Bryant v Crompton

Costs

1. The issue of costs took up some time at the hearing. The plaintiff seeks an order contrary to the starting position in s 88K(5), which provides that a plaintiff will pay the defendants' costs of an application for a court ordered easement. The plaintiff's primary position was that the defendants should be ordered to pay the plaintiff's costs, or a part thereof. The alternative submission was that there be no order as to costs.
2. I will make an order that there be no order as to costs, with the intent that each party bear their own costs, for the following reasons.
3. The following reasons are by way of summary only, however, and to a large extent I adopt the submissions made by Mr Gunning in writing and orally.
4. In Jeffrey v Adams [2023] NSWSC 1270 at [143]-[145], I set out the principles concerning costs where a successful plaintiff seeks an order that the defendant pay their costs of s 88K proceedings: The relevant principles concerning the operation of s 88K(5) are well known. For example, in Rainbowforce at [181]-[183] Preston CJ at LEC stated (citations omitted): 181 Section 88K(5) of the Conveyancing Act provides that the costs of the proceedings are payable by the applicant for the order unless the Court orders to the contrary. This creates an entitlement in the person affected by imposition of the easement "to have the costs of having it determined by the Court whether the circumstances appropriate for the grant of an easement are established, and the costs of assessing appropriate compensation" ... 182 This entitlement will only be lost if and in so far as the person affected has engaged in unreasonable conduct, such as making the proceedings more expensive… 183 The basis on which costs should be paid is the ordinary basis and not an indemnity basis, unless the conduct of the applicant for the order has been such as to justify an order for indemnity costs… Darke J further elaborated in McGrath v Mestousis (No 2) [2018] NSWSC 32 at [7]-[8] (citations omitted): [7] It is well established that an order to the contrary as envisaged by s 88K(5) may be made where the defendant has engaged in unreasonable conduct, including conduct that has made the proceedings more expensive … [8] In considering the reasonableness of the defendant's conduct, it is necessary to bear in mind that the conduct occurred in response to an application which, if successful, would result in the creation of an interest in the defendant's property. It has been held that s 88K bears a confiscatory nature … In Studholme at [188], Basten JA stated: It is not possible to prescribe the circumstances in which an owner of land will be deprived of his or her costs in resisting an application under s 88K of the Conveyancing Act. Further, departure from the general rule does not entail a particular result. For example, if the court were satisfied that the land owner had acted so unreasonably so as to warrant a departure from s 88K(5), there would be a number of options open. The court could (i) deprive the applicant of some part of his or her costs; (ii) deprive the applicant of all of his or her costs so that neither party would pay costs; (iii) order that the owner pay some part of the applicant's costs; (iv) order that the owner pay all of the applicant's costs to be assessed on the ordinary basis, or (v) order that the owner pay some or all of the applicant's costs to be assessed on an indemnity basis. These options are in ascending order of departure from the statutory position and require increasing degrees of unreasonableness on the part of the owner.
5. In that case, I ordered the defendants to pay the plaintiffs' costs of the proceedings, because of their refusal to allow their neighbours to use a track that had been used for years and where that use had only become necessary because the defendants had built a dam over an existing right of carriageway.
6. There have been other cases where the Court has refused to order a plaintiff to pay a defendant's costs: see eg Crawley v Baxter (No 3) [2023] NSWSC 955 (defendants paid 50% of plaintiff's costs); Swann v Spiropoulos [2006] NSWSC 1016 (no order as to costs).
7. The issue is whether the defendants have relevantly behaved "unreasonably" in the litigation, such as to disentitle them to a costs order under s 88K(5), and if so, the appropriate order.
8. In Studholme v Rawson (2020) 102 NSWLR 490 (Studholme) at [188], Basten J set out the various alternatives for a departure from s 88K(5). Mr Sud also appropriately conceded that the overriding purpose within the Civil Procedure Act 2005 (NSW) is a relevant consideration in the determination of the costs discretion, and that it is appropriate for the parties to bring before the Court only those real issues in dispute.
9. The plaintiff relies on the following conduct to demonstrate the defendants' unreasonableness justifying a departure from a usual s 88K(5) order: 1. The defendants failed to engage in negotiations, for example as to valuation of adequate compensation and the terms of the easement, prior to the commencement of proceedings, including the rejection of an offer. 2. The defendants had the benefit of two expert reports from Mr McElroy, which set out the unviability of the proposed alternative access options prior to the commencement of the proceedings, but still resisted resolving the dispute. 3. The defendants failed to bring forward expert evidence, which contradicted the conclusions of Mr McElroy prior to the commencement of proceedings. 4. The defendants brought forward evidence of several proposed alternative access options, being options B, C, D, E, F and G, which were then abandoned after Mr McElroy had dealt with them, except for Option C. 5. After proceedings had commenced, the defendants' expert, Mr Van Oers, in the joint expert report agreed that the defendants' proposed Option C was unviable and involved significant works, which effectively meant that no viable alternative option was proposed by the defendants.
