Hornsby Shire Council v The Valuer General of New South Wales

Supreme Court of NSW|2012-07-02|Before: Garling J

Factual Background 1On 21 February 2003, the Valuer General made a determination of compensation pursuant to his powers under the Land Acquisition (Just Terms Compensation) Act 1991, and the Valuation of Land Act 1916. He made this determination with respect to land which was owned by CSR Ltd, and which had previously been used as a quarry. The land was situated in the local government area of Hornsby shire Council ("the Council") 2He determined that the amount of compensation which was payable by the acquiring authority, the Council, the plaintiff, to the claimant, CSR, the fifth defendant, was $25,099,500. 3The statutes under which the Valuer General acted did not give the Council any right to appeal from the determination. However, the Council has in 2008, filed a Statement of Claim in this Court by which it claims that the determination of the Valuer General was invalid and the determination is liable to be set aside. 4In the alternative, it claims that the determination was made in circumstances where the Valuer General owed it a duty of care and the determination was negligently conducted and it is entitled to damages on account of that negligence. 5Underlying these claims, the Council relies upon conduct in which it claims CSR engaged, by which CSR: (a)put forward to the Valuer General a claim that it was possible that a hypothetical residential development could be constructed on a site in a financially feasible way, with only a relatively modest sum, being put aside for the cost of ensuring the site was stable; and (b)intentionally withheld from the Valuer General a number of geotechnical reports which demonstrated that the site was entirely unsuitable from the perspective of stability for the construction of the proposed hypothetical residential development. 6The Council pleads that the conduct of CSR, which it calls fraudulent, is sufficient to vitiate the determination, and also to give rise to the relief which the Council claims against CSR. 7The Council, as well as suing the Valuer General, also sues the State of New South Wales. It alleges that the State is vicariously liable for the negligence of the Valuer General pursuant to s 8(1) of the Law Reform (Vicarious Liability) Act 1983. 8As well, the Council claims damages for negligence against the third and fourth defendants, Mr Brian Nicholson and Alcorn Corbin Nichol Limited, being the parties responsible for the production of the valuation which underlay the determination of the Valuer General. 9It is alleged against the third and fourth defendants, that they were negligent in and about the production of the valuation because they failed to give effect, in reaching their valuation, to the geotechnical instability of the site and the fact that the hypothetical residential development proposed for the site by CSR was not financially feasible.

