Zacsam Pty Ltd v Moreton Bay Regional Council (No. 2)
[2016] QLC 31
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- Unreported Judgment
- Zacsam Pty Ltd v Moreton Bay Regional Council (No. 2)[2016] QLC 31
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Zacsam Pty Ltd v Moreton Bay Regional Council (No. 2)[2016] QLC 31
Zacsam Pty Ltd v Moreton Bay Regional Council (No. 2)[2016] QLC 31
LAND COURT OF QUEENSLAND
CITATION: | Zacsam Pty Ltd v Moreton Bay Regional Council (No. 2) [2016] QLC 31 |
PARTIES: | Zacsam Pty Ltd (applicant) |
| v |
| Moreton Bay Regional Council (respondent) |
FILE NO: | AQL817-11 |
DIVISION: | General Division |
PROCEEDING: | Applications for costs |
DELIVERED ON: | 24 May 2016 |
DELIVERED AT: | Brisbane |
HEARD ON: | Decided on written submissions Decision reserved 7 April 2016 |
HEARD AT: | Brisbane |
MEMBER: | WA Isdale |
ORDER: |
|
CATCHWORDS: | COSTS – compulsory acquisition – s 27 Acquisition of Land Act 1967 – s 34 Land Court Act 2000 – whether costs should be awarded – factors governing the exercise of the discretion Acquisition of Land Act 1967, ss 24, 27 Land Court Act 2000, s 34 Uniform Civil Procedure Rules 1999, r 681 Barns v Director-General, Department of Transport (1997-98) 18 QLCR 133 Mekpine Pty Ltd & Anor v Moreton Bay Regional Council [2012] QLC 46 Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In Liquidation) & Ors (2012) 33 QLCR 43 Mio Art Pty Ltd & Ors v Brisbane City Council [2010] QLC 86 Moreton Bay Regional Council v Mekpine Pty Ltd & Anor [2013] QLAC 5 Oshlack v Richmond River Council (1998) 193 CLR 72 PT Limited & Westfield Limited v Department of Natural Resources and Mines (2007) 28 QLCR 295 Vass & Anor v Coordinator-General (No. 2) [2015] QLAC 2 Wyatt v Albert Shire Council [1987] 1 Qd R 486 Zacsam Pty Ltd v Moreton Bay Regional Council [2016] QLC 12 |
APPEARANCES: | Not applicable The parties made written submissions |
SOLICITORS: | Not applicable |
Background
- [1]On 14 November 2011, the applicant filed an originating application seeking compensation under the Acquisition of Land Act 1967 (the Act) for the losses it claimed to have suffered consequent upon the exercise of power under the Act by the respondent.
- [2]On 15 February 2012, the respondent filed a general application for preliminary points to be determined. The preliminary matter also concerned another litigant, Mekpine Pty Ltd. This preliminary matter was heard in July 2012 and in September of that year this Court decided the preliminary point, that the applicant had an estate or interest in the resumed land.[1]
- [3]That finding was upheld by the Land Appeal Court in 2013.[2]
The general application
- [4]In relation to the general application filed by the respondent on 15 February 2012 the respondent does not oppose an order that it pay the applicant’s costs of, and incidental to, that application, with such costs to be assessed on the standard basis, if not agreed. This Court orders accordingly.
The originating application
- [5]The substantive matter was heard over three days in October 2015 and the decision given on 25 February 2016.[3] This Decision deals with the issue of costs on the substantive matter.
The applicant’s submissions
- [6]The applicant submits that it should have its costs as it was successful, and that costs, in the ordinary course, follow the event. It refers to s 34 of the Land Court Act 2000 (LCA) in support of that submission. It submits that the compensation assessed by the Court was greater than the amount advanced to it by the respondent in respect of compensation.
- [7]Section 34 of the Land Court Act 2000 provides that:
34 Costs
- (1)Subject to the provisions of this or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate.
- (2)If the court does not make an order under subsection (1), each party to the proceeding must bear the party’s own costs for the proceeding.
- [8]In its reply submissions, the applicant addressed s 27(2) of the Acquisition of Land Act 1967. Section 27 is a provision “to the contrary” and it prevails over s 34 of the LCA for the purposes of determining costs of the proceedings. Section 27 provides that:
27 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 nearer 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).
