Maurici v Chief Commissioner of State Revenue

Land and Environment Court (NSW)|1992-05-29|Before: Lloyd J, Talbot J, Cowdroy J, Pearlman J

The applicant appealed from the Commissioner's decision pursuant to s 56A of the Land & Environment Court Act 1979 ("the Court Act"), such appeal being limited to a question of law. The appeal was heard and determined by Cowdroy J, who upheld the appeal, remitted the proceedings to the Commissioner for rehearing and ordered the respondent to pay the applicant's costs of the appeal ( Maurici v Chief Commissioner of State Revenue (No 2) (1999) 105 LGERA 318). Cowdroy J held that the Commissioner had erred in law by making no deduction for an improvement, namely a retaining wall, which the Commissioner had erroneously decided was within the definition of " land improvement ". Cowdroy J also held that the Commissioner erred in law in failing to address the question of whether sales of vacant parcels of land had been inflated by the general scarcity of vacant land in Hunters Hill.

The present application for costs is made notwithstanding the relevant practice direction, which has been in place since 1996, as follows: The practice of the Court is that no order for costs is made in valuation appeals, farmland rating appeals (and other rating appeals) and subdivision appeals in Class 3 of the Court's jurisdiction, unless the circumstances are exceptional.

The practice direction is similar to that which applies in planning and building appeals. In Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365, Pearlman J said (at 369) as to that practice direction that it was made " to encourage dissatisfied parties to seek review of planning and building decisions by councils without risk of costs if unsuccessful ". Similarly I am prepared to infer that the practice direction relating to valuation appeals was also made to encourage dissatisfied parties to seek review of valuation without risk of costs if unsuccessful.

Mr J Stoljar, appearing for the applicant, submits that the Court's general discretion under s 69(2) of the Court Act to make an order for costs is enlivened; and alternatively and in any event there are exceptional circumstances in this case. The circumstances upon which the applicant relies are (a) the appeal was lodged and prosecuted in the context of the respondent's valuation of $2.44 million and by the time the respondent reduced its valuation two weeks before the hearing to $2 million the applicant had committed a considerable sum to the conduct of the appeal; (b) as a result of bringing the appeal the applicant achieved not a minimal reduction in land value but rather a reduction of almost half a million dollars; (c) the appeal raised complex questions of legal construction in respect of the retaining wall issue, of valuation methodology and of valuation principle with respect to the issue of the scarcity factor; (d) the applicant was represented by counsel and instructing solicitor, each side served comprehensive experts' reports, there was detailed cross examination of those experts and submissions were made on the facts and the law; and (e) the applicant was vindicated on appeal in respect of the retaining wall issue and the scarcity factor issue.

Miss J H H Blackman, appearing for the respondent, submits that the legal issues were not complex; the Commissioner's finding in relation to the retaining wall was only part of the case; the Commissioner accepted the methodology of the respondent's valuer on the other issues; and there was nothing in the case to take it outside the practice direction.

As I have noted, the practice direction was made in 1996. It was made following a number of inconsistent judgments on the question of whether the costs of valuation appeals should generally follow the event.

As long ago as 1974, Else Mitchell J in Seatainer Terminals Ltd v Valuer General (1974) 29 LGRA 6 said (at 13), in an appeal under the Valuation of Land Act: " The old principle in those circumstances was that the Valuer General should not be ordered to pay costs and would not ask for costs ". Else Mitchell J went on to apply that principle and made no order for costs even though he acknowledged that " there were special circumstances in this matter, not the least of which are that it was a difficult matter, raising novel questions, breaking new ground perhaps for the first time ... ".

In Tricas v Valuer General (Talbot J, NSWLEC, 29 May 1992, unreported) a valuation objection was upheld by an assessor (as Commissioners were then called) who ordered that the valuation be altered from $162,000 to $161,000. In making no order as to costs, Talbot J said (at 3): This Court will make an order for costs only when exceptional circumstances apply in building and planning appeals. It has been a long-standing practice of the Court and has now been enshrined in the Rules. The same practice has been applied in Class 3 applications where those applications are by way of an appeal against the refusal of an objection to a valuation.

Accordingly, and, according to the practice adopted by the Court, it is necessary that exceptional circumstances be shown in the sense that they have been established by the practice of the Court before either party in Class 3 proceedings by way of appeal against refusal of an objection to land valuation can be successful in an application for an order for costs.

