Kessly v Hasapaki

Court of Appeal (NSW)|2015-09-24|Before: Basten JA, Macfarlan JA, Mr P, Biscoe J

Solicitors: Benjamin & Khoury (Appellant) GA Lawyers (Respondent) File Number(s): 2014/340645 Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 3 Citation: [2014] NSWLEC 173; [2014] NSWLEC 174 Date of Decision: 29 October 2014 Before: Biscoe J File Number(s): 2004/30665

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

BASTEN JA: The parties to this appeal own adjoining properties in Sutherland Street, Mascot. The respondent, Mrs Katina Hasapaki, has lived in her house for almost 50 years. The appellant, Mrs Evangelina Kessly (formerly Grustein) has owned the adjoining property for some 20 years.
More than a decade ago, the appellant realised that the respondent's home encroached on her land. In 2004 she brought proceedings in the Land and Environment Court which resulted in orders made by consent on 17 December 2004.
The consent orders included a declaration as to the extent of the encroachment, by reference to a "sketch plan" prepared by a registered surveyor and annexed to the orders. The orders required that the appellant grant the respondent an easement in respect of the encroachment, for which the respondent agreed to pay the appellant an amount of $5,000 and a further amount on account of the appellant's legal costs and disbursements. Of the costs, an amount of $800 was to be paid in advance, with the remainder of the costs and the consideration being payable within seven days of the transfer of the easement.
The amount of costs payable in advance was duly paid. Thereafter, things did not move smoothly. On 11 January 2005 the appellant sent the respondent a transfer annexing a new plan prepared by a surveyor. The new plan was deficient and the respondent declined to execute the accompanying transfer. Following an exchange of correspondence in March 2005, there was no further communication between the parties for almost nine years, until January 2014.
On 25 July 2014, the respondent filed a notice of motion seeking to have the appellant committed for contempt of court. At the hearing of the motion on 29 October 2014 the appellant sought, but was refused, an adjournment [1] and the Court (Biscoe J) proceeded to hear the motion, found the appellant to be in contempt and made consequential orders. [2]

Issues

The present appeal raised two issues: first, there was a challenge to the refusal of the adjournment on the grounds of the appellant's medical condition. Secondly, there was a challenge to the orders with respect to the motion for contempt, in circumstances where the orders made did not reflect those sought on the motion and were made without notice to the appellant. The proceedings having been in Class 3 of the Land and Environment Court's jurisdiction, the appeal is limited to questions of law. [3]
At the commencement of the hearing of the appeal, counsel for the respondent indicated that his client had no interest in maintaining the declaration that the appellant had been guilty of contempt. (He tendered an open offer made to the appellant two days before the hearing, that the appeal could be resolved on the basis that order 2 would be set aside, but the appellant would pay the respondent's costs.) He also noted that there was no purpose in setting aside the procedural orders made on 29 October 2014, which had been carried out, with the result that the easement had been registered over the appellant's land and the certificate of title returned to the appellant. On that approach, the orders which remained in dispute were 7-9, which provided as follows: "7 The applicant is to pay the respondent's costs on an indemnity basis relating to compliance with the above orders. 8 The applicant is to pay the respondent's costs on an indemnity basis of and incidental to the respondent's Notice of Motion for contempt filed on 25 July 2014, which costs are assessable and payable forthwith. 9 The respondent may set off the monies that the respondent becomes liable to pay to the applicant under the Orders made on 17 December 2004 against the costs referred to in Orders 7 and 8 above, or part thereof."
The issues could not, however, be readily separated in this way. The primary judge held that he was "satisfied beyond reasonable doubt that the alleged contempt has been proved." [4] He then stated: [5] "The notice of motion seeks the rather drastic punishment for contempt of committing the respondent to imprisonment."
The judge noted that "the real purpose of the contempt proceedings", namely to give effect to the order for the grant of an easement, could be effected by having the respondent prepare the necessary transfer, and providing for the registrar of the Court to execute the document if the appellant failed to do so. [6] The judge stated that such a course was "quite common in orders in equity for specific performance" and referred to the power permitting such a course, in s 94 of the Civil Procedure Act 2005 (NSW). Critically for present purposes, the judge then stated: [7] "I also propose to impose by way of punishment for the contempt that the applicant pay on an indemnity basis the costs of the contempt proceedings and the costs of the respondent in complying with the orders that I have proposed."
There was no debate in this Court as to whether such an order could constitute an appropriate "punishment" for contempt. It is sufficient to note that what became orders 7 and 8 were imposed by way of punishment for contempt: accordingly, if the finding as to contempt is to be set aside, those orders require reconsideration. (Order 9 was consequential upon the continued operation of orders 7 and 8 and would fall away if they were set aside.) However, these consequences did not necessarily follow from the concession by the respondent that she did not seek to maintain the declaration (as opposed to the finding) of contempt.
The orders which the respondent did seek to defend could only be set aside if they were affected by an error of law. The appellant's case was primarily based on the proposition that the adjournment application had been wrongfully refused, with resultant procedural unfairness to the appellant and the invalidity of all that followed. Although not in the terms put on her behalf, the appellant was correct to assert procedural unfairness in the way in which the hearing proceeded, following the refusal of her adjournment application. To explain that conclusion, and the consequential orders, it is necessary to outline the procedural history.

