G Capital Corporation Pty Limited v Transport for NSW; Gertos Holdings Pty Ltd v Transport for NSW; Marsden Developments Pty Ltd v Transport for NSW

TABLE OF CONTENTS Introduction The extent of the costs argument The hearing Relevant statutory provisions Representation The additional evidence for the costs hearing The submissions Introduction The written submissions The primary position advanced for TfNSW The response from the Gertos interests Reply submissions from TfNSW The rejoinder submissions from the Gertos interests to TfNSW's reply The oral submissions The oral submissions for TfNSW The oral submissions for the Gertos interests The oral submissions in reply for TfNSW A supplementary response for the Gertos interests Consideration Introduction The abandonment of a s 59(1)(f) claim Mr Gertos' business arrangements The decision in SNS Conclusion Costs of the costs hearing Orders

Introduction

1. On 20 May 2021, in G Capital Corporation Pty Limited v Transport for NSW; Gertos Holdings Pty Ltd v Transport for NSW; Marsden Developments Pty Ltd v Transport for NSW [2021] NSWLEC 44 (my May judgment), I determined the compensation payable to G Capital Corporation Pty Limited, Gertos Holdings Pty Ltd and Marsden Developments Pty Ltd (the Gertos interests) for the compulsory acquisition of three adjoining properties on Parramatta Road at Annandale. There were two distinct elements that were required to be dealt with in my May judgment. The first was the market value compensation to be paid to each of the Gertos interests for the property which had been acquired from that entity (s 59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1992 (the Land Acquisition Act)). The second was a claim by each of the Gertos interests for payment of a stamp duty equivalent amount pursuant to s 59(1)(d) of the Land Acquisition Act.
2. As part of the first element, I also dealt with a cross‑claim by Transport for NSW (TfNSW) against an unrelated entity, Portman Securities Pty Ltd (Portman), to which TfNSW had paid compensation for an interest said to be held pursuant to a contract for purchase from Marsden Developments Pty Ltd, due to settle after the date of the compulsory acquisition of the three properties by TfNSW for the purposes of the Westconnex project. TfNSW was successful on the cross‑claim and Portman was ordered to repay TfNSW the market value amount which Portman had been paid. Portman was also ordered to pay TfNSW's costs of the cross‑claim (resulting in this decision being confined solely to costs issues between TfNSW and the Gertos interests).
3. It is unnecessary to set out any detail associated with the market value element of my determination of compensation, save to note that TfNSW's cross‑claim was successful and, with that, an agreement between all the Gertos interests and TfNSW as to market value was crystallised, thus resolving those elements of the Gertos interests' claims in a fashion reflecting that agreement.
4. However, the second separate element requiring determination related to claims by each of the Gertos interests for a stamp duty equivalent amount reflecting the quantum of such duty as would arise if each of the Gertos interests acquired a new property to a value equivalent to the market value of that which had been compulsorily acquired from it. I determined that each of the stamp duty equivalent payment claims was to be rejected.
5. It is to be noted that the hearing giving rise to my determination of compensation payable to the Gertos interests was held in two distinct phases, those phases reflecting the two elements described above as arising for determination.
6. At the conclusion of my May judgment, at [213] to [217], I said the following with respect to the costs of the proceedings: Costs 213 As TfNSW has been entirely successful in its cross‑claim against Portman Securities, in Matter No 207366 of 2018, Portman Securities should be ordered to pay TfNSW's costs of the cross‑claim as agreed or assessed. Given the extremely limited participation by the Pamboris interests in the proceedings, this is the appropriate limit of those interests' cost exposure. 214 As to the position between each of the Gertos entities and TfNSW, two matters are to be observed impacting on the costs position between the relevant Gertos entity and TfNSW. For the two proceedings involving G Capital and Gertos Holdings, market value and all other statutory compensation issues other than the claim for disturbance pursuant to s 59(1)(d) of the Land Acquisition Act have been agreed with TfNSW. 215 In the third proceedings, Marsden Developments has succeeded in its substantive position that Portman Securities was not entitled to any market value compensation for 166-172 Parramatta Road, Annandale. On this basis, as I understand the position, market value and all other statutory compensation issues (other than the claim for disturbance pursuant to s 59(1)(d) of the Land Acquisition Act) concerning Marsden Developments have been agreed with TfNSW. 216 However, TfNSW has successfully resisted the claim of each Gertos entity for stamp duty equivalent compensation pursuant to s 59(1)(d) of the Land Acquisition Act with respect to the compulsory acquisition of the property acquired from that entity. 217 Having regard to these various outcomes between the Gertos entities and TfNSW in each of the proceedings, the appropriate position is that costs between each Gertos entity and TfNSW should be reserved unless agreement is reached between the relevant Gertos entity and TfNSW on costs in each proceeding.
7. This further decision addresses the dispute which has now arisen between the Gertos interests and TfNSW as to the extent to which the Gertos interests should have their costs of the proceedings paid by TfNSW.

The extent of the costs argument

1. TfNSW does not contest that the Gertos interests are entitled to be reimbursed their costs arising from that element of the proceedings addressing the first element, the Gertos interests' market value claim and TfNSW's cross‑claim. As a consequence, to the extent that the parties' submissions address (as a primary submission or in response) matters of costs concerning the market value claim of the Gertos interests, it is unnecessary for me to consider those matters.
2. The position put on behalf of the Gertos interests concerning costs is a simple one. It is that TfNSW should pay the Gertos interests' costs of the complete proceedings on the ordinary basis.
3. On the other hand, TfNSW contends for a different costs regime. It proposes that the Gertos interests should be entitled to their costs, excluding those relating to the costs arising out of the Gertos interests' claims for stamp duty equivalent payments. TfNSW proposes that the Gertos interests should pay its costs of the stamp duty equivalent payments' element of the proceedings resulting in TfNSW proposing that the following costs orders be made in each of the proceedings: 1 The First Respondent is to pay the Applicant's reasonable costs of the proceedings, excluding those costs relating to the Applicant's claim for compensation for stamp duty under ss 59(1)(c), (d) or (f) of the Land Acquisition (Just Terms Compensation) Act 1991, on a party-party basis as agreed or assessed. 2 The Applicant is to pay the First Respondent's reasonable costs of the proceedings relating to the Applicant's claim for compensation for stamp duty under ss 59(1)(c), (d) or (f) of the Land Acquisition (Just Terms Compensation) Act 1991 on a party-party basis as agreed or assessed.
4. It is to be noted that the Second Respondent in each of the three proceedings did not take part in (and had no reason to take part in) the costs dispute between TfNSW and the Gertos interests being dealt with in these costs proceedings.

