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Cases Cited: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365
Canada Bay Council v Bonaccorso Pty Ltd (2007) 71 NSWLR 424; [2007] NSWCA 351
Chamberlain v Kiloren Pty Ltd [2026] NSWSC 451
Hansen (t/as Derrawee Pastoral Company) v Monterey (Coolah) Pty Ltd [2012] NSWSC 1383
Harrison v Schipp [2001] NSWCA 13
Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133; [1919] HCA 64
Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201
Nadilo v Eagleton [2021] NSWCA 232
One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6
Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306
Scripture Union v Prime Industrial Pty Ltd [2006] NSWSC 38
Vickery v Strathfield Municipal Council (1911) 11 SR (NSW) 354

Category: Costs

Parties: Therese Chamberlain (First Plaintiff)
Mark Chamberlain (Second Plaintiff)
Kiloren Pty Ltd (First Defendant)
Upper Lachlan Shire Council (Second Defendant)
Registrar-General (Third Defendant)

Representation: Counsel:
M Seymour SC / B Collingwood (Plaintiffs)
S Chapple SC / P Lowson (First Defendant)
G Jensen (Second Defendant) `
Solicitors:
WMD Law (Plaintiffs)
JSM Lawyers (First Defendant)
Moray & Agnew (Second Defendant)

File Number(s): 2023/00020908

JUDGMENT

1. This case arises out of a dispute between the owners of neighbouring land at Crookwell in NSW. The details of the dispute and the resolution of the real issues in the case are set out in Chamberlain v Kiloren Pty Ltd [2026] NSWSC 451 (principal judgment) which I handed down on 24 April 2026. I won’t repeat the details here other than is necessary to explain the reasons for the costs orders I will make.

Background

2. By way of background, the case was listed before me for a four-day hearing commencing on 20 April 2026. As at 20 April 2026 the Plaintiffs’ Statement of Claim was the Third Further Amended Statement of Claim which had been filed on 28 October 2025. The title of that document indicates multiple amendments being made by the Plaintiffs since the proceedings were commenced in 2023. A review of the Court file shows that on the occasions when leave has been granted to the Plaintiffs to amend the Statement of Claim it had generally been granted on conventional terms, namely that the Plaintiffs pay the First Defendant’s costs thrown away by the amendment.

3. As at 20 April 2026 the Third Further Amended Statement of Claim made five claims:

4. a claim that the Railway Street Lot, as that term is used in the principal judgment, is a public road;

5. if not, a claim that the Plaintiffs have a personal equity to use it as such, which equity binds the conscience of the First Defendant;

6. a claim that the First and Second Defendants have committed a nuisance by virtue of stormwater drainage most immediately from the First Defendant’s land onto the Plaintiffs’ land;

7. a claim for easements to be imposed by the Court under s 88K of the Conveyancing Act 1919 (NSW) which would burden the Railway Street Lot and benefit the Plaintiffs’ land with certain rights of access; and

8. a claim for easements to be imposed under s 88K which would burden the First Defendant’s land and benefit the Plaintiffs’ land to permit the Plaintiffs to access the First Defendant’s land to construct and maintain drainage infrastructure.

9. There were three defendants named in the Third Further Statement of Claim. The First Defendant is Kiloren Pty Ltd which owns the land adjacent to the Plaintiffs’ land. It is also the registered proprietor of the Railway Street Lot.

10. The Second Defendant is the Local Council. It is the entity in which the Railway Street Lot would be vested in fee simple if, as I have found, it is a public road. It along with the First Defendant was alleged to have committed the nuisance by reason of the drainage of stormwater over the Plaintiffs’ land. It had been added as a defendant in October 2025.

11. The Third Defendant is the Registrar-General. It was also added as a defendant in October 2025. It has filed a submitting appearance except as to costs.

