Gordon and Anor v Lever

Plaintiffs' submissions

1. The Plaintiffs note that the obligation on the applicant to pay the costs of the s 88K proceedings can be displaced if the conduct of the Defendant in the litigation is unreasonable and unfair, and/or has the consequence of increasing costs for the Plaintiff (Shi v Abi-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293). The Plaintiff further notes that nothing in s 88K overrides the obligations of the parties in ss 56-60 of the Civil Procedure Act 2005 (NSW) to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
2. The Plaintiffs state that the Defendants' course of conduct in the proceedings has been entirely unreasonable and inconsistent. They rely on the following actions of the Defendants as reasons for displacing the "presumption" in s 88K(5): 1. The Defendants' change in position in terms filed on 3 December 2018 caused the Plaintiffs to incur significant costs. The Plaintiffs made no allegations that there had been a breach in the rules of natural justice (T32/33). Rather the Plaintiffs submit that there were wasted costs because they had been required to meet evidence about building a causeway (T33/31) which then could not be ordered to be built given the Courts lack of jurisdiction (T30/25-31/13); 2. The Plaintiffs note that the Defendants failed to communicate about material changes in circumstances such as Mr Lever's wife becoming a registered proprietor of the property (T28/16-24; T32/19-38); 3. Failed to engage in meaningful and constructive settlement discussions by either not replying to offers made by the Plaintiffs, or continuing to offer an 'in personam right' that had been clearly rejected by the Plaintiffs prior to the commencement of the litigation. This is particularly unreasonable given that the Defendant's late father had approved the ongoing use of Option 1; 4. The fact the Defendants never disputed, at a practical level, the Plaintiffs' need to access the Defendants' land but consistently resisted an easement; 5. The Defendants persistently resisted the granting of an easement before then proposing to the Court that a particular limited easement be granted; 6. The Plaintiffs' note that the Defendants continued to offer this easement, despite the fact that it was unreasonable and unlawful and therefore could never be built (T30/25-31/13); 7. Engaged a number of experts at considerable expense and incurring significant legal fees that were out of proportion to the sums of money at stake in the litigation, and 8. Engaged a number of experts at considerable expense on issues that were not disputed on appeal and not part of the remitter; 9. The Plaintiffs state that they in fact have done better in the final orders than in the Heads of Agreement, contrary to the Defendants' assertion (T3/1-4).

Defendants' submissions

1. The Defendants submit that under s 88K(5) of the Conveyancing Act, the costs of the proceedings should be payable by the party that applied for the easement. The Defendants note that the Court should only order a contrary order if there has been some type of unreasonable conduct by the parties (Shi v Abi-K Pty Ltd).
2. The Defendants further state that there has been no unreasonable conduct on their part to warrant a contrary order. The Defendants note: 1. The Plaintiffs have always sought a practically unlimited and unnecessary easement over the Defendants' land. The Defendants' ongoing opposition therefore, is not unreasonable; 2. The Plaintiffs are critical of the Defendants refusing various offers. The Defendants note that these offers were simply restatements of their original proposal. The Plaintiffs remain unwilling to countenance any outcome that does not involve the grant of a practically unlimited easement over the Defendants' land; 3. The Plaintiffs offered no assistance to the Court in the 2018 proceedings in determining the factual issues raised by the Court of Appeal; 4. All the expert evidence put on by the Defendants was relevant to the issues before the Court and was in fact relied upon by the Court in its findings; 5. The Plaintiffs prolonged proceedings by seeking to rely on Mr Bewsher's largely inadmissible evidence; 6. All or most of the costs of the 2018 proceedings could have been avoided had the Plaintiffs honoured the non-binding good faith settlement agreement entered into at mediation, that conferred upon the Plaintiffs a better outcome than they ultimately achieved. It is for this reason that the Defendants seek their costs from the date of mediation on an indemnity basis; 7. In response to the Plaintiffs' assertions the Defendants note that they never adopted a binary approach to the litigation, rather they offered up other solutions including particular limited easements, as well as an 'in personam right' (T48/24-33; T49/47-49).

