Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority

AMP Capital Investors v Transport Infrastructure Development Corporation (No 3) [2007] NSWLEC 724 AMP Capital Investors v Transport Infrastructure Development Corporation [2008] NSWCA 325, 163 LGERA 245 Banno v The Commonwealth (1993) 81 LGERA 34, 45 FCR 32 BMP Manufacturing Pty Ltd v Roads and Traffic Authority of New South Wales (No 2) [2009] NSWLEC 41 Nasser v Roads and Traffic Authority (NSW) [2006] NSWLEC 562, 149 LGERA 289 Pastrello v Roads and Traffic Authority (NSW) [2000] NSWLEC 209, 110 LGERA 223 Serbian Cultural Club 'St Sava' Inc v Roads and Traffic Authority (NSW) (No 2) [2008] NSWLEC 78 Seven Network Ltd v News Ltd [2005] FCA 142 Simpson v Bagnall [2008] NSWLEC 79 CASES CITED: Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251, 63 NSWLR 407 Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386, 68 NSWLR 487 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, 134 LGERA 195 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 535, 136 LGERA 164 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2005] NSWLEC 10, 138 LGERA 174 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2006] NSWLEC 138 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, 161 LGERA 86 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 282 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178, 168 LGERA 1

APPLICANT: I Jackman SC with R Beasley and J K Taylor SOLICITORS: Minter Ellison

RESPONDENT: LEGAL REPRESENTATIVES: A Galasso SC SOLICITORS: Norton Rose

DEPARTMENT OF PLANNING: C Mantziaris SOLICITORS: Crown Solicitor's Office

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

WALKER CORPORATION PTY LTD v SYDNEY HARBOUR FORESHORE AUTHORITY

JUDGMENT 1 HIS HONOUR: This proceeding for compensation for resumption of land under the Land Acquisition (Just Terms Compensation) Act 1991 is concluded except for two reserved costs issues which are now before the Court for determination pursuant to notices of motion by a third party, the Department of Planning (Department), the applicant, Walker Corporation Pty Ltd (Walker), and the respondent, Sydney Harbour Foreshore Authority (Authority):

(a) the costs of a challenge by Walker to client legal privilege claimed by the Department over documents produced by the Department in response to a subpoena to produce that Walker caused to be issued on 21 April 2008; (b) the costs of the proceeding after the Court of Appeal's second remitter to this Court. 2 The following judgments have been delivered in the proceeding:

(a) initially, Talbot J determined Walker's market value compensation claim: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, 134 LGERA 195 ( LEC 1 ); (b) Talbot J next delivered a judgment as to the costs of LEC 1: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2005] NSWLEC 10, 138 LGERA 174 ( LEC 1 costs judgment ); (c) Talbot J then determined the quantum of Walker's disturbance loss in LEC 1: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 535, 136 LGERA 164 ( LEC 1 disturbance judgment ); (d) the Authority's appeal against LEC 1 was upheld by the Court of Appeal which remitted the matter to this Court to reassess market value: Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251, 63 NSWLR 407 ( CA 1 ); (e) on that first remitter, Talbot J reassessed market value but arrived at the same figure as in LEC 1: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2006] NSWLEC 138 ( LEC 2 ); (f) the Authority appealed successfully against LEC 2 and the Court of Appeal for a second time remitted the matter to this Court for market value to be reassessed: Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386, 68 NSWLR 487 ( CA 2 ); (g) Walker appealed unsuccessfully to the High Court against CA 1 and CA 2: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 (HCA ); (h) the second remitter came before me for case management and determination. I decided claims of client legal privilege over certain documents by the Department and the Authority: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, 161 LGERA 86 ( privilege judgment ). Costs were reserved and are now before me for determination; (i) I declined to grant leave to Walker to make certain amendments and call certain further evidence: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 282; (j) Walker's appeal against the last decision was dismissed by the Court of Appeal: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178, 168 LGERA 1; (k) finally, I assessed market value and compensation: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219. The costs of the second remitter were reserved and are now before me for determination. COSTS OF THE PRIVILEGE CHALLENGE 3 Although its notice of motion is worded differently, the Department seeks an order that Walker pay its costs of Walker's challenge to its claim for privilege over documents produced by the Department in response to the subpoena, excluding expenses incurred in complying with the subpoena in the period 20 May to 11 July 2008 (said to be costs associated with the production of erroneous privilege lists), and without disturbing the consent order made on 16 July 2008 that it pay Walker's costs thrown away by the vacation of hearing dates of 10 and 11 July 2008 before a referee appointed by the Court to determine the privilege dispute. It also seeks an order that Walker pay its costs of this costs dispute. 4 Although its notice of motion is also worded differently, the Authority seeks an order that Walker pay its costs of the hearing of the privilege dispute and of this costs dispute. The Authority participated at the hearing of the privilege dispute without objection and claimed joint or common interest privilege over a subset of 16 of the disputed documents.