12. When the case was called on for hearing on 20 April 2026 I was informed that the parties were in the process of resolving some but not all of the issues raised by the Third Further Amended Statement of Claim. Adjournments were sought and granted. During the day the parties reached an agreement on some matters. In the first instance, the agreement was set out in a document which was handed to the Court and marked MFI-2. Before coming to the consent orders which had been agreed and which were subsequently made, MFI-2 concluded with a notation of the agreement. The burden of the agreement is that the Council will perform certain drainage works on the land of the Plaintiffs and the First Defendant. The specification for the works is made by reference to an expert report which had been served by the Plaintiffs in the proceedings. The Council’s promise to perform the work is subject to certain rights of consultation with the Plaintiffs and the First Defendant on discrete matters which concern each party. The agreement also imposes an obligation on each of the Plaintiffs and the First Defendant to grant an easement or easements to the Council, as is necessary to carry out and maintain the works.

13. The hearing was adjourned to 22 April to allow the agreement to be finalised. The parties were confident that the hearing could still be completed in the allotted time and they were right. As contemplated by MFI-2, when the hearing resumed the following orders were made by consent:

“1. In relation to the Third Further Amended Statement of Claim filed on 28 October 2025 (3FASOC), dismisses the Nuisance Claim, and the claim under s 88K of the Conveyancing Act 1919 in relation to the 525mm Pipe (the Drainage Claim) (namely paragraphs 5, 6, 7, 9 and 10 of the Relief Claimed and [22]-[43], [44(b)] and [46] of the 3FASOC).

2. As between the Plaintiffs and the Second Defendant, no order as to costs on the basis that each party pay its own costs.

3. Subject to Order 4 below, the Plaintiffs to pay the First Defendant's costs referable to the Drainage Claim under s.88K of the Conveyancing Act 1919 (NSW) as agreed or as assessed.

4. Any question of:-

(a) the payment of the costs of the Nuisance Claim against the first defendant; and

(b) whether the s.88K costs referred to in 3 above should be paid on an indemnity basis,

are reserved for determination by the Court.

…”

9. The case then proceeded to a hearing of the Plaintiffs’ contention that the Railway Street Lot was a public road or, failing that, subject to a personal equity in favour of the Plaintiffs. At the conclusion of submissions on 23 April 2026 I adjourned the hearing until 24 April 2026 when I gave my judgment. I found that the Railway Street Lot is a public road by virtue of an acceptance before 1920 of a dedication before 1906, and that by reason of s 232 of the Local Government Act 1919 (NSW) it vested in fee simple in the Council which became entitled but not obliged to be registered as the registered proprietor. Although it was not necessary to decide, I considered the claimed personal equity and found that there was no basis for it. I made the declaration sought in the Third Further Amended Statement of Claim which resolved the claim that there is a public road. No other relief was sought for that claim other than an order for costs. As certain costs issues have been reserved in the orders made on 22 April 2026, I made orders for the preparation of those issues for further hearing, if necessary.

10. Each of the Plaintiffs, the First Defendant and the Council have now filed written submissions. No party requires a further hearing so the question of costs will be decided on the papers.

Plaintiffs’ submissions

11. The Plaintiffs accept that there should be some breakdown of the issues in the case for the purposes of the costs order. The submissions of all other parties reflect that approach.

12. The Plaintiffs’ submissions focus on a breakdown between the claim that the Railway Street Lot is a public road and the nuisance claim. As for the former, the Plaintiffs rely on r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) for the proposition that costs should follow the event which was in their favour.

13. The Plaintiffs submit that there has been no event for the nuisance claim because that claim was dismissed following a negotiated settlement. The Plaintiffs refer to Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 625; [1997] HCA 6 where McHugh J said at [9]:

“If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.”

14. The Plaintiffs submit that these principles apply on the facts in this case.

15. The Plaintiffs submit that a broad brush division of the issues is 40% for the public road claim and 60% for the nuisance claim. They submit that the First Defendant ought to be ordered to pay 40% of their costs of the proceedings, but give an allowance for nine interlocutory costs orders made against them in the First Defendant’s favour over the last three years, which they reckon to be 7% of the total costs of the proceedings. The 7% figure also includes the First Defendant’s costs of defending the claims for the imposition of a s 88K easement over its land for which costs the First Defendant has a statutory entitlement under s 88K(5). The order against the First Defendant should therefore be for the net costs and they say should be described in the order as 33% of the costs of the proceedings. Beyond that the Plaintiffs submit that there ought to be no order as to costs with the result that each party will bear its own costs of the nuisance claim.