Consideration

1. For the reasons which follow in my view the appropriate order is for the Plaintiffs to pay the Defendants costs on an ordinary basis for both sets of proceedings.
2. In my view s 88K(5) is a bespoke costs provision. It is clear in its intent, namely that applicants for easements under s 88K in addition to any compensation that may be payable, are to pay the costs of the proceedings subject to the Court exercising a discretion to the contrary. Clearly that discretion should be unfettered but exercised judicially. A wide number of factors may well depending on the circumstances be relevant. Sections 56 - 60 of the Civil Procedure Act 2005 are always to be kept in mind.
3. The question that arises is what factors are relevant to a Court's consideration of whether a contrary order should be made to the one contemplated in s 88K(5). In Shi v ABI-K Pty Ltd at [98] Basten JA with whom Barrett and Ward JJA agreed said in relation to s 88K(5): This proceeding was not a claim for damages or any analogous form of compensation; it was a claim for an interest in property for which appropriate compensation was required to be paid. The ordinary rule that the applicant pay the costs of any proceeding reflects the fact that such an applicant for such an order has no right to the grant of an easement over the property of another. Further the rule that the applicant pay the costs relates to proceedings which could only be brought after all reasonable attempts have been made (presumably by seeking agreement) but have been unsuccessful. The statutory scheme is not consistent with the proposition that an applicant can obtain a right to costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement. The property owner is entitled to refuse to consent to the easement whereby requiring the applicant to satisfy a court as to the various pre conditions including questions of the public interest and that the grant of the easement is reasonably necessary in the sense provided by the Section. Unless it has done more than reject reasonable offers of compensation the property owner should not be put at risk of an adverse costs order in those circumstances. The proper order was to require the applicant to pay Mr Shi's costs of the proceedings limited to the costs recoverable by a litigant in person.
4. In Ross Bilton & Ors v Georgia Lidgass [2016] NSWSC 1585 at [17] Rein J considered that making proceedings more expensive, and/or giving patently false evidence or manufacturing a case, or other circumstances analogous to the Court's power to award indemnity costs, are relevant factors in the exercise of a Court's discretion under s 88K(5).
5. It is clear that costs in relation to a particular item or issue may be carved out as being inappropriate or unreasonable. Windeyer J took this course in relation to the costs of valuation in evidence in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15795. Darke J took a similar view in McGrath v Metousis [No 2] 2018 NSWSC 32.
6. Recently, Pembroke J in Rawson v Studholme (2018) NSWSC 1764 made an order that the defendant pay a "significant proportion" of the plaintiff's costs, largely because the defendant had opposed the application on grounds that never had any reasonable prospects of succeeding and that were ultimately abandoned shortly before the hearing. The defendant had caused the plaintiff to put on substantial lay and expert evidence and prepare for a long hearing when the real issues in dispute were far fewer.
7. It cannot be gainsaid that these proceedings have been hard fought. Prior to May 2018 I think it is fair to say the parties' views on the appropriate outcome were diametrical. The Plaintiffs have, since the beginning of the proceedings back in 2017, taken a stance which is to seek a form of easement predicated on a total inability to use as an alternative route, Option 4 as it has come to be known, essentially because it is unsafe and there is, in effect, no lawful means to make it safe. The Defendants on the other hand have resisted for some time the notion of an easement at all and attempted to cajole the Plaintiffs into accepting previously existing informal arrangements which fell short of granting an easement.
8. However towards the conclusion of the first set of proceedings in August 2017 the Defendants purported to accept the principle of an easement, albeit a limited one. Because it came at the very end of the proceedings I was unable factually finally to deal with the matter at that point and directed that further evidence be obtained possibly from an expert. However I did grant a form of easement, thought ultimately by the Court of Appeal to be inappropriate.
9. The 2018 proceedings followed a mediation which took place on 11 May of that year. Non-binding Heads of Agreement were produced as a result of the mediation. Although not ultimately acceptable to the Plaintiff, as is clear from the Heads of Agreement (TB86), the Defendants offered the Plaintiffs both a form of easement and an in personam right to be created by Deed. The form of easement offered was at a very high level, and was not then precisely crafted.
10. The approach I adopted in the second set of proceedings, although there was significant argument on both sides about the nature of the proposed expert evidence each side deployed, was to take a relatively liberal approach as to the evidence which each side wished to rely upon.
11. The Plaintiffs' expert Mr Bewsher purported to express views on a number of issues, which in my view went beyond his expertise. He undoubtedly had expertise in the area of flood risk management, as well as on environmental planning and environmental impact assessments (Judgment 14 December 2018 at [113]). But in his report he travelled well beyond that expertise into areas such as questions relating to the Council's attitude as to possible construction of the causeway across Option 4, and the attitude of the Department of Primary Industries in relation to the causeway and protected fish species. There can be no criticism if a person who is appropriately qualified expresses views on such matters upon which they have specialised knowledge and/or training. However I found Mr Bewsher sought inappropriately to be a one stop shop.
