Kirela Pty Limited v The Minister administering the Environmental Planning and Assessment Act 1979

Findings 14 In Associated Confectionery (Aust) Ltd v Mineral and Chemical Traders Pty Ltd (1991) 21 NSWLR 349 Giles J (as he then was) determined that Pt 22 of the Supreme Court Rules was not satisfied in respect of an offer that was made expressed to be inclusive of costs. His Honour held that such an offer was in conflict with Pt 52 r 17(2) which provides:- (2) If a notice of offer contains a term which purports to negative or limit the operation of subrule (1), that offer shall be of no effect for any purpose under Part 22 or this rule. 15 It follows that the offer made by the respondent, being made in effect inclusive of costs, did not comply with the provisions of Part 22 of the Supreme Court Rules. 16 Authority exists for the proposition that an offer which fails to comply with the procedure provided by statutory rules may be treated as a Calderbank offer: see Schulte-Hordelhoff v Patons Brake Replacements Pty Ltd [1965] VR 369. It is apparent that a conflict exists concerning whether an offer, made inclusive of costs, can be said to constitute a Calderbank offer: see Smallacombe and Ors v Lockyer Investment Co. Pty Limited (1993) 42 FCR 97 but compare M T Associates Pty Ltd v Aqua-Max Pty Ltd & Anor (No 3) [2000] VSC 163 (3 May 2000). 17 The Court considers that the offer made by the respondent constituted a Calderbank offer since the applicant could have ascertained the amount of its costs and thereby calculate the net residue it would receive in respect of its claim for compensation. However such conclusion does not lead to the result that the respondent is entitled to costs. In Jones v Bradley (No. 2) [2003] NSWCA 258 the Court of Appeal affirmed the decision in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 wherein Giles JA held that a Calderbank offer did not automatically result a different order as to costs which would otherwise have followed and that a court must consider whether the failure to accept such an offer in all the circumstances warrants a departure from the ordinary rule as to costs. The Court must consider the circumstances of each case in its exercise of its discretion granted to it pursuant to s 69(2) of the Land and Environment Court Act 1979. 18 An important consideration is the fact that the applicant was obliged to institute these proceedings to obtain an award of compensation which exceeded the amount offered in the Notice of Compensation. Additionally the applicant was successful in obtaining an award which exceeded the amount as itemised in the respondent's offer of compromise for the principal issue in dispute, namely the market value of the acquired land. 19 A second consideration relates to the uncertainty of the offer. The respondent's offer required the applicant to assess its own costs on a solicitor and client basis and then deduct such sum in order to calculate the residue which would represent the amount of compensation for the compulsory acquisition of the applicant's land. The evidence of the solicitor for the applicant establishes that up to 15 January 2003 the applicant's legal costs excluding expert witness and other costs amounted to $267,000. There is no evidence of the quantum of the experts costs but an estimate is made that the witness costs and other costs of the proceedings up to 15 January 2003 was between $215,000 to $220,000. Prima facie, after deduction of such costs from the offer of compromise the residue is less than the amount which the applicant was finally awarded for compensation. 20 Thirdly, the nature of these proceedings should also be considered. Wilcox J in Banno and Anor v Commonwealth of Australia and Anor (1993) 81 LGERA 34 at p 53 suggested that people who have had their land compulsorily acquired should be "allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the [acquirer]'s costs if their case proves unpersuasive." 21 In Wollong Pty Ltd v Shoalhaven City Council (2002) 122 LGERA 331 at p 337 Talbot J stated :-

Applicants who appeal to this Court following an offer to pay compensation by an acquiring authority should not be discouraged from testing the adequacy of the offer by the threat of a punitive costs order…

The question remains whether the applicant was sufficiently unreasonable in refusing the offers to settle to justify an order that it pay the respondent's costs on a party and party basis… 22 In this case for the reasons considered above the Court is satisfied that the applicant is entitled to its costs of the proceedings. Orders 23 The Court makes the following order:-

1. ORDER that the respondent pay the applicant's costs of these proceedings.

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.