First Defendant’s submissions

16. The First Defendant sees the case differently. It submits that the Plaintiffs should be ordered to pay its costs of the whole proceedings other than in relation to the public road claim, in relation to which there ought to be no order as to costs.

17. The reason put forward for that position is that “the event” of the litigation which costs should follow is that the First Defendant has been successful on all issues other than the public road claim. Central to that submission is the proposition that the Plaintiffs were “unsuccessful” on all other claims. Apart from the personal equity claim, none of the other claims has been determined. The First Defendant nonetheless submits that the Plaintiffs were unsuccessful because the orders made on 22 April 2026 dismissed the prayers for relief in the Third Further Amended Statement of Claim which related to the other claims.

18. The First Defendant further submits that there would be significant injustice to the First Defendant if the Plaintiffs’ success on the public road claim is regarded as “the event”. In support of that contention it refers to the history of the litigation and the fact that the public road claim was only introduced by the amendment in October 2025. It further points out that much of the evidence which the Plaintiffs had served before the introduction of the public road claim was not read and some witnesses were not called at the final hearing, although that is hardly surprising given the amendments to the case in October 2025 and the settlement of the nuisance claim and the s 88K claim for a drainage easement before the witnesses started to be called.

19. In light of the dismissal of the other claims, the First Defendant submits that the Plaintiffs ought to be ordered to pay its costs of the proceedings because UCPR 42.20(1) is engaged. That rule provides:

42.20 Dismissal of proceedings etc

If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which they have been dismissed.

20. The First Defendant submits that there is no reason for the Court otherwise to order for the costs of the nuisance claim. It submits that there is no reason to distinguish the nuisance claim from the “525mm pipe drainage issue”. Although separately pleaded, the Plaintiffs’ evidence “canvassed the issue indistinguishably”. Given that the Plaintiffs must be ordered to pay the First Defendant’s costs of the claim for a drainage easement under s 88K(5), the Plaintiffs ought also to pay its costs of the nuisance claim. The First Defendant further submits that the nuisance claim was “doomed to fail” and by reason of the settlement on 22 April 2026 the Plaintiffs “capitulated”.

21. The First Defendant agrees the costs of the public road claim ought to be addressed separately but submits that there are a number reasons why it ought not to be ordered to pay the Plaintiffs’ costs. It submits that some of the evidence adduced by the Plaintiffs in support of the public road claim was not ultimately found by the Court to support the claim (although the evidence as a whole did). The First Defendant cites Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24] (Beazley, Ipp and Tobias JJA agreeing) for the proposition that the Court may depart from the usual position that costs follow the event if the plaintiff failed to succeed on a particular issue which took up a substantial proportion of the hearing. The First Defendant reviews the relatively short cross-examination of its lay witnesses and submits that the cross-examination was largely if not wholly directed to the unsuccessful personal equity claim.

22. A further reason why the First Defendant says it ought not to be ordered to pay the Plaintiffs’ costs of the public road claim arises from events between 2017 and 2020 when the First Defendant became the registered proprietor of the Railway Street Lot. Upon becoming aware of that development, the Plaintiffs liaised with the Registrar-General about administrative review of a decision which was couched in terms of a decision about the way the Railway Street Lot is described in the newly issued DP 1234442. Ultimately on 13 August 2020 the Registrar-General affirmed its decision and advised the Plaintiff of a right to seek review in the Supreme Court under s 122(3) of the Real Property Act 1900 (NSW). The Plaintiffs did not take that course but rather brought these proceedings.