In Dobrel v Valuer General (No 2) (1993) 80 LGERA 26 Bignold J ordered the respondent to pay the applicant objector's costs in a case decided by him in which the objector had successfully appealed against a valuation. Bignold J distinguished Tricas and said: " I do not understand this practice to have been so applied to such cases that are determined by judges of the Court for reasons of the complexity of the case or because the case may raise a question of valuation principle or a principle of law" .

In New South Wales Golf Club Ltd v Valuer General (1994) 82 LGERA 188 Bannon J ordered that a successful objector receive two thirds of its costs. In his reasons Bannon J noted the conflicting decisions of Talbot J in Tricas and of Bignold J in Dobrel . In resolving this conflict Bannon J accepted the reasoning of the Full Court of the Supreme Court of Victoria in Esso Exploration and Production Australia Inc v Shire of Morwell (1985) 60 LGRA 82 and in particular the reliance placed by the Full Court on a decision of the Privy Council in Commissioner of Valuation v Jamaica Gypsum Ltd (1971) 14 RRC 4 (Ryde's Rating Cases). The Privy Council decision was delivered by Lord Wilberforce, who said (at 11): In principle their Lordships consider that a person who successfully secures a reduction in the valuation, unless this is of a minimal amount, should be entitled to his costs, and that, unless by doing so he has added to the length or expense of the proceedings, the fact that he has supported a figure which turns out to be less than finally accepted should not be to his detriment.

After referring to the Jamaica Gypsum case, the Full Court said that the principle as to costs described by his Lordship applies to an appeal under the Land Valuation Act 1960 (Vic) save that the discretion to make an order for costs may only be exercised in favour of the successful party. In the New South Wales Golf Club case, Bannon J said that the advice of the Privy Council must be treated with great respect.

In Murray Publishers Pty Ltd v Valuer General (1994) 84 LGERA 13 Stein J allowed a number of related appeals against the determination of land values. The respondent had contended for values which in total exceeded $4 million. Stein J determined values which in total amounted to $536,000. Stein J rejected the objector's application for costs and made no order for costs. In reaching his decision on costs Stein J reviewed the authorities. With respect to the Jamaica Gypsum case Stein J said (at 18): I do not think that the principles discussed by Lord Wilberforce should be universally applied to valuation appeals throughout the common law world. There is a great distinction in power and jurisdiction between the Land & Environment Court and the Valuation Board for the District of St Thomas in Jamaica. This Court should decide its own policy and practice with regard to the costs of administrative appeals, including appeals against valuation of land.

Stein J said (at 17) that the decision in Esso has limited relevance in New South Wales: " In that case the legislative provisions allowed a qualified exercise of discretion by the Court to make costs orders only in favour of the successful party. This is to be contrasted with the wide discretion contained in s 69 of the Land & Environment Court Act.

Stein J said (at 17) that the rationale in Dobrel which seeks to explain costs in valuation appeals as dependent on whether the case is heard by a judge or by an assessor has little to commend it, such distinction appearing artificial and rarely having an effect on the way the matter is treated, save where real and substantial questions of law are argued. Where, however, issues of valuation law or fundamental questions of valuation methodology are determined then costs may be properly ordered.

Stein J expressed the opinion (at 18) that the practice of the Court in valuation cases should be that no order for costs be made unless exceptional or special circumstances are shown to exist. His Honour said: " I agree with Talbot J in Tricas . Precisely what will constitute exceptional circumstances is to be assessed on a case by case basis: Berk v Woollahra Municipal Council (No 2) (1992) 78 LGERA 180 at 184. The conduct of a party, whether successful or unsuccessful, may justify a costs award being made: see, eg, Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333. Clearly costs may be ordered to follow the event of a determination on a question of law " .

These cases were decided before the adoption by the Court of its present practice direction. The effect of the practice direction is to give effect to the views of Talbot J in Tricas and of Stein J in Murray Publishers .

19 Although the Court has a wide discretion to make an order for costs under s 69 of the Court Act, such discretion must be exercised judicially: that is to say, in accordance with established principles. The established principles in exercising the Court's discretion are those expressed by Talbot J in Tricas and Stein J in Murray Publishers and is now settled in the terms of the practice direction.

