Halloran and Sealark Pty Ltd v Shoalhaven City Council

Land and Environment Court (NSW)|1999-12-06|Before: Pearlman J, Mr J

Land and Environment Court of New South Wales CITATION: Halloran and Sealark Pty Ltd v Shoalhaven City Council [1999] NSWLEC 259

No 30033 of 1998 APPLICANT Halloran

PARTIES RESPONDENT Shoalhaven City Council

RESPONDENT Shoalhaven City Council

NUMBER: 30033 of 1998 and 30034 of 1998

KEY ISSUES: Compensation :- compulsory acquisition - reasonable legal costs - reasonable valuation fees - costs - apportionment

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

DATE OF JUDGMENT DELIVERY: 12/06/1999

APPLICANTS Mr J E Robson (Barrister)

SOLICITORS Blake Dawson Waldron LEGAL REPRESENTATIVES: RESPONDENT Mr J J Webster (Barrister)

SOLICITORS Morton & Harris

IN THE LAND AND 30033 of 1998 and 30034 of 1998 ENVIRONMENT COURT Pearlman J OF NEW SOUTH WALES 6 December 1999

No 30033 of 1998 WARREN HALLORAN Applicant v SHOALHAVEN CITY COUNCIL Respondent No 30034 of 1998 SEALARK PTY LTD Applicant v SHOALHAVEN CITY COUNCIL Respondent JUDGMENT

This judgment deals with claims by the applicants for legal costs and valuation fees and the costs of these proceedings consequent upon the determination of compensation for the acquisition of their land.

On 28 July 1999, I determined compensation for the compulsory acquisition of lot 1 in DP 870441 ("the acquired land") in the amount of $740,000 together with an additional amount reflecting reasonable legal costs and valuation fees as agreed between the parties, or failing agreement, as determined by the Court following any further submissions. The parties have been unable to agree on the amount of those costs and fees, and accordingly I have heard further submissions on the matter.

In addition, the applicants claim an order in their favour for the legal costs of the proceedings, a claim which was resisted by the respondent ("the council") and therefore that claim was also the subject of further submissions.

The entitlement of the applicants to reasonable legal costs arises under s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 ("the Just Terms Act"), which provides that, in determining the amount of compensation, regard must be had to "any loss attributable to disturbance". That expression is defined in s 59 to include a number of items, one of which is set out in subsection (a) as being the "legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land" .

The applicants claim an amount of $5,477.35 under this head of compensation. That amount is itemised in annexure 'A' to the affidavit of Mr A W Dwyer sworn on 25 August 1999 as follows:

Item Date of Invoice Activity Cost BDW Invoice No 1 30 December 1997 Take instructions to act and prepare advice to Applicants in respect of lease to Council for early access to land prior to compulsory acquisition on 6 February 1998 $1,105 251852 2 30 April 1998 Review acquisition notices, draft objections to acquisition notice, brief valuer, request payment of section 68 statutory advance $1,372.35 259263 3 30 June 1998 Review Points of Assessment, conference with client, research Points of Assessment filed by Council $1,000 282555 4 31 July 1998 Attendances on client, Frank Egan, reviewing valuation brief, settling compensation claim forms $1,200 264932 5 30 August 1998 Advice on prospective claim in respect of the special value of land for capital gains tax purposes $800 268975 5

The council disputes this claim, contending that the amount is not referrable to legal costs incurred in connection with the compulsory acquisition of the land as s 59(a) requires, but instead is referrable to legal costs in connection with the proceedings, particularly having regard to the fact that the class 3 application made by the applicants were each filed on 6 April 1998. The council claims that an appropriate amount under this head of compensation is $2,477. It bases this amount on an affidavit sworn on 22 September 1999, in which the council's solicitor, Mr A E Love, identified the type of legal work connected with compulsory acquisition as being the costs of obtaining the certificate of title for the residue land, general advice regarding compulsory acquisition, and general advice as to the applicants' rights pursuant to the Just Terms Act.

My findings in relation to this head of compensation are as follows: (a) I accept the proposition put forward by Mr Robson, appearing for the applicants, that costs incurred in connection with the compulsory acquisition of the acquired land do not automatically cut off once proceedings have commenced. There may still be legal work to be performed which relates generally to the compulsory acquisition rather than the actual litigation.

(b) The amount of $1105 itemised under point 1 cannot, in my opinion, be categorised as incurred in relation to the compulsory acquisition. It related to negotiations for the early occupation of the acquired land by the council.

(c) However, the remainder of the items set out in the above table are, in my judgment, reasonable costs incurred in connection with the compulsory acquisition of the acquired land.

Accordingly, I determine the amount of compensation for loss attributable to disturbance under s 59(a) in the amount of $4,372.35.

Another item included in the definition of "loss attributable to disturbance" is set out in s 59(b) as being the "valuation fees reasonably incurred by those persons [meaning the persons entitled to compensation] in connection with the compulsory acquisition of the land".

The amount which the applicants claim under this head of compensation is the fees of the applicants' valuer, Mr F K Egan, in the amount of $13,236, and the fees of Mr P G Howell in the amount of $6,723.95.

The council mounted the same criticism of these valuation fees as it had done in relation to the claim for legal costs, that is, it contended that the valuation fees were not incurred in connection with the compulsory acquisition of the land but instead were incurred in relation to the proceedings. Likewise, the council claimed that an appropriate amount under this head of compensation was $5,330, for which it relied upon the estimate made by Mr J W Austin in his affidavit of 22 September 1999.