Determination of costs between the Plaintiffs and the First Defendant

The event of the proceedings is that the Plaintiffs were successful

23. The outcome of the proceedings is that the Plaintiffs have successfully obtained a declaration that the Railway Street Lot is a public road. That is the event for the purposes of UCPR 42.1 because it is the practical outcome of the proceedings: Hansen (t/as Derrawee Pastoral Company) v Monterey (Coolah) Pty Ltd [2012] NSWSC 1383 at [29] (Schmidt J). The fact that other claims were dismissed as part of the settlement on 22 April 2026 does not warrant a different conclusion.

24. Nor does the fact that other claims have been abandoned since the proceedings were commenced in 2023. The First Defendant’s reliance on the Plaintiffs’ history of amendment is misconceived. The fact that other claims were previously advanced and then abandoned and the public road claim was only introduced late in the life of the case does not alter the fact that the claim which the Plaintiffs took to trial was the public road claim upon which they succeeded. The First Defendant already has the benefit of an order for costs thrown away by reason of the amendment in October 2025. It has the benefit of the same orders for earlier amendments. Such orders are made to cure any costs prejudice which a party may suffer from an amendment. The prejudice cured, on terms which presumably were acceptable to the First Defendant or otherwise determined by the Court to be adequate at the time the amendments were made, there is no basis for the First Defendant’s submission that its wasted costs should determine the exercise of the Court’s discretion when making final costs orders.

No reason otherwise to order for the public road claim and the personal equity claim

25. The First Defendant has not demonstrated that there is a basis for the Court to exercise its discretion to make an order other than that the costs follow the event for the claims which were determined at the hearing. By far the predominant issue addressed at the hearing was the Plaintiffs’ contention that the Railway Street Lot is a public road. The claim for a personal equity was a minor argument by which the Plaintiffs sought to achieve a similar outcome which in the event is unnecessary. The Plaintiffs’ personal equity claim took up approximately the same amount of the hearing as the First Defendant’s abandoned argument that conduct by the Plaintiffs was capable of estopping them from asserting that the Railway Street Lot is a public road.

26. Nor is the First Defendant relieved of a costs liability it would otherwise have because of the events between 2017 and 2020. Those events are not relevant to the question of who should pay the costs of the public road claim in these proceedings. By these proceedings the Plaintiffs contended that a public road was created before 1920 which, in accordance with the judgment of Rich AJ in Vickery v Strathfield Municipal Council (1911) 11 SR (NSW) 354 and the NSW Court of Appeal in Canada Bay Council v Bonaccorso Pty Ltd (2007) 71 NSWLR 424; [2007] NSWCA 351 (Mason P, Tobias JA and Young CJ in Eq), sits outside the scope of the Real Property Act 1900. The public right which the Plaintiffs sought to vindicate in these proceedings arose out of the same subject matter as the decisions made by the Registrar-General when issuing a new certificate of title for the Railway Street Lot, but it is a separate matter. As formulated at the final hearing, there was nothing defective about the approach taken by the Plaintiffs. There has never been an application by the First Defendant to have the proceedings dismissed as an abuse of process. The First Defendant does not now submit that the proceedings were an abuse of process.

27. The First Defendant further submits that by reason of the approach taken to these proceedings by the Registrar-General (submitting) and the Council (absent) the First Defendant “became responsible for defending a claim that had its origins in the decision of [the Registrar-General]”. As just explained, the submission is wrong because the public road claim did not have its origins in the decision of the Registrar-General. In any event, the First Defendant was not responsible for defending the public road claim. At all times it was open to the First Defendant to respond to the Plaintiffs’ claims in accordance with its own interests. It chose to resist the public road claim and by reason of that the Plaintiffs have been put to the expense of that claim. The purpose of the costs order is to compensate the Plaintiffs for that expense, not to punish the First Defendant: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J).

28. The order to be made in conformity with UCPR 42.1 is that the First Defendant is to pay the Plaintiffs’ costs of the proceedings.

No order is to be made as to the costs of the nuisance claim

29. Not, however, of the whole of the proceedings. The Plaintiffs do not seek an order that the First Defendant pay their costs of the nuisance claim.