The hearing

1. A short costs hearing was held on 26 July 2021. It was held, as a consequence of the COVID‑19 pandemic, using Microsoft Teams software, without the necessity for any physical attendance in the courtroom. These hearings were conducted in accordance with the Court's then operating COVID-19 Pandemic Arrangements Policy.

Relevant statutory provisions

1. For present purposes, it is appropriate to repeat the terms of s 59(1) of the Land Acquisition Act that require consideration in these costs proceedings. The relevant elements of the provision are in the following terms: 59 Loss attributable to disturbance (1) In this Act - loss attributable to disturbance of land means any of the following - (a) …, (b) …, (c) …, (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) …, (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

Representation

1. TfNSW was represented on the issue of costs by Mr M Astill, barrister. The Gertos interests were represented by Mr P Tomasetti SC and Mr J Johnson and Mr T Poisel, barristers.

The additional evidence for the costs hearing

1. For the purposes of the costs hearing, limited evidence was tendered of correspondence between the legal representatives of the parties. For the Gertos interests, an exchange of correspondence between the legal representatives concerning any potential special leave application to the High Court to appeal out of time against the Court of Appeal's decision in G Capital Corporation Pty Ltd v Roads and Maritime Services [2019] NSWCA 234 became Exhibit J.
2. For TfNSW, a bundle of four items of correspondence between its legal representatives and the legal representatives of the Gertos interests was tendered, becoming Exhibit 8. This correspondence covered the period 23 December 2020 to 1 February 2021.
3. As a matter relevant to timing issues, it is to be noted that the final item in Exhibit 8 was a letter from Mr Ristevski (the Gertos interests' solicitor) to TfNSW's legal representatives, in which Mr Ristevski confirmed, by necessary inference, that the Gertos interests claim for stamp duty equivalent payments was, at that time, advanced pursuant to s 59(1)(f) of the Land Acquisition Act. Paragraph 11 of Mr Ristevski's letter dated 1 February 2021 said: 11 If it assists, subject to the applicants reserving their rights in respect of the High Court's decision on the applicants' Special leave application, I can confirm that the s 59(1)(f) claim will be limited to the stamp duty costs of purchasing replacement property on account of the acquisition of the acquired land.

Introduction

1. In addition to the oral submissions made at the short costs hearing held on 26 July 2021, I had been provided with four separate sets of written submissions. These comprised: 1. Primary submissions from TfNSW in support of its proposed costs outcome. These submissions were dated 10 June 2021; 2. Written submissions in response on behalf of the Gertos interests were filed on 2 July 2021; 3. Although no directions for reply submissions on behalf of TfNSW had been made, reply submissions were filed shortly before the costs hearing on 26 July 2021 and 4. Response submissions to TfNSW's reply submissions were filed on behalf of the Gertos interests on 25 July 2021.
2. Although the Gertos interests rejoinder submissions to those made by TfNSW in reply complained that TfNSW's reply submissions had been made without notice to the legal representatives of the Gertos interests, and without the leave of the Court, I pay no regard to that for the purposes of assessing the merits of whether or not I should make a differential costs order concerning the stamp duty equivalent claims made on behalf of the Gertos interests.
3. Although the above noted submissions were comprehensive, it is to be observed that, as discussed below, the issues requiring consideration concerning the costs of the stamp duty equivalent payment claims can be summarised comparatively simply.
4. It is appropriate to summarise the various sets of written submissions prior to turning to consider the extent to which the oral submissions at the costs hearing expanded upon the positions earlier adopted in writing.

The primary position advanced for TfNSW

1. TfNSW's written submissions commenced by acknowledging that the general proposition was that a dispossessed owner, if acting reasonably in undertaking proceedings disputing the quantum of compensation to be paid, should have the acquiring authority pay costs of the proceedings provided that the dispossessed owner does not act in any disentitling fashion. Whether the dispossessed owner has undertaken the proceedings in a reasonable fashion requires assessment of the facts and circumstances of each individual case (citing Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon) at [70] to [72]). The submissions noted that the approach set out in Dillon had been followed in Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 (Brock).
2. TfNSW's submissions then cited further decisions confirming the general proposition that a dispossessed owner ought, ordinarily, recover the costs of the proceedings unless there was conduct on behalf of the dispossessed owner that warranted departure from such a position, even if the dispossessed owner was unsuccessful in the claim pursued.
3. It is to be noted that TfNSW expressly disavowed any suggestion that the stamp duty equivalent payment claims on behalf of the Gertos interests were either vexatious or dishonest (written submissions of 10 June 2021 at paragraph 16).
4. TfNSW's written submissions then set out two extracts from my May judgment as summarising the reasons why the stamp duty equivalent payment claim for the Gertos interests was rejected. These were [173] to [175] and, specifically as to costs, two paragraphs ([214] and [215]) - these appearing in the earlier reproduced costs extract of my May judgment at [6] of this judgment.
5. TfNSW accepted that the rejection of the stamp duty equivalent payment claim did not, in itself, mean that the Gertos interests were not entitled to their costs of this element, nor that TfNSW was, in itself, entitled to its costs of this element (written submissions at paragraph 19).
6. However, TfNSW submitted that this aspect of the Gertos interests' claim was unreasonable and gave rise to unnecessary expense. Four reasons were advanced in support of this proposition. These were:

• the claim had originally been advanced as founded on s 59(1)(f) of the Land Acquisition Act, with this position being maintained only until its abandonment during the course of the costs hearing. As a consequence, TfNSW incurred costs in responding to the claim advanced on this basis;
• although there is not an automatic disentitlement to costs for an unsustainable claim, this more lenient position does not apply to claims that are untenable or impermissible (as TfNSW submitted was the position with respect to the stamp duty equivalent payment claims);
• the first instance decision of Pain J, in G Capital Corporation Pty Ltd; Gertos Holdings Pty Ltd; Marsden Developments Ltd v Roads and Maritime Services [2019] NSWLEC 12 (upheld by the Court of Appeal), that there was no actual use of the land meant that there was no basis for any compensation claim founded on s 59(1)(f). A claim founded on this provision was impermissible and that this impermissibility was obvious (relying on [174] of my May judgment. As a consequence, the stamp duty equivalent payment claim based on relocation was doomed from the beginning. As there was no actual use by any of the Gertos interests of the property acquired from it, there could not be any relocation from it. It was clearly unreasonable to press such a claim following the decision of Pain J and it being upheld by the Court of Appeal.

