WILLIAM KEITH WILLIAMS v THE MINISTER OF LANDS [2001] NZCA 93 (5 April 2001)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca299/99

	between	WILLIAM KEITH WILLIAMS
		Appellant

	and	THE MINISTER OF LANDS
		Respondent

Hearing:	21 March 2001
Coram:	Keith J Fisher J Paterson J
Appearances:	R J Somerville QC and J A Firth for the Appellant K Robinson and E Fitzgerald for the Respondent
Judgment:	5 April 2001

judgment of the court delivered by KEITH J

[1] Mr Williams' farm property at Glenavy near Oamaru was damaged by seepage from the Morven Glenavy irrigation scheme.He began complaining to the Ministry of Works and Development in 1974, received a compensation payment later that year, formulated a claim in 1978 and lodged a formal claim with the Land Valuation Tribunal in 1983.That was removed by consent into the High Court.Chisholm J and Mr I W Lyall, following nine days of hearing in 1997, gave judgments later that year on the substance and on 1 September 1998 on preliminary expenses and costs.They

1. rejected the claim for permanent loss in value,

2. accepted in part the claim for loss of income for the six years from 30 June 1975, and for interest on that loss.,

3. accepted in part the claim for costs and disbursements incurred before the hearing,

4. rejected a claim for interest on those costs and disbursements, and

5. fixed hearing costs.

[2] This appeal by Mr Williams and cross appeal by the Minister of Lands challenge the second finding (cross appeal), the fourth (appeal) and fifth (cross appeal).

The claim for loss of income

[3] The High Court found, and the Crown accepted on appeal, that seepage from the main race of the irrigation scheme had a widespread impact on Mr Williams' ability to successful develop and use the area affected.The Court said this:

Our finding is that constant seepage from the main race directly contributed to the damage to and death of plant life on the lower terrace.While there was not complete decimation of all plant life on the terrace, we accept that main race seepage was responsible for a widespread impact on the ability to successfully develop and use the lower terrace between 1974 and 1981. Inevitably this directly affected Mr Williams' farming operation.

[4] On appeal, the Minister contends that that impact did not cause Mr Williams any loss of income.Mr Robinson, for the Minister, gave two main reasons in support of that contention : the absence of farm accounts and the fact that the farm actually achieved its stock unit target.

[5] The High Court agreed with Mr Robinson that temporary loss of income would usually be demonstrated by reference to farm accounts.Unfortunately they were not available.But that absence does not destroy the ability to calculate loss.The Court noted that "all the valuers acknowledged that they had been able to make an assessment without resort to the annual accounts".So far as the submission based on the achieving of the stock unit target was concerned, the High Court was not persuaded that was a sound proposition:

In our opinion the evidence has demonstrated that during the period under consideration productivity on the lower terrace was severely impaired by seepage from the main race.Inevitably there would be a flow-on effect in respect of the overall farming operation.We accept that without the lower terrace seepage problems, Mr Williams would have developed the lower terrace in conjunction with the rest of his property. This would have enabled the carrying capacity to be increased more rapidly and may even have led to an overshooting of stock unit targets.In our view delays in developing the lower terrace resulted in losses which were genuine, not fictional.

[6] We can see no error in that reasoning which was firmly based on evidence presented in the course of the lengthy hearing.

[7] The Court then went on to calculate the additional number of stock units that Mr Williams would have been able to carry in each of the years under consideration.No objection can be taken to that calculation, nor to the losses based on it.

[8] In summary, we are persuaded by the written submissions prepared by Mr Somerville QC that the Court had clear evidence before it that carrying capacity could have been increased in the period in issue and indeed was once the seepage problem was alleviated, that the Court was clearly right in rejecting the stock unit prediction as a constraint on the calculation of loss, and that the Court was entitled to undertake its calculation in the way it did. Accordingly this part of the cross appeal fails.

