First Plaintiff Second Plaintiff v First Defendant Second Defendant

First Plaintiff Second Plaintiff v First Defendant Second Defendant - [2012] VSC 67 - VSC 2012 case summary — Zoe

[99]

44 Ordinarily when considering the basis upon which costs are to be awarded, the parties' conduct before the commencement of proceedings is not relevant.[46] Nevertheless, the knowledge that a party has is relevant to an assessment of his or her conduct as a litigant.[47] Additionally, paragraphs 26(2)(d) and (e) of the Act make directly relevant to the question of costs the conduct of a party during the objection process. More particularly, as appears from the 2011 judgment, it is clear that Challenger did not properly consider the matters raised in Mr Webb's response or, alternatively, proceeded with its objection and the proceedings despite what was said to Mr Jackson, its valuer, in clear terms. I accept the submissions against Challenger that it would be implausible to think that Mr Jackson would not have discussed Mr Webb's initial response letter with representatives of Challenger. The alternative factual hypothesis would be even worse for Challenger in relation to this issue. I have, as indicated, already expressed views on these matters in the 2011 reasons for judgment so the only new point raised in the Challenger submissions is to the effect that Challenger reasonably and properly relied on the expertise and advice of Mr Jackson in assessing its position. I reject this argument for two reasons. First, the evidence indicated that Challenger was itself well aware of the development potential of the subject property, the Jam Factory site, and did not ensure that its experts were fully informed in this respect. Secondly, it is not open to a party, particularly, a sophisticated and experienced public company such as Challenger, to seek to avoid the consequences of its own omissions by relying upon the mistakes and omissions of an expert, such as Mr Jackson.[48] The final irony in the Challenger submission was the argument that when Mr Jackson was informed of his mistakes and omissions, he re-assessed the position and, at least substantially, maintained his position, his expert opinion. It is not necessary now to re-open my consideration and comments on the expert evidence which are contained in the 2011 reasons for judgment, save to say that I do not regard Mr Jackson's adherence to his position as a positive feature of his evidence or conduct as an expert. Quite the contrary, it reinforced my criticisms and adverse assessment.

[112]

53 Challenger submitted that as matters transpired, the Valuer-General did not subrogate Stonnington, and Stonnington and the Valuer-General were not jointly represented. It was said that, instead, Stonnington and the Valuer-General were separately represented and called separate valuation evidence. Challenger submitted that this was in circumstances where Stonnington and the Valuer-General ran cases that were substantially similar, thereby duplicating time and hence increasing cost. Further, it was said that the position was exacerbated because there were also material differences in their cases, which caused the trial to be further prolonged. In particular, it was said that it was only the Valuer-General that disputed Challenger's position as to the proper interpretation of the definition of "capital improved value" in the Act. Consequently, Challenger submitted that had the proceeding remained between the "true protagonists", this issue would not have arisen in the proceedings as it did. Additionally, it was said that Stonnington and the Valuer-General contended for different values, in reliance upon separate valuers, with materially diverging analyses, and cross-examined each others' valuers. The effect was, it was claimed, a very substantial prolongation of the trial, which was quite the reverse of the basis on which the joinder application was made and allowed by VCAT. More particularly, Challenger submitted that the trial would have taken not more than 12 days, rather than 20 days, had Challenger faced only the Stonnington case against it.[55] Consequently, it was said that as a result of the joinder of the Valuer-General, Challenger has been prejudiced by having to run this proceeding at trial for an additional eight days and, further, by reason of this joinder, Challenger has costs exposure which it would not otherwise have had. If the Valuer-General's application for costs succeeds, it says, Challenger would be prejudiced by having to pay the Valuer-General's costs, including 20 days of trial with both senior and junior counsel. If Stonnington's application for costs succeeds, it says, Challenger would be prejudiced by having to pay Stonnington's costs for an additional eight days. Finally, Challenger noted in its submissions that it put Stonnington and the Valuer-General on notice of these issues and the position it would take as to costs if it were unsuccessful at trial.[56]

[113]