1. The fourth basis upon which TfNSW proposed that the stamp duty equivalent payment claim lacked foundation was because the finding by Pain J that there was no actual use of the land precluded the reagitation of that proposition in the proceedings before me (relying on the discussion of issue estoppel and/or abuse of process in Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28).
2. Finally, TfNSW submitted that the Gertos interests had not relied on specialist expert advice in pursuing the claim for the stamp duty equivalent payment and thus, as a consequence, could not rely on such advice as providing any basis for pursuing an unsuccessful claim.
3. As a consequence, TfNSW submitted that there was no basis upon which the Gertos interests were entitled to their costs of the stamp duty equivalent claim and, to the contrary, it was appropriate that those interests be ordered to pay TfNSW's costs of that element of the proceedings.

The response from the Gertos interests

1. Mr Tomasetti's written submissions for the Gertos interests commenced by citing the decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno), a decision which confirmed that, in compulsory acquisition compensation cases, the dispossessed owner should ordinarily have their costs met by the acquiring authority unless the case pursued by the dispossessed owner was "a vexatious, dishonest or grossly exaggerated claim", or the claim was one which was presented in such a way as to impose unnecessary burdens on the acquiring authority or the Court.
2. Mr Tomasetti noted that these propositions had been cited with approval in Brock at [82]. In doing so, Tobias AJA accepted the proposition that where there had been a reasonable pursuit of the claim, one which did not give rise to unnecessary delay or expense in its determination, the dispossessed owner should have their costs of the proceedings.
3. Mr Tomasetti sought support for understanding what might constitute vexatious litigation in the context discussed by Wilcox J in Banno from the definition of "vexatious proceedings" in the Vexatious Proceedings Act 2008.
4. He submitted that, in the context of these proceedings, their commencement by the Gertos interests was not vexatious, nor were they conducted as an abuse of process to harass or annoy, without reasonable grounds, or for a wrongful purpose (adopting the phrasing from the definition in the above cited statute).
5. Mr Tomasetti's submissions on behalf of the Gertos interests then said, at paragraph 11: The Applicants' claim for stamp duty was not manifestly hopeless, or devoid of merit. It was cogently argued by counsel relying on Pain J's decision in SNS where aclaim for stamp duty to buy replacement land was allowed. The legal landscape for claiming stamp duty to buy replacement land has been changing. It is doubtful now that the stamp duty claim allowed in Fitzpatrick, SNS or Sounaf, would still succeed.
6. With respect to my finding, at [173] of my May judgment, that the case advanced on behalf of the interests was "flawed", he submitted that use of the word "flawed" merely meant "not correct in law". He submitted that: It did not mean hopeless, ridiculous, grossly exaggerated or vexatious in the required sense.
7. Mr Tomasetti noted that the Valuer General's determination of compensation for each of the Gertos interests had included an entitlement to a stamp duty equivalent compensation payment. Although the Gertos interests were contesting the Valuer General's determinations, thus putting this element of these determinations into play, Mr Tomasetti proposed that this demonstrated that the stamp duty equivalent compensation claims by the Gertos interests could not be described as manifestly hopeless or ridiculous.
8. The written submissions then set out, in tabular form, the financial outcomes arising from my May judgment across the various entitlement elements and compared them to the equivalent determinations by the Valuer General or the offer by TfNSW. In this context, it was submitted that the overall outcome achieved by the Gertos interests was significantly greater than that proposed by either the Valuer General or TfNSW for each item in the table. The written submissions then continued, saying in paragraph 21: … A person should be allowed access the Court, to present an arguable and well-organised procedurally fair case, without being deterred by the prospect of being ordered to pay some part of the State's costs if a part of their objection proves unpersuasive or "flawed".
9. The written submissions then said, with respect to the basis upon which TfNSW proposed that there be a departure from the usual costs order (at paragraph 22): While costs are compensatory, the change from the usual costs order sought by TfNSW has as its basis an imputation of improper conduct. Yet TfNSW has not adduced any evidence to support this serious assertion.
10. The written submissions then set out an analysis concerning the process which had led to these proceedings being initiated on behalf of the Gertos interests. It is unnecessary to set out any summary of those matters.
11. The submissions also summarised the basis upon which the Gertos interests stamp duty equivalent claim had been advanced. I do not propose to summarise this aspect of the Gertos interests' costs submissions, as the submissions for the parties and my conclusions concerning the various matters in dispute were addressed compendiously in my May judgment.
12. The written submissions then turned to address the matters advanced by TfNSW in support of its proposal for a differential costs order. In response to the proposition that there was a late abandonment by the Gertos interests of s 59(1)(f) of the Land Acquisition Act as a basis for the stamp duty equivalent payment claim, the written submissions put that:

• preservation of a possible claim pursuant to that provision was necessary for the purpose of preservation of appeal rights arising from Pain J's decision concerning "no actual use"; and
• I had noted, in [34] of my May judgment, that the time gap between the market value element of the hearing and that concerning stamp duty was to permit the Gertos interests to marshal their material for a claim pursuant to s 59(1)(d) and that I had subsequently noted, at [38], that the statutory basis for the then pursuit of the claim was under that statutory provision and not s 59(1)(f) of the Land Acquisition Act.

