52 The Respondent contends that the Applicant has been guilty of "disentitling" conduct throughout (i) its dealings with the subject land, (ii) the acquisition of the land by the Minister at the behest of the liquidator, and (iii) the conduct of these proceedings. I, therefore, need to survey its conduct in some detail, beyond what I have already said.
53 Mr Gibbons was appointed as liquidator of the Applicant company on 24 December 2002, and set about to realise upon its land assets, including the subject land and a neighbouring lot (Exhibit M1). He immediately sought valuation, town planning and legal advice (including from senior counsel) in order to consider his options. He put the neighbouring lot out to tender and reached agreement with a purchaser on the basis that that purchaser could on-sell to, or substitute as purchaser, a named party. At about the same time he decided to exercise his right to have the Minister acquire the subject land, and, when that occurred, he submitted a claim based on all the advice he had received. None of himself and the shareholders has valuation qualifications (see T12.5.2008, p33 L2, and p33 L50 to p34 L1).
54 Armed with advice that the Minister's statutory offer, based on the Valuer General's valuation, was too low, he embarked on these proceedings, seeking professional advice at every stage and striving for a better return acceptable to the shareholders. Ultimately, with their concurrence, after unsuccessful settlement negotiations in which the Minister refused to negotiate above the original figure, he opted to abandon these proceedings and accept the statutory offer.
55 I am satisfied that it was reasonable for the liquidator, acting on behalf of the company and its shareholders, to seek the Minister's acquisition of the land, particularly when the liquidator entertained a fear that the law might be changed to preclude the exercise of such a right. It was then reasonable, when the Minister did not respond to the request, that the liquidator should commence Class 4 proceedings, which were subsequently settled and resulted in the acquisition. The law provided for such acquisition to be requested and made, and it matters not what information was in the public domain or the liquidator's personal knowledge about the government's intentions regarding the land and its environs.
56 It was then reasonable for the liquidator to bring these current proceedings when the Valuer General offered a figure approximately two-thirds of the valuation the liquidator had obtained. It would not be fair for the Court, on the facts, to accept the submission that these proceedings were "flawed or hopeless from the start", simply on the basis that Mr Gibbons had sold the adjoining land for $81M to a particular purchaser to whom the Respondent appears (from Counsel's cross-examination) to attach some odium.
57 In due course, when an offer of compromise was made by the Respondent, under which the Applicant would receive only the amount of the statutory offer, but also interest and its costs of the proceedings, it was reasonable for the Applicant to give serious consideration to the circumstances, and take appropriate professional advice (which indicated a settlement figure of $113M). Having done so - including being formally advised that to take the statutory offer at a later stage in the proceedings would put the Applicant at serious risk of a costs order - it was reasonable for the liquidator, after consulting the shareholders, one of whom was inclined to accept the offer of compromise (T12.5.08 p35 L1-5), to decide to continue to take the chance on the judicial valuer bringing in a result better in quantum than the statutory offer.
58 It was also reasonable for the liquidator to oppose, in turn, the two principal amendments sought by the Respondent in order to rely on additional points of defence. The Applicant had senior counsel's advice dating from 1 December 2003 that there was some risk that an underlying rural zoning could be determined, but, when an amendment to that effect was allowed by Jagot J, the Applicant obtained further advice, which said that, on the evidence then available to the Applicant, the amendment approved should make very little difference to the quantum which the Applicant might expect to flow from the judicial proceedings. It was, therefore, reasonable for the Applicant to decide to continue with those proceedings.
59 As has been noted elsewhere, including in Judgments Nos. 3 and 4, minds differ strongly on the impact (if any) of Walker on the circumstances of this case. The Applicant has steadfastly contended that the High Court's decision did not change the fact that the Court of Appeal's decision in Walker (Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No.2) (2006) 151 LGERA 186) had little bearing on this case, while the Respondent has steadfastly contended that its impact on the Applicant's case is catastrophic. I am not convinced by the over-simplicity of the Respondent's submission (par 48 of submissions in reply) that the High Court would not have heard the appeal if it "had nothing to say beyond what the Court of Appeal had already said".
60 There are now available to this Court four differing opinions from senior counsel on the Walker question. One of them provided to the Applicant specifically acknowledged that the full ramifications of the decision have yet to be tested. If the Respondent's view of Walker, namely that the High Court significantly changed the relevant law on s.56(1)(a) of the JTC Act, were to prevail at the hearing of the substantive proceedings, the Applicant may have recovered far less than the statutory offer.
