC quote of $175,156, with nothing allowed for the " additional costs " claimed. The applicants offered, in response on 31 May, to accept $190,000 . The Council then offered, on 2 June, $92,857 , being 47% of the revised CCC quote of $197,556 ([13] above), adding a further condition that the current Court of Appeal proceedings be discontinued (see [9] above). The applicants reaffirmed their settlement figure, on 9 June, as $190,000 .

74 Biscoe J discussed, at helpful length, in Taylor (cited above in [59]), the rules in respect of Offers of Compromise, and the law regarding the Calderbank principles (see [23]-[29] and [38]-[39] of His Honour's judgment), before applying them to a very complex factual situation, citing extensive additional authority. I respectfully adopt His Honour's analysis, and will apply it in this case.

75 I myself had cause to consider the Calderbank principles, and relevant rules, in the unusual circumstances of Monaghan v Holroyd City Council [2009] NSWLEC 112; 167 LGERA 321, and I observed (at [74]-[75]) that "mere use of the word 'Calderbank' is not sufficient to bring a communication within the ambit of the … principles", such that an order for indemnity costs be made when "a genuine offer of compromise which it was unreasonable … not to accept" has been rejected.

76 I am satisfied that, having lost the case it put at the original hearing in complete opposition to the applicants' scour protection claim, the Council acted reasonably in: Waiving the Fitzpatrick condition the court imposed on compensation for the works (requiring the work to be done before any compensation is paid), Accepting advice that it should pay 47% of the cost, Obtaining independent advice on the quantum of that cost, and Making offers of compromise based on quotations obtained (not in admissible form) by the applicants, rather than on the advice it received as to cost.

77 Mr Dillon acted at least emotionally, if not unreasonably, (1) in refusing to accept that the applicants should bear some of the cost, (2) in pressing to a hearing their claim for the whole cost, steadily inflated, despite expert advice, and (3) in not compromising on his settlement figure of $190,000.

78 The applicants have fallen short of their settlement figure on this aspect of the case by about 50% ($98,152 cf. $190,000), and have exceeded the Council's highest settlement offer by only $5,295 in circumstances where the court has extended a generous level of discretion to the applicants in regard to ancillary costs involved in the project.

79 They should not recover their costs on this issue, and should make a reasonable contribution to the costs incurred by the Council.

80 I have concluded that the relevant principles dictate that, in the interests of justice, the applicants should be ordered to pay 50% of the Council's costs in respect of the scour protection dispute, on a party-party basis.

81 As a result of the decisions contained in this judgment, orders 4 and 6 (the Fitzpatrick order re scour protection works and the reservation of costs), made on 22 July 2009, can now be discharged. Orders 3 and 4 made on 31 March 2010 (re further disposition of the matter following dismissal of the Notice of Motion) can also now be discharged.

82 The final consolidated orders to be made in the applicants' substantive proceedings are, therefore, as follows: Compensation (1) The claim based on the loss in Market Value is determined in the amount of $45,000. (2) The Disturbance claim in respect of the removal and replacement of unsuitable fill is declined. (3) The Disturbance claim in respect of the rectification and establishment of a vegetation screen at the front of the block is declined. (4) The Disturbance claim in respect of the installation of scouring control measures to the creek is allowed in the sum of $98,152 (5) The Disturbance claim based on legal, valuation and ancillary costs associated with the acquisition is determined in the amount of $5,000.

Costs (6) The respondent is ordered to pay, on a party-party basis, 75% of the applicants' costs of the substantive proceedings, up to and including 22 July 2009. (7) The order made on 31 March 2010 that the applicants are to pay the respondent's costs in respect of the Notice of Motion of 25 September 2009, as incurred on and after the filing of the original Notice of Motion on 10 August 2009, on a party-party basis, is confirmed. (8) The applicants are ordered to pay the respondent's costs in respect of the Notice to Produce withdrawn by the applicants on 20-21 May 2010. (9) The applicants are ordered to pay, on a party-party basis, 50% of the respondent's costs in respect of the substantive proceedings, on and from 23 July 2009 until the date of this judgment.

Exhibits (10) The exhibits tendered during the proceedings on 17-18 June 2010 ( Exhibits C1-C5 , and D1-D3 ) are to be returned, but all previous orders in respect of retaining some exhibits are confirmed.

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Judgment (93 paragraphs)

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Cases Cited (11)