Nevitoro Investments Pty Ltd v Hawkesbury City Council

By letter dated 4 February 1998, presumably before the applicant was made aware of the additional sales information on which the respondent valuer proposed to rely, the applicant's solicitor made a written offer to settle on the basis that the council pay $450,000 plus interest at the statutory rate since 1989, together with costs, subject to the council waiving all unpaid council rates and paying land tax payable in respect of the property since 1989 when some zoning changes were introduced.

On 10 February 1998 the applicant was granted an adjournment to enable it to meet the new evidence, in respect of which it had received notice effectively the day before the commencement of the hearing. In the course of the adjournment the applicant retained the services of an alternative valuer who dealt with the new sale raised by the council and responded with further sales evidence in the adjoining town of Richmond.

During the interval before recommencement of the hearing, the council made a written offer dated 24 February 1998 indicating that it was prepared to settle the matter for "the sum of $500,000 inclusive of compensation arising out of the resumption, interest in accordance with the statutory rates applicable from time to time and costs" .

Following rejection of that offer the council again wrote to the applicant's solicitors on 6 March 1998 and advised that it was prepared to settle the matter for "the sum of $550,000 inclusive of compensation arising out of the resumption, interest in accordance with statutory rates and costs" .

In both cases the council stated that it did not accept the amounts claimed by the applicant for disturbance or severance, however, it noted the offer was made as a genuine offer to bring the proceedings to a conclusion and to avoid further substantial costs for both parties.

The second offer was rejected on 6 March 1998 and the hearing recommenced on 12 March 1998.

The new evidence was critical to the Court's determination as it enabled a comparison to be made with an actual sale of land which could be treated as properly comparable. Up to that time no such sale had been relied upon and significant adjustments had been made, particularly by the council, to reach a concluded view about the value of the land acquired.

In my written judgment dated 7 April 1998 the market value of the land was determined at $321,600 being the amount the council's valuer determined at the rate of $300 per square metre. This amount can be compared to the earlier valuation of $313,000 made by the council's valuer prior to placing reliance on the new sale, albeit on a different basis.

The applicant was successful in persuading the Court to award compensation for disturbance pursuant to s 55(d) in the sum of $26,525.75 over objections by the council in relation to quantum.

The relevance of the Valuer-General's determination, the applicant's claim and the settlement negotiations

The determination of compensation by the Valuer-General was detailed and set out the heads of compensation offered. The claim for compensation by the 0applicant was equally detailed. The contrast was between the amount offered in the sum of $329,500 and the amount claimed in the sum of $1,516,000.

The offers made by the applicant on 4 February 1998 and 17 February 1998 do not directly assist in determination of the costs issue. In that context they are to be regarded as no more than part of the negotiating process and as an indication of the applicant's willingness to settle for something less than the actual claim rather than incur further unnecessary legal and other professional costs.

On the other hand, the council's letters of 24 February 1998 and 6 March 1998 are in a category akin to a defendant making a genuine offer to meet a plaintiff's claim. It needs to be shown in respect of such an offer that it is fair and reasonable, presenting a realistic assessment of what in the circumstances is a fair and proper compromise ( Tickell v Trifleska Pty Ltd and Anor (1990) 25 NSWLR 353). It is not necessary that the amount offered must reflect the best result that the applicant could hope to obtain, but rather, as Rogers CJ Comm D said at 355, is "a realistic assessment of what, in the circumstances, represented a fair and proper compromise" .

It is not possible for the Court to determine in this case whether the offers made by the council were more or less than the amount which the applicant ultimately contended for or indeed recovered.

The inclusive nature of the offers did not allow the applicant to determine the appropriate amount to attribute to its claim. It is only reasonable that where such an offer is made the other party is given the opportunity to make a comparative assessment of the amount of the offer against the amount of the relief it is seeking. If the offer had been made in terms which defined the amount of compensation offered and left the amount of costs to be taxed or determined by other means, the applicant would have been able to understand the full implications of the offer made ( Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97; Hanave Pty Ltd v LFOT Pty Ltd (FCA, 11 November 1998, unreported); Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) [2000] FCA 602).

The offers therefore cannot be regarded as being such that the applicant continued with the litigation at the risk of a costs order on that account alone.

The relevant comparison to be made is between the total amount that the applicant would have received if the proceedings had not been commenced and the amount it actually received pursuant to the Court's determination.

Notwithstanding that its claim was significantly in excess of the amount determined by the Valuer-General at $329,500, the applicant was successful in persuading the Court to assess total compensation at $348,125.75.

To that extent, the applicant must be regarded as the successful party.

However, there are special circumstances relating to an additional claim made by the applicant pursuant to s 55(f) for the loss of car parking facility for the occupiers of the adjoining premises owned by the applicant. This claim was totally rejected by this Court and the Court of Appeal on the basis that the item was reflected in the market value of the land.

In the circumstances I think that it is fair and reasonable for the Court to recognise that the applicant was successful in recovering compensation in excess of the amount it would otherwise have received. However, it is also fair and just that the Court recognise the applicant's failure on the claim made pursuant to s 55(f) of the Just Terms Act. The issue is clearly defined and was the subject of specific evidence and debate which took up significant time.

In accordance with the well established principle that costs in compensation proceedings are discretionary and that it is open for the Court to have regard to the particular circumstances in each case, it is appropriate to make a special order where a party is generally successful although unsuccessful in respect of a substantial issue.

I am satisfied in the circumstances of this case that a special order is justified and that the respondent be ordered to pay the applicant's costs except for the costs relating to the applicant's claim pursuant to s 55(f) of the Just Terms Act.

An order in those terms will take account of any additional costs incurred as a consequence of any late notification of the additional valuation evidence upon which the council relied.

The Court makes the following orders:- 1. The respondent is ordered to pay the applicant's costs of the proceedings except for those costs incurred in relation to a claim made pursuant to s 55(f) of the Land Acquisition (Just Terms Compensation) Act 1991.

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