Australian Unity Retirement Living Management Pty Ltd v Karimbla Properties

Supreme Court of NSW|2019-08-14|Before: Slattery J

Judgment

This is the Court's second judgment in these proceedings. In the Court's first judgment given on 31 May 2019, the Court resolved the principal disputes between these parties and proposed (but stayed) a detailed set of orders regulating certain easements to allow consideration by the parties: Australian Unity Retirement Living Management Pty Limited v Karimbla Properties (No 10) Pty Limited [2019] NSWSC 635.
The first judgment contemplated that a supplementary hearing would need to take place about a number of matters, including the making of adjustments to the proposed orders of the Court. That supplementary hearing took place on 14 August 2019. The parties were represented at the supplementary hearing as they were the principal hearing. These reasons determine the issues argued at that supplementary hearing.
This judgment and the first judgment should be read together. Events, matters and persons are referred to in both in the same way.
Four issues remain to be determined: (1) whether the Court's proposed orders of 31 May 2019 should be varied; (2) who should bear the costs of compliance with certain aspects of the Court's proposed orders; (3) should a proposed amendment to the cross-claim be allowed at this stage of the proceedings; and (4) what costs order should be made in the proceedings.

(2) The Costs of Compliance with the Court's Orders

The next issue is who should bear the costs of compliance with the supervisory aspects of the Court's proposed orders.
This issue is relatively narrow in scope but it has long-term consequences. The defendant will generally bear the costs of compliance with the Court's orders with the exception of Order 2(g) and Order 2(i) and the part of Order 2(i) after the words "and will not invite". The dispute about Orders 2(g) and (i) is essentially a dispute about the ongoing costs of intermittent supervision by a traffic supervisor of certain activities on the easement. The allocation of those costs of compliance is discussed below. But first the cost of compliance of the other parts of Order 2 should be discussed.
Apart from Orders 2(g) and (i) the other costs of compliance will be borne by the party on whose land the compliance activity has to take place or who is already directly ordered to undertake the activity in question. The defendants will bear 100 per cent of the costs of compliance with Order 2(a), (b), and (c). The essential activity in these matters will be undertaken by the defendants: remarking the easement - (a), implementing Mr Ken Hollyoak's recommendations - (b), and erecting a loading's/unloading zone sign - (c). It can be anticipated that a limited degree of professional monitoring of the correctness of the work done by the defendants on these matters will need to be undertaken by the plaintiffs. For example, the plaintiffs may need to engage or re-engage their own professional engineers to check the work that has been done. Such engagement and checking will be at the plaintiffs' own expense. These reasons are given to explain the Court's understanding of the effect of the existing orders made on 31 May and 23 July 2019, to ensure that unnecessary disputes do not break out between the parties.
As to Order 2(d), the continuing cost of ensuring that goods are loaded or unloaded on the first defendant's property is, by the orders, the defendants' responsibility and will be at the defendants' cost.
Order 2(e) is in a slightly different category to all the other orders. This order envisages that the parties will each engage and instruct their own "suitably qualified experts to determine the exact dimensions and locations within [Easement B]" where a painted box can be marked on the driveway to allow the most efficient loading and unloading of goods or passengers. Each party will bear its own costs of the engagement of an expert to determine the area and location of the box to be painted. The defendants will bear the costs of painting the box.
As to Order 2(f), this is a matter for the continual supervision of the defendants and will be at the defendants' cost.
As to Order 2(h), the erection of the safety mirror, the bollard and the standard traffic signage will be undertaken on or adjacent to the defendant's property and will be at the defendants' cost.
As to the first half of Order 2(i) down to and before the words "and will not invite" the erection and display of the standard signage envisaged will be undertaken by the defendants and will be at the defendants' expense.
The same applies to the first half of Order 2(i). The display of the standard traffic sign referred to in that part of Order 2(i) will be at the defendants' expense.
Orders 4 and 5 of the Orders made on 31 May 2019 create a regime for the collection, retention and exchange of videos of the easement area from the cameras installed on the parties' premises. Implementation of those orders will obviously involve some costs to both parties. The Court envisages that each party will bear its own costs of those activities and they will not be recoverable from either side. The Court is here ordering a mutual regime of co-operation designed to reduce future disputation; a regime which should justly fall on the financial shoulders of both parties equally.
That leaves Order 2(g) and the second part of Order 2(i).
Neither side dispute that the Court had a capacity to allocate the costs of compliance with these two orders on a continuing basis. The defendants referred the Court to my previous decision in Buckley v Timbury (No. 2) [2013] NSWSC 1389 at [10] as an example of this jurisdiction. The matter at issue was the basis upon which the parties should be required to contribute to these costs.