54 Additionally, Challenger submitted that the Court has strong grounds to exercise its discretion to order the Valuer-General to bear its own costs in this proceeding on the basis of the well established principle that costs may not be awarded where a party has used the proceeding to run a test case of wide application,[57] especially where a test case has been run by a state agency.[58] In this respect, Challenger said that the Valuer-General sought and was granted leave to join the proceeding principally to run it as a test case on the issue of vacant to let allowances for the calculation of capital improved value as defined by the Act, and that is what the Valuer-General proceeded to do. Challenger submitted that was explicit in the Valuer-General's Further and Better Particulars of his joinder application.[59] At the hearing in VCAT of the Valuer-General's application for joinder on 18 September 2009, Mr Morris QC, Senior Counsel for the Valuer-General, identified this as a question of principle "that raises very interesting important valuation issues".[60] Mr Morris QC submitted that "that point of principle is one that has very important ramifications in breadth and depth - that is in the amount of value it will affect and the amount of properties it will affect".[61] This submission was accepted by Deputy President Dwyer.[62] Later, on 25 June 2010, Osborn J, in this Court, accepted the Valuer-General's submission that the proceeding raised legal questions of general importance and ordered the uplift of the matter from VCAT to this Court.[63] This position was emphasised, Challenger said, at the opening of the trial in this Court when Senior Counsel for the Valuer-General described the interpretation of the definition of capital improved value under the Act concerning the "vacant to let" allowance as the "fundamental" reason for the Valuer-General's involvement.[64] It was, nevertheless, submitted against Challenger that the Valuer-General's involvement in this respect does not take the proceeding into the realm of being a "test case" - at least vis-à-vis the Valuer-General and Challenger. In my opinion, this is the correct view in light of the authorities relied upon by Challenger and the other parties in relation to this issue. The position (generally and with respect to these proceedings) is encapsulated in the following passage from the judgment of Kyrou AJA in DPP v Ali (No. 2):[65]

[148]

"61. The Plaintiff's position as to the additional time of trial appears to be premised upon:

(a) a prima facie entitlement to compensation for costs incurred by reason of the VG's involvement alone, rather than the VG's conduct as a successful party (which is not impugned); and

(b) prima facie liability for only that portion of Council's costs that would have been incurred by Council had the VG not been joined.

62. It is submitted this premise is an improper basis for considering costs, notwithstanding the discussed [sic] that ensued before the Tribunal on 18 September 2009 (as to which see paragraphs 16ff of the Walsh affidavit). The Court's discretion as to costs under Order 63 and section 26 of the VLA should not be constrained by those discussions.

63. Further, even if the particular circumstances of the VG joinder application are relevant, it cannot be said that the Defendants (and certainly not Council) agreed that the Plaintiff should be compensated because of any addition whatsoever to the length of trial.

64. The Plaintiff also ignores the extensive time, both prior to trial and during it, in uncovering and addressing the 'Challenger proposal' as discussed in the reasons at paragraphs [91] - [158], occupying 42 pages of the reasons. The issue was, quite obviously a substantial and necessary part of the proceeding. Had the Plaintiff been more forthcoming about the Challenger proposal, it is likely the issue would have taken up substantially less time since it was necessary for there to be extensive submissions and for each valuer to comment upon it.

65. Gadens letter of 1 October 2010 (see exhibit PJW12 to the Walsh affidavit) had already put the Defendants on notice in relation to the Plaintiff's concern to avoid additional costs and time of trial by reason of separate representation leading to duplication of cross-examination or any leading questions in relation to common interests. Although the letter stated that the Plaintiff would raise these matters with the Court during the hearing, there was no need for objections from Counsel for the Plaintiff as to any such instances, nor any directions from the Court. It is therefore submitted that the Plaintiff's concerns were observed in the running of the trial."

[151]

69 For the reasons set out above, I am of the opinion that it could not be said that either Stonnington or the Valuer-General agreed in the course of the joinder application in VCAT that Challenger should be compensated as a result of any additional time and consequent cost consequences of the Valuer-General's joinder. Further, both Stonnington and the Valuer-General had separate and distinct statutory responsibilities, hence interests in the issues raised in the proceedings by Challenger; both having regard to the issues raised and the high value of the subject property. Challenger could reasonably have expected to meet these two parties as defendants in the proceedings. Thus the joinder of the Valuer-General cannot properly be regarded as in the nature of an "indulgence" - so that it could run a test case or on any other basis - hence the only issue of relevance, in my view, is whether there is any basis to say that Stonnington and the Valuer-General did not take responsible steps to ensure that any additional time flowing from the joinder of the Valuer-General was reduced "as far as practicable". In my opinion, this was achieved, as submitted by Stonnington and the Valuer-General, and any duplication in the proceedings flowing from the joinder of the Valuer-General was minimised as far as was practicable having regard to the nature of the proceedings. Further, and importantly, having regard to the statutory responsibilities conferred on the Valuer-General by Parliament under the provisions of the Act, it could not be contemplated, in my view, that it would necessarily follow that a successful application by the Valuer-General for joinder to proceedings in discharge of these statutory functions or obligations would result in a denial of entitlement to costs under the provisions of the same legislation conferring these responsibilities - particularly where any additional time spent and consequent cost flowing from the joinder was reduced as far as practicable having regard to issues properly raised in this context. I therefore reject Challenger's claim that there was any relevant prejudice as a result of joinder of the Valuer-General. Consequently, Stonnington is entitled to its costs for the proceeding for the entire 20 days of the trial and the Valuer-General is also entitled to costs on the bases otherwise found.

At a glance

Court

Decision date

Before

Source

Judgment (246 paragraphs)

Parties

Legislation Cited (40)

Cases Cited (9)