Dreamworld Pty Ltd v Chief Executive, Department of Natural Resources [1999] QLC 74 (1999) 20 QLCR 170

LAND COURT, BRISBANE 16 July 1999 Re: Appeal against Annual Valuation – Valuation of Land Act 1944 – Valuation Roll No: 12776 – Local Government: GCCC-Albert – (AV98-188 and AV98-23). Dreamworld Pty Ltd v. Chief Executive, Department of Natural Resources D E C I S I O N O N C O S T S On the opening of the hearing of this matter on 2 June 1999, the parties advised that an offer had been made by the respondent, and accepted by the appellant, and an application was now made for a consent decision by this Court in an amount of $1,250,000. On the determination of the valuation at that figure, the appellant now seeks an award of costs in its favour to the extent of costs thrown away because of the late settlement by the respondent. The respondent resists that request arguing that the respondent has also suffered certain costs thrown away because of the late withdrawal by the appellant of a second appeal which was to be heard in conjunction with the current matter. In the circumstances of the current hearing for costs, which the respondent argues has no sound justification, the respondent also seeks a decision for costs associated with that hearing. Mr R Needham of Counsel represented the appellant. Mr J O’Rourke, Legal Officer, represented the respondent. History of the Claim – From the records of the Court the following occurred: (1) On 7 January 1998 notices of appeal were lodged with this Court in respect of the subject land (Valuation No 12776 – carpark area 10.02 ha AV98-23), and adjoining land (Valuation No 12757 – theme park area 72.281 ha AV98-22), for appeals against annual valuations at 1 October 1996. [1999] QLC 74 -- 1 of 11 -- 2 (2) On 6 and 8 July 1998 notices of appeal were lodged for Valuation No 12776 – carpark area (AV98-188), and Valuation No 12757 – theme park area (AV98- 189) in respect of valuations at 1 October 1997. (3) A preliminary conference was listed by the Court for 1 April 1998, but was adjourned due to the ill health of the former agent for the appellant. (4) A preliminary conference under the chair of the Court was arranged on 2 July 1998, at which it was agreed to hear the four matters concurrently. The parties were well apart at that time, and the then agent for the appellant indicated that he may seek further information prior to any hearing, particularly in respect of an exchange of documents. It was agreed to allow a further month for consideration by the parties, and then to arrange a directions hearing at which the hearing date would be set and an exchange of documents arranged. Both former representatives attending that preliminary conference no longer represent the parties. (5) On 8 February 1999 a directions hearing was held in respect of the four appeals, at which it was advised that there was little likelihood of the matter being resolved between the parties. Both parties were preparing for a hearing, and it was predicted by both parties that the hearing was likely to take up to ten days. A hearing date of approximately May 1999 was requested, and the parties agreed to exchange documents 21 days prior to the commencement of the hearing. (6) On 9 February 1999 the four appeals were listed for hearing concurrently on 2 June 1999, with an exchange of statements directed to occur no later than 21 days prior to the hearing (12 May 1999). (7) On 19 May 1999 by letter dated 18 May 1999 the Land Court was advised that appeals AV98-22 and AV98-189 were withdrawn by the appellant. At the hearing on costs on 2 June 1999, Mr TJ McBride, solicitor for the appellant, provided the following further information in respect of costs involved solely for the carpark land: (1) The appellant, in preparing for the scheduled hearing, in October 1998 engaged the services of Mr R Brett, a registered valuer. Mr Brett attended conferences with Council in early February 1999. (2) Ms S Vigar, a registered town planner, was retained in February 1999 to prepare a town planning report. -- 2 of 11 -- 3 (3) Mr D Brown, a theme park tourism expert, was retained in February 1999 to prepare a report. (4) Conferences were held with Mr Brett, Ms Vigar and Mr Brown and Counsel in early May 1999. (5) On 17 May 1999, the respondent and the Land Court were advised that appeals for the theme park area (AV98-22 and AV98-189) would not be proceeding. (6) The appellant received the finalised reports of Ms Vigar and Mr Brown dealing solely with the carpark land (AV98-23 and AV98-188). (7) On 25 May 1999 Mr McBride approached Mr O’Rourke (for the respondent) seeking advice on progress on the exchange of documents which had not yet proceeded as directed. (8) On 26 May 1999 Mr Dalgarno (for the respondent) made an offer to reduce the valuation of carpark land to $1,250,000, which was then discussed between Mr Brett and Counsel, and subsequently accepted by the appellant on 26 May 1999. (9) As at the date of this hearing Mr Brett had not presented his final report on the carpark land. During the hearing on costs Mr Dalgarno, the Departmental Registered Valuer now accepting responsibility for the valuation, provided the following further evidence: (1) Quite separate to these appeals, a further matter was commenced involving Dreamworld Pty Ltd in respect of an application to close part of the roadway between the theme park area and the carpark land. That resumption, herein referred to as the “Dreamworld parkway”, was the subject of a “without prejudice” conference with the Chief Executive, Department of Natural Resources, on 20 April 1999. Information supplied at that conference involved town planning matters, which were raised by Mr R Brett for Dreamworld Pty Ltd, and negotiations are still proceeding between the parties. (2) Following that conference on 20 April 1999, the respondent decided to engage town planning advice from Mr G Sharman, a town planner, in respect of the four appeals then listed for hearing on 2 June 1999. Mr Sharman was retained on 20 April 1999, and provided his report to the respondent on 12 May 1999. (3) Mr Dalgarno confirms that the normal procedures followed in such appeals had formerly proceeded under Mr D Treston’s direction, the registered valuer formerly responsible for the valuation. However Mr Treston had signalled his intention to resign from the Department as at 14 May 1999. The date of his advice to the Department was approximately three weeks prior to his resignation (about 23 April 1999). During the period 23 April 1999 to the date of making the offer to the appellant on 25 May 1999, there had been a very -- 3 of 11 -- 4 heavy workload in the office of the respondent, compounded by Mr Treston’s impending resignation, and the need to hand over his commitments. (4) On receipt of Mr Sharman’s town planning report on 12 May 1999, Mr Dalgarno had discussions with Mr Sharman, his supervisors, and other officers engaged on the Dreamworld parkway road closure. The matters to which he was then involved included the four valuations, and the Dreamworld parkway road closure which were all very urgent. However Mr Dalgarno would appear, at that time, to have not been made aware of the need to exchange statements with the appellant on 12 May 1999, although he was aware that an exchange had been agreed, and the date of the exchange was signalled in the Court advice setting down the date for hearing. (5) Mr Dalgarno offers no reason why the town planning advice had not been sought prior to 20 April 1999, although he argues that such advice could reasonable have been expected by the date for exchange anyhow on 12 May 1999. It was noted from the Court records that Mr Paterson for the respondent indicated at the directions hearing on 8 February 1999, that town planning advice may be sought, depending upon the evidence submitted by the appellant. The Law: The powers of the Land Court in respect of the ordering of costs are to be found in the provisions of section 41(9) of the Land Act 1962 which states: “The Court may make such order as it thinks fit as to the costs of or incidental to any matter that it has jurisdiction to hear and determine including, without limiting the generality of this subsection, the costs of an adjournment or application made in a pending matter, allowances to witnesses attending for the purpose of giving evidence at the hearing and the costs of any survey of boundaries.” Those provisions are also conditioned in respect of a matter of valuation under the Valuation of Land Act 1944 by section 70 of that Act which states: “70.(1) Where the value of land as finally determined upon an appeal against the valuation is the value stated by the owner in the owner’s notice of appeal against the valuation, or is nearer to that value than to the valuation appealed against, costs shall not be awarded against the owner. (2) Otherwise costs shall not be awarded against the chief executive. ” However in the eventual decision of this Court to determine the costs in this matter at the agreed amount by consent of both parties, section 70 has no application in this case. Another provision for consideration is the impact of section 68, which states that the Chief Executive may reduce the valuation to the amount appealed by the appellant (section 68(1)); or to an amount which the appellant may then accept (section 68(2)); or to an amount -- 4 of 11 -- 5 which if not accepted by the appellant, then becomes the final amount appealed against (section 68(3)). However in all limbs of section 68 there is a statutory period of fourteen days prior to the date set for hearing, after which any actions by the Chief Executive are subject to the discretion of this Court, including discretion on costs. In the context of this matter the belated offer to reduce the valuation to $1,250,000 on 26 May 1999 was outside the statutory period of fourteen days prior to the date of hearing on 2 June 1999. Decision: In the current matter it is clear that costs thrown away by the appellant, the subject of this application, relate only to any matter dealing with the carpark land. While it may appear that Mr Brett, Ms Vigar and Mr Brown were engaged to provide overall advice on all of the matters initially listed for hearing, Mr McBride was only able to testify that Mr Brown had prepared a report for the carpark land (10 hectares). To the best of Mr McBride’s knowledge, Ms Vigar had not prepared a report for the Dreamworld parkway road closure. The key to the change of approach by both parties would appear to be correlated with the impact of the town planning advice. On receipt of their separate town planning advices, the appellant decided that it was not worth proceeding with the appeals for the theme park 72 hectare site (AV98-22 and AV98-189); and the respondent decided that if those latter appeals went to hearing then the respondent would seek to lead towards a higher figure than the amount appealed against. Mr Dalgarno gave evidence that from his recollection