(c) principles in relation to costs
60The power to award costs in Class 3 proceedings in the Land and Environment Court arises under s 98 of the Civil Procedure Act . That section provides that "costs are in the discretion of the court": s 98(1)(a). The provision is said to be subject to rules of court and to any Act: the primary rule in that regard is UCPR r 42.1, which provides that "the court is to order that costs follow the event unless it appears to the court that some other order should be made ...". However, as the Council pointed out in a note following the hearing of the appeal, r 42.1 is an excluded provision in respect of proceedings in classes 1, 2 and 3 of the Land and Environment Court's jurisdiction: UCPR, Schedule 1. Accordingly, the discretion remains unfettered, in the sense that there is no presumption that costs should follow the event. Although the primary judge referred to assessing costs on an "issues won and lost" basis, it does not appear that he placed explicit reliance upon a principle that costs should follow the event, which would, in the circumstances, have been erroneous.
61The written submissions in this Court sought to reagitate factors said to favour a different conclusion with respect to the award of costs. They did not demonstrate the adoption by of any erroneous principle. However, the appellants asserted that, whilst acknowledging its significance, the primary judge failed to apply the principle stated by Talbot J in Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 209; 110 LGERA 223, that there must be "a strong justification 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": at [17].
62Talbot J rejected the suggestion that it was appropriate to distinguish, in the circumstances before him, as to success or failure on particular issues, or heads of compensation. He did, however, acknowledge that there were cases in which that course had been taken and cases in which a claimant who was entirely unsuccessful on a clearly defined and separate issue might lose part of the costs which would otherwise be ordered.
63In Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2010] NSWLEC 27 at [35] Biscoe J identified a general principle that "a person who has had their land taken by way of compulsory acquisition should not bear their own costs, but rather should be allowed to access the Court to present an arguable and well organised case without being deterred by the prospect of being ordered to pay costs if the case proves unpersuasive". Jagot J stated in Simpson v Bagnall [2008] NSWLEC 79 at [10] that "in the ordinary course, a dispossessed owner can expect to obtain the usual order for costs in their [sic] favour, particularly when the amount of compensation determined is greater than that offered by the resuming authority".
64The principle thus stated was expressed in similar, though less unequivocal, terms by Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 at 51. However, the underlying principle has a longer history, a clear exposition being found in the judgment of Wells J in Minister for the Environment v Florence (1979) 21 SASR 108 at 134-135.
65All of these authorities, and many others, were cited in a comprehensive review of the relevant cases by Pepper J in Halley v Minister Administering the Environmental Planning and Assessment Act 1979 (No 3) [2011] NSWLEC 94 at [43]-[46]. Her Honour then held at [47]:
"As the case law currently exists there is, in my view, a tension between the statutory framework discussed above, namely, that generally costs follow the event, and the 'different [principles]' that have evolved outside this legislative context for determining costs in cases concerned with compensation for the compulsory acquisition of land."
66The words "outside this legislative context" may be ambiguous, but the asserted tension appears to depend upon the assumption, set out at [37] in her Honour's reasons, that r 42.1 of the UCPR applies to such cases: as already noted, it does not. Accordingly, the tension is only material to the extent that weight may properly be given to a successful outcome.
67The appellants did not identify any clear statement within the reasons given by the primary judge, demonstrating an erroneous decision on a question of law. Rather, they argued that his Honour failed to adopt a strong presumption in favour of claimants for compensation receiving their costs of proceedings in the Court. That presumption was sought to be derived from a number of provisions in the Act, including:
(a) the fact that a compulsory acquisition is, by definition, an exercise of the power of eminent domain over the rights of owners in land;
(b) the guarantee of just terms compensation defined as "not less than the market value of the land (unaffected by the proposal) at the date of acquisition" - see ss 3(1)(a) and 37;
(c) the requirement that the acquiring authority offer compensation in an amount determined by the Valuer-General - s 42(1);
(d) the requirement that the amount of compensation be such as will "justly compensate the person for the acquisition of the land" - s 54(1), and
(e) the provision for recovery of "legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land" - s 59(a).
68To the extent that the last factor might be said to override any general principles in relation to the discretionary award of costs in respect of litigation, the appellants called in aid the statement in s 8 that the Land Acquisition Act prevails, to the extent of any inconsistency, over the provisions of any other Act, which they submitted should include the Civil Procedure Act .
69The last contention cannot be accepted, nor can the reliance placed on s 59(a). Section 8 only confers priority on the provisions of the Land Acquisition Act over provisions of "any other Act relating to the acquisition of land ...": the Civil Procedure Act is not properly so characterised. Further, it is clear from its position in the Land Acquisition Act , as a basis for the proper calculation of compensation under Part 3, Div 4, s 59(a) is to be read as referring to legal costs incurred otherwise than in pursuit of valuation litigation, so that it operates, consistently with other paragraphs in s 59, to allow inclusion of a fixed sum in a claim and to permit, consequentially, inclusion of that amount in a judgment, regardless of the allocation of the costs of the litigation.
70In other respects, however, the appellants' propositions may be accepted. They support the proposition that a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense.
71That approach is also consistent with the absence of any general presumption that costs should follow the event: the owner who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered.
72Whether steps taken in maintaining proceedings are reasonable will depend upon the circumstances of the particular case. These may include a comparison between the positions adopted by the parties at the commencement of proceedings and the final outcome. To the extent that a claimant obtains less than the valuation provided by the Valuer-General, the claimant has been unsuccessful in the litigation. That will be a factor to be taken into account, but the weight given to that factor may depend upon the extent of the failure. The Court may also take into account the time and expense incurred in relation to specific items. Beyond such general statements, it is unhelpful to go, lest the very generality of the discretion be thought to be fettered in some way. In short, the purpose of an award of costs must be taken into account, namely to compensate the party for expenditure incurred in the course of litigation; the nature of the litigation and the reasonableness of the conduct of the litigation are central considerations.