Procedural history 10On 14 September 2011, pursuant to leave granted by Hoeben J, the Council filed a Further Amended Statement of Claim. In it, it made claims for relief which can conveniently be described as claims for administrative law relief, and as well, claims for damages and other relief based upon negligence and breach of statute. 11The administrative law relief claimed was as follows: "1A A declaration that the determination of compensation issued on behalf of the [Valuer General] dated 21 February 2003 is void and of no effect. 1B An order that the [Valuer General] redetermine the amount of compensation payable by the [Council] to [CSR] in respect of the acquisition of the Quarry Land (as defined below) according to law. 1C An order that [CSR] pay to the [Council] the sum of $25,099,500, together with interest." 12In addition to claiming damages at common law, and pursuant to the Trade Practices Act 1974 (Cth) and s 68 of the Fair Trading Act 1987, the Council in its damages claim, claimed an order to the following effect: "An order, by way of restitution that [CSR] pay to the [Council] the difference between $25,099,500 and the compensable amount for which the [Council] would have been liable had [CSR] disclosed the CSR geotechnical evidence (as defined below) to any of the first, third or fourth defendants." 13Consequential relief was sought with respect to both claims. 14On 27 February 2012, the Valuer General and the State, filed a joint defence to the Further Amended Statement of Claim. Some of the paragraphs of the joint defence were different from the substance of some of the paragraphs of the previous defence which had been filed. The Council claimed in correspondence, and in submissions in this Court, that the Valuer General and the State were attempting to withdraw admissions which they had made previously in a defence to the Amended Statement of Claim. It will be necessary to return to those matters in due course. 15Each of the other defendants have filed defences. 16The proceedings have been on foot for some time, during which various orders have been made for the preparation of evidence, exchange of expert reports, and generally of the kind to ensure that the matter is ready for a hearing. 17The proceedings come before the Court because of a Notice of Motion filed on 3 May 2012 by the Valuer General and the State, in which orders are sought of various kinds. 18However, at the hearing of the motion, senior counsel for the moving parties indicated that only two orders of substance were being sought. The first was an order: "that pursuant to Rule 28.2 of the UCPR, there be heard separately and before any other questions in the proceedings the claims in paragraphs 1A, 1B and 1C of the Further Amended Statement of Claim filed 14/9/2011". 19In short, the Valuer General and the State sought to have the administrative law proceedings heard and determined first, and before the claims for damages. 20All other parties to the proceedings opposed the making of that order. 21The second order of substance sought by the Valuer General and the State of NSW was that they ought to have leave, pursuant to r 12.6 of the Uniform Civil Procedure Rules to withdraw various admissions made by them in their defence filed on 14 August 2009 to the original Statement of Claim, and in their subsequent defence filed on 21 September 2010. 22This order affected only the Council. The Council opposed the making of that order. 23In the course of the hearing of the application to withdraw the admissions, an issue arose as to whether legal professional privilege had been waived in the contents of a Memorandum of Advice of Mr P Menzies QC and Mr J Maston. I determined that there had been no waiver of privilege and declined to order that the advice be provided to the Council. I indicated that I would give reasons in due course. These reasons include my reasons for that decision. 24At the conclusion of the argument on the first issue about a separate hearing, I indicated that I would not make such an order and that I would deliver my short reasons for that in due course. These are those reasons.

Separate hearing of the administrative law claims 25The claims for administrative law relief, that is, that the determination was invalid, and the claims for damages and/or restitution are substantially alternative claims. 26The Valuer General and the State submit that it would be more efficient, and in the interests of justice for the Court to hear and determine the administrative law claim separately from, and in advance of, all other claims in the proceedings.

Legal Principles 27The principles relating to whether or not separate questions should be ordered are well known. They may be shortly encapsulated. 28In exercise the discretion which exists in r 28.2 of the Uniform Civil Procedure Rules, to make an order for the separate hearing and determination of a part of a matter, it is essential that the Court gives effect to the provisions of s 56 of the Civil Procedure Act 2005. By s 56(2), the Court is obliged to seek to give effect to the overriding purpose of the Civil Procedure Act and Rules of Court when exercising any power given to it by the Act or Rules of Court. 29Section 56(1) provides that: "The overriding purpose of this Act and of rules of court, in their application to a civil dispute or civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceedings." 30The commencing point for the consideration of an order such as the one being sought is that it is ordinarily appropriate that all issues in proceedings should be disposed of at the one time: Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 at [5] per Johnson J. 31In Perre v Apand Pty Ltd (1999) 198 CLR 180 at 332 [436], Callinan J said: "Care does need to be taken in deciding whether to conduct separate trials of different issues. It sometimes happens that they may turn out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which they are intended to avoid. In tort cases in which damage is the gist of the action, it will be generally be undesirable to accede to requests for them, or to order them, unless all parties accept that compensable damage has been sustained by the plaintiffs or applicants as the case may be". 32In Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 55, Kirby and Callinan JJ said at [168]-[170]: "168. The appeal should be allowed. However, we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap. 169. The second and related comment is this. A party, whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests. 170. Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question." 33Although these remarks were made prior to the introduction of the Civil Procedure Act, and whilst there may be room for a different view as to whether the Court should take a more interventionist role in particular cases, in identifying and separating issues which can resolve significant parts of litigation expeditiously: see Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 at [6], I am satisfied that it remains the case that determination of separate questions is an unusual, perhaps exceptional, course which is only to be taken when the benefit can be seen to clearly outweigh the disadvantages of the kind discussed by Kirby and Callinan JJ in Tepko. 34Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 has helpfully summarised the principles to be applied by a Court in considering whether to order the determination of separate questions. I will not set out the entirety of those principles. I derive from his Honour's judgment, with which I express respectfully, my agreement, the following principles of relevance in this case: (a) it is for the party seeking the order to show to the Court that it is desirable for the determination of the separate question to occur: Idoport at [7(3)]; (b) the determination of a separate question may be appropriate where the resolution of the separate issue carries with it a strong prospect that the parties will be able to resolve their dispute themselves: Idoport at [7(4)(b)]; (c) the determination of a separate question will be unlikely to be appropriate where there is a commonality of witnesses and issues of credit as between the separate issue and the other issues in the case which will, or may, necessitate a ruling on the credit of one or more witnesses: Idoport at [7(5)(b)]; and (d) a determination of a separate question is unlikely to be appropriate unless it is possible to clearly see that the determination will facilitate the just, quick and cheap resolution of the proceedings or the central issues in the proceedings: Idoport at [7(6)]; 35Giles CJ in Comm Div (as his Honour then was) said in Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-142: "Part 31 r 2 of the rules empowers the court to make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings, and for the statement of a case and the question for decision. In the ordinary course all issues in proceedings should be decided at the one time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties' dispute." 36Although the judgment was dealing specifically with r 31.2 of the Supreme Court Rules, the principles that are articulated, and the approach taken, are directly applicable to these proceedings.

