Chief Executive, Department of Transport v Stanbroke Pastoral Company Pty Ltd [1999] QLAC 121 (1999) 21 QLCR 17

IN THE LAND APPEAL COURT AT BRISBANE A98-26 BETWEEN: CHIEF EXECUTIVE, DEPARTMENT OF TRANSPORT Appellant/Respondent AND: STANBROKE PASTORAL COMPANY PTY LTD Respondent/Claimant JUDGMENT Delivered at Brisbane this 18th day of November 1999 1 This is an appeal by the Chief Executive of the Department of Transport, the respondent to a compensation claim made by the claimant, Stanbroke Pastoral Company Pty Ltd (“the respondent”), pursuant to the Acquisition of Land Act 1967. The proceedings in the Land Court were compromised by the parties two weeks before the hearing was scheduled to commence, leaving only a question of costs relating to the abandonment by the respondent of a claim for “loss in cattle condition” for determination by the Land Court. The learned President refused the appellant’s application for costs and the appellant now appeals from that decision. 2 The following chronology records most of the relevant facts. 31 January 1997 Proclamation of the resumption by the appellant of an easement over land of the respondent used primarily for cattle grazing purposes. 18 June 1998 Respondent forwards to the appellant an “assessment of compensation document” which includes a claim for “loss in cattle condition” (“the Claim”) in the sum of $105,261. The Claim alleges loss arising from reduced weight gain in the respondent’s cattle resulting from their [1999] QLAC 121 -- 1 of 11 -- 2 movement from the paddock in which a pipeline had been constructed. 23 June 1998 Appellant’s solicitors seek further and better particulars of the Claim which are not provided. 24 June 1998 The claim is referred to the Land Court. 1 December 1998 The matter is agreed to be set down in May 1999. It is subsequently listed for hearing on 10 May 1999. 15 April 1999 Application by the appellant for directions including an order that further and better particulars of the Claim be provided. The respondent’s solicitor advises the Court that leave would be sought at a later date to amend the Claim and that, pending the making of such application, the provision of particulars was premature. There was no challenge by the respondent’s representative to an assertion by the appellant’s counsel that the respondent had foreshadowed an intention to increase the Claim to $311,192. 19 April 1999 Respondent’s solicitors advise that they are not ready to effect an exchange of experts’ reports. 22 April 1999 Leave is given to the respondent to amend its claim by abandoning the Claim. The amendment is then made and the respondent abandons the Claim. Leave to amend is given subject to the appellant’s right to seek an order for costs in respect of the Claim. 27 April 1999 The matter is compromised, except as to the question of costs of the Claim. 3 In the course of preparing to meet the Claim the appellant obtained reports from eight experts which, together with other related preparation, involved it in expenditure exceeding -- 2 of 11 -- 3 $240,000. 4 It was accepted by Mr Gallagher QC, who appeared with Mr Jones for the appellant, that, as the appeal was from the exercise of a judicial discretion, it was necessary for the appellant to demonstrate some error in the exercise of the President’s discretion. The applicable principle is expressed in the following passage from the judgment of Dixon, Evatt and McTiernan JJ in House v R (1936) 55 CLR 499 at 505 - “It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. ” 5 Courts are particularly reluctant to interfere with the exercise of discretions in relation to costs: Mitchison v Bullock (1886) 12 VLR 512, Maiden v Maiden (1908) 7 CLR 727 and Wentworth v Rogers (No 3) (1986) 6 NSWLR 642 at 651-2. 6 It was submitted that there were errors in the President’s reasons and it is convenient to address each of them in the order in which they appear in the appellant’s outline of submissions. (a) The President was erroneously influenced by the fact that the costs incurred by the appellant exceeded the original claim. 7 Part of the evidence before the President was that the appellant had incurred expenditure in excess of $240,000 in the preparation of expert witnesses’ reports. The President’s reasons refer to the fact that the Claim was for $105,261 and it is remarked, appropriately we would have thought, that such expenditure was somewhat inappropriate if all that was intended to be achieved was to defeat a claim for $105,261. He concluded that the lack of a usual and expected proportionality between the two sums (as well as other evidence) indicated that the appellant was treating the case as a test case. Such conclusion, with respect, was virtually inescapable having regard to sums we have mentioned and to evidence which we later mention. -- 3 of 11 -- 4 8 It was also urged, as part of this point, that the President failed to have regard to the respondent’s intimation that the Claim was to be increased to in excess of $300,000. We see no error in the President’s approach