El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979

Land and Environment Court (NSW)|2013-02-22|Before: Pepper J, The J, Mr J

The El Boustanis Seek an Additional Two Years of Lost Profits 1By notice of motion dated 19 January 2013, Mr Elias and Mrs Guita El Boustani ("the El Boustanis"), the applicants in compensation for compulsory acquisition proceedings, seek an order pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 ("the UCPR") (otherwise known as the 'slip rule') to correct the Court's calculation of compensation in relation to lost profits. 2The El Boustanis contend that the Court clearly intended to award five years compensation for lost profits but has instead only awarded three. The respondent, the Minister Administering the Environmental Planning and Assessment Act 1979 ("the Minister"), submits that no mistake has occurred and that the Court plainly intended to award three years of compensation for lost profits, which it did, and which is reflected in the Court's orders. 3The El Boustanis relied on correspondence passing between them and the Minister ventilating the issue. It is clear from this correspondence that the parties are in disagreement over the resolution of the question. 4In my opinion the Minister's position is correct and the application must be dismissed.

The Lost Profits Issue 5As stated in the principal decision (El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 [2012] NSWLEC 266) the El Boustanis grew tomatoes, cucumbers and other vegetables for wholesale on land that was, in part, compulsory acquired on 23 July 2010 by the Minister. 6Prior to the resumption date, the 2010 crop of tomatoes and vegetables had been planted for harvest in late December 2010 or early 2011. Despite initially being told by the Department of Planning that the 2010 crop could be harvested, notwithstanding the proposed resumption, the El Boustanis were subsequently informed on 20 September 2010 that they had to vacate the resumed land by 30 November 2010, thereby preventing them from harvesting the crops referred to above. 7In addition to the market value of the land and relocation costs associated with re-establishing their business elsewhere on a new property, the El Boustanis claimed lost profit by reason of the acquisition. 8By the conclusion of the proceedings the dispute concerning the award of lost profits had narrowed itself as follows: (a) it was not a matter of controversy that the compensation for the lost profits for the 2010-2011 and 2011-2012 years was payable (El Boustani at [138]); (b) for the 2010-2011 year the lost profits were agreed in the amount of $104,579, plus $11,221 (the costs thrown away occasioned by the forced abandonment of the 2010-2011 crop), for a total of $115,800 (El Boustani at [139]); (c) the Minister contended that only two years of lost profits were payable by way of compensation (2010-2011 and 2011-2012); (d) the El Boustanis submitted that four years of lost profits (2010- 2011, 2011-2012, 2012-2013 and 2013-2014) were payable. The claim by the El Boustanis for four years of lost profits was clearly articulated by them in their pleadings, their closing written and oral submissions and in their final updated claim table; (e) the evidence of the El Boustanis' expert forensic accountant, Mr Peter White, calculated the net present value of the total loss of profits based upon three years of lost profits (that is, ending with the 2012-2013 year). A three year time period was adopted by Mr White on the basis of Mr El Boustani's evidence that it would take 24 months to re-establish the business to a state where production could recommence once construction of new facilities was completed; and (f) at no point did the El Boustanis claim or make submissions to the effect that they were entitled to five years of lost profits. 9In El Boustani the Court relevantly dealt with the claim for lost profits in the following way (at [139] and [148]-[150]): 139. For the 2010-2011 year this sum was agreed in the amount of $104,579, which I accept. To this should be added $11,221, which the parties agreed the El Boustanis had incurred as costs thrown away occasioned by the abandonment of the 2010-2011 crop. This brings the total to $115,800 for the 2010-2011 year. ... 148. The El Boustanis also sought compensation for loss of profits for a further two years, namely 2012-2013 and 2013-2014. This represented the amount of time they estimated it would take to re-establish their business to the point of production after construction of the igloos (and related facilities) on any newly acquired property. Accordingly, the El Boustanis seek an amount of compensation in the sum of $121,511 for these additional two years. 149. The Minister's submission was that the El Boustanis were only entitled to an initial two years of lost profits, and that anything further could not properly be characterised as a direct and natural consequence of the acquisition because it was occasioned by the preference of the El Boustanis, as Mrs El Boustani expressed in her oral and written evidence, to wait until proceedings were finalised prior to purchasing a property with an existing dwelling located on it. Put another way, the lengthy delay in re-establishing their business arose as a consequence of the desire by the El Boustanis to "replace something different to that which has been acquired", viz, a farm with no home. 150. I do not agree. The evidence that it would take two years before a crop would be produced after the construction of igloos and related infrastructure on any new property was unchallenged and was not dependant upon whether or not the newly purchased property was vacant. Allowing for a year to find a new property and to construct the facilities necessary to grow tomatoes, in addition to the two years necessary to permit full production, in my opinion the El Boustanis should be compensated for a total period of three years of lost profits. That is to say, $115,800 + (2 x $60,755) = $237,310. I note that this approach is also consistent with the evidence of Mr White. 10Accordingly, disturbance for lost profits was calculated in the sum of $237,310. This was reflected in order 3(b) of the final orders (at [161]).