30. Should then the Plaintiffs be ordered to pay the First Defendant’s costs of the nuisance claim? The principle stated by Mason J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin suggests not but that principle must be considered in the light of UPR 42.20. The operation of UCPR 42.20(1) was considered at some length in Australiawide Airlines Ltd v Aspirion Pt**y Ltd [2006] NSWCA 365 where Bryson JA (McColl and Basten JJA agreeing) observed that UCPR 42.20(1) did not have a predecessor in the Supreme Court Rules. His Honour went on to say:

“46 Costs discretions are truly discretionary and are not closely confined by appellate authority; see Oshlack v Richmond River Council (1998) 193 CLR 72 at 84 [31], discussion by Gaudron and Gummow JJ at 81-89 and particularly at 88 [40], and their Honours’ observation on there being no absolute rules. The approach to discretionary powers taken in Oshlack and in Latoudis v Casey (1990) 170 CLR 534 contrasts markedly with the prescriptive view taken in an earlier age appearing from the judgment of Atkin LJ in Ritter v Godfrey [1920] 2 KB 47 at 54 to 62.

47 In a passage which may well have influenced McLaughlin AsJ’s formulation of the exception to the general and normal principle, McHugh J. said in Lai Qin at 625:

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

His Honour went on to refer by way of example to six earlier decisions.

48 This passage from Lai Qin is not readily applicable to decision under r.42.20(1). UCPR r.42.20 is not entirely consistent with McHugh J.'s observation that the proper exercise of the costs discretion will usually mean that the Court will make no order as to costs. Justice McHugh's observations were directed to the discretionary power in O71 r39 of the High Court Rules (Cth), set out in Lai Qin at 623, which was discretionary overall, whereas in contrast r.42.20(1) creates a starting point by requiring “… the plaintiff must pay the defendant's costs of the proceedings …” unless that outcome is displaced by a discretionary decision. It should in my opinion no longer be said that if the moving party, or if both parties have acted reasonably in commencing and defending proceedings the proper exercise of the costs discretion will usually mean that the Court will make no order as to the costs of the proceedings; observance of the starting point under r.42.20 will make this outcome less usual than it earlier was.

49 Justice McHugh’s observation acknowledges the discretionary nature of the power, and does not purport to limit the way the discretion is to be exercised. The usual outcome which McHugh J. indicated is the usual end point, not the starting point, for the exercise of discretion. Cases including Australian Securities Commission V Aust-Home Investment Ltd (to which McHugh J. referred) at 200-202 indicate a range of considerations and outcomes.

50 In One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at 553 Burchett J. said:

[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court’s discretion otherwise than by an award of costs by the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.

51 This passage was cited with approval in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 by Davies AJA at [5]: Mason P and Meagher JA agreed.”

31. Bryson JA went on to say at [53] that UCPR 42.20(1) does not create a presumption about the disposition of costs which must be outweighed. The rule specifies a starting point of consideration when exercising the discretion. The rule states what the costs order will be unless there is a discretionary decision to order otherwise. At the discretionary stage the matters to be considered are little altered.

32. Starting from UCPR 42.20(1), the Plaintiffs submit that the Court ought to exercise its discretion otherwise to order so that there is no order as to costs as between them and the First Defendant. When considering those submissions, the passage set out above in Australiawide Airlines from One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 (Burchett J) makes clear that the Court may take into account the circumstances in which the proceedings were dismissed. The First Defendant submits that the Plaintiffs’ nuisance claim was “doomed to fail” and that the Plaintiffs’ agreement to the settlement should be characterised as a “capitulation” but no evidence is referred to in support of those submissions. To the contrary there is evidence from which the inference may be drawn that the Plaintiffs did not capitulate. The evidence on the costs application includes the terms of the notation which the parties gave to the Court on 20 April 2026 (MFI-2). The terms record that drainage work is to be performed by the Council in accordance with an expert report obtained by the Plaintiffs in these proceedings, and that the First Defendant is to give easements to permit that work to be undertaken and maintained. There is nothing to suggest that the First Defendant is to be paid for the easements over its land. The agreement about the performance of drainage works and the granting of easements is sufficiently closely connected to the dismissal of the Plaintiffs’ nuisance claim and their claim for drainage easements under s 88K that the parties sought to have it noted in the form of orders sought from the Court.

