The Court delivered judgment in these proceedings on 29 July 2020 (see Brunton v Hennessy [2020] NSWSC 972). The case concerned various issues in relation to rights of access for two adjoining parcels of land (Lot 2 and Lot 4) near Brewongle, owned by the plaintiffs. The rights of access are described as the Fish River access and the William Lawson Drive access. The proceedings as between the plaintiffs and the second defendant were settled prior to the hearing.
In respect of the first defendant, the plaintiffs alleged:
1. that the first defendant failed to create, and unlawfully interfered with the plaintiffs' use of the Fish River access (Access Issue 1);
2. that the first defendant unlawfully interfered with the plaintiffs' use of the William Lawson Drive access (Access Issue 2);
3. that in breach of the Lot 4 contract, the defendant failed to construct a road of a particular standard along the William Lawson Drive access (Road Issue); and
4. that in breach of the Lot 4 contract, the first defendant failed to install a number of cattle grids along the William Lawson Drive access (Cattle Grids Issue).
Access Issue 1 and Access Issue 2 fell away before the commencement of proceedings (see judgment at [5]). A Transfer Granting Easement form was registered in about mid-August 2019 so as to create the Fish River access. In June 2020 the defendant gave undertakings not to interfere with the plaintiffs' rights of access over the Fish River access and the William Lawson Drive access, and to remove speed bumps he had constructed on the William Lawson Drive access. The undertakings were noted by the Court on 30 June 2020, only a few days before the commencement of the hearing.
Accordingly, the only issues that remained at the commencement of the hearing were the Road Issue and the Cattle Grids Issue. The Court found that there had been no breach of the Lot 4 contract in relation to the construction of the road. It was further determined that the first defendant had breached the contract in failing to install cattle grids, but only nominal damages were awarded.
The plaintiffs indicated at the outset of the hearing that, regardless of the outcome, they wished to make submissions as to costs. Directions were made for the parties to provide submissions with a view to the matter being dealt with on the papers. The Court has considered the submissions that were provided by the plaintiffs (dated 6 August 2020), the first defendant (dated 19 August 2020), and the plaintiffs in reply (dated 4 September 2020).
The plaintiffs submitted that the first defendant should pay their costs reasonably attributable to Access Issues 1 and 2 on the basis that the first defendant capitulated in respect of those claims, or that the first defendant should be deprived of his costs on those issues because he had engaged in disentitling conduct (see Oshlack v Richmond River Council (1998) 193 CLR 72 at [69]; G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263). The plaintiffs accepted that the first defendant should be awarded costs on the Road Issue. In relation to the Cattle Grids Issue, it was submitted that the default position in r 42.1 of Uniform Civil Procedure Rules (2005) should be displaced in the circumstances.
The first defendant submitted that he ought to be regarded as having wholly succeeded on both matters determined by the Court, so he should receive his costs for those issues, which were said to account for about 85% of the overall costs of the proceedings. It was submitted that a plaintiff awarded nominal damages is usually not to be regarded as the successful party in the action (see Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak [2006] NSWSC 1149 per Campbell J (as his Honour then was) at [49]). The first defendant submitted that on general principles the parties should prima facie bear their own costs for Access Issues 1 and 2, which were not the subject of a determination following a hearing on the merits. However, the first defendant argued that when regard is had to an offer of compromise made to the plaintiffs on 17 July 2019, the proper order would be that the plaintiffs pay all of the first defendant's costs of the proceedings.
In reply, the plaintiffs submitted that the offer should be ignored because it made no provision for the resolution of the issues of interference, was expressed to be inclusive of costs, and was only open for 6 business days.
The submissions of both sides essentially approached the question of costs by reference to the outcome of particular issues. That seems to me to be appropriate in the circumstances. If the proceedings are viewed as a whole, neither side should be regarded having won "the event".
In my view, whilst the defendant achieved success on the issues determined at the hearing, the plaintiffs achieved practical success in relation to Access Issues 1 and 2. It seems to me that, having initially persisted with his defence on these issues, the first defendant ultimately capitulated to the plaintiffs. As the first defendant submitted, it is not appropriate for the Court to hold a hypothetical trial to determine which party would have been successful on the question of unlawful interference, especially where the conduct of both sides was put in issue (see Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [31]-[32]). However, without having to embark upon such an exercise, I think that it is clear from the first defendant's conduct in proceeding to create the Fish River access, and the belated proffering of undertakings, that he ultimately abandoned his defence and capitulated to the plaintiffs' claims. The plaintiffs should therefore receive their costs in respect of Access Issues 1 and 2.
It is in my view clear, and apparently accepted by the plaintiffs, that the plaintiffs should pay the first defendant's costs in respect of the Road Issue.
The remaining question is what is the appropriate order for costs in relation to the Cattle Grids issue, for which the plaintiffs were awarded nominal damages. Both parties referred to the decision of Campbell J in Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak (supra)). The first defendant argues that a party awarded nominal damages is not usually considered to be the successful party, and that costs should follow the event on that issue. The plaintiffs submitted that it is appropriate for the Court to exercise its discretion under UCPR r 42.1 to make "some other order" where, as in this case, "some other right is vindicated by the judgment, such as the establishment of a legal right irrespective of whether any substantial remedy is obtained" (Mid-City Skin Cancer & Laser Centre v Zahedi-Anarak (supra) at [52], citing Hamilton J in Ng v Chong [2005] NSWSC 385 at [8]).
Accepting that the first defendant breached a contractual obligation to install cattle grids, the plaintiffs failed to obtain the relief sought, being orders in the nature of specific performance. Merely nominal damages were awarded in circumstances where specific performance was not shown to serve any useful purpose, and the plaintiffs failed to prove that they suffered any loss. There was no practical vindication of the contractual right, or vindication of any other right. In my opinion, the circumstances support a conclusion that the plaintiffs should pay the first defendant's costs in respect of this issue.
Finally, it is necessary to say something about the first defendant's offer of compromise. In my view, the plaintiffs did not act unreasonably in failing to accept the offer. The interference with the plaintiffs' rights to access their property was a significant component of the litigation, yet the offer made no provision for the resolution of those issues. Those issues were later resolved by the acceptance of the first defendant's undertakings. In these circumstances I do not think that it can be said that the first defendant ultimately achieved an outcome more favourable to it than if the offer had been accepted.
For the above reasons, it is my view that the appropriate exercise of the Court's discretion as to costs is that the first defendant pay the plaintiffs' costs in respect of Access Issues 1 and 2, and that the plaintiffs pay the first defendant's costs in respect of the Road Issue and the Cattle Grids Issue.
[2]
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Decision last updated: 25 September 2020