Wollong Pty Limited v Shoalhaven City Council

The notice of compulsory acquisition appeared in the New South Wales Government Gazette on 28 August 1998. The Valuer General's assessment of compensation payable in the sum of $796,770 was served on the applicant that day. Class 3 proceedings were commenced by an application lodged on 20 October 1998.

A without prejudice offer to settle for the amount of compensation assessed by the Valuer General plus costs was subsequently withdrawn by the applicant on 6 August 1999. In the meantime, the respondent had paid the $717,093 to the applicant on 20 November 1998.

On 7 October 1999, the applicant filed an Offer of Compromise whereby it indicated it would accept the sum of $790,000 pursuant to section 55(a) of the Just Terms Act and the sum of $6,770 pursuant to s 55 (d), together with interest on the basis that each party pay their own costs. The offer lapsed.

Points of Claim were filed and served on 12 November 1999 wherein the applicant claimed $2.4 million compensation.

By letter dated 22 February 2000 ("the Calderbank letter") the council offered to settle the proceedings on the basis that compensation be paid as determined by the Valuer General in the sum of $796,770 and that the respondent pay the applicants costs up to 22 February 2000. The Calderbank letter was headed "Without Prejudice save as to costs" . The offer lapsed.

In September 2000, the applicant amended its Points of Claim seeking compensation in the sum of $1.487 million.

On 23 November 2000, the applicant rejected a further Offer of Compromise dated 24 October 2000.

Thereafter, statements of evidence were filed and served and the matter proceeded to a hearing commencing 12 June 2001.

Following judgment, a Notice of Appeal was filed and subsequently discontinued by consent in April 2002. The applicant's motion to reopen the proceedings in this Court was rejected on 24 May 2002.

The overpayment by the respondent is approximately $121,000. The applicant has already repaid $121,787.56.

The claim for interest is approximately $26,000. The claim is resisted on the basis that there is no provision for payment of interest on an overpayment pursuant to the Just Terms Act, and further that the Court does not have jurisdiction to entertain or determine such a claim.

In Haig v Minister Administering The National Parks and Wildlife Act 1974 (No.3) (1996) 90 LGERA 408, the Court of Appeal had already given judgment ((1995) 85 LGERA 435) determining the compensation payable by the Minister to Mr Haig for the resumption of the land under the Public Works Act 1912. In the second proceedings, the Minister applied for orders directing a refund of overpaid compensation together with interest. The Court was satisfied that it may make such orders ( Production Spray Painting & Panel Beating Pty Ltd and Others v Newnham and Others (No 2) (1992) 27 NSWLR 659 at 661).

In Production Spray Painting , the Court had referred to a well established principle that the reversal of a judgment on appeal entitles the appellant to recover any monies paid under the reversed judgment. It was held that the claimants in that case were entitled to an order for the repayment of money paid by them and that they were entitled to its repayment with interest ( Rodger v The Comptoir d'Escompte de Paris (1871) LR 3 PC 465 at 475 - 6) In Rodger Lord Cairns said at 475 - 6 as follows:- It is contended, on the part of the respondents here, that the principal sum being restored to the present petitioners, they have no right to recover from them any interest. It is obvious that, if that is so, injury, and very grave injury, will be done to the petitioners. They will by reason of an act of the Court have paid a sum which it is now ascertained was ordered to be paid by mistake and wrongfully. They will recover it without the ordinary fruits which are derived from the enjoyment of money. On the other hand those fruits will have been enjoyed, or may have been enjoyed, by the person who by mistake and by wrong obtained possession of the money under a judgment which has been reversed. So far therefore as principle is concerned, their Lordships have no doubt or hesitation in saying that injustice will be done to the petitioners, and that the perfect judicial determination which it must be the object of all courts to arrive at, will not have been arrived at unless the persons who have had their money improperly taken from them have the money restored to them, with interest, during the time that the money has been withheld.

In Lake Macquarie City Council v Luka (1999) 106 LGERA 94 at 107 Handley JA seems to have assumed that this Court has the necessary jurisdiction to deal with any overpayment of compensation which will have to be refunded by the owner and interest on the amounts to be refunded. In so doing his Honour referred to Haig at 412 where the Court of Appeal had decided that in the interest of consistency the Court was required to apply the statutory rate or rates at the time being in force in awarding interest on overpaid compensation ordered to be refunded. The statutory rate at that time was in accordance with the provisions of the Public Works Act, as notified by the Treasurer pursuant to s 126A(5). The corresponding provisions are now contained in s 49 and s 50 of the Just Terms Act.

Section 48 of the Just Terms Act includes express provisions relating to the repayment of any amount in excess of the ultimate award of compensation in subsections (4), (5) and (6) as follows:-

(4) A person who receives an advance payment of compensation which exceeds the amount of compensation to which the person is entitled must repay to the authority of the State the amount of the excess. (5) Any advance or other payment of compensation to a person not entitled to the compensation must be repaid to the authority of the State that made the payment. (6) Any amount due to an authority of the State under this section may be recovered as a debt in any court of competent jurisdiction.

