The recent decision of Heislers v Melbourne Water Corporation [2014] VCAT 1399 highlights the risk of adverse costs orders being made against acquiring authorities in compulsory acquisition cases, and given that risk, the need for acquiring authorities to take steps to protect against that risk.
In compulsory acquisition cases, a successful claimant will still have a strong claim for costs being awarded in the claimant's favour even if the amount of compensation ultimately awarded is much less than the claimants' claim.
For the effects of an easement for the Victorian desalination plant pipeline, the Heislers claimed market value in the sum of between $210,000 and $300,000. The Heislers also made other, smaller claims, including for disturbance, solatium and pre-referral expenses. The parties could not agree on the compensation payable, and so the dispute was referred to the Victorian Civil and Administrative Tribunal. The Tribunal assessed the market value at $155,000, which was exactly the amount of Melbourne Water's offer. With regard to the other items of claim, the Tribunal awarded approximately $20,000 above the original offer. Given the Tribunal's findings on market value, one might say the result was a relatively good one for Melbourne Water.
At the costs hearing, Melbourne Water claimed costs against the Heislers, and the Heislers claimed costs against Melbourne Water.
The Tribunal awarded costs in favour of the Heislers, albeit with a 20% discount. The Tribunal observed comments made by the Court of Appeal in Love v Roads Corporation [2011] VSCA 434 that "the discretion as to costs in compensation proceedings is tilted in favour of the claimant". The Tribunal also had regard to the way in which both parties conducted the case. Both parties made a number of criticisms of the other. The Tribunal's key findings in terms of those criticisms are at paragraphs 27, 28 and 39 of the decision.
Given the discretion as to costs in compensation proceedings is tilted in favour of the claimant, for acquiring authorities, the decision highlights the importance of giving early consideration to 'Calderbank offers' and/or offers of compromise at an appropriate point in the litigation, to provide a measure of costs protection to the acquiring authority.
Click here to view the decision.
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