5 Walker does not resist an order that it pay the Department's reasonable expenses in relation to compliance with the subpoena (presumably excluding the expenses excluded by the Department: see [3] above) but contends that the Department should pay its costs relating to the privilege dispute and to this costs dispute. It submits that the Authority's notice of motion for costs should be dismissed because it was in the same interests as the Department. 6 The background is as follows.

7 On 21 April 2008 Walker caused a subpoena for production to be issued to the Department.

8 The Department responded to the subpoena by informally producing certain documents caught by the subpoena, and claiming client legal privilege over other documents.

9 On 20 May 2008 the Department provided Walker with a list of documents over which it claimed client legal privilege. On that date Walker sought further information about those documents. The Department characterises this as the starting point of Walker's privilege challenge. A second amended list was provided on 6 June 2008. Third and fourth amended lists were provided on 3 and 29 July 2008.

10 On 23 June 2008 the Court referred the privilege dispute to a referee for inquiry and report.

11 On 24 June 2008 the Department sought advice from the Crown Solicitor who briefed counsel. 12 On 9 July 2008, on the Department's motion, the Court vacated the referral hearing dates of 10 and 11 July 2008. The Department's supporting evidence indicated that:

(a) privilege was incorrectly claimed in relation to documents in the 20 May 2008 list; (b) in relation to other documents in that list, a decision was subsequently made to waive privilege; (c) some documents in the 3 July 2008 list in respect of which the word "waiver" was applied were documents in relation to which a claim for privilege was in fact still maintained; (d) revisions of the 3 July 2008 list so that it accurately reflected the content of the privilege claim would require some time. 13 On 16 July 2008 the Court by consent ordered the Department to pay Walker's costs thrown away by the vacation of the referral hearing dates. The Court also gave directions in relation to determination of the privilege dispute by the Court.

14 On 30 July 2008 144 documents over which the Department originally claimed client legal privilege were provided to Walker, apparently as a result of Walker's challenge to the Department's privilege claim. 15 On 1 August 2008, the Department sent the applicant five further documents over which it had previously claimed privilege. This reduced the number of disputed documents to 66.

16 Earlier informal proposals between May and July 2008 by both Walker and the Department to resolve the privilege dispute based on full or partial disclosure of the documents to Walker's counsel were not accepted. 17 In an affidavit filed on 14 August 2008 Walker's solicitor said he had insufficient information to enable him to form a view with reasonable confidence as to whether a valid claim of privilege existed in respect of a significant number of disputed documents. 18 I heard the privilege dispute on 25 and 26 August 2008.

19 On 29 August 2008 I gave judgment on the privilege dispute and reserved costs. I upheld the privilege claim in relation to 62 of the 66 documents in dispute at the privilege hearing, I held that three documents were not privileged wholly or partly and that privilege had been waived in respect of a fourth. 20 The Department submits that it has succeeded in its defence of the challenge to the claim of privilege and that the normal costs rule should apply that costs follow the event.

21 Walker submits that the Department should pay its costs relating to the privilege dispute because: (a) the onus was on the Department to establish proper grounds for its claim of privilege; (b) the Department's attempts to discharge that onus caused confusion and were tainted by errors. The Department abandoned claims for privilege in relation to 144 out of 263 documents, which cast doubt on its process as a whole and justified Walker's approach to the Court to determine that the Department had got it right; (c) the Department's evidence was insufficient to establish its claim without the Court examining the documents for itself; (d) the Department declined to accept sensible proposals by Walker to resolve the confusion and difficulties arising from the Department's claim, which would likely have resolved the dispute; (e) as costs are compensatory in nature and not punitive, it would not serve the administration of justice for the Department to be "compensated" in circumstances where it made inappropriate claims for privilege over more than half of the documents it originally sought to withhold, refused Walker's sensible proposals to resolve the matter, and could not make good its claims for privilege until the documents were examined by the Court. 22 Walker submits that the Authority's motion for costs should be dismissed because there was such a commonality of interest between the Department and the Authority that, with the exception of argument over document 49C, there was no need for the Authority to involve itself in the dispute. The Authority was unsuccessful in its arguments over document 49C, which was the document with which it was primarily concerned. 23 I do not think that the refusal of the Department or Walker to accept each other's proposals to resolve the privilege dispute should have costs consequences in the circumstances of this case.