The applicant resists the claim for interest on the overpayment of compensation because it is not one which the Just Terms Act allows. Mr Robson argues, on behalf of the applicant, that the ratio in Haig was that a successful appellant has a common law right to restitution in integrum (including interest) and that the Court has no discretion but to award full restitution in such cases where the successful appellant has paid money in satisfaction of a judgment which is subsequently reversed on appeal. This decision, he says, is confined to the Court's obligation to correct an injustice which flows from the Court's own administration of justice. It is not, in his view, authority for the proposition that there is a general common law right to interest on overpaid compensation. Accordingly, it is the applicant's case that the principle in Rodgers , as applied in Haig , is a common law right of restitution based on unjust enrichment flowing from the reversal of a court order, not the advance payment of compensation pursuant to a statutory entitlement.

Despite the reservations expressed by the President of the Court of Appeal in Heydon v NRMA Ltd and Others (No 2) (2001) 53 NSWLR 600 at 603 - 5, the High Court nevertheless has held that it is only where there is an agreement or custom in support of payment of interest or a common law right to restitution that interest will be allowed on recovery of money in claims for debt or damages ( Victorian WorkCover Authority v Esso Australia Ltd (2001) 75 ALJR 1513 applying London Chatham and Dover Railway Co v South Eastern Railway Co (1893) AC 429).

The right to restitution which Mason P was considering in Heydon was in respect of monies paid under a judgment later set aside. In his view, the right to interest in that case "springs up upon the setting aside of the judgment under which money was previously paid, with interest calculated from the date of payment by the ultimately successful litigant" .

Section 66 of the Just Terms Act entitles the person who has claimed compensation under Pt 3 to lodge with the Land and Environment Court an objection to the amount of compensation offered pursuant to a compensation notice. Pursuant to s 66(2), if such objection is duly lodged the Court is to hear and dispose of the person's claim for compensation. Section 66(4) makes a special provision in relation to interest as follows:- (4) If the Land and Environment Court decides that the amount of compensation payable (without the addition of interest) does not exceed by more than 10% the amount of compensation offered by the authority of the State, the Court may cancel or reduce the amount of interest that has accrued under this Act in respect of the compensation since the institution of the proceedings.

There is no express statutory provision whereby interest becomes payable on any amount due pursuant to s 48(6).

Present circumstances do not equate to the facts as they were in Heydon, where the right to payment was for the restitution of monies paid under a judgment later reversed or set aside. The circumstances in Haig were also different in that compensation had been overpaid as a consequence of an earlier judgment of the Court. Moreover, the obiter remarks of Handley JA in Haig should not be taken as a reflection of a considered opinion held by his Honour in respect of the jurisdiction of this Court, either to order repayment of overpaid compensation or the award of interest thereon.

Section 16(1A) of the Land and Environment Court Act 1979 ("the Court Act") provides no assistance in the present case as the Court, having finally disposed of all questions of compensation, is deprived of any capacity to determine a matter ancillary to an outstanding matter that falls to be determined within jurisdiction.

In the Court's view, the terms of s 48(6) of the Just Terms Act provide the most persuasive authority for determining that the intention of the legislature was to enable an authority of the State to recover an overpayment as a debt in another court of competent jurisdiction. The jurisdiction given to the Land and Environment Court under the Just Terms Act is, as stated earlier, to hear and dispose of the person's claim for compensation. No express jurisdiction is given to the Court whereby it may enforce any determination of compensation by ordering recovery against the resuming authority. Section 68 provides that payment of compensation in respect of matters before the Court is to be made in accordance with decision of the Court. Once the Court has made its decision it has disposed of the person's claim for compensation within jurisdiction. Enforcement of payment, or any other rights which arise as a consequence of the decision of the Court, do not, therefore, fall within jurisdiction of this Court.

The Court is not satisfied it has jurisdiction to make an order for recovery of the overpayment. Hence it follows that there is no jurisdiction to order the payment of interest on that overpayment. In reaching this conclusion the Court has had regard to s 19(e), s 24, s 25 and s 69A of the Court Act. None of these provisions take the matter any further. They reinforce the limited extent of the Court's jurisdiction.

Section 66(2) of the Just Terms Act merely authorises the Court to hear and dispose of the person's claim for compensation. It is, therefore, doubtful that the Court can enforce an order for payment of compensation. It is not necessary for me to decide this point. However, the Court does not have inherent jurisdiction to make such orders as it deems fit, unless there is an express statutory authority to do so ( DJL v The Central Authority (2000) 201 CLR 226).

The application for payment of interest on the amount of compensation overpaid by the respondent to the applicant cannot be entertained in this Court. Even if the claim is within jurisdiction, the Court is not satisfied that there is a statutory or common law right for recovery of interest in the circumstances.