33. In that light, the dismissal of the Plaintiffs’ nuisance claims appears not so much like a surrender but as a response to a supervening event achieved by the Plaintiffs in negotiations with the Council and the First Defendant. In its written submissions on the costs application, the First Defendant accepts that it was a party to the settlement agreement, as is apparent from the First Defendant’s agreement to grant easements. Given that characterisation of the dismissal, in this case the principle explained by McHugh J and described by Burchett J as the “usual end point” is compelling.

34. The First Defendant resists that conclusion by the further submission that there was overlap between the nuisance claim and the “525mm pipe drainage issue”. No evidence is identified to demonstrate overlap. No expert evidence was read at the hearing other than in a minor unrelated respect. Even if demonstrated, any such overlap is not relevant to the exercise of the discretion to order costs. An order for costs in proceedings is made under s 98 of the Civil Procedure Act 2005 (NSW) for the purpose of compensating a successful party for the cost of vindicating (or defending) its rights in the proceedings. As UCPR 42.1 makes plain, such an order is usually an incident of the party’s success in that endeavour. The order for costs contemplated by s 88K(5) of the Conveyancing Act 1919 serves an altogether different purpose, namely to compensate a defendant upon whose land an easement is to be imposed for the costs of protecting its rights in the proceedings by which the imposition is sought. The fact that the First Defendant has a statutory entitlement to its costs for the drainage easement claim does not inform the question whether it should be compensated for the costs it has incurred in defending the nuisance claim.

35. In all the circumstances, I consider that this is an appropriate case for the Court to depart from the starting point in UCPR 42.20(1). Pursuant to the exercise of the discretion there is to be no order as to costs in respect of the nuisance claim.

Costs of the easement claims

36. Order 3 made by consent on 22 April 2026 provided that the Plaintiffs are to pay the First Defendant’s costs referable to the claim under s 88K in relation to the 525mm pipe. Whilst the First Defendant reserved its right to seek those costs on an indemnity basis it has not made any submissions on that topic.

37. In view of s 88K(5) there is no dispute that the Plaintiffs are also to be ordered to pay the First Defendant’s costs of the claim for easements which would burden the Railway Street Lot and benefit the Plaintiffs’ land with certain access rights.

Absent agreement, insufficient basis for the Court to estimate the split

38. The Plaintiffs submit that the orders ought to be framed to achieve a 40:60 split between the costs of the main two claims and a 7% allowance for the interlocutory costs orders plus the costs for the easement claims. The figures appear to be based on impressionistic estimations by the Plaintiffs. Whilst the ambition of a simplified outcome is to be applauded, the reasoning behind the Plaintiffs’ estimates is not exposed in a way which would allow the Court to adopt them without the agreement of the First Defendant. Without reasoning or an agreement, the Court cannot be satisfied that the Plaintiffs’ estimates are fair to the First Defendant.

Determination of costs as between the Plaintiffs and the Council

Plaintiffs’ submissions

39. The Plaintiffs submit that a costs order against the Council is appropriate because it formally denied the existence of the public road in its defence. It further cites Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201 (Basten, Giles and Bell JJA agreeing) and submits that the Council was the most appropriate party to assist the Court on the status of the Railway Street Lot which is a further reason why a costs order should be made against the Council.

40. The Plaintiffs submit that the Council should be ordered to pay half the costs to be paid by the First Defendant. The submissions appear to contemplate a several split between the two active Defendants as opposed to more conventional joint and several costs orders for the whole, leaving the Defendants to seek contribution amongst themselves after the order has been satisfied by payment to the Plaintiffs: Scripture Union v Prime Industrial Pty Ltd [2006] NSWSC 38 at [28]-[29] (McDougall J). The conventional order better serves the purpose of a costs order, namely to compensate the successful plaintiff and not to punish the unsuccessful defendant: Oshlack at [67]; Nadilo v Eagleton [2021] NSWCA 232 at [6] (Brereton JA). The Plaintiffs do not say why there ought to be a departure from the conventional position in this case.