24 In Seven Network Ltd v News Ltd [2005] FCA 142 at [25] Tamberlin J said: "While I would not go so far as to classify the discovery process undertaken by News as deliberately evasive, as submitted by Counsel for Seven, there is a real concern that sufficient attention has not been paid to the great importance of ensuring that discovery is made on a proper, reliable and sound basis. In the present case, approximately one third of the claims for privilege in respect of documents originally said to be privileged have been withdrawn. This, in itself, casts some doubt on the discovery process as a whole. Indeed, the position is that the affidavit of Mr Brodie, which is the only affidavit verifying the list of documents and the claim for privilege, is so unsatisfactory that there is in effect no relevant affidavit verifying the discovery in accordance with the FCR or otherwise." 25 The evidence establishes that the original privilege claims were not made on a reliable and sound basis. Over one half of the claims of privilege in respect of documents originally said to be privileged were withdrawn. This, in itself, casts some doubt on the privilege claim as a whole. Numerous documents over which privilege had been claimed were not produced to Walker until a few weeks before the hearing of the privilege dispute. 26 However, I think that all this had passed into history and the parties became focussed on the 66 documents remaining in dispute by, say, 15 August 2008. The privilege claim in relation to those disputed documents was unlikely, I think, to have been able to be determined except by the Court even if the Department's handling of its privilege claim had been impeccable. I conclude that the Department should be awarded costs from 15 August 2008. However, I do not consider that the Department should have all its costs from that date given the measure of success that Walker enjoyed.

27 Although, numerically, the Department was the successful party to the privilege dispute that I decided, I do not think that the costs issue after 15 August should be entirely resolved by such simple arithmetic. The privilege claim failed in respect of four documents, and the claim in respect of one of those documents (document 49C) occupied a discrete and significant part of the hearing time because of the waiver issue that it raised. The fact that a privilege claim fails even to that extent is significant for otherwise the challenger would never see documents it was entitled to see and, hypothetically, unseen documents over which privilege is erroneously claimed may be of great importance. Nevertheless, the Department had the lion's share of success at the hearing and this should be reflected in the costs order. I propose to order Walker to pay 80 per cent of the Department's costs of the privilege dispute from 15 August 2008 and of the Department's notice of motion for costs.

28 Similar considerations apply, in my view, to the Authority. I consider that the Authority was entitled to be present at the privilege dispute hearing because it claimed privilege in respect of a subset of the disputed documents, including document 49C in relation to which it was particularly concerned. However, its claim in relation to 49C failed. As the Authority only seeks costs of the privilege dispute hearing, I propose to order Walker to pay 80 per cent of those costs and of the Authority's notice of motion.

COSTS OF THE PROCEEDINGS 29 Walker seeks an order that the Authority pay its costs of the second remitter which I determined. The Authority submits that there should be no order for costs because (a) Walker pursued an exaggerated claim, in particular by contending that the market value of the acquired land was $82.8 million whereas I held that it was $33.5 million, and (b) a costs order would compound the "inappropriate benefit" that Walker derived from the costs order in its favour in relation to the first hearing of its claim by Talbot J in 2004 (LEC 1) which in 2005 the Court of Appeal overturned and remitted to this court for redetermination (CA 1).

30 Talbot J ordered the Authority to pay Walker's costs in respect of LEC 1.

31 Subsequently, in CA 1 the Court of Appeal made the following order with respect to the costs of LEC 1: "Direct that the costs of the parties in the Land and Environment Court be determined by that court, on the further hearing of the matter." 32 On 21 November 2006 this Court, by consent, ordered the Authority to pay Walker's costs in relation to LEC 1. 33 Subsequently in CA 2 the Court of Appeal, in upholding the Authority's appeal against LEC 2, made the following order, at [65]: "Order the Respondent to pay the Appellant's costs of the appeal and the hearing in the Land and Environment Court."

I take that order to refer to the costs of LEC 2. 34 The discretion to award costs in compensation matters is one that has been "uniquely applied to tilt the discretion in favour of the dispossessed owner": Nasser v Roads and Traffic Authority (NSW) [2006] NSWLEC 562, 149 LGERA 289 at [32]. As Jagot J said in Simpson v Bagnall [2008] NSWLEC 79 at [10]: "…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." 35 As a general principle, a person who has had their land taken by way of compulsory acquisition should not bear their own costs, but rather should be allowed to access the Court to present an arguable and well organised case without being deterred by the prospect of being ordered to pay costs if the case proves unpersuasive: Banno v The Commonwealth (1993) 81 LGERA 34, 45 FCR 32 at 53, Pastrello v Roads and Traffic Authority (NSW) [2000] NSWLEC 209, 110 LGERA 223 at [17]; AMP Capital Investors v Transport Infrastructure Development Corporation (No 3) [2007] NSWLEC 724 at [18] - [21]; AMP Capital Investors v Transport Infrastructure Development Corporation [2008] NSWCA 325, 163 LGERA 245 at [102]. 36 In Serbian Cultural Club 'St Sava' Inc v Roads and Traffic Authority (NSW) (No 2) [2008] NSWLEC 78 a nil determination of market value gave rise to no order for costs. In that case Jagot J observed at [16]: "The cases show that there are no hard and fast rules leading to any automatic results. The discretion with respect to costs is a broad one that must be exercised judicially having regard to all of the relevant circumstances."

