Johnston v Cutbush

Parties: Skye Noel Johnston (Applicant)
Peter William Cutbush (First Respondent)
Shachi Estler (Second Respondent)

Representation: Counsel:
LA Walsh (Applicant)
C Simpson (Respondents)
Solicitors:
Castrikum Adams Legal (Applicant)
Somerville Laundry Lomax (Respondents)

File Number(s): 2024/00238835

Publication restriction: Nil

JUDGMENT

Nature of Proceedings

1. These proceedings concerned an application under the Encroachment of Buildings Act 1922 (NSW) (the Act) for the removal of structures on the Applicant’s land in the locality of Rosebank. The Respondents are the encroaching owners.

2. Commissioner Gray determined the substantive proceedings in Johnston v Cutbush [2025] NSWLEC 1482 (the Substantive Decision), requiring the Respondents remove the structures from the Applicant’s land.

3. The Applicant now seeks that the Respondents pay the costs of the substantive proceedings and the hearing on costs. The Respondents opposes such an order or alternatively seeks an order that the Respondents pay one-third of the Applicant’s costs.

Facts

4. In October 2022, the parties attended mediation and entered into heads of agreement (HoA). On 11 July 2023, the Applicant’s solicitor notified the Respondents that the Applicant no longer wished to proceed with the HoA.

5. On 28 June 2024, the Applicant commenced the Class 3 proceedings under the Act.

6. On 7 July 2025, the Commissioner delivered the Substantive Decision. At [3] of the Substantive Decision the Commissioner identified the structures the subject of the application under the Act (the Structures):

3 The structures that arise for consideration include the following:

(1) A detached studio that encroaches onto the applicant’s land by up to 5.57m (including its eaves), which is equipped with a solar hot water system, air conditioning units, 2 satellite dishes and a TV antenna;

(2) A detached building containing a waterless composting toilet (WCT) located wholly on the applicant’s land but that services the studio and is connected to it by a paved area and underground electrical conduit;

(3) A grey water tank that forms part of a system of sewage management, located wholly on the applicant’s land but connected to the WCT by underground pipework and to a reed bed and absorption trenches located on the respondents’ land; and

(4) A detached wooden shed located wholly on the applicant’s land but connected to the studio by a paved area.

7. The Applicant sought an order pursuant to s 3(2)(c) of the Act, by way of an amendment to the Class 3 Application for the removal of the Structures (excluding the wooden shed). Alternatively, the Applicant sought an order for the transfer of land the subject of the building encroachment.

8. In finding at [82] of the Substantive Decision that those Structures enlivened the jurisdiction under s 3 of the Act, the Commissioner determined that the Respondents remove the Structures within 60 days of the orders (the Orders).

9. On 14 August 2025, the Applicant filed an Amended Notice of Motion seeking its costs on the terms summarised below (Costs Motion):

10. Pursuant to s 14 of the Act, the Respondents pay the Applicant’s costs of the proceedings as agreed or assessed; and

11. An order that the Respondents pay the Applicants cost of this motion.

12. On 5 September 2025, the Respondents filed a Notice of Motion seeking an extension of time for compliance with the Orders pursuant to r 7.3 of the Land and Environment Court Rules 2007 (NSW).

13. On 24 September 2025, by consent, the Commissioner granted an extension of time for compliance with (1)(a) and (1)(c) of the Orders to 15 October 2025. The Commissioner noted the Applicant’s agreement to grant limited access to the Respondents via the driveway on the Applicant’s land for the purpose of dewatering the grey water tank referred to in (1)(c) of the Orders.

14. The Commissioner listed the Costs Motion for hearing on 15 October 2025.

Costs pursuant to the Encroachment of Buildings Act

13. Section 14 of the Act provides:

14 Costs

In any application under this Act the Court may make such order as to payment of costs charges and expenses as it may deem just in the circumstances and may take into consideration any offer of settlement made by either party.

14. Section 15 of the Act provides:

15 Rules and practice

(1) Rules of Court may be made for the practice and procedure of the Court in applications under this Act.

(2) The practice and procedure of the Court shall, except so far as they are inconsistent with this Act or any rules of Court, apply to applications under this Act.

15. The Civil Procedure Act 2005 (NSW) (CP Act) and the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) make provision with respect to costs in proceedings such as those commenced under the Act.

16. Section 98(1) to (4) of the CP Act provides:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act—

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court.

(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.

(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to—

(a) costs up to, or from, a specified stage of the proceedings, or

(b) a specified proportion of the assessed costs, or

(c) a specified gross sum instead of assessed costs, or

(d) such proportion of the assessed costs as does not exceed a specified amount.

17. Rule 42.1 of the UCPR provides that:

42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

18. From a consideration of the legislative regime, the provisions of s 98 of the CP Act and r 42.1 of the UCPR are not inconsistent with the provision of s 14 of the Act provided that in determining the costs discretion the Court takes into consideration what is just in the circumstances and any offers of settlement.

Evidence at the Costs Hearing

19. At the hearing on costs, the Applicant read the affidavits of Mercedes Castrikum affirmed on 1 August 2025 and 14 October 2025. The Applicant also tendered a bundle of documents exhibited to the affidavit of Mercedes Castrikum affirmed on 14 October 2025.

20. The Respondents read the affidavits of Shachi Estler affirmed on 25 August 2025 and Sol Ibrahim affirmed on 25 August 2025.

Applicant’s Submissions

21. The Applicant’s primary submission was that having been successful in the proceedings she was entitled to an order for her costs.