Council’s submissions

41. Accepting that costs should follow the event, the Council submits that the event of the claim that the Railway Street Lot is a public road is that the Council is the successful party. In support of that submission it recites a history of the Council initially perceiving that the Railway Street Lot is vested in the Council and that between May 2017 and August 2017 the Council was engaged in a process of formally closing the public road and selling the Lot to the Plaintiffs. “Unbeknown to Council” from December 2016 the First Defendant was engaged in its own process of becoming the registered proprietor of the Railway Street Lot by liaising first with Land and Property Information NSW and then with the grandchildren of William Short, which process came to fruition on 11 October 2017 when the grandchildren transferred to Railway Street Lot to the First Defendant. Those steps “thwarted” the Council’s plan to transfer the Railway Street Lot to the Plaintiffs. The Council submits that the First Defendant’s actions were the genesis of the litigation and, for the purposes of costs, the “real cause” of the litigation.

42. The Council submits that the outcome of the litigation is that the Council has been restored to the position it was in in 2017. For that reason, the Council submits that it has been successful in the litigation.

43. Despite its success, the Council submits that the appropriate cost order is that it bear its own costs. It further submits that there ought to be no order that it pay the costs of any other party.

44. In further support of that position the Council refers to the fact that it was not joined to the proceedings until the amendments were made in October 2025. It also relies on the fact that on 22 April 2026 it joined in the settlement of the nuisance claim and the claim for drainage easements under s 88K. Given the absence of objection from the other parties, the Council is to be taken to have adduced into evidence a copy of the “Deed of Settlement” which evidently was made in the wake of the document in MFI-2. The Deed will be marked Exhibit CA. Recital C of the Deed states:

“C. The parties acknowledge that they are seeking the following orders from the Court:

(a) The dismissal of the Nuisance and Drainage Claim as between the Plaintiffs and Second Defendant, that each party pay its own costs, and resolves all issues of costs as between the Plaintiff and the Second Defendant in the proceedings;

(b) The First Defendant's costs referable to the Drainage Claim under s. 88K be paid by the Plaintiffs as agreed or as assessed; and

(c) Any question of:

1. The payment of the costs of the Nuisance Claim against the First Defendant; and

2. Whether the s. 88K costs should be paid on an indemnity basis are reserved for determination by the Court.”

45. Apart from Recital C, the operative terms of the Deed do not address the orders to be sought from the Court or the costs of the proceedings. The document in MFI-2 is clearly part of the same transaction as that implemented by the Deed. The orders made on 22 April 2026 are to be construed having regard to the terms of the Deed (and vice versa, having regard to cl 3.1 of the Deed and the reference to the orders in Recital C) (Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133; [1919] HCA 64 at 144 (Isaacs J)). The terms of MFI-2 and the orders made by the Court on 22 April 2026 are set out above.

46. The Council further points out that at the commencement of the resumed hearing on 22 April 2026 it sought to be excused, which it describes as submitting informally with respect to the remaining issues in the case. Counsel appearing for the Council pre-empted that position on 20 April 2026 when the following exchange occurred in Court:

HIS HONOUR: “…Mr Jensen, so you've heard what's been said and is it your client's position that it will submit in relation to the claim that there's a road?”

JENSEN: “Your Honour, our position is we do not wish to be heard and seek–”

HIS HONOUR: “Because if there is a road, it will affect your client.”

JENSEN: “I understand that, your Honour, but–”

HIS HONOUR: “Very well.”

JENSEN: “–we don't seek to be heard–”

HIS HONOUR: “Very well.”

47. On 22 April 2026 the following exchange occurred:

JENSEN: “If I may, Jensen for the second defendant. May I be excused?”

HIS HONOUR: “Yes, you can take your own course.”

