Crosby v Hanley

Leave to discontinue the proceedings

1. When considering whether to grant leave to discontinue proceedings, the Court has a wide discretion to do justice between the parties. It is undesirable to compel a party to litigate against its will, but the Court should also consider whether discontinuance will prejudice the other party, perhaps by removing from them an advantage that they had gained in litigation (see Greaves v CGU Insurance Ltd [2004] NSWSC 912 at [5]-[8]).
2. In the circumstances of this case, the Court will grant leave to discontinue the proceedings pursuant to UCPR r 12(1)(b). The defendants have removed any impediments to the plaintiffs' access to the easement. As such, the plaintiffs have achieved, in a practical sense, what they had sought by commencing these proceedings. Accordingly, the proceedings no longer serve any useful purpose. No relevant prejudice will be inflicted on the defendants if the proceedings are discontinued.

Costs of the proceedings

1. UCPR r 42.19 applies to proceedings that are discontinued under UCPR r 12.1, and it therefore applies here. UCPR r 42.19 provides that unless the Court orders otherwise, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.
2. Accordingly, the usual position is that the discontinuing party pays costs. There must be "some sound positive ground or good reason for departing from the ordinary course" (see Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [54]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [54]).
3. The plaintiffs submit that a departure from the ordinary course may be justified where the defendant has acted unreasonably (see One Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [5]). The plaintiffs submit the defendants acted unreasonably in defending the proceedings "in circumstances where the nuisance caused by them locking of [sic] the gate on the southern side of the channel and erecting the fence was manifest". In that respect, the defendants submit that they "have never denied the Plaintiffs their right to their full access".
4. These submissions invite some assessment of the substantive dispute between the parties, which is whether the defendants caused substantial and unreasonable interference with the plaintiffs' use and enjoyment of the easement. However, where proceedings have been terminated before a hearing, the Court should avoid engaging in a hypothetical trial to determine the issue of costs (see Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622 at 624; One Tel Ltd v Commissioner of Taxation (supra) at [5]). This is not an inflexible rule; the Court may award costs if it is confident that one party was almost certain to succeed if the matter was fully tried (see Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin Lai (supra) at 625).
5. It is also relevant to consider whether the defendants relevantly changed their position. In OPENetworks Pty Ltd v Myport Pty Ltd [2019] FCA 1659 O'Bryan J stated the following at [68]: Where a defendant changes its position so as to give the plaintiff substantively what it sought in the proceeding and thereby renders the proceeding futile, the Court may award costs in favour of the plaintiff… it would be unjust if the plaintiff were denied his or her costs incurred in achieving the relief sought by the commencement of the proceeding.
6. I approach the present dispute in light of these principles.
7. The plaintiffs' claim is for private nuisance, and there are a number of acts said to constitute a substantial and unreasonable interference with the plaintiffs' use and enjoyment of the easement.
8. The defendants placed a gate with a padlock on it near the pump site and did not provide a key to the defendants. The plaintiffs say this prevented them from accessing the pumping station. However, the defendants state in their Defence that the lock was a "dummy lock", intended for security purposes; as a result, the gate was never locked and so the plaintiffs were not denied access to the pumping station. The defendants removed the padlock on the gate soon after plaintiffs filed their Summons. The parties were also in dispute about whether certain other gates were locked by the defendants. However, it is clear that the defendants placed a lock on the gate that had given the plaintiff access to the northern (and western) side of the irrigation channel. It is also clear that the fence erected on the southern side of the irrigation channel narrowed the path alongside the irrigation channel, and was said to inconvenience the plaintiffs in carrying out various works along the easement. In this respect, the plaintiffs seem to have had a strong prima facie case, as there is evidence that the plaintiffs had difficulty manoeuvring in the narrowed path to complete maintenance works on the easement. However, I am not confident that the plaintiffs would have inevitably succeeded on this claim. The interference to the easement is said to arise from the narrowness of the path, and this is a question of degree requiring some precision. The required precision is both factual and legal: the width of the path must be identified, and the terms of the easement must be properly construed so as to determine whether the path is so narrow that it constitutes a substantial and unreasonable interference with the plaintiffs' rights.
9. In my opinion, the plaintiffs were justified in commencing the proceedings. Nevertheless, it has not been shown that the defendants generally acted unreasonably in contesting the proceedings. However, without embarking upon any hypothetical trial involving the determination of factual issues that are or may be in dispute, it is clear that in practical terms the plaintiffs succeeded in obtaining redress so as to satisfy the complaints that led them to commence the proceedings. Over a period of time since the commencement of the proceedings in July 2019, the defendants did a number of things that eventually satisfied the plaintiffs' complaints, and thus removed the need for the proceedings to continue.
10. The defendants submit that they should be entitled to costs because the plaintiffs did not fulfil "rights from mediation" and rejected the "Agreed Deed" from mediation. The plaintiffs submit in reply that those submissions are evidentiary materials that are not in admissible form. The plaintiffs also submit that events transpiring in mediation are privileged, and the plaintiffs have not waived that privilege: Civil Procedure Act 2005 (NSW) s 30(4). I accept the plaintiffs' submissions on this point, and I have not taken into account the assertions concerning the parties' mediation.
11. In my opinion there are good reasons to order otherwise under UCPR r 42.19 so that the plaintiffs do not have to bear the costs of the proceedings (as the discontinuing party). The plaintiffs were justified in commencing the proceedings. The defendants' changes of position by removing the locks and fencing, and constructing the culvert, have obviated the need for the proceedings to continue. The plaintiffs have thereby achieved practical success. I do not think that this practical success should be seen as entirely the result of a capitulation on the part of the defendants. The actions taken by the defendants might not have been motivated by a belief that their legal position was untenable. Nevertheless it is clear, including from some of the admissions contained in the Defence, that the plaintiffs would have almost certainly succeeded in obtaining some relief had the defendants not acted. Moreover, the defendants could have acted more quickly and thus avoided the need for some costs to be incurred. In these circumstances, I have formed the view that the appropriate exercise of the Court's discretion as to costs is to order that the defendants pay one half of the plaintiffs' costs of the proceedings.
12. Accordingly, the Court will: 1. Grant leave to the plaintiffs to discontinue the proceedings pursuant to UCPR r 12.1(1)(b); and 2. Order that the defendants pay one half of the plaintiffs' costs of the proceedings.

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