- [9]The applicant then made its reply submissions in the following way:
“5. The Applicant acknowledges the applicability of section 27 of the Acquisition of Land Act 1967 (‘the ALA’) to the determination of costs of the proceedings generally.
- Section 27(2) of the ALA relevantly provides the Court with discretion to make an order as to costs in that it states ‘costs (if any) shall be awarded to…’ (underlining added).
- Section 27(2) of the ALA relevantly refers to the ‘the amount of the valuation finally put in evidence by the constructing authority.’
- The Respondent put the following amounts in evidence at trial in respect to each component of the Applicant’s claim:
- (a)$67,532 for loss of profits. The Applicant’s position for this component was $137,628.16. The Court resolved this component in favour of the Applicant.
- (b)Nil for the loss of value of the Applicant’s business. The Court did not accept the Respondent’s evidence supporting a nil amount for this component.
- (c)Nil for the loss of rental liability. The Court did not accept the Respondent’s evidence supporting a nil amount for this component.
- In the circumstances the Respondent should not be awarded its costs of the proceedings generally as the Respondent’s evidence to support its position against each component of the Applicant’s claim was not accepted by the Court.
- The Applicant respectfully submits that if the Applicant, as the successful party in the proceedings, is not awarded its costs of the proceedings generally then the Court should exercise its discretion under section 27(2) of the ALA to make no order as to costs of the proceedings generally.”
The respondent’s submissions
- [10]The respondent’s submissions noted that s 27 of the Act governed the matter of costs. The applicant claimed:
- (a)loss of profits of the applicant’s business in the sum of $311,520.00, for the period from May 2010 to February 2014;
- (b)loss of the capital value of the applicant’s business in the amount of $420,000.00;
- (c)loss caused by unpaid rental liability of the applicant for leased premises in the amount of $66,547.00; and
- (d)costs incurred in the preparation of the claim for compensation in the amount of $15,000.00
- [11]On the last day of the hearing the applicant conceded that its claim for lost profits ought to be the amount of $137,628.16 and stated that the costs of making the compensation claim had been valued by agreement at $9,748.20.
- [12]The respondent notes that there was no amendment of the claim and no leave to amend was sought or granted.[4]
- [13]The respondent submits that the Court should exercise its discretion under s 27(1) to order costs in its favour as it was almost completely successful overall, was more successful than the applicant in respect of each disputed component of the claim, and the applicant’s case depended on unreliable financial documentation that was not reconstructed so as to provide the Court with a complete picture. It was also said that the applicant’s narrative was incomplete in relation to the circumstances surrounding the applicant ceasing business, the landlord then running it, and its ultimate cessation.
- [14]The respondent submits that once the advance of $121,998 paid on 24 October 2014 is allowed for, only $25,378.36, plus interest, will be payable to the applicant.
- [15]In accordance with s 27(2) of the Act, the amount of compensation finally determined, $137,628.16, is far nearer to the final position adopted by the respondent, $77,280.20, than to the claim of $813,067 made by the applicant.
- [16]The respondent also directs attention to the claim for lost profits after the date the applicant ceased to trade and the claim for rent liability when both loss of profits and loss of the value of the business were claimed.
- [17]The respondent notes that on the last day of the hearing the applicant abandoned $173,891.84 for lost profits and reduced its $15,000 sought for costs of preparing its claim to $9,748.20.
- [18]The respondent characterises the claim made as grossly inflated and/or weak. It submits that the Court would have real concerns about the bona fides of the bulk of the applicant’s claim.
- [19]The respondent submits that the Court ought to exercise its discretion to award costs in its favour. It recognises the concession made by the applicant at the conclusion of the hearing that $173,891.84 of its claim should not be allowed. Accordingly, it submits that costs should be on the standard basis.
- [20]The reply submissions for the respondent repeat that due to the operation of s 27(2), costs, if any, shall be awarded to the respondent in the circumstances of this case. It refers to the observation of McHugh J in Oshlack v Richmond River Council[5] that:
“… Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.”
The costs discretion
- [21]Section 27(1) provides that, within the bounds set by s 27(2), costs are in the discretion of the Court. The discretion is to be exercised judicially, that is for reasons that are not arbitrary and can be justified.[6] One of the factors to be taken into account is the outcome of the case. In Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In Liquidation) & Ors[7] the Land Appeal Court, although considering s 34, pointed out that while r 681 of the Uniform Civil Procedure Rules 1999 that the costs follow the event, does not govern the exercise of the discretion, it does nevertheless inform it as there is justice in that approach. The underlying principle is the same here, within the restrictions in s 27(2). It protects those put to expense by others.[8] The Court should not be bound by any presumptive rule or principle in exercising its discretion[9] but must consider all of the facts and circumstances of the case.
- [22]It is relevant to take into account that the matter concerned compensation relating to the compulsory acquisition of land. In Barns v Director-General, Department of Transport[10] the Land Appeal Court said:
“This Court has an unfettered discretion as to the costs of and incidental to an appeal before it. An unfettered discretion is not an unprincipled one, and on ordinary principles, costs in circumstances such as these would follow the event. The general rule that costs will usually follow the event is one which is deeply embedded in our law. Although it has attracted some criticism in recent years, there was no attempt by the legislature to modify it when the practice of this Court was given attention in the Land Act 1994. It is a general rule which prima facie should be applied in this case.
The respondent submitted that the rule is not always applied by Courts exercising jurisdiction in land compensation matters. He cited Moyses v. Townsville City Council, Theo v. Brisbane City Council, Minister for the Environment v. Florence and Banno v. Commonwealth of Australia. These cases show that in compensation cases, the Land Court must take into account the fact that an appeal to that court is the only way in which a dispossessed owner can obtain an independent determination of the value of the land taken. As Wilcox J said in Banno:
‘The acquisition left the applicants in the position of either accepting the Commonwealth’s assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position should be allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the Commonwealth’s costs if their case proves unpersuasive. I distinguish the case 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.’
Those cases justify some flexibility in the application of the general rule against a dispossessed owner. They contain no support for a departure from the rule as against a resuming authority in circumstances where the rule would ordinarily be applied.”[11]
- [23]It is useful to consider the decision of the learned President in Mio Art Pty Ltd & Ors v Brisbane City Council[12] where Her Honour said:
“[9] The effect of s.34(1) of the Land Court Act and s.27(1) of the Acquisition of Land Act is that the Land Court has a complete discretion as to the award of costs, subject only to s.27(2) of the Act. The discretion is to be exercised judicially, that is, for reasons that can be considered and justified. There are a number of factors that are relevant to the exercise of that discretion.
[10] One factor is that
‘Compulsory acquisition cases differ from ordinary claims in the significant respect that the claimant, unlike the ordinary plaintiff, has no choice whether to make a claim or not. The mere acquisition by compulsory process gave the claimant a claim to compensation which he or she could hardly be expected to renounce.’
…
Similarly, in Pastrello v Roads and Traffic Authority (NSW) Talbot J said -
“There needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case.”
[11] Another factor to be considered is the quantum of the claims as compared with the amount of the Court's determination. The Council has submitted that the claims were exorbitant and that the effect of the exorbitant claims was that the Council was forced erroneously and unnecessarily into a lengthy and complex two week trial.
[12] It is clear that the claims pursued by the claimants in this matter were substantially higher than the amount awarded as compensation. However, as pointed out by the Land Appeal Court in Yalgan Investments Pty Ltd v Shire of Albert, s.27(2) of the Act should not be interpreted to mean that where the claim is substantially more than the amount awarded, and the amount put in evidence by the constructing authority is not substantially less than the amount awarded, the Court should award costs to the constructing authority. It is more relevant to enquire whether the conduct of the claimant (such as, for example, making an exorbitant claim) was such as to force the authority, unreasonably and unnecessarily, into litigation or whether the claimant pursued a vexatious, dishonest or grossly exaggerated claim, or presented its case in such a way as to impose unnecessary burdens on the constructing authority.
…
[14] The claims may be characterised as excessive but it should be recognised that the claimants have, in effect, been penalised for making excessive claims through the operation of s.27(2) of the Act. The effect of s.27(2) is that the claimants are unable to obtain an award of costs even though they have obtained a determination that is $3,500,000 higher than the Council’s final valuation. The question is whether the claimants' conduct has been such that, in addition to being deprived of the opportunity to obtain an award of costs, costs should be awarded against them.
[15] The claims in this matter were not vexatious or dishonest. The claimants were entitled to pursue their claims for the loss of the land and, as recognised in Pastrello v Roads and Traffic Authority (NSW), there needs to be strong justification for awarding costs against an applicant where the effect of the order is to erode the benefit of the just compensation awarded as a consequence of the Court's determination. There were legitimate and complex town planning, architectural and valuation differences between the parties related to the development potential of the subject land. Those issues were such that I consider that litigation was almost unavoidable. Moreover, the claimants were vindicated to the extent of an award of an additional $3,500,000 beyond the Council's final position. The evidence indicates that no offer to settle was made as between Mio Art or Greener and the Council, although prior to the hearing the Council had paid out $13,500,000 by way of compensation for the resumed land.”[13]
Exercising the discretion
- [24]The discretion is to be exercised in view of all of the facts and circumstances in this case. Costs are for the purpose of compensating the successful party for the expense to which it has been put in respect of the claim which was made against it.
- [25]The claim made by the applicant was successful in that the amount awarded by the Court was higher than the amount of the advance paid to it, although not greatly so. However, some of the weakness in the claim was acknowledged at the conclusion of the hearing. It is rightly pointed out by the respondent that s 24(3) of the Act is applicable. It is in the following terms:
- “(3)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).”
- [26]It is the case that the applicant was unsuccessful in relation to much of its total claim.
- [27]The conduct of the applicant, while making a claim which was substantially beyond what was able to be proved, was not such as to unreasonably and unnecessarily force the respondent into litigation as it did substantiate a claim greater than the sum advanced. It was also not vexatious or dishonest. It was certainly exaggerated, perhaps grossly so. There was however a fair concession made at the end of the case.
- [28]It would have been correct for the applicant to seek leave to amend the claim but nothing turns on this. The applicant’s legal representation was conducted properly and an appropriate concession was made. The Court is satisfied that there was no lack of bona fides on the applicant’s side, rather a lack of evidence sufficient to support the claim.
- [29]The respondent has been substantially successful overall but the applicant was entitled to bring its case to the Court. An order for costs would unjustly diminish the compensation which has been awarded.
- [30]The considerations are closely competing but, on balance, the Court has formed the clear view that the correct course, in relation to costs of the originating application filed on 14 November 2011, is for the Court to make no order as to costs.
Order
- The respondent pay the applicant’s costs of and incidental to the general application filed by the respondent on 15 February 2012. Such costs are to be assessed on the standard basis, if not agreed.
- In relation to the originating application, the Court makes no order as to costs.
WA ISDALE
MEMBER OF THE LAND COURT
Footnotes
[1]Mekpine Pty Ltd & Anor v Moreton Bay Regional Council [2012] QLC 46.
[2]Moreton Bay Regional Council v Mekpine Pty Ltd & Anor [2013] QLAC 5.
[3]Zacsam Pty Ltd v Moreton Bay Regional Council [2016] QLC 12.
[4]Vass & Anor v Coordinator-General (No. 2) [2015] QLAC 2. Section 27(2) of the Act refers to the amount finally claimed and s 24(3) requires leave of the Court to amend a claim.
[5] (1998) 193 CLR 72 at [67].
[6]Wyatt v Albert Shire Council [1987] 1 Qd R 486 at 489.
[7] (2012) 33 QLCR 43 at [4].
[8]Vass & Anor v Coordinator-General (No. 2) [2015] QLAC 2 at [59].
[9]PT Limited & Westfield Limited v Department of Natural Resources and Mines (2007) 28 QLCR 295 at [20] where the Valuation of Land Act 1944 was applicable.
[10] (1997-98) 18 QLCR 133.
[11] Ibid at 135, 136. Followed in Vass & Anor v Coordinator-General (No. 2) [2015] QLAC 2 at [62].
[12] [2010] QLC 86.
[13] [2010] QLC 86 at p 4, 5 and 6.