It is, therefore, necessary to see whether there are any circumstances in this case which are exceptional. It is not an exceptional circumstance that the applicant achieved a reduction in the valuation. The very significant reduction in Murray Publishers from $4 million to $536,000 was not an exceptional circumstance. Neither, in my opinion, is it an exceptional circumstance that the respondent, shortly before the hearing, contended for a figure of $2 million rather than its original assessment of $2.44 million. The figure of $2 million was not accepted by the applicant, who contended at the hearing for a much lower figure of $1.25 million. Neither is it an exceptional circumstance, in my opinion, that the applicant was represented by counsel and instructing solicitor, that each side served comprehensive experts' reports, that there was detailed cross examination of those experts, or that submissions were made on the facts and the law. The respondent was not legally represented. Moreover, it must be remembered that the proceedings were not governed by the rules of evidence and were required to be conducted with as little formality and technicality and with as much expedition as the proper consideration of the matters before the Court permitted (s 38(1)(2) of the Court Act). These latter considerations strongly, in my opinion, lend support to the view that there should be no order for costs in valuation appeals.

The principal legal issue was whether the retaining wall should be regarded as a " land improvement ". The legal issue did not, however, involve the determination of a fundamental question of legal principle or construction. It is true that the application of legal principle to any factual circumstance is in itself a question of law. It seems, however, that there was no dispute at the hearing as to the law to be applied. The legal question involved no more and no less than the application of settled law to the particular facts. In my opinion this does not amount to an extraordinary circumstance.

The other questions which were raised related to valuation methodology and valuation principle. The Commissioner accepted the respondent's valuer's methodology. The applicant failed in its challenge to the respondent's valuer's methodology in the appeal determined by Cowdroy J. The Commissioner failed to address the applicant's argument on valuation principle relating to the scarcity factor and the applicant succeeded on this issue before Cowdroy J. In Murray Publishers Stein J was of the opinion that a focus by the parties on the methodology of the valuations adopted by their respective valuers does not constitute exceptional circumstances justifying a departure from the practice that there should be no order for costs. I am likewise not satisfied that the raising of these questions constitutes exceptional circumstances.

Accordingly there will be no order for the costs of the proceedings before Commissioner Nott. In accordance with the principles to which I referred in MacDonald v Mosman Municipal Council [2000] NSWLEC 67, the applicant must pay the costs of the notice of motion.

For the abovementioned reasons I make the following orders: 1. The applicant's notice of motion dated 3 December 1999 is dismissed.

The applicant must pay the costs of the notice of motion.

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.

Land Valuation Act 1960(Vic)

Environment Court Act 1979

CITATION : Maurici v Chief Commissioner of State Revenue (No 3) [2000] NSWLEC 71 APPLICANT: PARTIES : Anthony Phillip Maurici RESPONDENT: Chief Commissioner of State Revenue FILE NUMBER(S) : 30039 of 1999 CORAM: Lloyd J KEY ISSUES: Costs :- in class 3 - valuation appeal - appeal successful - no exceptional circumstances LEGISLATION CITED: Land & Environment Court Act, s38(1)(2), s 56A, s 69(2) Berk v Woollahra Municipal Council (No 2) (1992) 78 LGERA 180; Commissioner of Valuation v Jamaica Gypsum Ltd (1971) 14 RRC 4 (Ryde's Rating Cases); Dobrel v Valuer General (No 2) (1993) 80 LGERA 26; Esso Exploration and Production Australia Inc v Shire of Morwell (1985) 60 LGRA 82; MacDonald v Mosman Municipal Council [2000] NSWLEC 67; CASES CITED: Maurici v Chief Commissioner of State Revenue (No 2) (1999) 105 LGERA 318; Murray Publishers Pty Ltd v Valuer General (1994) 84 LGERA 13; New South Wales Golf Club Ltd v Valuer General (1994) 82 LGERA 188; Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365; Raiti v Leichhardt Municipal Council (1991) 72 LGRA 333; Seatainer Terminals Ltd v Valuer General (1974) 29 LGRA Tricas v Valuer General (Talbot J, NSWLEC, 29 May 1992, unreported) DATES OF HEARING: 28/02/00 DATE OF JUDGMENT: 04/14/2000

(1999) 105 LGERA 318

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