of events at the conference with Dreamworld Pty Ltd on 20 April 1999, he recollected that Mr Brett had spoken about town planning advice which had influenced his opinion about the value of the road closure matter. Mr Dalgarno concluded that the overall impact of the town planning advice had impacted decisions on all three interlocking matters including the theme park area, the carpark area, and the Dreamworld parkway road closure. It certainly had in respect of the responses of the respondent. However Mr Dalgarno confirms that dealings on the road closure are entirely separate to the valuation matters currently before this Court. It was also agreed by Mr Dalgarno that between the dates of the first valuation for the subject carpark land (1 October 1996), and the second valuation at 1 October 1997, there had been a new draft town plan for the area. Ms Vigar had therefore been required to provide town planning advice in respect of the two town planning schemes, as the draft town plan had gone on display about one month prior to 1 October 1997. -- 5 of 11 -- 6 The contents of the town planning advice, although not fully explained to this Court, appeared to relate to whether the carpark land should have been valued as a separate parcel to the theme park site, or as part of the theme park area. In the end the revised unimproved value of $1,250,000, now a consent decision of this Court, was arrived at as part of the overall area of the theme park. The fact that the two parcels (theme park and carpark) were separate parcels, separated by a road, had influenced the former valuations, where under section 35(1)(b) of the Act, and in the absence of the Chief Executive using his discretion to include the parcels in one valuation, those parcels were valued as separate parcels. The discretionary nature of section 35 was upheld by the Land Appeal Court in Chief Executive, Department of Natural Resources v. DJ Hedges (V97-181), 28 May 1999, unreported. In that matter the different approach to lands which do not adjoin, but which are used for “farming” purposes under section 34(1)(b), as compared to lands which are used for another purpose, was noted by the Land Appeal Court which said at page 7: “It is our finding that the Chief Executive was not required under the Act, to include in one valuation, several parcels of land which do not adjoin but are used, other than for purposes of farming, as one holding, and on which is erected a single dwelling house.” The thrust of the planning advice in the current matter was that it is the nature of the restrictive zoning of the land which would influence its highest and best use. Prior to that advice the Chief Executive had considered the location and exposure of the carpark land as justifying a certain level of unimproved value, separate to the theme park area, but accepting the existence of the theme park opposite the carpark. Likewise the unimproved value of the theme park area had been considered as if the existing improvements upon that land did not exist, but the nature and extent of the carpark existed opposite the theme park. The decision by the respondent to revise that earlier decision has now had an impact upon the valuation of the carpark land, and presumably also the theme park land, although the latter is not known as that matter has now been withdrawn. It is also a fair conclusion that similar impacts will also flow to the subsequent valuations of the subject lands at 1 October 1999, however that is not a matter for consideration at this time. Should the Dreamworld parkway road closure proceed, that would also have an impact upon the succeeding valuations. In deciding whether costs should be awarded in valuation matters, I am aware of guidance to be found in WH Bowden v. The Valuer-General (1980) 7 QLCR 138, and in a range of matters considered in Collins Foods International (Properties) No 2 Pty Ltd v. Chief -- 6 of 11 -- 7 Executive, Department of Natural Resources (1996-97) 16 QLCR 651. The general thrust of those precedents is that unless there is evidence that a party has acted arbitrarily or capriciously, then own costs should be borne by the respective parties. It is agreed that there is no level of arbitrariness or capriciousness on the part of the respondent in this matter. The argument however is entirely one of the impact of the late notice of the amended valuation from the respondent. In that regard Mr Needham draws particular support from Collins Foods International (supra), where the appellant belatedly withdrew the appeal only a few days before the date set for hearing. The learned Member noted at page 665: “This is not to say that the Court will not, in a proper case, make an award of costs, but there would need to be sufficient reasons for such an award. In exercising its discretion, the Court necessarily takes into account all of the circumstances then appearing. Such cases include cases where a party may justifiably seek costs through lateness of notice, or where the Court is satisfied that proceedings are of a frivolous or vexatious nature or perhaps where a hearing is adjourned due to the wrongful conduct of a party.” The Member went on to compare the findings of Ditchlyn and Others v. Chief Executive, Department of Lands (AV94-382/383), 29 September 1995, unreported, where certain undisputed costs thrown away were found in the respondent’s favour. In that matter the Member found that it was the administrative inefficiency of the appellant which led to the