Submissions 37It is necessary to determine the application of those principles to these proceedings. 38Senior counsel for the Council has submitted that the issues in both the administrative law proceedings and in the claim for damages are intertwined and interdependent. He has submitted that the same witnesses will be giving evidence with respect to the issues in both sets of proceedings, and that it would be inefficient to separate out the issues as proposed by the Valuer General and the State. He also submits that if there were two separate hearings on similar factual issues, since it is unlikely that the same judge could hear both matters, there is a real risk of inconsistent findings of fact and inconsistent judgments. 39He also submits that a determination of the administrative law proceedings will have the effect of determining substantially all of the issues which are likely to arise in the various claims for damages and that it would therefore not be any more efficient to deal with that issue first. 40Senior counsel for the Valuer General and the State, submits that a decision of this Court on the validity of the determinations would have the effect of substantially shortening the hearing of the matter because it may mean that any claim for damages is only a very limited one, particularly in circumstances where the determination is set aside. 41As well, senior counsel submits that having regard to the unique position of the Valuer General, namely that as it is the determination of the Valuer General which is sought to be set aside, he would ordinarily be expected to play a more limited role with respect to the administrative law proceedings than with respect to the claims for damages. In short in the administrative law proceedings, he says that the Valuer General would submit to any order of the Court, and play only the limited role contemplated by R v Australian Broadcasting Tribunal; Ex Parte Hardiman [1980] HCA 13; 144 CLR 13

Discernment 42I have come to the view that in the particular circumstances of this case, it is not appropriate to separate out the issues as contended for by the Valuer General and the State. 43The factual issues are clearly closely related whether the Court is considering the relief claimed in the administrative law proceedings, or else the relief claimed in the damages claim. 44Central to both of these separate claims for relief is whether CSR in fact conducted itself in the way pleaded, whether that conduct constituted fraud, whether the conduct affected the valuation which was undertaken by the third and fourth defendants, and, ultimately the determination made by the first defendant. 45As well, depending upon what findings are made on those issues, a question will arise as to whether the different valuations which may have resulted, assist in the proof of the appropriateness of the determination of the Valuer General, had he conducted himself according to law. This question will be a matter which is also relevant to the quantification of damages. 46These are matters which tell strongly against separating the issues as do the authorities to which I have earlier made reference. 47Standing against this is the potential embarrassment and discomfort which the Valuer General may feel in participating in the proceedings, which are being conducted jointly as proceedings for administrative law relief and a claim for damages. 48I accept that these claims for relief would ordinarily result in a differential attitude to participation on the part of the Valuer General. However, it does seem to me that that potential embarrassment is capable of being properly and carefully managed in the course of the proceedings, and it is not sufficient to stand against the hearing of all of these issues together. 49I am not satisfied that there is any overall savings and efficiencies to be found as submitted by senior counsel for the Valuer General and the State. The relief sought is in the alternative, and it may be that the Council needs to know the entirety of the relief upon which it has succeeded before making an election between alternative forms of relief. The procedure proposed would then not necessarily result in the saving of any time, nor costs. It would thus not necessarily be more efficient. 50For these reasons I am not prepared to exercise my discretion that there be a separate hearing, and determination, of the questions as sought in the notice of motion of the Valuer General and the State. 51That claim for relief is dismissed.