However, in the case of Mr Howell, the council raised another objection. It claimed that no amount should be included in respect of Mr Howell's fees, because he was not involved in the proceedings as an expert valuer. I accept the submission that his fees should not be included under this head of compensation. As I noted on p 13 of my judgment, Mr Howell is an employee and director of Realty Realizations Pty Ltd, a company controlled by Mr Halloran. The work which he carried out, although done no doubt with the benefit of his professional valuation qualifications, was work involved in the briefing of, instruction to, and discussion with Mr Egan, and I would therefore regard that work as part of Mr Howell's employment. Furthermore, although that work was connected with the preparation of a valuation (by Mr Egan) it does not appear to me to be actual valuation work itself, and accordingly it does not properly fall within s 59(a).

Item Date Activity Cost 1 29 June 1998 Inspect site with Mr Halloran and Phil Howell and make Council enquiries 2 2 July 1998 Conference with M Astill, C Ireland and P Howell 3 4 August 1998 Inspect site and sales with P Howell 4 5 August 1998 Inspect site and sales with P Howell 5 9 September 1998 Report and computer modelling 6 10 September 1998 Report and computer modelling 7 11 September 1998 Report and computer modelling 8 15 September 1998 Conference with P Howell 13 Disbursements 486.00

I have noted that the work covered by those fees was undertaken in June, July, August and September 1998, and I have also noted that Mr Egan's valuation for the purpose of the proceedings was dated 12 November 1998. Mr Dwyer in his affidavit of 30 September 1999 stated that Mr Egan was given a valuation brief on 19 May 1998, and was furnished with the council's points of assessment on 10 June 1998. Having regard to all of these dates, I am satisfied that the valuation work carried out by Mr Egan over the months June to September 1998 was for the purpose of providing valuation advice to the applicants in response to the council's assessment of the value of the acquired land. I conclude accordingly that the valuation fees for that work were fees incurred in connection with the compulsory acquisition and were not incurred in connection with the proceedings.

Accordingly, I determine the compensation for loss attributable to disturbance under s 59(b) in the amount of $13,236.

The proceedings were heard over six days. On the first day of the hearing, the applicants served upon the council a substantial amount of material which consisted primarily of documents provided by Mr Howell in response to the council's betterment claim. The tender of that material was objected to on the ground that the council had not had sufficient time to deal with it, and an application for an adjournment was made. The Court then directed that the hearing continue for a further day in relation only to the issue of the market value of the acquired land, and that the issue of betterment be dealt with at an adjourned hearing.

It is appropriate in those circumstances that the applicants should pay the costs of the council thrown away as a consequence of that adjournment, and Mr Robson, appearing for the applicants, did not offer any opposition to such an order.

The applicants claim their costs in relation to the remainder of the proceedings, but the council claims that each party should pay their own costs, or, alternatively, that the council should pay only one-third of the applicants' costs.

The Court has a wide discretion under s 69(2) of the Land and Environment Court Act 1979 in determining an award of costs. In doing so, it may take into account all relevant factors, and is not bound to order that costs follow the event.

I take into consideration the following relevant matters:

(a) The applicants claimed compensation of $1,030,000;

(b) The valuer-general had valued the acquired land in the amount of $702,000; (c) The council claimed that the market value of the acquired land was $655,000, but that the applicants were entitled to "nil" compensation, the value of the acquired land being exceeded by the increase in value of their adjoining lands as a consequence of betterment; (d) On 28 July 1999, I determined the compensation payable to the applicants to be $740,000; (e) In reaching that figure, I rejected the council's betterment claim, but I agreed with the approach of Mr Austin (for the council) rather than Mr Egan (for the applicants) in relation to the highest and best use of the acquired land before and after the compulsory acquisition.

In other words, compensation was determined at a figure less than the applicants had claimed, yet it was substantially more than the council considered they were entitled to. The applicants therefore substantially succeeded in their claim, including succeeding in their contention that there was no betterment, although they did not succeed on the methodology for determining the highest and best use. I think that in these circumstances it is appropriate to apportion the costs, and in my opinion an appropriate apportionment would be to order the council to pay 75 per cent of the costs of the applicants.

In accordance with the foregoing, I make the following formal orders:

(1) Compensation for loss attributable to disturbance under the Land Acquisition (Just Terms Compensation) Act 1991 in respect of the compulsory acquisition of lot 1 in DP 870441 is determined: (a) pursuant to s 59(a), in the amount of $4,372.35; and (b) pursuant to s 59(b), in the amount of $13,236.

(2) The amount of compensation for loss attributable to disturbance is to be apportioned between Warren Halloran and Sealark Pty Ltd in the same proportion as the respective areas of lot 1 in DP 870441 which they owned prior to the compulsory acquisition bear to the total area of lot 1 in DP 870441. (3) The council must pay 75 per cent of the applicants' costs of proceedings no 30033 of 1998 and no 30034 of 1998, including the costs arising as a consequence of the notices of motion dated respectively 25 August 1999 and 23 September 1999, such costs to be as agreed or as assessed, but not to include the costs referred to in order (4); (4) The applicants must pay the respondent's costs of proceedings no 30033 of 1998 and no 30034 of 1998 thrown away as a consequence of the adjournment of the proceedings on 23 February 1999, such costs to be as agreed or as assessed.

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.

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Judgment (44 paragraphs)

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