The claim for interest on the prehearing costs and disbursements

[9] Mr Williams sought prehearing costs of $148,396, reduced in the costs judgment, when certain amounts had been deducted, to $136,730.51.On appeal, he contends that since full compensation is to be paid under s60 of the Public Works Act 1981 the Court should have inflation-proofed that part of the compensation attributable to the prehearing costs.The Court said that the total amount of those costs was large.That reflects the comparison with the amount ordered by way of loss of income under the substantive part of the judgment.That figure was $6,688, with inflation adjustment from 30 June 1981 to the date of the judgment.Having made the comment about the large size of the total amount of the expenses, the Court continued:

... it will be apparent from our earlier comments that we are of the view that to a large extent Mr Williams was forced into a corner by the attitude of the respondent.Under these circumstances we are prepared to make an order which will have the effect of reimbursing Mr Williams for this expenditure.This represents a relatively liberal approach. We are not prepared to make an order for the payment of interest.

[10] When the High Court came to consider the questions of expenses and costs in the second judgment it was not asked, as it could have been, to revisit the question of interest on the expenses.

[11] Mr Somerville could not, in the end, resist the proposition that the Court had essentially treated the claim for costs and the interest on them in a composite way.On the one side, there was the "relatively liberal approach" in awarding the large total amount.On the other, was the relatively small amount of under $7,000 awarded as compensation for loss of income.It seems to us that the Court was appropriately, if rather elliptically, saying in the paragraph quoted that, as a result of its liberal approach to the costs themselves, it was not willing to make an order for the payment of interest on those costs.We cannot find any error of principle in that reasoning. Accordingly, the appeal on this matter fails.

The amount of the hearing costs

[12] The Minister appeals against the order that the claimant be paid hearing costs of $177,004.61.He challenges the award on the basis that the High Court failed to exercise the discretion about costs conferred on it by s90 of the Public Works Act.Under subs (1), the Court has the discretion to direct "direct to and by whom and in what manner those costs or any part of them shall be paid".Mr Robinson stressed the emphasised words.Further, the award ought to have been reduced in acknowledgement of the offers which the Minister made well before the claim was set down for hearing.That provided a basis for the exercise of the power under subs (2) of s90 to "order the claimant to bear his costs and to pay the costs of the respondent in so far as the costs of either party were incurred after the making of the offer" if the amount of compensation awarded is less than the amount offered.

[13] The Court, in the course of its judgment, did in fact set out the offers and the provisions of s90.The notices of payment into Court followed, as Mr Robinson acknowledged, the parallel provisions of the High Court Rules.The Court ruled that the matter was governed by s90 rather than by the High Court Rules, and that was the basis on which the appeal proceeded before us.The Court said this:

We now apply s90.It is first necessary to determine whether, for the purposes of subs (2), the compensation awarded to the claimant was less than the amount offered.Section 89 directs the Land Valuation Tribunal (in this case the Court) not to award a gross sum in respect of two or more items of any claim for compensation but to make an award in respect of each item.This would suggest that s90(2) should be approached on the same basis so that offers in respect of individual items of compensation should be compared with the award under the equivalent head.That interpretation would mean that in respect of the loss of income head the claimant had recovered less than had been offered. But it is clear that the Court is vested with a discretion.In all the circumstances of this case we consider that it would be unjust and inappropriate for an order to be made which had the effect of requiring the claimant to bear his own costs and those of the respondent in respect of the loss of income head of claim from the date of the first offer.

Our refusal to award costs in accordance with the provisions of subs (2) means that subs (3) applies.Unless the Court considers that for special reasons it would not be proper to do so, there should be an order for the respondent to pay the reasonable costs of the claimant. There are no special reasons in this case.Consequently the respondent should pay reasonable costs of the claimant.

[14] As Mr Somerville pointed out, the two offers made by the Minister amounted to $110,000, while all up the appellant was to receive a total of $160,000. There is, accordingly, an argument, depending on how subs (2) is interpreted, that the offers at issue did not exceed the amount awarded.We do not consider that we have to resolve that issue, however, since we can see no basis for upsetting the exercise by the High Court of its discretion under s90.

[15] Accordingly, this part of the cross appeal also fails.

Result

[16] It follows thatthe appeal and the cross appeals all fail.Costs in this Court lie where they fall.

Solicitors:

J A Firth, Waimate for the Appellant

Crown Law Office, Wellington for the Respondent