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File Number(s): 2023/120530

Publication restriction: Nil

JUDGMENT

1. I delivered judgment and made final orders in this matter on 26 March 2025: Harvest Water Management Consultants Pty Ltd v Todd [2025] NSWSC 266 (my earlier reasons). I directed the parties to file and serve submissions and any evidence on the question of costs, which they have now done. These reasons deal with that question.

2. The orders made on 26 March 2025 included the following:

3. Judgment for the plaintiff in the sum of $121,660.43.

4. Declare that the plaintiff has no caveatable interest in the property known as 4/3 Boundary Lane, Tweed Heads NSW 2485.

5. Order that the caveat dealing number AS649496 (the caveat) be withdrawn.

6. Order the plaintiff to pay any costs associated with the withdrawal of the caveat.

7. The order for judgment in the sum of $121,660.43 reflects the plaintiff’s overwhelming success on the main issue in dispute in the proceedings. Order 2 reflects success by the defendant on the question of whether the plaintiff had a caveatable interest in Ms Todd’s Tweed Heads property: see my earlier reasons at [139] to [143]. Orders 3 and 4 reflect success by the defendant on a related question that had become moot by the time of the hearing, namely the validity of the plaintiff’s caveat which should not have been filed without leave under s 74O of the Real Property Act 1900 (NSW): see my earlier reasons at [138].

8. This outcome would ordinarily be thought to entitle the plaintiff to at least the bulk of its costs of the proceedings. Neither party made an offer of compromise or Calderbank offer that would entitle them to anything other than costs on the usual basis.

9. However, the plaintiff has obtained judgment for a sum that is comfortably within the jurisdiction of the District Court. Rule 42.34 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides as follows:

42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court

(1) This rule applies if—

(a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and

(b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants.

(2) If the proceedings could have been commenced in the District Court, an order for costs must not be made unless the Supreme Court is satisfied that the commencement and continuation of the proceedings in the Supreme Court was warranted.

6. Ms Todd submits that neither the commencement nor the continuation of the proceedings in this Court was warranted. She submits that the ‘caveat claim’ was meritless and that the proceedings should have been brought in the District Court. She submits that the plaintiff’s ‘persistence with a defective caveat prolonged the proceedings unnecessarily’.

7. Ms Todd submits that the Court should make no order for the costs of the plaintiff’s claim. She also submits that the Court should order the plaintiff to pay the costs of the cross claim on the indemnity basis.

8. Finally, Ms Todd relies on authority such as Warwick Green Building Pty Ltd v Woodward [2021] NSWSC 362 for the proposition that the plaintiff’s failure to send a letter of demand prior to action should be taken into account on the question of costs. She also relies on authority such as Bates v Lloyd [2005] NSWSC 1253 at [12] and Windgap Foundation Ltd v Solomons [2018] NSWSC 809 at [65] for the proposition that ‘the plaintiff may be at risk on the question of costs if it is shown that the defendant would have conceded’.

9. These last-mentioned submissions can be dismissed out of hand. It is ludicrous to suggest that Ms Todd might have conceded any point at all if she had received a ‘letter of demand’ prior to action. It emerged during the trial that she conceded liability significantly beyond the scope of what she admitted in her defence and yet still she persisted in the litigation. In any event, and more importantly, it is not clear that all of the parties’ correspondence prior to action was in evidence. However, such correspondence as was in evidence included clear demands and the basis for them,

10. More needs to be said about the history of the caveats and the parties’ positions in relation to them.

11. At the time these proceedings were commenced, the plaintiff had lodged a caveat over the Tweed Heads property. That caveat was not defective in form, but the relief sought in relation to it was: see paragraph [145] of my earlier reasons. The lawyers for Ms Todd did not however identify that difficulty. It was not mentioned in the defence, the cross-claim or submissions. Her only point was that the plaintiff did not have a caveatable interest in the property, which is a point on which she ultimately succeeded.

12. During 2024, long after Ms Todd had already filed her cross claim seeking orders that the original caveat be removed, her solicitor served a lapsing notice in relation to it by sending it by registered post to what he thought was the address of the plaintiff’s solicitors. In fact, the plaintiff’s solicitors had moved office and the lapsing notice did not reach them.