1. The written submissions then responded to the propositions advanced by TfNSW concerning the decision of Pain J (dealing with actual use of the sites) by referring to the fact that the stamp duty equivalent payment claim for the Gertos interests had been based on the umbrella nature of Mr Gertos's business interests as being similar to those of Mr Royal addressed by her Honour in SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 (SNS).
2. The submissions put that "the claim for stamp duty was never hopeless or without foundation" and that the Valuer General's determination that such a payment was appropriate was relevant.
3. The submissions noted that there had been a number of instances where such stamp duty claims had been unsuccessful but that there had not been, in any of those instances, a differential costs determination disallowing portion of the dispossessed owner's costs concerning such a stamp duty claim. The conclusion to the written submissions, at paragraph 53, was in the following terms: For these reasons, the principle in Banno cited with approval in Brock applies. The Applicants should be entitled to their costs of the proceedings, as agreed or assessed, without any deduction of the costs of their stamp duty claim.

Reply submissions from TfNSW

1. TfNSW's reply submissions dated 23 July 2021 responded to the above discussed written submissions on behalf of the Gertos interests. After confirming that TfNSW did not resist a costs order in favour of the Gertos interests, for those elements of the proceedings other than the costs of the stamp duty equivalent payment claims, and that the submissions on behalf of the Gertos interests addressed broader matters relating to the entirety of the proceedings (not requiring to be discussed, as I noted above, at [41]), Mr Astill then responded to a number of the specific elements in the Gertos interests' written submissions.
2. First, he noted that TfNSW did not allege that the Gertos interests had pursued a vexatious or dishonest claim.
3. Relevantly, he then turned to address the Gertos interests' reliance on the decision of Pain J in SNS, saying, at paragraph 8: In relation to the Applicant's reliance on SNS: (a) the facts were materially different in that in that case the site was not let to any tenants (here the land was so let) and was actively used by the owner for redevelopment (here the land was not so used), (b) compensation for stamp duty was claimed and awarded under s 59(1)(f).2 Here, the Applicants did not press their claim under s 59(1)(f) but instead relied on s 59(1)(d). SNS cannot be said to be authority for such a claim and, in any event, (c) the correctness of SNS may be doubted in light of subsequent Court of Appeal authority to the effect that any stamp duty claim may only be established under s 59(1)(d) so that if entitlement cannot be established under that provision, s 59(1)(f) is not available.
4. With respect to the proposal that there be a differential costs order relating to this specific element of the proceedings, he proposed that there was a specific reason why such a differential approach was here appropriate, submitting in paragraph 10 (citing Qasabian Family Investments Pty Ltd v Roads and Maritime Services (No 2); Fishing Station Pty Ltd v Roads and Maritime Services (No 2) [2017] NSWLEC 179 (Qasabian No 2) at [54] to [56] and [61(1)]): However where a claim is made that flies in the face of settled authority, such as the Applicants' claim for stamp duty, a costs order in favour of the First Respondent in relation to the claim under s 59(1)(d) should follow.
5. He then addressed the list of cases advanced on behalf of the Gertos interests where such claims for stamp duty had been rejected and where the interests had submitted that no adverse costs orders had been made as a consequence. It is not necessary to set out TfNSW's response to this element of the Gertos interests' submissions.
6. Mr Astill then discussed the time and necessary preparation involved in addressing the stamp duty equivalent payment claim, submitting that such an analysis would only arise in the context of assessment of quantum of costs if an order was made in TfNSW's favour rather than being a matter to be weighed in my assessment of whether such an order should be made.
7. He then addressed the question of preservation of appeal rights for the Gertos interests requiring the potentiality of the claim pursuant to s 59(1)(f) being preserved. He submitted that this was irrelevant in the present context.
8. He next detailed matters arising from the bundle of correspondence which had been appended to his reply submissions and which had been admitted as Exhibit 8. It is not necessary to set out the details of that correspondence chain.
9. In conclusion, he submitted that, at paragraph 22: More fundamentally however, the particular provision on which the Applicants ultimately relied is beside the point as the claim for stamp duty had no merit, as a matter of law, under all possible provisions. A costs order in favour of the First Respondent in respect of the claim for stamp duty should be granted.

The rejoinder submissions from the Gertos interests to TfNSW's reply

1. On 25 July 2021, rejoinder submissions were filed on behalf of the Gertos interests to the reply submissions which had been filed on behalf of TfNSW.
2. The Gertos' rejoinder submissions proposed that the overall nature of that which had been addressed in my May judgment provided contextual relevance for present costs determination purposes, noting that my rejection of the claim had only been made "after argument from both sides on this point". The submissions, in paragraph 10, then continued: That the claim was cogently argued as falling within sec 59(1)(d) suggests the Applicants were entitled to make the argument and have the claims determined: Brock [79], Dillon [61] - [65], Banno. See also [169] of the Judgement which suggests the argument to be anything but hopeless or unreasonable to make.
3. It was noted that, as I had set out in my May judgment at [168], there was a climate of changing jurisprudence arising from recent Court of Appeal decisions.
4. The submissions then addressed TfNSW's reliance on Qasabian No 2 and distinguished it on the basis, at paragraph 13, that: The unreasonable conduct in Qasabian (No 2) was not in running legal arguments in which the applicant failed but was in continuing the proceedings to challenge the valuation where both expert valuers had agreed on the value. Moore J identified the proper test at [58] with respect to running the legal arguments - the argument was not so entirely devoid of merit to be regarded as unarguable.
5. Even under those circumstances, the submissions noted, the result was a denial of costs being awarded to the applicant in that matter, without any order being made in that case for that applicant to pay TfNSW's costs of that element of the proceedings.
6. The rejoinder submissions then addressed earlier costs outcomes in a fashion unnecessary to be set out in present circumstances.
7. The rejoinder submissions concluded by addressing other incidental matters, including the extent of the issue in the context of the overall hearing and the amount of time devoted to submissions concerning the Gertos interests' stamp duty equivalent payment claims.
8. The rejoinder submissions also addressed the extent to which s 59(1)(f) was (or was not) engaged for the purposes of the stamp duty equivalent payment claims.
9. Finally, the rejoinder submissions put that making a costs order in favour of TfNSW in the fashion sought would be contrary to principle in Class 3 proceedings of this type (citing elements of Brock and Dillon).