Orders 2(g) and the second part of 2(i) require the incurring of ongoing costs of an accredited traffic controller, either to supervise trucks reversing down the driveway to load or unload on any part of Easement A or B, or where children under the age of 18 are invited to access the premises of OBK using the driveway as access. It is envisaged that the same person or group of persons will be trained for both tasks. As the Court has previously indicated, it is logical that the defendants retain these traffic controllers and that the defendants will ensure that they are properly trained and qualified for this role. In relation to Order 2(g) (heavy vehicle access) the Court explained in its first judgment why some contribution by both sides will be necessary and invited submissions about what that contribution should be: first judgment at [149] - [155]. Similar considerations apply in relation to Order 2(i) (children under 18 to OBK).
But assessment of the contribution is complicated by three factors. First, there is not very clear evidence as to the amount of time that the traffic controllers will be allocated to supervising heavy vehicle access as distinct from supervising persons under the age of 18. Secondly, the basis of apportionment between supervising heavy duty vehicles and supervising under 18 year olds is different. Thirdly, it is undesirable for there to be a separate accounting for each of the two tasks on which the traffic controllers are engaged, heavy duty vehicle supervision and under 18 year old supervision.
Before these issues are discussed one preliminary matter should be clarified. In fixing a contribution the Court is not forecasting the outcome of potential nuisance proceedings. The issue of the amendment of the cross-claim is dealt with in the next part of this judgment. As will be seen from that section of the Court's reasons the bringing of a nuisance claim by the defendants against the second and third plaintiffs is something that may or may not happen in the future. The Court has decided that it should not authorise the bringing of such claim in these proceedings. The bringing or the result of a hypothetical nuisance claim is not a relevant consideration in the exercise of the Court's discretions to fix an appropriate contribution to the future expense of traffic controllers. But the Court has outlined in the principal judgment between paragraphs [88] - [103] a number of matters that arise out of the physical typography of the easements that the Court can take into account in moulding relief, including the parties respective financial contributions to traffic controllers. The parties are referred to that part of the Court's principal judgment.
Of the three issues raised above, two may be dealt with readily. As to the relative usage of traffic controllers for supervising heavy vehicles, or for supervising under 18 year olds, it can be said that it is likely that the traffic controllers will be regularly and continuously engaged in respect of both activities. The relative proportion of both activities is likely to change over time and there seems little point in trying to finally fix relative proportions of those activities other than to say that they are both not insubstantial. This means there is a strong reason for not separating out these two tasks otherwise the accounting exercise that the Court is ordering will become too burdensome. The Court will assess both the allocation of costs of both tasks together, mindful of the differences between them.
Based on paragraphs [78] and [79] of my first judgment, the defendants submit that "a significant level of loading flexibility and safety would have been afforded to Lot 1 in using Easement A if the access to the rear of Lot 1 were not denied to Lot 1 by the Anglesea ramp and associated retaining wall structures". The significant burden of the need for traffic controllers in relation to heavy vehicle access derives from the topography which provides topographical disadvantages to the defendants and topographical advantages at least to Australian Unity Aurora and indirectly to Management. These topographical features effectively force a situation in which the defendants are required to use traffic supervisors for heavy vehicles using Easement A whilst the same topography advantages, at least Australia Unity Aurora, in utilising Easement B. In my view, the Court would be justified in these circumstances of allocating the burden of contribution to traffic controllers for this task more greatly upon the plaintiffs than the defendants.
But using traffic controllers to supervise under 18 year olds the position is the reverse. The access of those individuals to OBK is not impacted in any way by the existence of the ramp to the Anglesea building. The degree of usage of the easement by those persons is a direct result of the defendants' activities in conducting a kitchen attracting relatively high frequency visitation at the site of OBK. The contribution to the cost of traffic controllers to supervise hazards created by that activity should fall more heavily upon the defendants.
But as best as can be foreseen on the evidence the frequency with which traffic controllers will be engaged in tasks of supervising under 18 year olds is likely to be less predictable, and slightly higher, than the frequency with which they will be called upon to supervise heavy vehicle traffic. The heavy vehicle access for garbage removal is more susceptible to scheduling and being kept to a confined time period than the attendance of under 18 year olds at OBK. Moreover, that the visitation times of heavy vehicles at the site are likely to be lower by the nature of the tasks involved and the visitation periods for under 18 year olds. For these reason the Court will allocate a greater responsibility for the making of contribution for the overall costs of traffic controllers to the defendants.
But what should that contribution be? The plaintiffs submitted that they could be required to pay up to 15 per cent of these costs capped at $15,000 per annum. But a capping regime may work injustice to the defendants if the usage of traffic controllers becomes far greater than anticipated.
A simple proportionate formula is appropriate. In my view, the plaintiffs should be required to pay one third of the overall costs of the defendants' provision of the traffic controllers referred to in Orders 2(g) and (i) of the orders made on 31 May 2019.