The applicant has derived no benefit from the litigation. On two occasions the company indicated it was prepared to settle pursuant to terms of offers which were subsequently met by the council, making offers in more or less the same terms. None of the offers materialised into settlement. There is no direct explanation for the change in the applicant's position from the making of a without prejudice offer and the filing of an Offer of Compromise during mid 1999 and the filing of Points of Claim setting the compensation figure at $2.4 million, subsequently reduced to $1.48 million. The applicant was given an opportunity to further consider its position in February and October 2000 when the council reiterated a willingness to settle on the basis of the valuation make by the Valuer General.

Firstly, the question becomes whether the Calderbank letter, in the circumstances of this case, entitle the respondent to an order for indemnity costs from 22 February 2000. The letter expressed the offer as follows:- 1. The Council is to pay compensation to the Applicant as determined by the Valuer General's determination;

2. Council to pay costs of the Applicant, as agreed, or as assessed, to the date of this letter.

The applicant was informed in unequivocal terms that if the offer was rejected and the council was successful in the proceedings an application would be made for an indemnity costs order.

The Court recognises that the letter contained an offer presenting a realistic assessment of a fair and proper compromise. It was a figure based upon a formal valuation made by the Valuer General pursuant to s 47 of the Just Terms Act. The offer was made in terms that defined the amount of compensation offered and left the amount of costs to be agreed or assessed. An offer expressed in that way is not ambiguous. The applicant was therefore 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 without prejudice offer was qualified by an express reservation as to costs. In accordance with general principle, the letter can, therefore, be taken into consideration on the question of costs ( Messiter v Hutchinson (1987) 10 NSWLR 525, Calderbank v Calderbank [1975] 3 WLR 586, Amev Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13 NSWLR 486).

Eight months later, by the formal Offer of Compromise dated 24 October 2000 made pursuant to Pt 22 Div 1 of the Supreme Court Rules ("the SC Rules"), the respondent offered to compromise the claim on terms that the respondent pay $880,000 plus costs.

A consideration in relation to the exercise of the Court's discretion in regard to costs in class 3 proceedings needs to take into account the nature of litigation. It arose out of a compulsory acquisition of private land for a public purpose. I am not prepared to hold that the pursuit of the applicant's case was vexatious or grossly disproportionate to its entitlement. The reason the claim was unsuccessful in monetary terms was because the Court held the evidence did not establish that the site would have been zoned for residential purposes at the date of acquisition absent the proposal. Furthermore, it would not be reasonable for a hypothetical purchaser to assume that a rezoning to permit residential development would take place in the foreseeable future, particularly within 18 months. Although ultimately unsuccessful, the case for the applicant was not unarguable. Moreover, the fact that the hearing extended over a long period was not due to procrastination or waste of time on the part of the applicant or its representatives.

Applicant's who appeal to his Court following an offer to pay compensation by an acquiring authority should not be discouraged from testing the adequacy of the offer by the threat of a punitive costs order. The conduct of the litigation by the applicant does not, in the Court's view, trigger an order for indemnity costs notwithstanding the Calderbank letter and subsequent Offer of Compromise. However, that does not necessarily lead to the conclusion that the circumstances do not warrant an order that the applicant pay the party and party costs or at least some part of the respondent's costs.

The question remains whether the applicant was sufficiently unreasonable in refusing the offers to settle to justify an order that it pay the respondent's costs on a party and party basis or whether the philosophy expressed by Wilcox J in Banno and Another v Commonwealth of Australia and Another (1983) 81 LGERA 34 should prevail. Wilcox J does not appear to dwell upon a case where reasonable attempts to settle the litigation have been made by the statutory authority. The remarks by Wilcox J are made in the general context of the dispossessed owner. Furthermore, Pt 22 and Pt 52A r 22 of the SC Rules are expressly applied to all compensation proceedings in class 3 by Pt 13 Div 8 r 27 of the Land and Environment Court Rules 1996. The additional element in this case is that the applicant itself offered to settle on the same basis as the respondent, although at different times. The timing of the respective offers is, to some extent, relevant in the sense that the parties were understandably better informed about the strength of their respective cases as the preparation for a hearing progressed. This position is reflected in the amended offer made by the respondent in the Offer of Compromise dated 24 October 2000. In my view, the respondent is entitled to the benefit of attempts to compromise the claim by an order for costs.

Taking into account the whole of the circumstances, the Court is satisfied that it is reasonable for the applicant to pay the respondents costs on a party and party basis after the service of the Calderbank letter on 22 February 2000. Having regard to the position before that letter was served and, in particular, the offers made by the applicant, it is reasonable that the Court exercise its discretion so that each party pay their own costs up to 22 February 2000.

The Court makes the following formal orders:- (1) By consent, the respondent pay the applicant $24,100 for valuation fees.

(2) By consent, the respondent pay the applicant statutory interest in the sum of $6,393.15.

(3) The applicant pay the respondent's costs after 22 February 2000.

(4) Each party pay their own costs up to 22 February 2000.

(5) The claim for interest on compensation overpaid is dismissed. (6) Costs of 15 September 2002 reserved. (7) The exhibits may be returned.

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