The oral submissions for TfNSW

1. Mr Astill noted that, although the orders sought by TfNSW were not the ordinary ones which would arise in Class 3 proceedings such as this, TfNSW was entitled to a costs order in its favour because a claim for stamp duty was against settled authority and applicants should not make claims against settled authority and expect costs orders in their favour to be made for such claims (Transcript 26 July 2021, page 67, lines 29 to 32).
2. He submitted that TfNSW was in a stronger position than in the Qasabian No 2 costs proceedings because the prior decision by Pain J rendered it unreasonable for the stamp duty claim to be pursued at all. Because Pain J's findings had not been overturned by the Court of Appeal, pursuit of this stamp duty claim was unreasonable.
3. He noted that the stamp duty claim by the Gertos interests had been addressed in what amounted to a separate hearing on this issue.
4. Mr Astill then took me through a number of elements of my decision as demonstrating that the stamp duty equivalent claims had failed, basically, on settled authority - relatively easily discernible from those authorities (Transcript 26 July 2021, page 70, lines 29 and 30). He then took me through the relevant paragraphs of the decision of Pain J concerning "actual use" to demonstrate the basis upon which her Honour had held that the Gertos interests were not actually using the properties which had been acquired by TfNSW.
5. He then addressed my first decision in the litigation involving Qasabian Family Investments Pty Ltd (Qasabian) (Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73), referring to those elements of this decision, where I had referenced other first instance decisions where stamp duty claims had been rejected. He undertook this analysis, he noted, to provide a context to the submissions he proposed to make addressing Qasabian No 2.
6. With respect to this decision, he proposed that TfNSW was in a stronger position in these proceedings than that which had arisen for the respondent (then RMS, now TfNSW) in Qasabian No 2 (although Qasabian No 2, itself, was sufficient support for the position advanced by TfNSW in these costs proceedings).
7. However, he submitted that, here, the earlier decision by Pain J put TfNSW in a stronger position than had been the position in Qasabian No 2. He submitted (Transcript 26 July 2021, page 72, line 46 to page 73, line 4): We say these proceedings before your Honour today are stronger from our perspective because there was a specific finding after a fully agitated hearing going for some days, as I recall, before Pain J which went against the applicants; and from that time on there was no proper basis for these applicants to pursue that stamp duty claim. In those circumstances, Transport for NSW should certainly not be burdened with paying their costs of doing that; but also, in our submission, should not be burdened by paying its own costs of doing that. That is why we say that orders 1 and 2 as set out in our submissions are appropriate.
8. I then enquired of Mr Astill as to why a potentially different circumstance did not here arise because the claim now advanced on behalf of the Gertos interests for stamp duty equivalent payments was not advanced pursuant to s 59(1)(f) of the Land Acquisition Act but had been pursued, expressly, solely on the basis of s 59(1)(d) of that Act. Mr Astill's response as to whether there was a relevant difference was in the following terms (Transcript 26 July 2021, page 73, lines 31 to 45): ASTILL: The answer to your Honour's proposition is yes. Yes, it, at least at first blush, looks like a different claim. If you're claiming under 59(1)(d), that's a different claim to 59(1)(f). So, prima facie I must concede, your Honour, that at least raises a question. However, the question is rather theoretical, really, because although different words are used "relocation" in one, "actual use" in another it's the same factual basis that underlies both provisions, as your Honour found relatively easily, as your Honour recites that unless you are actually using land, how can you relocate? And that's what Mr Tomasetti did, with respect to him. He walked the tightrope and was careful to not as he was bound not to attempt to recanvas what Pain J had decided on actual use; and he formulated his claim as your Honour recites as 103 and as your Honour then summarises at 105, which I took your Honour to earlier. But the factual basis underlying those provisions of course, they're different provisions, but the factual foundation for them is, as your Honour found, the same.

