When rejected settlement offers operate against a claimant in the State Administrative Tribunal

The State Administrative Tribunal (SAT) recently considered the factors relevant to the exercise of discretion whether to award costs in the context of its original jurisdiction regarding the amount of compensation payable in respect of the compulsory acquisition of land by a government authority in Guida and Commissioner of Main Roads [2017] WASAT 141 (S) (Guida). 

Under section 87 of the State Administrative Tribunal Act1, the starting position is that in a SAT proceeding, the parties are to bear their own costs.  The SAT does however have the discretion to award costs to a party in some circumstances.
The SAT may for example, award costs in a land compensation scenario where a settlement offer has previously been made, but rejected.

If, for example, the claimant made a settlement offer to the acquiring authority, which the acquiring authority rejected, and the ultimate compensation sum awarded by the Tribunal is greater than the settlement offer, then the Tribunal would likely award costs against the acquiring authority for costs incurred for the period following the rejection of the settlement offer (see eg. rules 40 to 42 of the State Administrative Tribunal Rules 2004 (WA)).

On the other hand, however, a rejected settlement offer can also operate against a claimant. 

In Guida, the claimant made a substantial claim for injurious affection not supported by the evidence, and however rejected an earlier settlement offer made by the acquiring authority in relation to compensation for the compulsory acquisition of the claimant’s land. 

The final compensation amount awarded by the SAT to the claimant was significantly lower than the amount of the settlement offer made by the acquiring authority.

The acquiring authority sought a contribution to their legal costs and submitted that the claimants had not acted in a manner cognisant of the SAT's statutory objectives to act speedily and in a manner which minimises costs to parties.

The claimant submitted that the SAT ought not to depart from the usual position that each party bear its own costs, and its conduct did not support the position that their compensation award ought to be eroded by way of a costs order made against them.

The SAT agreed with the acquiring authority and adopted the rare course of awarding costs of the process against the claimant and in favour of the acquiring authority.

In particular, SAT awarded costs to the acquiring authority on the basis that the claimants had acted unreasonably in pursuing a claim for compensation which was not supported by evidence, for unreasonably prolonging and increasing the costs of hearing of the matter by rejecting a reasonable offer of settlement. The SAT also noted that the quantum of the award was to act as a deterrent to landowners who might pursue grossly exaggerated claims.

Ultimately, the claimant was required to pay the acquiring authority $33,389.94, being 50% of the acquiring authority’s legal and consulting costs in the proceeding.

Lavan comment

Lavan did not act for any party in the Guida matter.

We do however regularly act for claimants against acquiring authorities, and have been involved in some of the most high profile land compensation matters in this State.

The decision in Guida is a timely reminder to claimants that they should seek robust valuation evidence and legal advice to support any claim for compensation.

If you have any questions in relation to a land compensation claim you have or may have, please call one of the members of our Planning, Environment and Land Compensation Team members.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.