61 The Lai Qin principle means that the true impact of Walker on the facts of this case cannot now be adjudicated in these proceedings, nor can the Court usefully adjudicate on the contention of the Applicant that the Respondent should have amended its defence in December 2006 (after the Court of Appeal decision) if it wished to rely upon Walker.
62 After I granted the amendment allowing the Respondent to rely upon the High Court's decision, the liquidator received some strong advice that the Respondent's view would not prevail, but other senior counsel were less confident of that outcome. He admitted to some concern about the divergent views, and informed the shareholders in detail. It was reasonable for the Applicant to conclude at that late stage that it should take the statutory offer.
63 Mr Gibbons gave sworn oral evidence that, having accepted the statutory offer, he still believes the land is worth more than the amount he has now accepted (T12.5.08 p38 L1-3). He made his decisions to firstly reject the offer of compromise, and later to accept the statutory offer, on the basis of the best advice available to him, and with the concurrence of his shareholders, after his efforts to negotiate a settlement at a higher compromise figure ($105M) failed (T12.05.08 p38 L32-37).
64 I have concluded that the conduct of these proceedings by the Applicant was "reasonable", and that none of its conduct should be seen as "disentitling".
The conduct of the Respondent
65 By the same token, subject to comments I intend to make in the context of indemnity costs (see pars [73]&[74] below), I am not satisfied that the Respondent misled or trapped the Applicant in any way. It was perfectly entitled (i) to "play it hard" in resisting the Applicant's claim, (ii) to move beyond the advice of experts upon whom it relied as at November 2006, (iii) to seek support from experts (such as Mr Rowan) for a case aimed at achieving at trial a compensation figure significantly lower than that advised to the Minister in the Valuer General's determination, and (iv) to twice seek the indulgence of the Court to reframe its case on the basis, in the first instance, of fresh advice, and, in the second instance, of perceived changes in the applicable law.
66 I do not accept the Applicant's contention that the "late" Walker amendment, which precipitated the Applicant's decision to take the statutory offer was "disentitling" conduct by the Respondent. The lateness of that amendment was dealt with in Judgment No.3.
67 I can find no conduct by the Respondent which I could describe as "unreasonable" or "disentitling".
A General Order for Costs
68 I have, therefore, concluded that the prevailing consideration must be that, in the end, the Applicant effectively abandoned its proceedings. Accordingly, I have firmed in my preliminary view that, in general terms, costs should be ordered in the Respondent's favour.
69 It then remains for me to consider (i) whether any of the Respondent's costs should be recovered from the Applicant on an indemnity basis, and (ii) what, if any, different orders should be made in respect of some specific events during the proceedings.
Indemnity Costs?
70 In Niezabitowski, Biscoe J had to deal with evidence which indicated that the Applicants had decided not to continue with the proceedings on 6 June 2006, filed its notice of discontinuance on 12 July 2006, and purported to accept the offer (made on 28 June 2004) in a letter dated 14 July 2006. His Honour found that the Applicants had continued to create the appearance of proceeding with their objection "in order to secure a technical advantage while endeavouring to negotiate a settlement with the Respondent". As the Respondent incurred costs after 6 June as the result of the tactical position adopted by the Applicants, the principles of indemnity costs were found to apply (and His Honour explained them in pars [52]-[53]). His Honour found the conduct of the Applicants to have been "unreasonable conduct in the relevant sense", and made his costs order apply on an indemnity basis from 6 June 2006.
71 Unlike Niezabitowski there is nothing in the behaviour of the Applicant in these proceedings which would require that any part of the order I propose to make against it for costs should be on the basis of indemnity costs.
72 Unlike some of the cases where indemnity costs are ordered, the Applicant in this case did not ignore the Respondent's offer of compromise. The evidence suggests that the offer was given very serious consideration, at a time when the employment zoning of the subject land was, simultaneously, formally in issue in the proceedings, but taken as a "given" by all experts.
73 At the very time the Respondent had its offer of compromise on the table (mid 2007) it was shifting its ground in the proceedings to a harder stance, and setting itself up to make the amendment eventually approved by Jagot J, and to contend, for the first time, for a figure lower than the statutory offer. The force of that shift was not made readily apparent to the Applicant at the time. Mr Rowan (not listed as an expert in November 2006) was engaged in February 2007, but his opinions were not revealed to the Applicant until about June 2007, and their monetary implications were not clear until March 2008 when further Amended Points of Defence were filed following the Walker amendment.
74 All of that conduct on the Respondent's part might be viewed by some as "disentitling", if the Respondent were otherwise seen to be entitled to an order for indemnity costs against the Applicant. However, I do not see the Respondent as entitled to such an order, in any event.