The oral submissions for the Gertos interests

1. Mr Tomasetti commenced his oral submissions by turning to the breadth of the costs discretion addressed by the Court of Appeal in Dillon. He said (Transcript 26 July 2021, page 74, lines 23 to 28): TOMASETTI: It's important in our submission, with respect, just to understand what's meant by the word "unfettered" when the Court of Appeal, in particular, speaks about the unfettered discretion that the Court is exercising under s 98. Because r 42.1 of the UCPR is excluded from application in class 1, 2 and 3 proceedings, there is no presumptive rule in these types of proceedings about costs following the event either the event overall or the event on subissues.
2. He then addressed the decision in Dillon at some length as explaining why, based on a range of earlier decisions, it had not been appropriate to make a differential costs order on the basis of lack of success on components of claims made in those Class 3 proceedings.
3. He drew attention (Transcript, page 76) to the fact that the Court of Appeal had rejected the approach by the primary judge in Brock, concluding that the applicant in those proceedings was inappropriately deprived of her costs by the primary judge. The implication from the Court of Appeal's conclusion was that such an approach had been infected with error. He then turned to address matters arising from the fact that the claims for the Gertos interests for the stamp duty equivalent payments had been pursued pursuant to s 59(1)(d) and not s 59(1)(f). After noting the portions of my May judgment where I addressed this, he explained why it had been necessary to preserve the possibility of further pursuit of an appeal relating to "actual use" matters, saying (Transcript 26 July 2021, page 77, line 40 to page 78, line 10): What is, in our submission, essential to understand the reason that the argument was made by the Gertos entities under 59 1(d) is because the language of 59 1(d) is not the same as 59 1(f). It is wrong to say that we abandoned the claim under s 59 1(f); what we were doing was reserving our rights under 59 1(f), because we weren't sure whether litigation was going to ultimately go. The letters that are attached to our primary submissions, the two email correspondences, show that sought to avoid going to the High Court, from the preliminary determination of the from the determination of the preliminary question from the Court of Appeal, but we couldn't do that because Transport would not give us any undertakings not to raise the fact that we hadn't appealed in time, so we had to, and the High Court, as your Honour knows, said it is premature to answer this question until the proceedings are over, and the wisdom of that decision is evident in the outcome because ultimately the proceedings were resolved without having to trouble the High Court with this question, important as it is. We were then faced with the position of going forward from a final decision of the Court, and the final decision may have taken us back to the High Court, and we wanted in the High Court to be able to argue the correctness of Pain J's decision and the correctness of the Court of Appeal's decision.
4. He then turned to responding to Mr Astill's submissions concerning the Qasabian litigation. In this context, he noted that I had recorded, at [68] of my May judgment, that recent decisions of the Court of Appeal had had the effect of narrowing the scope of potential recovery pursuant to s 59(1)(f), so that a broader stamp duty claim can no longer be pursued seeking to utilise that provision. He then submitted (Transcript 26 July 2021, page 78, lines 39 to 42): Although 591(f) is no longer available as a potential vehicle for claims such as these made by the Gertos entities, an aspect of those decisions do provide assistance in reaching a proper understanding of how the wording of 59 1(d) is to be understood.
5. He then turned to the criticism advanced on behalf of TfNSW that the Gertos interests' submissions in this costs argument had addressed the substantive matters in the entirety of the proceedings and submitted that those elements of the submissions were not irrelevant, saying (Transcript 26 July 2021, page 78, line 48 to page 79, line 8): These proceedings were highly complex factually, and the outcome can't be ignored by transport namely, that each entity receives significantly more compensation at the end of the day than was offered by the Valuer General or that was offered by Transport in the proceedings. Mr Gertos and his entities - the entities, we submit, consistent with principle, are entitled to bring the claims to the Land and Environment Court to be ventilated before a judge who would then hear evidence, submissions, et cetera, et cetera, a process not available in front of the Valuer General and have each of the claims tested. That can't be denied; that is consistent with authority.
6. He then submitted that the basis upon which the Gertos interests' legal representatives should pursue the case was that (Transcript 26 July 2021, page 79, lines 17 to 24): … we, the representatives for parties and [in] litigation like this have an obligation to present their client's cases fearlessly and efficiently and as cogently as possible whilst exploring every possible avenue that is legitimately available to get the compensation that these people are entitled to, where they had their land forcibly taken from them for public projects, and that's why the Court says unless the claim is hopeless, vexatious, frivolous, those kinds of words, then they shouldn't be discouraged from making a costs application.
7. After noting that the various other decisions to which Mr Astill had taken me were also those of first instance judges with whom I was not obliged to agree, he returned to the fact that the Court of Appeal had embarked upon a revisiting of the correctness of earlier decisions (as to the scope of matters potentially able to be claimed pursuant to s 59(1)(f) and put that, as a consequence, it is not inherently unreasonable for a party to seek to persuade a first instance decision-maker that it might be appropriate to depart from an earlier first instance decision.
8. Finally, it is appropriate to set out two aspects of Mr Tomasetti's oral submissions toward their conclusion. I do so because they, effectively, constitute the peroration of what he advanced on behalf of the Gertos interests. The first was recorded at Transcript 26 July 2021, page 81, lines 14 to 24, the submission being in the following terms: But the error here is important, because what Transport is arguing is that you should make this costs order to discourage others from doing things; but that's a policy decision which should play no role in the declaration on today's hearing. Your Honour, costs orders should not be used to discourage legal representatives from running arguable cases. It would be, in our submission, contrary to High Court authority to exercise your discretion on the basis that inter alia you wanted to discourage other applicants from running cases that didn't agree with your Honour's decision in this case. Costs orders are compensatory …
9. The second element appropriate to be set out is on the same page of the transcript at lines 41 to 48: Your Honour never said this was hopeless. Your Honour said it was flawed, but every argument that doesn't succeed is flawed; and in litigation, unfortunately, with the adversarial nature of the process in this country, there's always a winner and a loser. You have to develop a thick skin. And your Honour, just because one loses because an argument is flawed, it doesn't mean that it should never have been run and wasn't indeed run in the best interests of the client and in fulfilment of the duty that the lawyer owes to the client so to do.

The oral submissions in reply for TfNSW

1. Mr Astill replied by indicating that he had, by that time, had the opportunity to examine the matter which I had raised with him at page 73 of the transcript concerning whether the earlier cases which had been drawn to my attention (and were stamp duty claims which had failed) were claims which had been made pursuant to s 59(1)(f) of the Land Acquisition Act. Mr Astill took me to three of those cases that had earlier been cited, taking me through elements of the decisions in Speter v Roads and Maritime Services [2016] NSWLEC 128 (Robson J), Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 (Pain J) and Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11 (Robson J) to demonstrate that these were claims which had been made pursuant to a suggested entitlement to a stamp duty equivalent compensation payment.
2. Mr Astill summarised the position he advanced as arising from these decisions, saying (Transcript 26 July 2021, page 83, lines 45 to 49): So, your Honour, there are at least three in the short time I've had and, in those three, earlier cases are referred to where 59(1)(d) was rejected as a basis for claiming stamp duty where nothing was physically being relocated. So that's really just in answer to the proposition that settled authority didn't necessarily include para (d).
3. In response to a question from me concerning whether or not the fact that the Gertos interests had achieved a better outcome than that which had been proposed by the Valuer General or offered by TfNSW (being a position, in a broad sense, comparable to that arising in Brock), Mr Astill submitted (Transcript 26 July 2021, page 84, lines 9 to 19): ASTILL: Your Honour, our position is that I'll take a step back. The cases make it abundantly clear that, even where an applicant does not achieve more than they got from the Valuer General or offers or the like, it's not unreasonable for them to pursue their claim and get in the sense of getting costs. So if it's irrelevant that you might get less, it must be irrelevant that you might get more. It's just logical, but that's not what the focus is on in any costs claim. It's not about whether you get better as a bundle or worse as a bundle or the same; something else has to be found. That is, the unreasonableness of pursuing the claim must be found in some way. So we say it's not the fact that these Gertos entities, if I can call them that, ended up with more than they might have got; that's irrelevant to this particular application …
4. Finally, with respect to the submissions advanced by Mr Tomasetti concerning policy considerations, Mr Astill submitted (Transcript 26 July 2021, page 84, lines 24 to 35): ASTILL: The other thing my friend said, which I should reply to, he said policy considerations play no role and, with respect, that can't be right. There's a clear policy role in these kinds of considerations, so policy is absolutely crystal clear, the policy behind Dillon and Brock. The policy is that these are not ordinary proceedings. These types of proceedings are proceedings where applicants have, through a unilateral act of the State, lost their land and they're entitled to pursue claims for costs, for compensation and even where they do it's further to what I was saying before even where they do worse, they still should get their costs of proceedings, as long as they have not acted unreasonably. So we don't quibble with that being the general proposition, but we say in this case that this particular aspect of the proceedings, it was unreasonable to be pursued by the applicants. That's the nub of it.