Withdrawal of admissions 52The Council submits that notwithstanding that the Defence of the Valuer General and the State was being filed to a newly amended statement of claim, it was nevertheless necessary for those parties to obtain the leave of the Court before withdrawing any admissions which had been made in an earlier Defence. 53Whether or not leave is necessary is a complex question. It is preferable, since I am giving reasons, ex tempore, that I do not express any concluded view on this submission, but rather to proceed upon the basis that I should assume that leave is necessary for the Valuer General and the State to withdraw any admissions in any previous pleadings. All parties were content that the Court proceeded on this basis. 54If admissions are to be withdrawn, then it seems to me that leave ought be granted where it is in the interests of justice so to do. This is a broad reaching discretion, which will be exercised having regard to the particular features of the case in question. 55The evidence in support of the application to withdraw the pleadings was that contained in two affidavits of Ms Jane Graham. In the course of those affidavits, Ms Graham made reference to a Memorandum of Advice received from senior and junior counsel. 56In particular, her affidavit contained the following: "9. On 14/11/2011 it was necessary to brief new junior counsel following the appointment of the previous junior counsel, to senior counsel. 10. On 21/11/2011, it was also necessary to brief new senior counsel as previous senior counsel is engaged on other matters. 11. I requested a joint advice from the newly appointed junior and senior counsel, after they were briefed in November 2011. The material briefed was voluminous and the time required for counsel to read it [sic]. 12. Instructions were also given to counsel for the drafting of the defence of the first and second defendants to the Further Amended Statement of Claim filed 14/9/2011. 13. By letter dated 15/12/2011, I notified the plaintiff by letter of the desire to withdraw the admission of a duty of care on the part of the first defendant, to raise further relevant defences under the Civil Liability Act 2002 and otherwise." 57It was submitted by junior counsel for the Council, that by that affidavit, and by the submissions which were put before this Court, the Valuer General and the State had waived privilege, which undoubtedly existed, in counsel's Memorandum of Advice, because they had exposed their state of mind in a way which would mean that it would be inconsistent for them to maintain legal professional privilege. 58Having attended carefully to the submissions of counsel, I was not persuaded that the affidavits and submissions had exposed the state of mind of the Valuer General and the State as claimed, nor was I persuaded that there was any inconsistency in allowing the claim for legal professional privilege to be maintained. 59I concluded therefore that there had been no waiver of legal professional privilege and rejected the application for the provision of the advice. 60The principal admission which the Valuer General and State wish to withdraw is the admission set in out in paragraph 13 of the Defence filed on 21 September 2010. That paragraph is in the following terms: "13. In answer to paragraphs 42, 43, 44, 45 and 46 of the Statement of Claim, the Valuer General and the State admit that the Valuer General owed the Council a duty of care to make a determination of the compensation to be offered to CSR with reasonable skill, care and diligence and otherwise do not admit the paragraph." 61Although those paragraphs of the earlier Statement of Claim are maintained in essentially identical form in the Further Amended Statement of Claim, the Valuer General and the State now wish to put in issue the following matters: (a)whether the Valuer General as that public office is so described, is capable of being sued for damages for a breach of the common law, or for conduct contrary to statute; (b)whether in exercising the statutory functions provided to him, the Valuer General owes to any party, including a party in the Council's position, any common law duty of care or any statutory obligation; and (c)whether the individual who held the office of Valuer General was entitled to the benefit of the immunity from suit contained in clause 9 of Schedule 1 of the Valuation of Land Act 1916, and if so, whether that immunity from suit affected the position of the Valuer General. 62The admission as to the existence of a duty of care is one as to law. The matters which are now sought to be put in issue are complex questions. 63The transcript of the submissions by counsel for all parties, together with the interaction with the Bench reveals the complexity of the issues which are raised by the statute by which the Valuer General functions, the nature of the functions undertaken and the potential liability of a person in the Valuer General's position for damages at common law or under statute. As well, these exchanges reveal real questions as to the correct identity of the party to be sued. 64There is no doubt in my mind that these questions raised by senior counsel for the Valuer General and the State appear to be matters that are all fairly arguable in a suit of this kind. As well, I am satisfied that they are novel questions, the determination of which may have a significant impact upon the way in which the Valuer General goes about his duties. 65He is entitled to the benefit, should this case proceed to judgment, to a judicial determination of those issues. 66The Council, understandably, submitted that the Valuer General and the State, being government parties, who made the admissions at an earlier point in time with some care, ought be held to them. 67Although the Valuer General and the State argued somewhat faintly that the admissions had been made through inadvertence, I am not prepared to accept that that is so. I am prepared to accept that the admissions may have been made without careful consideration of all of the complex legal issues which may arise. This is not a question of inadvertence, as that phrase is used in the authorities which are applicable. 68The Council, properly conceded that it could not demonstrate any irremediable prejudice if the admissions were withdrawn, providing that it had a proper opportunity to obtain any evidence which it thought necessary to support the pleading of the existence of a duty of care. It also submitted that it would need to be properly compensated by an order for costs. 69The council strongly submitted, however, that the provisions of the Civil Procedure Act would support a refusal of the relief sought. 70I acknowledge the strength of the arguments for the Council, but I am satisfied that the nature of the issues sought to be ventilated are real issues in these proceedings. I am satisfied that they are fairly arguable. I am also satisfied that it would not be an appropriate exercise of my discretion to hold the Valuer General and the State to an admission, which may have the consequence that the entirety of the suit is fought on a false legal basis. 71In my view, that is not a desirable outcome in this otherwise very complex litigation. 72The proceedings have not reached a stage at which it would be unjust to permit a withdrawal of the admissions. No irremediable prejudice exists. 73I am therefore satisfied that the admissions should be allowed to be withdrawn and the necessary leave should be granted. 74It will be necessary to make orders providing for the case management of the case consequent upon this leave being granted.