(3) Amending the Cross-Claim

The next question argued was whether a proposed amendment to the cross-claim should be allowed at this stage of the proceedings.
In paragraph [108] of its first judgment the Court reserved for further consideration whether or not it should permit the cross-claim to be further amended to allow a claim in nuisance to be brought or whether such a claim in tort is to be pursued it would need to be by way of fresh action. After the first judgment the parties exchanged submissions on this issue. By Motion the defendants/cross-claimants sought leave to amend to plead a cause of action in nuisance against each of the plaintiffs, management, LMB, LMA and Australian Unity Aurora.
The Court's aim was to see if this dispute could be quelled in one proceeding. But that appears not to be practicable. The Court having raised this issue in the principal judgment for consideration and having heard submissions, it has nevertheless decided that leave to amend the cross-claim should not be granted for the following reasons.
First, the cross-claimants have given no adequate explanation as to why the amendment is being sought at this late time. The law is clear where a party seeks the exercise of a discretion such as this, a factor of delay such as is present here, will ordinarily require the party seeking the exercise of the discretion to explain the delay: AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; (2009) 258 ALR 14; [2009] HCA 27 at [103].
The construction of the wall commenced on 4 November 2014 and concluded in November 2016. These proceedings were commenced in September 2017. Thus all of the facts that would constitute a cause of action in nuisance were known to the defendants/cross-claimant in November 2016, well over a year before these proceedings were commenced. Mr Lawrance has candidly admitted that the defendants have not advanced any explanation for the delay. In my view, that is a decisive factor in itself against the application to amend.
Secondly, allowing the amendment at this stage cannot achieve an outcome on the existing evidence. Again, Mr Lawrance candidly admitted that if the amendment were allowed he would be obliged to re-open his case on the cross-claim and seek to adduce further evidence about the origins and the course of the alleged nuisance said to be occasioned by LMB and LMA. This would occasion significant delay to the completion of these proceedings and is inconsistent with the no doubt considered forensic decisions that were taken to conduct the proceedings the way they have been structured to date on both sides.
Thirdly, the amendments would occasion significant prejudice to the cross-defendants. Mr Walton SC indicated that Rabbi Slavin would have been cross-examined differently and more extensively from the way that he was had the nuisance issues been in play and that other evidence would have been adduced from the plaintiffs about the nuisance issues. This is understandable. Whilst it is theoretically possible for Rabbi Slavin to be recalled and for that evidence to be allowed, the further delay to the finalisation of these proceedings that would occasion could not readily be compensated by a costs order.
Fourthly, the defendants are, at their choice, free to pursue the nuisance claim to evaluate and decide whether or not to pursue the nuisance claim in separate proceedings. The plaintiffs have indicated that they are not prepared to undertake not to plead a point relying upon Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; (1981) 55 ALJR 621; [1981] HCA 45 ("Anshun") in defence of future proceedings. But such a point may be of little consequence in future proceedings, as causes of action in nuisance accrue on a daily basis. If an Anshun point was available in respect of any nuisance occasioned up to the time these proceedings were commenced, it may not be available in respect of proceedings commenced for later periods. And because of the nature of nuisance proceedings it may be that it was never apt for such proceedings to be run conjointly with these proceedings.
In paragraph [187] of the principal judgment the Court left open the question of whether the cross-claimants wanted to press for the making of declarations on the cross-claim. They have indicated that they wished those declarations to be made and they are included in the orders below.

