Simpson & Anor v Bagnall & Ors

KEY ISSUES: Costs :- compensation for anticipated compulsory acquisition of land - applicants largely but not wholly successful - disputed costs orders - applicants ordered to pay 50% of respondents' costs

LEGISLATION CITED: Civil Procedure Act 2005 Roads Act 1993

CASES CITED: Constantino v Roads and Traffic Authority (NSW) (No 2) (2005) 144 LGERA 224 Simpson & Anor v Bagnall & Ors [2007] NSWLEC 823

APPLICANT Mr G Laughton SC SOLICITORS E C Abernethy & Co LEGAL REPRESENTATIVES: RESPONDENT Mr Stefan Balafoutis SOLICITORS Graham Barrett & Associates

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JAMES DAVID KINGSLEY SIMPSON First Applicant

LYNNE ELIZABETH SIMPSON Second Applicant

STEPHEN DAVID BAGNALL First Respondent

LORIS LORRAINE STEVENSON Second Respondent

JUDGMENT Jagot J: 1 This is a dispute about costs consequent on the delivery of my principal reasons on 19 December 2007 (Simpson & Anor v Bagnall & Ors [2007] NSWLEC 823) in which I determined the first and second respondents' entitlement to compensation in the amount of $7,523 (at [69] of my principal reasons).

2 The proceedings are unusual in that the compensation has to be determined before the Minister can exercise the power to acquire land for the purpose of a public road under Div 2 of Pt 12 of the Roads Act 1993. The public road purpose in this case involved the realignment of an existing public road so as to provide lawful access to the applicants' land but also consequently to land of others along the route of the existing public road, including the respondents' land.

3 The proceedings have a long and unhappy history to which I briefly referred in my principal reasons. The respondents claimed compensation in the amount of $48,000. The applicants said that just compensation should be determined in the amount of some $3,523. As set out in my principal reasons I basically accepted the applicants' arguments but for one matter. I made an allowance for fencing that the applicants had rejected in principle. However, the applicants' valuer had agreed the quantum with the respondents' valuer for any such fencing (after which the respondents' position in that regard altered). When the cost of the fencing was added to the applicants' valuation it led to the determination of compensation in the sum already mentioned; namely, $7,523.

4 Two offers were made to settle the proceedings. Neither of the offers has the status of a formal offer of compromise (given particularly that the relevant provisions of the Civil Procedure Act 2005 and Uniform Civil Procedure Rules 2005 did not apply in this Court when the offers were made by reference to those provisions). The applicants' offer can be described as an offer for compensation in the amount of $15,000 fully inclusive of costs, whereas the respondents' offer was in the amount of $25,000 exclusive of costs. Both offers were made late in the piece, indeed after the hearing had commenced on 20 September 2007. The hearing had to be adjourned for various reasons to which I will return, and was completed on 15 November 2007.

5 The applicants submit that the appropriate order is that the respondents pay the applicants' costs on an indemnity basis or that there be no order as to costs.

6 The applicants' claim for indemnity costs, in my view, is unsustainable. The applicants' offer was inclusive of costs, which causes some practical difficulty in assessing whether the respondents' conduct in not accepting the offer was unreasonable such as to warrant any form of indemnity costs order. Further, the nature of the proceedings has to be taken into account. The proceedings determined compensation in anticipation of the realignment of a public road where that realignment would involve the taking of some of the respondents' land and the return of some other parts of the land. That is, there would necessarily be an interference with the respondents' proprietary rights. There is simply no basis for any exercise of discretion in the applicants' favour for any form of indemnity costs order.

7 The real issue is whether, as the applicants submit in the alternative, there should be no order for costs in the respondents' favour or whether, as the respondents submit, there should be the usual order for costs in their favour, having regard to the nature of the proceedings and their outcome.

8 The applicants submit that there should be no order of costs in circumstances where: · The compensation ultimately determined was far closer to the applicants' end of the scale than the respondents'. · The only issue on which the respondents succeeded was fencing, but that amount had been agreed between the valuers before the respondents changed their position and sought a greater sum. · The course of the proceedings involved greater costs than should have been the case because of various adjournments, which at least in part were a consequence of the respondents' representations to the Minister (and certainly were not through any fault on the part of the applicants). · The applicants made an offer where the principal amount offered exceeded the amount of compensation ultimately determined. · With respect to the adjourned hearing on 20 September 2007, the respondents were not ready to proceed.