(a) the laying of the contempt charge

In December 2013, the appellant initiated further steps in the dispute by lodging a caveat on the respondent's title. (The basis for such a step was not explained to the trial judge or to this Court.) On 22 January 2014, the appellant's solicitors wrote to the respondent claiming payment of the amount ordered by the Land and Environment Court. Correspondence continued until 14 May 2014, when the appellant's solicitors ceased to act for her and advised the respondent's solicitors of that fact.
It was tolerably clear by that stage that there was a dispute as to whether the sketch plan attached to the Court's 2004 order correctly reflected the encroachments and as to whether a new plan annexed to the appellant's draft transfer was inaccurate. One course might have been to obtain a further report from a surveyor; if necessary, the Court could have been invited to revisit the consent order. If it appeared that one party had been recalcitrant, the other could have sought an order that the registrar of the Court sign the necessary transfer on behalf of that party.
Steps along these lines were not taken; rather, on 25 July 2014, the respondent filed the notice of motion seeking to have the appellant committed for contempt. Orders were made at a directions hearing on 26 August 2014 that the appellant file and serve any evidence in response to the motion by 15 October 2014.

(b) the hearing of the contempt charge

The contempt charge came before Biscoe J for hearing on 29 October 2014. A solicitor, Mr Gourlie, appeared for the appellant, and sought an adjournment on the basis of medical evidence. Mr Gourlie relied upon his own affidavit sworn the previous day (28 October 2014) which recounted his firm being instructed on 13 October 2014 and annexed medical certificates relating to the appellant. Earlier that month she had undergone an abdominal procedure. One certificate was from her surgeon, pre-dating the operation, which anticipated that it would take "some 4-6 weeks for you to fully recover from the operation." A more recent certificate stated that the appellant had been discharged from hospital (probably on 11 October 2014) and would be unable to attend court "until 25 October 2014". A yet more recent certificate, from a general practitioner, dated 27 October 2014, noted that she was suffering from "headache and dizziness" and would be "unfit for work/study up to and including: 30/10/2014." Her solicitor informed the Court that she was then undergoing scans with respect to that condition.
The adjournment application was made on the basis that the appellant was unfit to attend court and that the solicitor had been unable to obtain instructions from her over the period during which his firm had been acting. No objection was raised as to the affidavit, nor as to the annexures. He was not cross-examined.
During exchanges with Mr Gourlie, the primary judge made it clear that, at least for the purposes of the adjournment application, he was satisfied that the orders had been made but had not been complied with. Nevertheless, he attempted to identify a "way forward" which was, in substance, that adopted in the procedural orders, namely that the respondent should prepare an instrument in registrable form (previously the obligation of the appellant), that the appellant be given a reasonable period to execute it and, if she failed in that regard, the registrar be empowered to do it for her. [8] The judge then noted that Mr Gourlie might have a difficulty in accepting such a course in the absence of his client. The judge then asked: [9] "You say you understand she's off getting scans and things. Where is she? Can she come in within the hour and just see whether we can't resolve it?"
Mr Gourlie asked if he could make a phone call to which the judge replied: [10] "I think that's a good suggestion. That's what I'm a bit minded to do at the moment, because it may be, without having to go down the whole contempt part [path?] and everything else, that if it were to be resolved in the way that I've suggested - which might mean that your client would have to pay the legal costs of preparing this document by the other side and also the costs of today, just prima facie - that without hearing formally a contempt charge and finding, if I find the case proven, that she is in contempt, that it can just be resolved by these further consent orders which I think if the parties back in 2004 had thought it through, would have incorporated such provisions, namely if she doesn't prepare such a document, the other side can and then if she doesn't execute it, the registrar will execute it."
