1 The respondent (claimant) is ordered to pay the applicant (acquiring authority) the sum of $10,000 in relation to the costs of the proceeding and the authority may offset that amount against any compensation or interest which is owing to the respondent (claimant).

REASONS (given orally at the hearing and subsequently revised)

1 On 26 September 2003 the tribunal, constituted by Deputy President Baker-Smith and Member Ian D Robinson, ordered that the Minister for Environment and Conservation pay compensation to Mr Kupfer arising from the acquisition of land in Blakiston Avenue, Mt Evelyn. The tribunal fixed the compensation at $105,191, of which $95,000 represented the market value of the interest acquired and $4,750 represented solatium.

2 The Minister now seeks costs in relation to the hearing of the disputed claim. The basis of the Minister's application is set out in a written submission prepared by counsel for the Minister dated 17 October 2003.

3 Mr Kupfer has not attended the hearing to contest the application but wrote to the tribunal by letter dated 5 December 2003. I have read that letter and take it into account.

4 The question of costs in a proceeding of this sort is to be determined having regard to section 91 of the Land Acquisition and Compensation Act 1986. In the context of this type of application section 109 of the Victorian Civil and Administrative Tribunal Act has no application.

5 The first matter mentioned in section 91(1) of the Land Acquisition and Compensation Act is the amount of compensation awarded by the tribunal as compared with the amount offered by the authority. Other matters which are referred to focus on the conduct of the parties in relation to the disputed claim.

6 The original offer made by the authority was in the sum of $70,000 which was offered on 13 April 1999. On 11 April 2001 a valuers' conference was held at which the valuer for the authority agreed to review his valuation and increase it to $95,000. At that conference it was also stated that the authority would pay solatium to a maximum amount of 10% along with the claimant's reasonable costs. The valuer for the owner said he was prepared to recommend to his client that Mr Kupfer accept a revised offer of $110,000 inclusive of solatium plus costs. I infer that this amount was in fact offered by the authority at that time.

7 On 23 May 2003 the authority made a without prejudice offer to Mr Kupfer to settle the matter for $138,000. I take it that that offer included any costs that had been incurred by Mr Kupfer. However, even taking this into account, it is clear that that offer was considerably in excess of the final determination by the tribunal.

8 In his written submission Mr Connor, who appeared for the Minister, contended that the May 2003 offer of compromise should be taken into account and lead to the conclusion that the costs of the proceeding after that date be paid by the respondent on a party/party basis in accordance with County Court Scale D. In that context he also referred to sections 112, 113 and 114 of the VCAT Act which deals with offers of compromise. He suggested in his written submission that section 112 might not apply because it did not apply to proceedings in the review jurisdiction of the tribunal. However I suspect this concession is wrongly made as the proceeding before the tribunal does not appear to me to be in the review jurisdiction of the tribunal but rather is in the original jurisdiction.

9 Notwithstanding that, there is a potential problem with secret offers, of which an offer of compromise is a species, in cases concerning compensation for the compulsory acquisition of land. In Coastal Estates Pty Ltd v Shire of Bass No 2 [1994] VicRp 13; [1994] 1 VR 210 Mr Justice Gobbo considered the issue of secret offers in compulsory acquisition cases in some detail and concluded that they had no useful basis in these types of proceedings and should be disregarded. As the unsuccessful counsel in that case, who had devised the strategy of making a secret offer and then sought to defend its legitimacy and relevance, I am in a somewhat uncomfortable position to now assess whether the decision in Coastal Estates is correct. Ultimately, I do not believe it is necessary for me to enter into that territory because, as presently advised, I hold the view that when I sit as a member of the tribunal I am bound by decisions of single judges of the Supreme Court. Further, even if the offer were to be taken into account, it is unlikely that it would have made any substantial difference to my ultimate conclusion.

10 Focusing as I must on section 91 of the Land Acquisition and Compensation Act and on the open offers that were made, I find that the offer of $110,000 was, for all intents and purposes, an open offer. It is true that a letter was written in relation to that which was marked "without prejudice". (I refer to the letter of 27 June 2001.) The fact that $95,000 had been put forward as the revised valuation and that some money in addition to that was being offered was a matter that was quite openly advanced during the hearing and, in a sense, was made open even if originally it might not have been fully open. Taking that into account it is clear that the amount of compensation awarded by the tribunal was no more than the relevant amount offered by the authority. That I think is an important factor in determining what the outcome in relation to costs should be. If an authority offers an amount and the claimant recovers no more than that amount, generally speaking the authority should not be out of pocket for defending, and successfully defending, its offer.

11 The Minister in this case also relies on certain matters concerning the way the proceeding was conducted, including an excessive claim by the claimant and unreasonable conduct on the part of the claimant. Whilst these are relevant, they must be understood in the context that this was a particularly difficult case for Mr Kupfer as he was obviously emotionally attached to the land which was being acquired and felt, no doubt sincerely, that the acquisition was very unjust. Whilst emotion cannot displace reason it is a relevant matter to take into account in the context of the full circumstances of the matter.

12 Taking these matters into account, I conclude that the authority should recover a substantial proportion of its costs.

13 There is much to be said in a case like this for awarding a fixed amount of costs. I am informed that the costs incurred by the Minister, after 23 May 2003, if assessed on a party/party basis in accordance with County Court Scale D, would be about $15,000. I propose to fix the amount of costs at $10,000. The reason I choose $10,000 rather than $15,000 is to make some allowance for events that occurred before the time that the $95,000 was offered which, to some extent, should be regarded as an offset, and also to take some account of the circumstances involved in the offer of the $95,000.