9 The respondents submit that the only issue in the proceedings was just compensation. Just compensation was determined in an amount greater than allowed for in the applicants' valuation. The offer is not particularly material as it was made so late in the day. Moreover, the offer was inclusive of costs when costs had already been incurred in an amount approaching if not exceeding the principal amount of the offer.

10 The applicants also relied on a series of decisions in this and other courts about the special approach to costs in compensation matters. A summary of most of the relevant principles is to be found in Constantino v Roads and Traffic Authority (NSW) (No 2) (2005) 144 LGERA 224, in particular at [7], [9], [16], [19] and [20]. Each of the decisions referred to by Bignold J in these paragraphs reflect the fact that the compulsory acquisition of land is a serious matter where a dispossessed owner has no option other than to come to court if they dispute the amount of compensation offered. The consequence is that, in the ordinary course, a dispossessed owner can expect to obtain the usual order for costs in their favour, particularly when the amount of compensation determined is greater than that offered by the resuming authority.

11 In this case the respondents say that there was no disentitling conduct on their part. The claims made were not frivolous, vexatious, dishonest or grossly exaggerated. The proceedings were not extended due to any procrastination or time wasting by them. They did receive a determination of compensation greater than that allowed for by the applicants' valuation. Accordingly, the usual order for costs in their favour should be made (particularly recognising that the effect of no order as to costs in these proceedings would essentially be to deprive the respondents of the benefit of compensation altogether having regard to the sums that were in dispute). The respondents submit that the hearing on 20 September 2007 would not have finished on that day in any event due to the issue with the Local Aboriginal Land Council. Therefore, it could not be said that the respondents had unnecessarily caused increased costs to be incurred.

12 Both parties accepted that the Court has a broad discretion with respect to costs. Neither suggested that any of the recent amendments commencing on 28 January 2007 with respect to the application of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 to this Court in any way affected the principles that should be applied to this broad discretion. I accept that the context of the proceedings is important. It is a context in which compensation must be determined in anticipation of the compulsory acquisition of land. However, the nature of the issues in dispute in this case must also be recognised. As I have said the public purpose (in substance) was the realignment of the public road. This will involve both the taking and restoring of parts of the respondents' land and give everyone along the realigned road full lawful access, including the respondents.

13 In this context (and recognising that the respondents are correct that there is ultimately but one issue in this type of proceedings, namely the determination of just compensation) certain matters are material.

14 First, the applicants were successful on all issues but one (that is, the issue of compensation for fencing). However, even with respect to this issue the applicants' valuer had agreed an amount with the respondents' valuer at one point in the proceedings.

15 Secondly, the determination of compensation was undoubtedly far more towards the applicants' end of the scale than the respondents'. In essence, I adopted the approach of the applicants' valuer but for the amount in respect of fencing where I adopted the agreed amount between the valuers.

16 Thirdly, it is clear from the directions made on 20 September 2007 that the respondents were not ready to proceed on that date. Although it is true that much of that day was taken up with the issues associated with the Local Aboriginal Land Council, it is also true that the hearing could have been completed far more efficiently and less expensively but for the respondents' position about the inadequacy of their own evidence on that day.

17 Fourthly, the applicants made an offer shortly after the adjourned hearing where the principal amount offered exceeded the compensation ultimately determined, albeit inclusive of costs.

18 All of these factors are relevant to the exercise of the costs discretion in this case. They must be weighed up along with the fact that these are proceedings in anticipation of a compulsory acquisition of the respondents' land and, of course, the fact that the respondents did receive a determination of compensation exceeding the amount in the applicants' valuation (because the applicants put in issue as a matter of principle, if not as a matter of quantum, the fencing).

19 Taking into account all of these circumstances I am satisfied that the respondent should not receive the full benefit of the usual order as to costs. Rather the appropriate costs order in the particular circumstances of this case, having regard to all of the matters to which I have referred, is that there be an order that the applicants pay 50% of the costs of the respondents (that is, the first and second respondents) as agreed or assessed, excluding the costs of the hearing of 20 September 2007 in respect of which each party is to pay its own costs. ****************************

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