12. The Defendants sought to meet Mr Bewsher by calling two experts, Mr McElroy an engineer and Mr Patterson an engineer with expertise in hydrology.
13. Given the issues presented to the Court prior to the trial, which focussed very much upon Option 4 both as to what structure if any might be placed across the causeway to render it safe or safer and/or the predictability of water flows in the Richmond River, in my view I am not prepared unduly to criticise either side for the positions they took. A Court will always be able to exercise a discretion on costs if there are unnecessary costs incurred in relation to expert evidence. Clearly where expertise is duplicated and what is being done is simply adding an additional but identical voice to the litigation very few Courts would contemplate allowing the costs of the second expert. However here that is not the case.
14. The Plaintiffs at all times opposed the easement proposed by the Defendants. The Plaintiffs never adopted a different position. In my view the Defendants were entitled to contest the reasonable need of such an easement as contended for by the Plaintiffs. The mere fact that positions may have changed from time to time or even in the course of proceedings, is not unusual in litigation. By its very nature litigation is dynamic.
15. True it is that the Defendants did not ultimately press for an easement in the terms they initially sought. The easement originally contended for in the 2018 proceedings was predicated upon the Plaintiffs undertaking certain works over Option 4. As a result of discussion between myself and Counsel for the Defendants during final submissions, the Defendants conceded that in fact the Court had no power to order the Plaintiffs to spend money on their own land (see [92] of my 2018 judgement in this matter).
16. I do not think, however, that this change caused the Plaintiffs any significant difficulties or prejudice. The Plaintiffs never produced evidence at least, as I understood, that the costs of these proposed works were inhibitive or excessive. Rather, the Plaintiffs position always was, and remains, as contended by Mr Bewsher, that Option 4 was at all times unsafe and that a causeway could never be built for reasons that it would not be approved and/or opposed by either the local Council or the Department of Primary Industries. Apart from Mr Bewsher, no other expert evidence was called by the Plaintiffs on the question of the causeway. Whilst the Defendants' position can correctly be called a change in the position, and although it did indeed happen late in the case, the Plaintiffs' never themselves took the point that the Court did not have jurisdiction until the matter was expressly raised, (see Plaintiffs submissions on remitter [15]). At all times the Plaintiffs resisted the causeway for reasons of safety or that it would not be approved. This position never changed.
17. Whilst there was a measure of consensus arrived at, at the mediation in May 2018, it did not lead to any binding arrangements. Further the agreement although reasonably well developed, clearly would have required a number of additional steps for it to amount to an offer capable of acceptance. Leaving aside an easement more precisely defined, the terms of a Deed had to be agreed. I do not regard the Plaintiffs' inability finally to reach an agreement as amounting to an unreasonable position on their part. I certainly do not regard it as warranting an award of indemnity costs.
18. Equally however I am not persuaded that the Defendants have conducted themselves in any way such as to warrant a departure from the usual order contemplated by s 88K(5). The stance adopted by the Defendants to a large extent aligns with not only my findings of fact, but my ultimate view about Option 4 being a reasonable alternative for much of the year even without a constructed ford or causeway. The form of the easement I granted in effect leaves it essentially in the Plaintiff's hands to make an assessment of whether it is safe to cross at Option 4. That provides the Plaintiffs with a very wide discretion, one albeit it would be necessary to exercise in good faith.
19. Some criticism was made of the fees charged by Mr McElroy. However I do not regard the criticisms as reasonable. Further and more to the point, the submissions were not developed to a level where I could detect the requisite unreasonableness as suggested. It must be recalled that all experts have a paramount duty to the Court, not to their clients and certainly not to the opposing side. They are obliged if they feel it necessary to take such steps as may be required in order to clarify or confirm views that they may well have formed. Some criticism was made because Mr McElroy sought access to the Plaintiffs' property on a second occasion. Instead of a simple agreement being reached it was again thought necessary to have a confrontation even over this matter. That is not in my view an indication of unreasonableness on the part of the Defendants. It is simply a reflection of the fact that this litigation has been hard fought, seemingly at every turn.
20. There can be no suggestion here that the Defendants have for example manufactured evidence or, as I have indicated, in my view unreasonably incurred expenses. Nor do I regard the Defendant's wife becoming a joint owner of the relevant property or the notification of that fact shortly before the hearing unreasonable or frankly of any relevance on the costs issue.
21. Both parties rightly or wrongly directed attention to some matters which turned out ultimately not to be relevant. However by and large all of the evidence was directed in my view relevantly to the question of reasonable necessity. I do not think it is appropriate in all of the circumstances, nor reasonable to provide for any other Order, other than that in both sets of proceedings the Plaintiffs ought to pay the Defendants costs on an ordinary basis.

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