13. It was only many months later that the plaintiff’s solicitor learned that the original caveat had lapsed. At that point, he caused a fresh caveat in the same terms to be lodged but without regard to s 74O of the Real Property Act. This is the caveat that counsel for the plaintiff accepted, right from the outset, was defective. But its existence had no bearing on the underlying question of whether the plaintiff had a caveatable interest in the property in the first place. It is that issue, not any issue about the defective caveat, that was the subject of dispute.

14. It follows from all of this that the parties were genuinely in dispute at all relevant times about whether the plaintiff had a proprietary interest in the Tweed Heads property. The fact that Ms Todd raised this issue in her cross claim – in a form more conducive to final relief than had been articulated in the statement of claim – only underscores this point.

15. The fact that proceedings were commenced in the Supreme Court because of a claim that ultimately failed is not of itself a reason to conclude that the commencement of proceedings in the Court was not warranted within the meaning of UCPR r 42.34(2). The claim for a declaration that the plaintiff had a caveatable interest was bad in form. But the claim directly concerned a matter that was and remained genuinely in dispute between the parties, namely whether the plaintiff had a proprietary security interest in the Tweed Heads property. That same dispute was later raised by the defendant’s cross claim. It was a dispute of a kind that would ordinarily be dealt with in this Court. In these circumstances, I am satisfied that the commencement of the proceedings in this Court was warranted.

16. The question of whether the plaintiff was warranted in continuing the proceedings in this Court involves some additional considerations. First, it seems unlikely that the Court would have transferred the proceedings to the District Court where the defendant was seeking orders for the removal of a caveat. I note that the fact of the original caveat lapsing, which occurred at the defendant’s behest around eight months after her filing of the cross claim, did not cause her to abandon the cross claim.

17. Secondly, there is evidence to show that the solicitors for the plaintiff did consider asking for the proceedings to be transferred to the District Court in about December 2024. This seems to have been prompted by the discovery that the caveat had lapsed. However, by that point the matter had been listed for hearing in the Supreme Court for early February 2025. The effect of transferring the proceedings would have been to prolong the dispute significantly, because it would probably have been six to eight months before hearing dates could have been obtained in the District Court. That would not ordinarily be a reason to justify the continuation of proceedings in this Court. However, it is important to remember that Mr Irwin is terminally ill: see paragraph [73] of my earlier reasons. His condition has only worsened in the period since the hearing. His solicitor was justifiably concerned to ensure that the February hearing dates were kept.

18. These considerations are important, but they are not a complete explanation of why the proceedings were not transferred to the District Court. Application could have been made for the proceedings to be transferred long before December 2024 when the plaintiff’s solicitor first seems to have considered the prospect.

19. Nevertheless, in circumstances where the parties were so clearly in dispute as to the existence of a caveatable interest in the Tweed Heads property and where Ms Todd was content to press her claims in that regard even despite the lapsing of the original caveat, I am satisfied that both the commencement and maintenance of the proceedings in the Supreme Court was warranted.

20. It is appropriate for the Court to make costs orders. The orders should reflect the overall outcome of the dispute in the light of the way the litigation was conducted. Overwhelmingly, the hearing concerned the plaintiff’s principal claim for a money judgment. The question of whether the plaintiff had a caveatable interest was an important issue on which Ms Todd succeeded, but it was not the subject of lengthy evidence or argument as compared to the debt issue. The question of the validity of the second caveat occupied no significant Court time at all.

21. I am not prepared to order the costs of the cross claim to be paid on an indemnity basis. Although the plaintiff ultimately lost on this issue, its claim to a security interest in the Tweed Heads property was not so hopeless that the Court should depart from the ordinary rule as to costs in relation to it. I also reject the suggestion that the litigation was unnecessarily prolonged because of the plaintiff’s ‘persistence with a defective caveat’. As already mentioned, the plaintiff readily accepted that the existing caveat was defective in form and that it should be removed. That issue occupied next to no Court time. As I have explained, it was necessary to resolve the underlying issue as to the existence of a proprietary interest irrespective of the existence of the formally defective caveat.

22. In an effort to avoid further dispute between these parties, I do not propose to make separate orders for the costs associated with the statement of claim and those associated with the cross claim.

23. I order the defendant to pay two thirds of the plaintiff’s costs of the proceedings on the ordinary basis.

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