in that regard either. As the above chronology shows, no application to amend was in fact made. The intimation as to the possibility of an application to amend, in any event, was near the date of the proposed trial and there was evidence, apart from the remarkable level of expenditure by the appellant on preparation, which justified the conclusion that the appellant treated the case as a test case. (b) The President erroneously seemed to accept that the respondent acted reasonably in abandoning the Claim as soon as it realised it could not prove its case. 9 This argument seems to confuse concepts. It was surely reasonable (and desirable) for this respondent to abandon the Claim as soon as it formed the view that it could not prosecute it successfully. The President’s approach was a response to the way in which the case was argued before him. Mr Gallagher commenced the appellant’s submissions at first instance, as follows - “Mr President, I appreciate my learned friend went to some lengths but our submissions are quite short. This is simply a claim abandoned too late. We are not here to debate the reasonableness of the claim or whether it would’ve succeeded or not. They were all matters within the choice of the claimant. The claimant had a claim and as part of that claim he sought to amend that claim thereby abandoning a substantial part of the claim but what we say too late.” (emphasis supplied) 10 In the course of developing that point at first instance, it was submitted that, in effect, the abandonment was too late because of the lapse of time between the formulation of the Claim in June 1998 and its abandonment in April 1999 having regard to the fact that the appellant, to the knowledge of the respondent, had expended time and money in preparing to resist the Claim. It does not appear to us that the President failed to take the above matters into account in reaching his determination. He acknowledged that it was part of the appellant’s argument that the Claim was abandoned “at a very late stage”. In the part of his reasons headed “Consideration and -- 4 of 11 -- 5 Conclusion” he makes reference to “the late amendment of the claim”. He also acknowledges that the respondent “had a duty to investigate to see if that head of claim could be sustained”. 11 In argument before us Mr Gallagher submitted also that it was incumbent on a claimant for compensation to properly formulate a sustainable case, if not by the time of referral of the claim to the Land Court, then shortly thereafter. He made the valid point that if this were not done a respondent could be obliged to incur expense which turned out to be unnecessary, as was the case with this Claim. 12 Normally in civil litigation, where a party makes allegations to which its opponent is required to respond but abandons them prior to trial, the abandoning party will pay its opponent’s costs relating to the abandoned issues. 13 But compulsory acquisition cases differ from the normal run of civil cases in that the claimant in the former, unlike a plaintiff or applicant in the latter, has no real choice as to whether to make a claim or not. The mere acquisition by compulsory process gives the claimant a claim to compensation which he or she could hardly be expected to renounce. See Yalgan Investments Pty Ltd v Council of the Shire of Albert (11 December 1987, Land Appeal Court (unreported)); Minister for the Environment v Florence (1980-1981) 45 LGRA 127 and Banno v Commonwealth of Australia (1993) 81 LGERA 34. 14 Mr Gallagher placed reliance on s 24(3) of the Acquisition of Land Act 1967 which relevantly provides - “The claimant shall not amend the claim filed by the claimant in the office of the registrar of the Land Court except upon leave granted by that court (which leave the court may grant upon such terms as it deems just, including terms with respect to the payment of costs).” It does not appear to us that that provision provides much assistance to the appellant beyond serving as an acknowledgement that the Court has a discretionary power to award costs against an amending claimant. The provision imposes no fetter on the exercise of the discretionary -- 5 of 11 -- 6 power and nor does s 41(9) of the Land Act 1962 which provides - “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 ... The Court may, upon making an order as to costs pursuant to this subsection, order that the costs be ascertained and fixed by the taxing officer of the Supreme Court ... according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court and the taxing officer is authorised and required to ascertain and fix such costs in accordance with that order.” 