A supplementary response for the Gertos interests

1. Mr Tomasetti sought and was granted a further opportunity to respond (to which no objection was raised). In doing so, he referred to the fact that the legal position was changing, as I had noted in my May judgment, and that the various other first instance decisions which had been cited in these proceedings all predated the relevant recent Court of Appeal's decisions. With respect to potential policy considerations, he submitted (Transcript 26 July 2021, page 85, lines 18 to 23): Your Honour, what we were intending to say finally in relation to policy, you can't exercise a costs discretion in this particular litigation with a view to discouraging other people from doing things. That's contrary, if there is policy, to the very policy espoused by Basten J that is, that people who have their land taken compulsorily by the State should be encouraged to have access to the Courts, to have determination of compensation revisited by a judge.
2. Finally, he submitted that, as I understood him, the ability of dispossessed owners to access the courts for the determination of compensation reflected the current (and appropriate) policy. He summarised the position concerning the stamp duty equivalent payment claims as had been pursued by the Gertos interests as legitimate, saying (Transcript 26 July 2021, page 85, lines 33 to 37): … the policy is certainly to encourage people to have access to the Courts. So we put an argument. In our submission it was available. It is important to inform the process by way of a precedent and a reasoned judgment and there's no reason in accordance with authority or principle not to award the applicants their costs of bringing this class re-litigation [Class 3 litigation] to the Court.

Introduction

1. It is fair to observe that, in the past history of determinations of disputed compensation claims made pursuant to the Land Acquisition Act, a very broad approach had been taken to the scope of claims capable of being brought, successfully, pursuant to s 59(1)(f) of that Act. Effectively, whether the claims were successful or not, this provision had been approached by claimants' legal representatives as having broad application, in a catch-all fashion, when a claimant considered that they had an entitlement to an element of compensation which might be capable of being construed as constituting some other financial cost reasonably incurred. By doing so, the dispossessed owner of the interest in the compulsorily acquired property was thus provided with a statutory vehicle upon which a compensation entitlement could be sought.
2. Many past claims for stamp duty equivalent compensation payments appeared to have been made pursuant to s 59(1)(f) (or its earlier statutory equivalent prior to the 2015 amendments, which amendments were, relevantly, only to matters of form rather than substance).
3. At [188] to [200] of my May judgment, I set out a number of cases where claims for stamp duty equivalent compensation payments for relocation were dealt with - with a number being rejected because there was no actual relocation. It is to be observed that the rejected claims in each of those proceedings were made pursuant to s 59(1)(d) and/or (f).
4. It is also to be observed that the frequently cited instance where such a stamp duty equivalent compensation payment was awarded, Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, that claim had been pursued pursuant to the terms of the provision then known as s 59(f) (now renumbered s 59(1)(f)).
5. As I observed, in my May judgment, the Court of Appeal has, in a number of comparatively recent decisions, explained why the past expansive approach to s 59(1)(f) was no longer appropriate. I explained this in the following terms: 168 In these proceedings, it is accepted by the Gertos entities and TfNSW that recent decisions of the Court of Appeal (Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279; (2009) 236 LGERA 389; [2019] NSWCA 41 (United Petroleum); Alexandria Landfill Pty Ltd v Transport for NSW (2020) 243 LGERA 102; [2020] NSWCA 165 (Alexandria Landfill)) have had the effect of narrowing the scope of potential recovery pursuant to s 59(1)(f), so that a broader stamp duty claim can no longer be pursued seeking to utilise that provision.
6. During the course of the hearing giving rise to this costs decision, I asked Mr Astill whether TfNSW contested that which I had written in my May judgment in this regard. He indicated that TfNSW did not contest the accuracy of that observation. It is therefore unnecessary, for the purposes of this decision, to undertake any further detailed analysis of what is clearly a more narrow approach now to be taken to what is potentially encompassed by a claim pursuant to s 59(1)(f) of the Land Acquisition Act.

The abandonment of a s 59(1)(f) claim

1. Although Mr Ristevski had written to the legal representatives of TfNSW, as close to the hearing as some three weeks before it, indicating that the claims made on behalf of the Gertos interests for a stamp duty equivalent payment were pressed on the basis of ss 59(1)(d) and 59(1)(f), in the alternative (letter of 1 February 2021 - Exhibit 8), this was not the position which was pursued during the hearings before me that resulted in my May judgment. Mr Tomasetti's written submissions of 24 February 2021 had made it clear that the claim was advanced solely on the basis of s 59(1)(d).
2. As I observed, at [113] and following, Mr Tomasetti's submissions relied for the stamp duty equivalent payments' claim on the interpretation of s 59(1)(d) advanced on behalf the Gertos interests.
3. The timing of the abandonment of s 59(1)(f) as a potential basis for the Gertos interests' claims for stamp duty equivalent payments and the singular reliance on s 59(1)(d) as the basis for the claims does weigh slightly in favour of the potential for a differential costs order being warranted. However, the proposition that those advising the Gertos interests considered that there was a necessity to preserve a potential appeal position, in circumstances where TfNSW had indicated it would not waive reliance on a delay argument should such a late appeal be pursued, satisfies me that the weight to be accorded to this factor in these costs proceedings is slight.