making of the late decision to withdraw the appeal. In the current matter there is no detailing of the actual costs thrown away, and it is Mr Needham’s argument that if costs are found to lie by this Court, then those details would be assessed by the taxing officer of the Supreme Court of Queensland. Mr Needham also argues that key to a decision in this matter is whether the respondent acted reasonably in making his decision to offer a reduced valuation on 26 May 1999. Mr Needham concedes that had the respondent acted reasonably and given his notice in such time at an earlier date, then it would be a normal procedure for each party to bear its own costs. However he points out that had the appellant’s solicitor (Mr McBride) not contacted the respondent by telephone on 25 May 1999 to seek progress on the exchange of statements, then it could be concluded that the respondent may have even been later in offering the reduced valuation. Mr Needham further argues that the unreasonableness of the late offer should also be seen in the context that it had been signalled by Mr Paterson, for the respondent on 8 February 1999, of the possible importance of town planning advice. Had that occurred at an earlier date then the whole matter might have been resolved without any further expense by either party. -- 7 of 11 -- 8 Mr Needham further notes that the town planning advice has ongoing implications implications for the respondent, and as such are not costs which could be assessed as costs thrown away by the respondent. That, he argues, is not the same for the appellant in respect of the appeals on the valuations. Mr Needham argues those costs are different to any costs associated with negotiating the Dreamworld parkway road closure matter. Mr O’Rourke draws support from the findings of the Land Appeal Court in Hymix Industries Pty Ltd v. Valuer-General (1990-91) 13 QLCR 173, where the Land Appeal Court said at page 186: “In the subject case it could not be held that either party has approached the valuation in an arbitrary, frivolous or vexatious manner or has completely disregarded principles which given certain facts, should be applied. The position is more to the contrary. The evidence has demonstrated that some complexity was involved and in our opinion there still remains some doubt as to the correct value of the land. In the circumstances we are of the opinion that no order should be made.” The need for the Court to exercise restraint was also noted in RJ Scougall v. Chief Executive, Department of Natural Resources (1996-97) 16 QLCR 536, where the Land Appeal Court at page 556 supported the conclusion of the former President of the Land Court in Queensland Landmark Developments Limited v. Valuer-General (1992) 14 QLCR 168, where the President said at page 171: “the attitude which the Court should take in the exercise of its discretion is primarily one of restraint which, speaking broadly, may be exercised against the Valuer-General if satisfied that he has acted arbitrarily or capriciously and against the owner if satisfied that he has acted in a frivolous or vexatious manner.” However, Scougall can be distinguished as, though Mr Scougall a registered valuer, should have been aware that he had little prospect of success, that matter was not found to be frivolous or vexatious, in view of the fact that the relief afforded by a court decision one year appeared to have not been allowed for in the succeeding year. In the current matter there is no suggestion of any frivolous or vexatious nature by the respondent. Mr O’Rourke also draws support from the fact that the town planning advice linked the theme park site to the carpark site. In light of that linkage Mr O’Rourke notes that the appellant only withdrew his appeal on the theme park site on 17 May 1999, yet seeks costs against the respondent because the respondent did not offer a reduction on the carpark site until 26 May 1999. It is Mr O’Rourke’s argument that equity and fairness would dictate that similar constraints should prevail for both parties in these circumstances. Mr O’Rourke notes -- 8 of 11 -- 9 that conferences were held between counsel and Ms Vigar for the appellant in early May, and yet the decision to withdraw on the theme park site did not occur until 17 May 1999. Mr O’Rourke also notes that costs have been thrown away by the respondent in respect of Mr Treston, Mr Dalgarno and Mr Sharman. However he argues that the respondent has sought a restrained attitude to those costs, and saw those as costs associated with a complex matter requiring extensive consultation. Mr Needham counters such claims by arguing that it is the appellant’s case that the respondent has acted negligently and unreasonably in delaying the final offer to reduce the valuation. Summary: In seeking an overview of this matter I note that initially the parties were well apart on each of the initial four valuations to the extent of the theme park $5,000,000 (appellant) and $6,500,000 (respondent); and for the carpark $1,500,000 (appellant) and $2,500,000 (respondent). The initial Court supervised preliminary conference and the subsequent directions hearing confirmed those entrenched positions. It would appear that the subsequent town planning advice convinced both parties that a fresh appraisal of both the theme park and the carpark should be taken. The results of that advice appear to have resulted in a reduction in the carpark land, and a possible increase in the theme park land. It is quite natural