15 Mr Gallagher submitted that s 27 of the Acquisition of Land Act 1967 was of no relevance, as it is concerned with the exercise of a discretion after the hearing and determination of a claim. In our view s 27 is relevant to the extent that it forms part of the statutory background or framework against which costs orders in compensation cases fall to be made. 16 Section 27 provides - “Costs. (1) Subject to this section, the costs of and incidental to the hearing and determination by the Land Court of a claim for compensation under this Act shall be in the discretion of that court. (2) If the amount of compensation as determined is the amount finally claimed by the claimant in the proceedings or is near to that amount than to the amount of the valuation finally put in evidence by the constructing authority, costs (if any) shall be awarded to the claimant, otherwise costs (if any) shall be awarded to the constructing authority. (3) Subsection (2) does not apply to any appeal in respect of the decision of the Land Court or to costs awarded pursuant to section 24(3) or section 25(3).” 17 It will be seen that s 27(2), by referring to “the amount finally claimed by the claimant” and to “the amount of the valuation finally put in evidence by the constructing authority”, contemplates that the amounts of compensation respectively contended for by the claimant and the constructing authority may vary, even after the commencement of the Land Court hearing. 18 Subsection (2) is framed with a view to discouraging inflated claims and, perhaps, is also directed at encouraging early settlements: Commissioner for Railways v Buckler (1994- -- 6 of 11 -- 7 1995) 15 QLCR 262 at 268-269. Although the claim did not proceed to a final hearing, it does not seem to us that the policy manifested in subsection (2) is necessarily irrelevant to a determination of costs in matters which are not concluded by a determination of compensation. But in those circumstances, as s 27(1) makes plain, costs are in the discretion of the Court, subject only to the requirements of sub-section (2). 19 Although, as we remarked earlier, the discretion is unfettered, it must be “exercised judicially, that is to say, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation”: Latoudis v Casey (1990) 170 CLR 534 at 557. As McHugh J points out in Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 - “Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation.” Any such “rules” or established patterns of conduct in relation to costs “... cannot extinguish the element of discretion. They must not be allowed to harden into rigid or inflexible requirements”: Oshlack at 121-2 per Kirby J. Brennan J in Norbis v Norbis (1986) 161 CLR 513 at 537 made observations generally similar in effect. Those observations were referred to with approval in the judgment of Gaudron and Gummow JJ in Oshlack at 86. 20 In Latoudis, the majority view was that the reasonableness of the prosecutor’s conduct was irrelevant to the proper exercise of the costs discretion. At 542-3, Mason CJ explained this conclusion in the following way - “... in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that -- 7 of 11 -- 8 they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.” 21 In Oshlack, the majority, Gaudron and Gummow JJ (at 83) and Kirby J (at 117-120), expressed the view that the reasons in Latoudis, being directed to the criteria to be applied by a court of summary jurisdiction in exercising a statutory discretion to award costs in criminal proceedings, could not be determinative of principles to be applied by the Land and Environment Court in awarding costs under s 69(2) of the Land and Environment Court Act 1979 (NSW). The majority judgments placed greater emphasis than the minority on the relevant statutory framework and on the unfettered nature of the subject statutory discretion. 22 Having regard to the nature and purpose of the subject legislative provisions, we see nothing in Latoudis or Oshlack which would prevent the reasonableness of the conduct of the claimant for compensation being taken into account in determining costs in the event of a compromise of the claim. There is authority for such an approach: Yalgan, Moyses v Townsville City Council (1979) 6 QLCR 271 and Florence (supra). 23 As the above discussion demonstrates, there can be no inflexible rule as to the awarding of costs where a claimant withdraws part of its claim. Whether or not the claimant acted bona fide and reasonably in making the claim in the first place will be a relevant consideration, as will the circumstances in which it was withdrawn and whether notice of withdrawal was given in a timely way. And, in our view, where property has been compulsorily acquired by the State for the common good, a court should not be too astute to find fault with the dispossessed owner’s attempts to formulate and pursue a claim for compensation. 24 The learned President took those matters into account. He also had regard to the distinctive nature of claims under the Acquisition of Land Act 1967 and considerations pertaining to the treatment by the appellant of the Claim as a test case. Those are also relevant -- 8 of 11 -- 9 considerations. We can detect neither a failure to take relevant considerations into account nor the placing of such undue emphasis on a particular matter so as to call the exercise of the discretion into question. (c) The President erroneously formed the view that the Claim was not unduly excessive or frivolous. 