This decision was cited with approval in BMP Manufacturing Pty Ltd v Roads and Traffic Authority of New South Wales (No 2) [2009] NSWLEC 41.

37 In Banno v The Commonwealth (1993) 81 LGERA 34, 45 FCR 32, Wilcox J referred to the court's general discretion as to costs and the public interest in allowing applicants in compulsory acquisition matters access to the court without being deterred by the prospect of being ordered to pay costs if their case proves unpersuasive. His Honour went on to observe at LGERA 53: "I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court." 38 There is no suggestion that Walker pursued a claim that was vexatious, dishonest or grossly exaggerated. However, the Authority makes the more modest submission that Walker's claim was self-evidently exaggerated, given the Court's determination. I do not accept that the fact that its claim was much larger than the Court's determination is sufficient, of itself, to deprive Walker of its costs. Nor is the situation different when the surrounding circumstances are taken into consideration. Walker succeeded in establishing that the compensation to which it was entitled was well in excess of the statutory offer. Walker's claim was supported by expert evidence. As is common in such cases in this jurisdiction, the competing valuation evidence was far apart. 39 The Authority also submits that there should be taken into account that an order for costs of the second remitter would compound the "inappropriate benefit" that Walker derived from the LEC 1 costs order in its favour. I do not accept the submission. In allowing the Authority's appeal from his Honour's decision, the Court of Appeal in CA 1 directed that the costs of LEC 1 be determined by this Court on the further hearing of the matter. Thereafter, the parties consented to an order that the Authority pay Walker's costs of LEC 1. In the circumstances, I am unable to conclude that that costs order was an "inappropriate benefit". Nor do I think that a costs order, which is compensatory in nature, should be characterised as a "benefit". 40 Finally, the Authority submits that Walker should not be entitled to an order for costs with respect to the existing use rights part of its case because that issue was not ultimately required to be determined. A similar proposition was rejected by Talbot J in the LEC 1 costs judgment at [8]: "…it was appropriate for the applicant to pursue each of the avenues available to it in respect of the determination of highest and best use. The evidence in relation to existing use rights and the prospective application of SEPP 5 formed part of the factual circumstances relating to the value of the land and the determination of its market value. They were each matters that the hypothetical prudent purchaser would have taken into account and investigated as part of its overall assessment. The arguments put forward on behalf of the applicant were cogent and relevant to the investigation a prudent purchaser would have undertaken. The case for existing use rights and a perspective SEPP 5 development were not frivolous and they both fell within the contemplation of the relevant legislation. Therefore, this is not an appropriate case to separate out issues in relation to particular aspects of the case and to apportion costs according to the extent of success by the respective parties in respect of those issues."

41 Applying that decision, Walker should not be deprived of costs for pursuing an alternative existing use rights claim for which there was supporting evidence.

42 For these reasons, I propose to order the Authority to pay Walker's costs of the proceedings before me. This will, of course, not disturb any existing costs order.

ORDERS 43 The orders of the Court are as follows:

1. The applicant is to pay 80 per cent of the Department of Planning's costs of the privilege dispute decided by the Court on 29 August 2008 as from 15 August 2008, 80 per cent of the Department of Planning's notice of motion filed on 15 October 2009, and the Department's reasonable expenses incurred in complying with the subpoena to produce issued on 21 April 2008. 2) The amount payable by the applicant to the Department of Planning pursuant to order 1 may be offset against any amount payable to the applicant by the Department of Planning pursuant to the costs order made by the Court in favour of the applicant on 16 July 2008. 3) The applicant is to pay 80 per cent of the respondent's costs of the hearing of the privilege dispute decided by the Court on 29 August 2008 and 80 per cent of the respondent's costs of its notice of motion filed on 5 February 2010. 4) The applicant's notice of motion filed on 15 February 2010 is dismissed. 5) The respondent is to pay the applicant's costs of the second remitter from the Court of Appeal. 6) The exhibits may be returned.

04/03/2010 - Typographical error "15 October 2008" changed to "15 October 2009" - Paragraph(s) [43] Order No 1.

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.