On 13 March 2014, the NSW Land and Environment Court dismissed a costs application made by the acquiring authority, Sydney Water Corporation (SWC), following the Court’s determination of the substantive Class 3 proceedings: Tempe Recreation Reserve Trust v Sydney Water Corporation (No 2)  NSWLEC 23. In particular, the costs application sought an order that the dispossessed landowner, Tempe Recreation Reserve Trust, pay SWC’s costs of the proceedings on an indemnity basis from the day after SWC’s offer of compromise.
Despite the fact that SWC’s offer of compromise had the “hallmarks of compliance” with rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and was a genuine offer, the Court held that SWC was not entitled to its costs on an indemnity basis under rule 42.15 because the Court’s determination was not “less favourable” to the Trust than the terms of the offer. If the Court was in error and rule 42.15 was in fact engaged, the Court exercised its discretion to “otherwise order” and declined to make an order for indemnity costs against the Trust.
On 24 December 2013, having regard to the matters set out in section 106A of the Crown Lands Act 1989 (NSW) (CL Act), the Court assessed the loss to the Trust as a result of the compulsory acquisition of an easement for a water supply pipeline in the amount of $100,000, plus disturbance costs in the amount of $6,000, and ordered SWC to pay the Trust’s costs of the proceedings: Tempe Recreation (D.500215 & D.1000502) Reserve Trust v Sydney Water Corporation  NSWLEC 221. More details about this decision are set out in an earlier In Brief.
Following this determination, SWC filed a costs application seeking an indemnity costs order from the day after SWC’s offer of compromise. On 13 February 2013, SWC made an offer of compromise in the amount of $268,000 in accordance with rule 20.26 of the UCPR (Offer). In the circumstances, SWC submitted that the Trust obtained less favourable relief than the terms of the offer and, consequently, that SWC was entitled to an indemnity costs order under rule 42.15 of the UCPR.
Whether rule 42.15 was engaged
The Court held that rule 42.15 was not engaged because the Court’s determination of compensation was not “as favourable or less favourable” to the Trust than the terms of the Offer. Although the Trust was ultimately awarded less monetary compensation by the Court than the Offer, the interpretation of the easement and the scope of works permitted by the easement would not have been resolved without the determination by the Court in the substantive proceedings. In the circumstances, Biscoe J observed that the Trust received a “more valuable” outcome from the Court’s determination than the Offer which only provided a “dollar amount”.
Discretion to "otherwise order"
Discretion If the Court was in error in respect of the engagement of rule 42.15, the Court also considered whether it would exercise its discretion and “otherwise order”. The Court held that the factual circumstances of the case provided a sufficient basis for an "otherwise order" for the following reasons:
This case demonstrates that, even if a respondent in Class 3 compensation proceedings issues an offer of compromise in compliance with rule 20.26, the respondent will not necessarily be entitled to its costs of the proceedings on an indemnity basis from the day after the offer date.
In order to obtain such an order, the respondent must establish that:
In determining whether an order or judgment is more or less favourable than an offer, the Court will consider both monetary and non-monetary factors, and weigh up those competing factors.
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