Costs 75The Valuer General and the State have failed on that part of the motion which deals with the separate hearing of the administrative law issues. I would order them to pay the costs of all parties of and associated with that part of the motion. 76As to the balance of the motion, the Valuer General and State have succeeded in withdrawing an admission, but the consequence of that is that the Council has been put to the expense of coming to court, and will be put to the expense of subsequent pleadings. 77In my opinion, it is proper, given that the admissions were made carefully in the first place, and no real reason is advanced for their withdrawal save that the issues are of substance and ought be litigated, that the Valuer General and the State pay, on an indemnity basis, the costs of the Council of: (a)the hearing of this motion insofar as it affects the withdrawal of admissions; and (b)the costs associated with amending its Statement of Claim to take account of the withdrawal of the admissions.

Orders 78I make the following orders: (1)The first and second defendants have leave to withdraw the admission made in paragraph 13 of the Defence to Amended Statement of Claim filed 21 September 2010; (2)The motion filed 3 May 2012 be otherwise dismissed; (3)The first and second defendants pay the costs of the motion, except as provided in Order 4; (4)The first and second defendants pay the plaintiff's costs, on an indemnity basis, of: (a)the hearing of the notice of motion insofar as it affects the issue of the withdrawal of admissions; and (b)of and occasioned by the amendment of the plaintiff's Statement of Claim so far as necessary to take account of the withdrawal of the admission as to duty of care.

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 August 2012

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