22. The Applicant contended that there were no circumstances relating to the conduct of the proceedings (or otherwise) that would disentitle her to an order for costs. In response to the matters raised by the Respondents, in particular, the Applicant contended that:

23. The Applicant’s amendment of its Statement of Facts and Contentions on 8 November 2024 was responsive to the information provided by the Respondents at the mediation of the proceedings;

24. The Applicant’s further amendment of its Statement of Facts and Contentions on the first day of the hearing, which removed the requested order that a timber shed be demolished was consistent with the Applicant’s position that the timber shed had been constructed wholly within her land and was therefore not an encroachment. The Respondents, however, continued to rely upon the existence of the timber shed as a relevant matter to consider in the claim that some of the Applicant’s land should be transferred to accommodate the retention of the timber shed; and

25. The Respondents’ reliance upon the Applicant’s decision not to proceed with the HoA is not a matter relevant to the conduct of the proceedings, the position having been made clear prior to the commencement of the proceedings.

26. Having regard to the nature, conduct and outcomes of the proceedings, the Applicant submitted that these factors were not disentitling conduct. The Applicant was still wholly successful in the proceedings and an order for the payment of her costs was just in the circumstances.

Respondents’ Submissions

24. The Respondents accepted that the Court’s discretion under s 14 of the Act was “wide and unfettered” but must nonetheless be exercised in accordance with settled principles, including that costs should normally follow the event: Gabriel v Billett (No 2) [2023] NSWLEC 123 at [22].

25. The Respondents’ position was that the Applicant’s conduct disentitled her to an order for costs, and that there should be either no order for costs, or in the alternative, the Respondents be ordered to pay one-third of the Applicant’s costs.

26. The conduct that the Respondents identified as being disentitling was:

27. The Respondents had incurred an amount in excess of $80,000 in good faith pursuing what they understood had been agreed in the HoA. The Respondents acknowledged that the HoA was not a binding contract and that it was at all times open to the Applicant to resile from the position in the HoA;

28. The Applicant’s conduct, however, in resiling from the HoA was unreasonable in that:

(a) The Applicant changed her mind about the HoA “about the day” after she signed it, but did not advise the Respondents of this for a further 9 months; and (b) The Council agreed to sell the Applicant the land envisaged by the HoA, and sent her a signed agreement to that effect, but the Applicant did not sign or return it to the Council, having decided to abandon the HoA;

3. The Applicant had refused to consider reasonable alternative bases of compromise, such as the purchase of some of her land and the removal of some of the encroachments; and

4. During the course of the proceedings the Applicant raised and then abandoned a number of claims and filed affidavits that were not read at the hearing.

5. Having regard to the circumstances outlined, the Respondents submitted that it would not be just to award costs.

Findings on Costs

28. It is apparent from the orders made in the substantive proceedings that the Applicant was successful in her claim and that in so far as the Respondents contended for alternative relief, they were unsuccessful. In the ordinary course, having regard to the provisions of r 42.1 of the UCPR and s 14 of the Act, the Applicant would be entitled to her costs of the proceedings. Having considered the matters relied upon by the Respondents I do not consider that the Applicant’s conduct would alter this position.

29. As to the amendments made to the Statement of Facts and Contentions, both after the mediation and on the first day of the hearing, I do not consider that such conduct was unreasonable or resulted in the incurring of unnecessary costs or delay. The parties were each contending for different outcomes: the Applicant for demolition of the encroachment and the Respondents for transfer of the land upon which the encroachments were located. The consequence of these two competing positions was that, to some extent, the Applicant’s case was put both as a positive case and a responsive case. The amendments were largely to remove the responsive case, whilst that case was still prosecuted by the Respondents. This change is of little substance in the circumstances of these proceedings. As to the matter relating to the “waste disposal” there was uncertainty as to the nature of the disposal system, which when clarified was no longer pressed. I consider such amendments to be wholly within the usual conduct of the litigation, and the circumstances were not such that it represents a disentitling factor or supportive of a finding that the award of costs would be unjust in the circumstances.

30. As to the HoA, it is true that the Applicant could, and possibly should, have advised the Respondents at an earlier stage that she no longer wished to adhere to the informal arrangements contained therein. However, the HoA and its abandonment were matters unrelated to the proceedings, in that once the HoA was abandoned it was entirely open to the Applicant to commence the proceedings, and such proceedings were ultimately justified, as evidence by the Orders made in the substantive proceedings. The fact that the proceedings would have been unnecessary if the HoA had been adhered to does not operate to impugn the Applicant’s conduct in the proceedings. The same considerations apply to the Respondents incurring the costs with respect to the transfer of land under the HoA.

31. The asserted alternative bases upon which the proceedings may have been resolved all related to the Applicant agreeing to transfer part of her land to the Respondents. The fact that the Applicant declined such an alternative, in the circumstances of this case, is not disentitling. The Respondents raised such a matter for consideration by the Court and such approach was not considered appropriate, as evidenced by the Commissioner’s reasoning in the substantive proceedings and the Orders ultimately made.

32. For the reasons outlined above, the Applicant is entitled to an order that the Respondents pay the whole of her costs of the proceedings.

33. As the Applicant has also been successful in the hearing of the application for costs, she is also entitled to an order that the Respondents pay the costs of the hearing of the application for costs.

Orders

34. The Court orders that:

35. The Respondents are to pay the Applicant’s costs of the proceedings; and

36. The Respondents are to pay the Applicant’s costs of the hearing of the application for costs.

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