that the appellant would accept the reduced unimproved value for the carpark land (less than the amount appealed for). It is also a reasonable inference that the appellant decided to withdraw the appeals on the carpark, as it was possible that the respondent may have argued for a higher figure than the $6,500,000 appealed against. While the details of the theme park land are not known to this Court, the evidence of Mr Dalgarno leads me to that conclusion. Because of the quantum of the amounts involved, and the history of the entrenched conferences prior to hearing, it is likely that the matter would have eventuated before this Court for resolution. In preparing for such a hearing either party would have been well advised to seek professional advice, particularly the town planning advice. That the respondent chose only to seek his town planning advice on 20 April 1999, casts some shadow upon his wisdom, in light of the eventual outcome of that advice. However the town planning advice was forthcoming by 12 May 1999, the agreed date for exchange of statements. It would appear that the administrative arrangements within the office of the respondent, during the period 23 April 1999 (the date of Mr Treston’s notice of resignation) to 12 May 1999 (the date due for exchange), showed something less than optimum awareness of -- 9 of 11 -- 10 all aspects of the matter. The fact that an exchange had not occurred by 25 May 1999 (when Mr McBride contacted Mr O’Rourke) demonstrates that confusion. That Mr Dalgarno was able to make an offer (later accepted) on 26 May 1999 demonstrates how an impending crisis can crystallise the mind. There is no doubt that Mr Treston’s forthcoming resignation, and the need to transfer work to Mr Dalgarno, together with other pressing matters in the office, all accentuated the situation for the respondent. However those additional matters provide little comfort for the respondent. The need for parties to meet their obligations in these matters has been highlighted on many occasions. While it dealt with a matter of jurisdiction, the need for good administrative arrangement was demonstrated in the findings of Director-General, Department of Transport v. Congress Community Development and Education Unit Limited (A97-09), 25 June 1998, to be reported. In that matter a solicitor acting as agent, omitted to meet the constraints of the Legislation in respect of the late lodgment of an appeal, citing pressures of work commitments on urgent business for the Government. While the Land Appeal Court allowed the appeal to lie, it was critical of the actions of the solicitor, and noted in the further reasons for judgment at page 2: “On any view, the creation of an environment within the office of the Crown Solicitor which exposed an apparently efficient solicitor, and one entrusted with care and attention of a matter of State importance, to work- related exhaustion, to the degree which would cause an important task to be forgotten, is hardly consistent with a reasonable standard of professional conduct. ” There are lessons in that decision for the respondent in the current matter. However in the current matter I am aware that the town planning advice changed the direction of both parties . Had either party taken that advice earlier, and thought to negotiate on a “without prejudice” basis, even at the preliminary conference, or near the directions hearing, then the protracted nature of the appeals may have been reduced. Of course to signal one’s hand prior to any eventual hearing might have lessened the chances of final success at any hearing. However to restrain the provision of a clearer picture of the town planning issues, and then later seek to recover costs thrown away after a subsequent reduced offer, would appear to be having it both ways. In the course of this complex matter, I believe it would be proper for each party to bear their own costs up until both parties were in receipt of their separate town planning advices (12 May 1999). As that date was also the agreed date for the exchange of all -- 10 of 11 -- 11 statements, it is reasonable to conclude that all major costs associated with preparing their respective cases would have already been completed by the parties. That then leaves the period from 12 May 1999 to 17 May 1999 when the appellant decided to withdraw his appeals on the theme park; and 12 May 1999 and 26 May 1999 when the respondent made the new offer on the carpark. In making their respective decisions it is clear that both parties considered their options. If the appellant went to hearing on the theme park site it ran the risk of a higher value being argued because of the town planning advice, which it then knew. The respondent was unlikely to offer a reduced value for the carpark until there was some clarity on the theme park site. Once the appeal on the theme park site was withdrawn, the respondent then moved to resolve the carpark appeal. To have not done so in light of the town planning advice likely to be forthcoming in any hearing, would have left the respondent exposed. In the end I find this is not a case for the awarding of any costs as a consequence of any precipitive late action by the respondent. I also find that there is no case for the awarding of costs associated with the hearing on costs. Both parties should bear their own costs associated with both the preparation of their cases, and the prosecution of the hearing on costs. (NG Divett) Member of the Land Court -- 11 of 11 --