(4) Costs Orders in the Proceedings

Finally the parties debated what costs order should be made in the proceedings.
The costs of the cross-claim should be dealt with separately. The unamended cross-claim principally related to seeking declarations that the residents of LMA did not have any rights to use Easement B. The correctness of the position being propounded on the cross-claim was not conceded by the plaintiffs until the opening of proceedings and in my view the cross-claimants should have their costs of the cross-claim.
But apart from the cross-claim the plaintiffs submit that the appropriate order is for the plaintiffs to have the costs of the proceedings awarded to them in their entirety. The plaintiffs submit that costs would normally follow the event and here which is taken to be practical outcome of the proceedings. The plaintiffs argue that they essentially obtained the relief sought in their Statement of Claim. The plaintiffs argue that most of the orders they proposed towards the end of the hearing were also made on 31 May 2019. And the plaintiffs say that to the limited extent that they did not succeed on any particular issue that it cannot be said that they should be deprived of their costs in respect of such issues because the issues were not "clearly dominant or severable" see Griffith v Australian Broadcasting Corporation (No. 2) [2011] NSWCA 145 at [15].
In response Mr Lawrance submits that this is an appropriate case for each party to bear their own costs. He points out that the relief that was sought in the Amended Statement of Claim was far more restrictive upon his clients' freedoms than the relief which was ultimately granted. For example it would have prevented leaving vehicles for any period of time on the easement which would have prevented loading and unloading. That position was ultimately abandoned in the plaintiffs' written submissions.
The Court has decided that some reduction should be made in the plaintiffs' costs, a reduction of 25 per cent. The reason for this is that much of the evidentiary contest in this case was ultimately directed towards the final form of relief. The detail of the written and oral submissions at the end of the case was focused in considerable degree to issues of relief. Considerable time was occupied upon matters of the fine tuning of relief upon which the plaintiffs were not entirely successful. It is appropriately just for some deduction to be made in their costs for that reason. In my view, the defendants should pay 75 per cent of the plaintiffs' costs of these proceedings, up to today.
The plaintiffs claimed indemnity costs based upon three unaccepted offers made to the defendants on 6 April 2018. They claim indemnity costs after that date. The defendants submit that the offers were sufficiently different from the result achieved that it is not possible to say that the plaintiffs were more successful than the offer that was made. That is a not uncommon feature of offers made in easement cases, where a simple monetary comparison cannot readily be made. But the offer in the 6 April 2018 letter was so different from the outcome of the proceedings that Calderbank principles are not engaged.

Conclusion and Orders

The Court Orders as follows: 1. Order that the text of the Court's orders of 31 May 2019 be varied as follows: 1. Vary subparagraph 2(g) by: 1. Adding the words", but excluding a sports utility vehicle or other four-door passenger vehicle," after the word "capacity" and before the words "is reversing"; 2. Adding the words "up or" after the words "is reversing" and before the words "down the driveway"; 3. Adding the word "such" after the word "when" and before the word "vehicles". 1. Further vary subparagraph 2(g) by adding the words "take reasonable steps to" after the word "will" and before the word "ensure". 2. Vary subparagraph 2(i) by deleting the word "pedestrians" where it immediately follows the word "invite" and, in its place, inserting the words "children under the age of 18" and deleting the word "pedestrians" where it immediately follows the words "supervise those" and, in its place, inserting the word "children". 1. Order the parties bring in Short Minutes of Order within 21 days to reflect any other amendments flowing from these reasons. 2. Order that the costs of compliance with Orders 2(g) and (i) (second part) of the orders of 31 May 2019 be borne as to two-thirds by the defendants and the stay on those orders will end in 14 days. 3. Decline leave to the cross-claimant to file and serve a Further Amended Statement of Cross-Claim in the form provided to the cross-defendants on 25 July 2019. 4. Declare that the Right of Carriageway marked "B" in Deposited Plan 1094020 does not permit the fourth plaintiff to use, or authorise the use of, the land the subject of that Right of Carriageway to access either Lot A in Deposited Plan 913610 or Lot 1 in Deposited Plan 626110. 5. Order that the defendants pay 75 per cent of the first to fourth plaintiffs' costs of these proceedings on the ordinary basis. 6. Decline the plaintiffs' application for an order for indemnity costs. 7. Grant liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 September 2019

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