48. The Council thereafter took no further part in the proceedings.

49. Finally, the Council accepts that it denied the existence of the public road but says that it did so in reliance upon a document entitled “Search Report” dated 16 August 2017 signed by MJ Armstrong & Co. The Search Report stated that the registered proprietor of the Railway Street Lot was Benjamin Short (Accountant) and William Short and that “there is no evidence of any dedication of the part of Railway Street as a public road”. The document then went on to state:

“Note: The records of the LPI are not conclusive as to the status of roads, lanes, etc created in subdivision prior to 1920 (as in this case). Such status may be affected by use by the public or the expenditure thereon of public money.”

50. The Council says that it had no knowledge of its own as to the status of the Lot.

Determination

51. The starting point for the Plaintiffs’ application for a costs order against the Council is Order 2 made on 22 April 2026 that there be no order as to costs as between the Plaintiffs and the Council. Unlike the other orders made on 22 April 2026, Order 2 is not qualified by reference to any particular claim in the proceedings. It conforms to Recital C of the Settlement Deed which recited that each party is to bear its own costs of “all issues”. Objectively viewed, the evident frame of the settlement was that the nuisance claim and the claim for drainage easements would be resolved on the terms noted in MFI-2, that the Council would withdraw from the proceedings and that there would be no order as to costs between the Plaintiffs and the Council. That is the subjective understanding which the Council had of the settlement, as stated in paragraph 5 of its written submissions on costs dated 2 June 2026 (although, cf paragraph 60).

52. There is nothing in the Plaintiffs’ submissions which warrants Order 2 being varied. Although the Council denied that the Railway Street Lot was a public road, it was not an active contradictor even before it withdrew on 22 April 2026. I do not accept the submission that the Council was in some way obliged to assist the Plaintiffs to prove their case about the public road. The case turned on disputed questions of fact about dedication and acceptance arising from events over one hundred years ago. The case is far removed from the sort of case which attracts the principle referred to in Mahenthirarasa. It is also relevant that the Plaintiffs are to have a costs order against the First Defendant in respect of the public road claim which means that concern for them to be compensated for the costs which they have incurred in vindicating that claim is less of a consideration then it might otherwise be.

53. The foregoing is sufficient to dispose of the question of the costs order to be made against the Council (there is to be none). However, a number of the Council’s submissions warrant comment. First, no finding has been made about the circumstances in which the First Defendant became the registered proprietor of the Railway Street Lot in October 2017 and how that event interacted with the Council’s then plan to close the road and sell the land to the Plaintiffs. Secondly, all such activity occurred before these proceedings commenced. The history explains why the proceedings were necessary but it is not relevant to the question of costs. The only costs which are being considered are the costs of the proceedings. The only delinquency which is relevant to the costs of the proceedings is delinquency in the conduct of the proceedings and none is suggested: Harrison v Schipp [2001] NSWCA 13 at [133]-[135] (Giles JA, Handley and Fitzgerald JJA agreeing). Thirdly, even if correct, the fact that the Council received the document entitled “Search Report” would not relieve it of any liability for costs it would otherwise have had. Fourthly, in any event the “Search Report” specifically excluded from the statements made in it the circumstances most relevant to this case, namely the events which occurred before 1920.

The Council and the First Defendant

54. The First Defendant does not seek any costs order against the Council.

Costs as relates to the Registrar-General

55. No party seeks a costs order against the Registrar-General.

Orders

56. For these reasons, the following orders are to be made:

Noting:

A. The costs orders already made in these proceedings up to and including 24 October 2025; and

B. The orders already made by the Court on 22 April 2026 and 24 April 2026:

1. The Plaintiffs are to pay the First Defendant’s costs referrable to the claim for access easements the subject of Prayer 8 and paragraphs 44(a) and 44 of the Third Further Amended Statement of Claim filed on 28 October 2025.
2. There be no order as to costs as between the Plaintiffs and the First Defendant (with the intention that each party bear its own costs) referrable to the nuisance claim the subject of Prayers 5, 6 and 7 and paragraphs 22-43 of the Third Further Amended Statement of Claim filed on 28 October 2025.
3. The First Defendant otherwise pay the Plaintiffs’ costs of the proceedings.
4. The Third Further Amended Statement of Claim filed on 28 October 2025 is otherwise dismissed.

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