The Scope of the Slip Rule Today 11Rule 36.17 of the UCPR provides as follows: 36.17 Correction of judgment or order ("slip rule") If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error. 12The rule generally applies to the correction of clerical errors or accidental omissions or slips, that is to say, mistakes upon which no real difference of opinion can exist and upon which no further exercise of a court's discretion is required. It does not confer power to supplement or vary final orders by making substantive alterations to determine points that were not argued, considered or decided at the hearing. The relevant intention is the objective intention of the decision-maker at the time the original orders were made (George v Webb [2012] NSWSC 86 per Ward J at [26]). 13In Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 McHugh JA said in relation to the slip rule and the jurisdiction of the Court to correct accidental slips or omissions (at 449 E-G): The Courts of Common Law and the Court of Chancery had inherent power to correct any clerical mistake or error in a judgment or order if it was the result of an accidental slip or omission: Lawrie v Lees (1881) 7 App Cas 19 at 34-35. This power was an exception to the general principle that a party is bound by judgment or order once it has been drawn up unless he can set it aside: Kinch v Walcott [1929] AC 482. But although the principle of the slip rule is clear enough in conception, its application in practice has often proved difficult. The dividing line between a mistake or error which Is the result of an accidental slip or omission and a mistake or error which is the difficulty became much greater when it was decided that an error might be the result of an accidental slip or omission even though, because of the inadvertence of the party's legal representative, the point was not raised at the hearing of the action: cf L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1982) 151 CLR 590 at 594-595. 14In Storey & Keers his Honour further stated that the rationale of the slip rule "requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist" (at 453F). 15The scope of the slip rule was more recently considered by the Court of Appeal in Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411. In particular, the scope of the common law rule was assessed in light of s 56 of the Civil Procedure Act 2005 (or the overriding purpose rule). 16In Newmont Yandal the Court of Appeal observed that caution must be exercised in the application of case law from the past or from other jurisdictions when construing the slip rule in other contexts (at [117]). This was because (at [26]-[27]): 26. Accordingly, this Court, unlike other courts which have the traditional form of slip rule, is required to approach the task of interpreting the relevant words, including "error", "accidental slip or omission" and "correct", in such a manner as to give effect to the overriding purpose. Such an interpretive requirement may lead to different results in New South Wales when compared with the past or with other jurisdictions. 27. Similarly, the Court must seek to give effect to the overriding purpose when exercising the discretion to correct an error or mistake in a judgment or order pursuant to r 36.17. In each respect this constitutes a substantive difference, which requires the Court to treat prior case law and the case law from other jurisdictions with some care. 17Not dissimilar to Newmont Yandal, this case concerns an 'error' and not a 'clerical mistake'. But as Spigelman CJ noted in Newmont Yandal what constitutes an 'error' that is suitable for correction under the slip rule is more elusive (at [23]): ... There is a substantial body of case law about whether or not a particular "slip or omission" was "accidental". There is a more limited body of case law on what constitutes an "error" and what is a permissible "correction". It is, of course, important that the Court apply the actual formulation in the rule. Many of the cases, for example those which state that a "deliberate" decision is not within the rule, can be understood as a way of expressing the proposition that the act or omission there relied upon was not "accidental". 18Thus if a judge "assesses the evidence wrongly or misconstrues or misappreciates the law, the resulting award or judgment will be erroneous but it cannot be corrected ... The remedy is to appeal" (Mutual Shipping Corp of New York v Bayshore Shipping Co [1985] 1 All ER 520 at 530 per Donaldson MR, quoted in George v Webb at [23]). 19However, in Newmont Yandal, after reviewing the authorities, the Court of Appeal held that by reason of the insertion of the overriding purpose objective into the Civil Procedure Act the slip rule may be applied to carry into effect the actual intention of the judge making the order to ensure that the order did not have a consequence which the judge clearly intended to avoid (at [116]). As a result, orders may be corrected under this rule to avoid or ameliorate "an unforeseen and unintended legal consequence" (at [58] and see also at [60]). 20It is on this latter more expansive conceptualisation of the slip rule that the El Boustanis rely.