75 "Compromise" is seen in the authorities as requiring the parties to "give something away", and I do not accept the Applicant's contention that the Respondent's offer of compromise lacked any element of genuine compromise. True it is that it represented a result available to the Applicant at any time until the Court delivered judgment on the objection (a contention the Respondent resisted strongly once the statutory offer was taken), but it offered no challenge to the Applicant's right to interest, and included an offer to pay costs. The Applicant saw the Respondent's offer as requiring it to give away about $30M which it believed, on advice, that it could expect, in exchange for keeping its interest and getting its costs.
76 In all the circumstances the Applicant can be excused for not seeing it as a compromise which should be accepted, at least at that time, but I am satisfied that it received the Applicant's genuine consideration. It was not until later in the proceedings that the Applicant saw the risk of gaining far less at trial - as noted in par [73], the valuation evidence firmed against the Applicant's case only in March 2008.
77 Had the Applicant foreseen the possible impact of the Walker amendment (as distinct from that amendment approved by Jagot J around the time of the offer of compromise) - and it must be remembered that the offer of compromise was on the table many months before the High Court's decision in Walker - the Applicant may have seen the offer as "a real and genuine compromise" (per Santow JA in Green), and not merely a device to force the Applicant to abandon its claim "to avoid the risk of a costs order" (per Dunford J in McKerlie).
78 Rejection of an offer of compromise does not automatically expose the rejecting party to an order for indemnity costs. If it is ignored, or there is evidence to show a lack of genuine consideration of it, an order for indemnity costs might follow, but neither of those circumstances applies here.
79 To result in an order for indemnity costs the behaviour of the party concerned, whether generally or in regard to its rejection of an offer of compromise, must be found to be "imprudent", "unreasonable", or tainted by fraud, misconduct, an ulterior motive, wilful disregard for known facts or settled law, groundless contentions, "disentitling conduct", "plainly unreasonable conduct", or "relevant delinquency" (see Santow JA in Green, summarising various cases. See also Oshlack, Ritchie 8752, and Canterbury). Even so, as Lloyd J concluded in Canterbury, the rejection of a reasonable offer is but "one among many" factors to be considered.
80 I see no grounds for making any orders in this case that costs be paid on an indemnity basis.
Specific events
81 I turn, finally, to the specific events in the case, to which attention has been drawn.
82 It is a principle of long standing that a party granted an indulgence by a court should expect to be ordered to pay the costs consequentially occasioned to its opponent. See Stewart v North Metropolitan Tramways Co (1886) 16 QBD 556, and Ritchie at 2532.
83 The Respondent obtained from the court leave to make two substantial amendments to its Points of Defence. On the first occasion (6 July 2007) Jagot J made a costs order, and on the second occasion (17 March 2008) I reserved the question. Despite the revelation that there was an offer of compromise on the table at the time of Jagot J's consideration of that first amendment, I can see no reason to vacate her costs order, and good reason to emulate it. The Respondent should pay the Applicant's costs of the two amendments made to the Points of Defence and the costs thrown away by the Applicant as a result of the Respondent's success in those two interlocutory proceedings.
84 I see no reason to vacate either the "costs in the cause" order made by Lloyd J on 20 November 2007, or the costs order made by Jagot J on 12 December 2007.
85 When the statutory offer was accepted late on Friday 18 April 2008, the Applicant sought unsuccessfully to get the Respondent before the court to vacate the hearing appointed for the morning of the next working day. I find no fault with the Respondent in this regard. The Applicant should pay its own costs of that day.
86 When the court then sat on Monday morning 21 April 2008 both sides put their views, in a preliminary way, on whether the Applicant's acceptance of the statutory offer was valid or effective, and the "separate question" to be answered was variously formulated. Each party should pay its own costs of that day.
87 As there was clear authority in this court on that separate question, authority not challenged on appeal, but accepted and followed in subsequent cases, (and thought to be clearly correct, incidentally, by senior counsel consulted by the Applicant, other than Mr Coles), I believe that the Respondent should pay the Applicant's costs of and incidental to the determination of that separate question by my judgment of 29 April 2008 (Judgment No.4).
88 In par [89] of Judgment No.4 I appointed 5 May for the hearing of the matters being determined in this present judgment. The Applicant was simply not ready to proceed on that day - and no satisfactory explanation has emerged - whereas the Respondent was ready. The Applicant should pay the Respondent's costs of that day.
89 Each party should pay its own costs of the hearing of these concluding matters on 12 and 13 May.
Orders
90 Accordingly, the proceedings are to be finalised in the following way: