Australia: Land Court in Queensland has sole discretion to determine whether to award costs

IN BRIEF - FORMER LANDOWNERS' CONDUCT FOUND TO BE UNREASONABLE

The case of Mahoney & Ors v Chief Executive, Department of Transport and Main Roads (No. 5) [2016] QLC 36 concerned applications for costs made by the Chief Executive, Department of Transport and Main Roads in the Land Court against John Mahoney, Kathryn Mahoney and the estate of Austin Mahoney in relation to two hearings which took place in 2012 and 2015 for the compulsory acquisition of the former landowners' land.

The Court considered the legislative framework within which the Court may order costs under section 34 of the Land Court Act 2000 and section 27 of the Acquisition of Land Act 1967. It was determined that the provisions of the Acquisition of Land Act prevailed over the provisions for costs in the Land Court Act.

The Court awarded costs to the Department for the 2015 hearing only as it found that the former landowners' conduct which delayed the resolution of the matter was unreasonable.

AWARD OF COSTS FOUND TO BE IN THE COURT'S DISCRETION AND TO BE EXERCISED JUDICIALLY ON THE BASIS OF REASONS THAT WERE JUSTIFIABLE

In considering the application made by the Department, the Court observed (at [5]) that it "should not be bound by any presumptive rule or principle in exercising its discretion but must consider all of the facts and circumstances of the case."

Section 27(1) of the Acquisition of Land Act conferred the Court with a discretion to award costs within the bounds of section 27(2) of the Act. The Court was required to exercise its discretion judicially on the basis of reasons that were not arbitrary and could be justified.

The Court relevantly considered the decision in Mio Art Pty Ltd & Ors v Brisbane City Council [2010] QLC 86 which outlined at [10] the following matters that were relevant to the exercise of the discretion by the Court:

• There had to be a strong justification for awarding costs against a claimant where the effect of the costs order would "erode the benefit of the just compensation recovered as a consequence of the Court's determination."
• The quantum of the claims as compared with the amount of the Court's determination for compensation and whether the claimant had acted unreasonably and unnecessarily to force the authority into litigation or "pursued a vexatious, dishonest or grossly exaggerated claim".

DEPARTMENT SOUGHT COSTS OF AND INCIDENTAL TO THE 2012 AND 2015 HEARINGS AS THE DEPARTMENT ACHIEVED TOTAL SUCCESS AND THE FORMER LANDOWNERS DID NOT ACHIEVE AN OUTCOME WHICH WAS ANY BETTER THAN THE DEPARTMENT'S SETTLEMENT OFFER

In 2012, the Department successfully appealed to the Land Appeal Court the original decision made by the Land Court in relation to whether the "San Sebastian principle" applied. The former landowners were refused leave to appeal in the Court of Appeal.

In December 2012, the Department made an offer to the former landowners to settle the matter for the sum of $345,000. The former landowners did not accept the settlement offer and disputed the value of the compensation.

Following a number of attempts to resolve the matter, the Department had to bring an application to the Land Court in 2015 in order to progress the litigation. The former landowners responded with their own application to the Land Court disputing the amount of the compensation.

Both applications were heard by the Court in December 2015. The Department was successful at the hearing and sought its costs of and incidental to the 2012 hearing incurred after August 2012, and also its costs of and incidental to its application in 2015 on the basis that the Department was successful and the outcome achieved by the former landowners was no better than the December 2012 offer.

COURT FOUND THAT AN AWARD OF COSTS FOR THE 2012 HEARING WOULD DEPRIVE FORMER LANDOWNERS THE FULL BENEFIT OF THE COMPENSATION

The Department submitted that the general rule in relation to costs following the event should be applied as the 2012 hearing involved a determination of a legal question rather than a conventional hearing of competing valuations which was more akin to a civil trial. The Department further submitted that the former landowners' case was weak to further support its submission.

The former landowners refuted the claim and submitted that their case was not weak. The former landowners further submitted that a lengthy investigation was undertaken and there was difficulty to obtain information. It was emphasised by the former landowners that considerable efforts were made to deal with the dispute outside of the Court process.

The Court accepted that the legal question was raised in an attempt to limit the proceedings as opposed to any vexatious purpose. The parties had acted genuinely and were not purposely unreasonable to force the other into litigation. In this instance, the Court considered it inappropriate to treat the dispute as if it was a civil case.

The Court did not make an order as to costs in relation to the 2012 hearing as in "making the order sought would deprive the applicants of the full benefit of the compensation which has been determined to be just and reasonable." (At [29].)

COURT AWARDED COSTS TO THE DEPARTMENT IN RELATION TO THE 2015 HEARING AS IT FOUND THAT THE UNREASONABLE CONDUCT OF THE FORMER LANDOWNERS WAS ENOUGH TO ERODE THE BENEFIT OF THE COMPENSATION

The Department submitted that the former landowners' dispute on the compensation amount was unreasonable and had forced it into litigation.

The basis of the former landowners' rebuttal of the Department's claim was that they were seeking to have the matter resolved out of Court and were focusing on obtaining a fair compensation. The former landowners did not consider that their conduct was capable of forcing the Department to pursue its application in 2015.

The Court found that the 2015 hearing was distinct from the 2012 hearing. It was necessary for the Department to bring on an application to resolve the matter because the former landowners were delaying a resolution based on an understanding which was "without merit and could properly be characterised as unreasonable." (At [32].)

The Court held that the Department had conducted its application in a proper and efficient manner and found that "the unreasonableness of the applicants' conduct in the 2015 applications is sufficient to weigh decisively against the erosion of the compensation awarded." (At [33].) The former landowners were ordered to pay the Department's costs of and incidental to the applications heard in 2015.

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