The Court Intended to Award Three Years Lost Profits 21The El Boustanis submitted that awarding only three years lost profits could not have been what the Court intended having regard to the earlier findings made by it. This was premised on, it was argued, the Court's acceptance of Mrs El Boustani's unchallenged evidence, first, "that it would take two years before a crop would be produced after the construction of igloos and related infrastructure on any new property" (El Boustani at [150]), and second, the fact that no new property had been purchased because of the El Boustanis' desire not to do so until after the proceedings were finalised (El Boustani at [149]). The correspondence passing between the parties referred to above indicates that, at least as at 14 December 2012, no new property has been purchased by the El Boustanis. 22According to the El Boustanis, it is "clearly apparent" that, in addition to the lost profits for the 2010-2011 and 2011-2012 years, the Court intended to award compensation to them for the three years referred to at [150] of the reasons for judgment. Furthermore, the period referred to in the judgment commences now, that is to say, after judgment has been finalised and after the El Boustanis have already lost the 2010-2011, 2011-2012 and 2012-2013 crops. While it is correct that the their initial claim in the proceedings was for four years lost profits, this was conceived in late 2011, and a further year's crop has since been lost. 23Finally, the El Boustanis submitted that to the extent that Mr White only calculated lost profits for three years, this evidence is immaterial given that he was instructed to perform the assessment nearly two years ago. 24According to the El Boustanis, it is for these reasons, therefore, that the Court should award the compensation for an additional two years of lost profits in the amount of $60,755 per year. 25There is no doubt the Court's reasoning on the number of years of lost profits payable could, and should, have been expressed more clearly. I agree with the, at least implicit if not explicit, submission of the El Boustanis that the judgment is equivocal in this regard. This is regrettable. Parties deserve transparency and pellucidity in judicial reasons. Having said this, a fair and reasonable reading of the judgment in context nevertheless reveals that it was the intention of the Court to award a total of three years of lost profits, commencing from the resumption date, and no more. The reasons for this are explained below. 26First, it is plain that the commencement of the three year period for the calculation of the lost profits was, as the parties submitted to the Court throughout the proceedings, and as the Court accepted, the date of resumption. It was never, as is presently contended, at the finalisation of the proceedings. 27Second, the rejection in El Boustani at [150] ("I do not agree") of the Minister's submission seized upon by the El Boustanis for the purpose of this application was a rejection of the submission that anything beyond two years of lost profits could not be characterised as a direct and natural consequence of the acquisition by reason of Mrs El Boustani's desire to wait until proceedings were finalised before purchasing a new property. In so doing, the Court also rejected the related submission that the delay giving rise to a claim for additional lost profits beyond two years was not causally connected to the claim because the El Boustanis were seeking to replace the acquired land (with no dwelling) with something different (a property with an existing dwelling). But this rejection must be read in its proper context, namely, having regard to the contention of the Minister that no more than two years of lost profits ought to be awarded by the Court. The Court disagreed with this assertion. But it does not follow that the Court accepted the position that the El Boustanis now contend for. 28Whereas the Minister was only willing to entertain a year within which to establish full production on any newly acquired property, the Court accepted that two - and not three - years was necessary (as a direct and natural consequence of the acquisition) in light of the evidence. It did not amount to the Court accepting that, as is suggested, the El Boustanis were entitled to wait until the proceedings were concluded in order to purchase a new property, construct new facilities and commence production, and, in the process, accumulate additional years of lost profits. 29Third, as a matter of inference, it must follow that the Court rejected the El Boustanis' claim for four years of lost profits. It did so on the basis of Mr El Boustani's unchallenged evidence that it would take two years before crops would be produced after the construction of igloos on any newly purchased property, and on the basis of allowing the El Boustanis a year within which to purchase the property (either with or without a dwelling on it) and to build new facilities. Hence the Court arrived at an award of three years lost profits commencing in 2010-2011, that is to say, as at the acquisition date. 30Fourth, in bringing this application the El Boustanis have assumed that the Court endorsed their preferred position to wait until the proceedings were finalised prior to purchasing a new property upon which to re-establish their horticultural business. The Court did no such thing. To reiterate, the Court rejected the Minister's submission (El Boustani at [150]) only insofar as it was relied upon by the Minister to deny the El Boustanis an additional year in order to establish production. It did so because it was not consistent with evidence that this would take two years and not one. Findings were made to this effect (at [150]). However, and at the risk of repetition, this cannot be equated with a finding by the Court of an entitlement by the El Boustanis to claim for lost profits until such time as the proceedings were finalised, a new property was acquired and production was established. 31Fifth, it was never any part of the claim put forward by the El Boustanis that they were claiming five years of lost profits. It was therefore not a matter addressed by either party at the hearing. 32To correct the orders at this stage for the reasons put forward by the El Boustanis would, in my view, result in an impermissible exercise of the power contained in r 36.17 of the UCPR. This is because it would require an exercise of an independent discretion on a matter upon which a real difference of opinion exists, namely, that the El Boustanis were entitled to wait until the proceedings were finalised prior to purchasing a new property and recommencing their business. Such an 'error' cannot be properly characterised as 'accidental' for the purpose of the slip rule. Rather, if the El Boustanis consider that the Court has misconceived or assessed the evidence incorrectly, and that therefore, the resulting award of compensation is erroneous, this is an error not amenable to be corrected pursuant to the slip rule, but must, instead, be remedied upon appeal. 33For these reasons the application must be dismissed.

Each Party Should Bear Their Own Costs 34An 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 (Dillon v Gosford City Council [2011] NSWCA 328; (2011) 184 LGERA 179 at [71]). By logical extension this ought to include any application to have orders corrected pursuant to an exercise of the slip rule. 35Although the El Boustanis have not succeeded on their application, in my opinion, no adverse costs consequences should result. This is because the application was reasonable, with no disentitling conduct engaged in by them. I therefore propose to order that each party pay their own costs in respect of this application. I note that this order was not opposed by the Minister.

Orders 36For the reasons given above the application is dismissed with each party to pay their own costs. The sole exhibit is to be returned.

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: 07 March 2013

(2011) 184 LGERA 179

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