25 This contention is impossible to sustain. Not only does it not appear to be supported by the evidence, but the opening words in Mr Gallagher’s address, which we have quoted above, are quite inconsistent with an argument that the Claim was “unduly excessive” or “frivolous”. (d) The President erroneously concluded that the case was a “test” case and that the appellant’s expenditure on preparation in relation to the Claim could not be justified if it was only to meet the respondent’s claim. 26 The contention that the appellant did not regard the case as a test case was but faintly pursued on appeal. One need only point to the amount of the Claim, the range of expert opinion sought and the sum expended in resisting it to demonstrate that the President’s finding was supported by the evidence. It was supported also by an affidavit sworn by a Ms Cosgrove on behalf of the appellant which was relied on by the appellant at first instance. (e) The President erroneously concluded that the investigations by the appellant “went much further than simply to rebut the present claim and were of a wider general interest”. 27 This point was not pursued in oral submissions. Our attention was directed to no evidence before the President which would tend to show that his conclusions in this regard were wrong. (f) The President gave undue weight to the supposed future benefits of the reports obtained by the appellant with a view to resisting the Claim. -- 9 of 11 -- 10 28 The part of the reasons which forms the basis of this criticism is - “The respondent admits that it has incurred expenditure in excess of $240,000 in the preparation of expert witnesses’ reports. The draft costs order sought by the respondent lists eight experts. In addition, there would be additional costs including the fees of senior and junior counsel. This expenditure is in respect of part of a claim which was for $105,261. Such an expenditure of public money could not be justified if it was to meet this one claim alone. But it was not. The evidence clearly indicates that this was a test case not only in respect of the easement resumptions from Ballera to Mt Isa, but for other future resumptions. The investigations by the respondent went much further than simply to rebut the present claim and were of wider general interest. Therefore, in my opinion, the respondent’s costs were not thrown away by the late amendment of the claim. The respondent has succeeded in avoiding an undesirable precedent in respect of the weight loss aspect of the present claim. If the matter is again raised by any landowner affected by the present scheme or any future scheme, the respondent is well equipped to meet such a claim. ” 29 It is not submitted that, if the President was justified in finding that the appellant had in fact treated the case as a test case, that would not be a factor which could be taken into account in any determination of costs in relation to the Claim. In our view such a matter is of obvious relevance. 30 The hearing was being used by the appellant to serve the dual purposes of determining compensation in this case on the one hand and establishing a bank of evidence and expertise for use in future cases (as well as endeavouring to ensure a favourable outcome in this case so as to discourage other such claims) on the other: cf Crane & Williams Pty Ltd v Hornsby Shire Council (1966) 12 LGRA 379 at 411, 412 and Dore v Gormley (1962) 9 LGRA 187. Conclusion 31 We mention also that, in our view, it would have been desirable for the appellant, before incurring substantial costs in relation to the Claim, to have sought directions that the Claim be fully particularised and that the respondent serve its evidence in chief in support of it before the matter was listed for trial and before the appellant was obliged to serve any material in support of its case. Had such directions been given, the appellant would have been able to avoid incurring -- 10 of 11 -- 11 all but minimal costs in relation to the Claim. If the respondent had opposed such a course the applicant’s position in relation to costs would have been greatly strengthened. The appellant’s failure to act in this way is a further matter which tends to support the decision below. 32 For the above reasons, the appeal must be dismissed. There appears to be no good reason why the respondent should not be entitled to its costs of the appeal. Accordingly, in accordance with the provisions of s 44(16) of the Land Act 1962, we order that the appellant pay the respondent’s costs of and incidental to this appeal, such costs to be ascertained and fixed by the Registrar of the Supreme Court at Brisbane according to the scale of costs prescribed by law for the time being in respect of proceedings in the Supreme Court and the Registrar is authorised and required to ascertain and fix such costs in accordance with this order. J.D.M. Muir Justice of the Supreme Court R.E. Wenck Member of the Land Court G.J. Neate Member of the Land Court -- 11 of 11 --