Mr Gertos' business arrangements

1. In my May judgment, I set out the relevant paragraphs from the affidavit of Mr Gertos concerning the way he structured his business activities. It is appropriate to reproduce the relevant paragraphs for the purposes of my present costs consideration. The extract from my May judgment is in the following terms: 108 In his affidavit of 25 February 2021, at paragraphs 4 to 7, Mr Gertos described his past and present business activities in the following terms: 4 I describe each company as a special purpose vehicle (SPV) as the purpose of their being incorporated was to own for the time being and/or carry out any development of a particular parcel of land if and when that occurred. Each of the applicants in these proceedings I regard as a SPV. 5 My business has been to buy a parcel of land and then to develop it in the ways I have previously described in my earlier affidavit. Sometimes my development plans became redundant for a particular parcel if an opportunity arose to sell the land at a profit arose without carrying out development. 6 At present I am in the process of developing land at 137 Campbell Hill Road, Chester Hill, NSW for 100 residential units. I purchased that land in March 2020 for $6,350.000. I obtained a development consent for that development. Annexed and marked "B" is a copy of the development consent (Determination and Statement of Reasons dated 17 August 2017). The land was purchased in the name of a SPV namely Waldron Hill Properties Pty Ltd. I am the sold [sole] director and shareholder of that company. Annexed and marked "C" is a copy of an ASIC extract for Waldron Hill Properties Pty Ltd obtained 25 February 2021. 7 I have also purchased land at 921-925 Punchbowl Road, Punchbowl, NSW in the name of Westwood Capital Pty Ltd for $26 million. I am the sole director and shareholder of Westwood Capital Pty Ltd. Annexed and marked "D" is a copy of an ASIC extract for Westwood Capital Pty Ltd obtained 21 February 2021. Contracts were exchanged on 27 December 2019 and settlement has not yet occurred. Annexed and marked "E" is a copy of the front page of the Contract and execution page I caused to be made an application for a Gateway determination to rezone the land at Punchbowl. A copy of the Gateway determination dated 25 May 2018 is annexed and marked "F". I am proposing to develop a shopping centre and shop top housing (380 dwellings) on that site. 109 It is not necessary consider the detail of any of the documents referenced in the above paragraphs of Mr Gertos' affidavit.

The decision in SNS

1. In support of the stamp duty equivalent claim on behalf of the Gertos interests, Mr Tomasetti relied, inter alia, on drawing a parallel between the circumstances addressed by Pain J in SNS as to the arrangement of the business interests of the principal of that claimant, Mr Royal, and the way that Mr Gertos arranged his business interests as described above. The relevant passages from the decision in SNS were set out in my May judgment as follows: 123 In this context, Mr Tomasetti took me to two paragraphs in her Honour's decision. The first, [56], was in the following terms. 56 Mr Royal director of SNS affirmed an affidavit on 15 September 2017. SNS is part of a group of companies (Sans Group) directed and managed by Mr Royal each of which carries on the business of acquiring and developing property. Mr Royal listed six additional companies within the Sans Group which had purchased and been involved in the development of seven properties since 1986. Mr Royal also stated that some of the Sans Group companies have acquired partial interests in various development properties. 124 Mr Tomasetti then took me to [346], a paragraph in the following terms: 346 Mr Royal as the sole director of SNS attested to having a number of development companies through which he has pursued developments of various kinds over many years. His business model is to create a company for each development site under an umbrella group of companies. I accept that he is in the business of land development and that SNS is part of his portfolio of companies created to achieve that end. The stamp duty claim for replacement land is reasonable as the area acquired was substantial in the context of the MSTCP.
2. Although there were some significant dissimilarities in the detail of the facts involved with Mr Royal's business activities, as dealt with by Pain J in SNS, there were also a number of factual similarities between Mr Royal's arrangements and those discussed by Mr Gertos in his affidavit extract set out above.

Conclusion

1. Although the stamp duty equivalent payment claims made on behalf of the Gertos interests were found by me to be flawed and could not succeed, I am satisfied, on balance, that the costs position advanced for TfNSW (as earlier set out at [10]) should not prevail.
2. Although the Gertos interests' case was flawed, there was a sufficient basis arising from the evolving (and narrowing) position emerging from decisions of the Court of Appeal concerning the scope of s 59(1)(f) of the Land Acquisition Act, coupled with sufficient (but certainly not complete) coincidence between the fashion in which Mr Gertos had arranged his property investment activities and the arrangement of Mr Royal, as dealt with by Pain J in SNS, to conclude that, properly and competently advised, there was at least some rational chance that a claim for stamp duty equivalent payments made pursuant to s 59(1)(d) might succeed.
3. It is not suggested by TfNSW that the Gertos interests were not properly and competently advised to pursue such a claim.
4. Although it failed, for the reasons outlined in my May judgment, it was not hopelessly untenable. Despite the fact that there had been earlier unsuccessful first instance decisions based on the provision, in none of those matters were the business interests of the primary protagonist arranged in the fashion here engaged (or engaged before Pain J in SNS).
5. The fact that the overall result for each of the Gertos interests was a significantly improved compensation outcome, when compared to that determined by the Valuer General or offered by TfNSW, means that there is sufficient commonality with the position on costs arrived at by the Court of Appeal in Brock for this, also, to weigh in the Gertos interests' favour in my determination of this costs contest.
6. Overall, despite the flaws which I held existed in the stamp duty equivalent payment compensation claims, I am satisfied that the broad approach taken by the Court of Appeal in Dillon should apply.
7. The result is that the appropriate costs orders are that TfNSW pay the costs of each of the Gertos interests of the proceedings and of this costs contest.

Costs of the costs hearing

1. Costs of costs applications ordinarily follow the event. There is no discernible basis upon which I should depart from that position here. As a consequence, TfNSW is to pay the Gertos interests' costs of this costs application as agreed or assessed.

Orders

1. In Matter No 207357 of 2018, the orders of the Court are: 1. The First Respondent is to pay the Applicant's costs of the proceedings; 2. The First Respondent is to play the Applicant's costs of the costs hearing; and 3. The exhibits are returned.
2. In Matter No 207345 of 2018, the orders of the Court are: 1. The First Respondent is to pay the Applicant's costs of the proceedings; 2. The First Respondent is to play the Applicant's costs of the costs hearing; and 3. The exhibits are returned.
3. In Matter No 207366 of 2018, the orders of the Court are: 1. The First Respondent is to pay the Applicant's costs of the proceedings; 2. The First Respondent is to play the Applicant's costs of the costs hearing; and 3. The exhibits are returned.

Amendments 08 December 2021 - Additional case added to the section Cases cited. 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: 08 December 2021