10. In relation to the first element raised, the authorities provide that a rejection of an offer prior to the commencement of proceedings is not the appropriate test or approach contemplated by s 88K(5) when determining who ought to pay the costs of such an application: see Studholme at [186]-[187] (Basten JA, Bell P and Gleeson JA agreeing).
11. Furthermore, the appropriate value of compensation has not yet been determined, therefore even if such an analysis was relevant here, the Court is not in a position to determine whether the refusal of the compensation proffered by the plaintiff was unreasonable.
12. I consider a real issue here is whether the hearing was prolonged and the litigation was more expensive because of the way the defendants conducted their defence. While it is uncontroversial that a defendant is entitled to put a plaintiff to proof when an application is made under s 88K, I consider that the defendants went beyond that through deploying the expert reports of Mr Van Oers and in fact requiring the experts to attend a view on the first day of the hearing and to give evidence on the second day of the hearing.
13. I do not accept the defendants' submission that Mr Van Oers only resiled from his expert reports, including as to the cost of the necessary works for option A, because of a late concession by the plaintiff. In fact, Mr Bryant in his 22 December 2023 affidavit, which was served on the defendant shortly thereafter, deposed that the use of his land did not extend into logging operations. That evidence was the evidence-in-chief from Mr Bryant. It would have been available to Mr Van Oers when he prepared his 4 February 2024 report. He does not refer to that evidence and instead postulated that option C was preferable to option A, and in providing that opinion considered the comparative costs from his perspective of ensuring that either option was at an appropriate standard to be used by the plaintiff.
14. In the joint report of the experts dated 29 February 2024, Mr Van Oers resiled from his opinion that option C, as explained by Mr McElroy, was viable, but also adopted Mr McElroy's opinion as to appropriate works to be carried out on option A if the use to which option A would be put was consistent with Mr Bryant's evidence.
15. Mr Sud appropriately conceded that criticism may be levelled at his clients for additional costs for the proceedings, but at the earliest from when Mr Van Oers prepared his first report. It is not apparent why Mr Van Oers did not attend the defendant's property in order to properly understand option C, and why his misunderstanding of Mr McElroy's report only occurred at the view on the first day of the hearing.
16. I accept that the plaintiff has incurred significant costs as a result of the defendants choosing to conduct their defence the way they did. The defendants went beyond merely putting the plaintiff to proof, but then at the trial effectively abandoned any alternative easement options and agreed to the works to be carried out in relation to the only remaining option, A.
17. I do not accept the defendants' submission that this merely amounted to the defendants putting the plaintiff to proof, "even if it turned out to be an expensive argument". I consider that, had Mr Van Oers adopted his position by properly understanding the various options from the outset, it would have been unnecessary for a view at the property, and the only debate that would have been necessary was the appropriate terms of the easement over option A, which has occurred today.
18. Further, the defendants' resistance of an easement over option A was based on an unexplained and unquantified concern about an increase in contamination to cattle. Those concerns were not accepted as a basis to refuse the easement in the judgment: Bryant v Crompton at [33] - [37].
19. In the circumstances, I consider it appropriate to make an order that there be no order as to costs in relation to the proceedings.
20. The appropriate orders are: 1. Pursuant to s 88K of the Conveyancing Act 1919 (NSW), an easement, being a right of carriageway, is imposed burdening ­the first and second defendants' land comprised in Lot 69 in DP 751077 and benefitting Lot 101 in DP 751077, over the area of the plan annexed and marked "A" ("Right of Carriageway") and on the terms annexed and marked "B". 2. No order as to the costs of the proceedings, save for the costs of hearing on the terms of the easement and costs and the costs order previously made in relation to the Plaintiff's amended notice of motion filed on 13 November 2023. 3. Order the defendants to pay the plaintiff's costs of the hearing on terms of the easement and costs as agreed or assessed. 4. Within 7 days of the date of these orders, the parties are to agree on a single expert valuer to determine the question of compensation payable under s 88K(4) of the Conveyancing Act, and to provide to the expert the primary Bryant v Crompton judgment, these orders and agreed instructions for the valuation to take place on or before 14 June 2024. 5. If the parties cannot agree, direct each party within 10 days of the date of these orders to submit to the Associate to Peden J the name and curriculum vitae of their proposed expert, for the Court to determine the valuer to be appointed and make further orders. 6. Lists the matter for directions in the Real Property List on 21 June 2024. 7. Liberty to the parties to apply on 3 days' notice setting out the relief sought.