After a further brief exchange with counsel for the respondent, the judge stated: [11] "I'm suggesting something which I think both parties - potentially, anyway - can provide a win for both parties. On the one hand, she avoids the whole risk of contempt proceedings and findings against her. On the other hand, we have a regime whereby, at long last, a document is executed which does reflect that sketch. Because, subject to anything else you might say, as long as those orders are in force - and they are - that sketch plan is what provides the flesh for the orders and must be complied with."
Although Mr Gourlie was given an opportunity to speak to his client over the phone and spoke to his client, he was not able to provide any assurance that she would attend as suggested by the judge. Biscoe J dealt first with the adjournment application, making orders refusing the application and publishing reasons. [12] Mr Gourlie then sought leave to withdraw, which was granted. The judge proceeded to deal with the motion for contempt.
The first order sought by the contempt motion was procedural, namely that the requirement for service of a sealed copy of the judgment be dispensed with; that order was made. Order 2 sought to have the appellant found guilty of contempt for failing to comply with the consent orders of 17 December 2004. Order 3 sought to have the appellant committed to prison. Order 4 was consequential, namely that the sheriff be directed to bring the appellant before the court before taking her to the place of imprisonment. The fifth order sought costs.
The primary judge took the view, quite properly, that the matter should be disposed of expeditiously and in a manner which would resolve the practical problem. Again quite properly, he treated the request for an order for committal to gaol as an excessive response to the unresolved practical problem.
The primary judge then made orders which reflected the usual form of orders designed to deal with non-compliance by one party, as he had foreshadowed. The orders set out at [7] above were made. (According to the copy of the orders provided to this Court, they were not entered until 15 May 2015.)
The substantial issues which had been in dispute between the parties were resolved by the execution by both the appellant and the respondent of a transfer granting an appropriate easement, on 3 December 2014. The transfer, together with the plan, was lodged with the Registrar General on 11 December 2014 and registered on 17 December 2014.

Claim of procedural unfairness

The appellant alleged in this Court that she should have been granted an adjournment on 29 October 2014, based on her "unchallenged" medical evidence. It is true that it was not challenged, but it did not require the grant of an adjournment in the reasonable exercise of the court's discretion. The judge gave proper attention to the medical evidence, the history of the matter (including the directions for filing of evidence which had not been complied with) and the apparent intention of the appellant not to comply with the orders made by consent on 17 December 2004, as revealed in a letter from her then solicitors of 22 April 2014. While a different view of some aspects of these considerations might have been taken by another court, there was no error of law on the part of the primary judge in rejecting the adjournment application.
The real problem lay not in refusing the adjournment application, but in what was said in the course of the hearing and what happened thereafter. It is apparent from the exchanges between Mr Gourlie (for the appellant) and the primary judge, set out at [18] and [19] above, and in particular those parts italicised in the extracts, that the "practical" solution being proffered by the primary judge involved not proceeding to make a finding with respect to the contempt charge, nor to impose a penalty. It was on that basis that Mr Gourlie was given the opportunity to obtain instructions, following which he indicated that his client would not be attending. It was on the same basis that he sought advice from his principal and then sought leave to withdraw.
In those circumstances, it was not open to the primary judge to make a declaration that the appellant was in contempt and impose a penalty on her in her absence. It follows that order 2, being the declaration that she was guilty of contempt, and orders 7-9, obliging her to pay costs assessable on an indemnity basis, should be set aside.

Costs orders - contempt motion

The remaining issues concern the appropriate orders for the costs of the preparation of the transfer and the costs of the contempt motion.
The orders of 17 December 2004 were not in terms varied. The appellant has thus suffered a diminution in the amount she will be paid for the easement, being fixed in accordance with an agreed valuation in 2004. Order 4 made in 2004, which required that the respondent pay the appellant the balance of the appellant's legal costs with respect to the transfer, being a further $800, was also not varied. Nevertheless, as she did not satisfy the condition for the further payment, it is of no consequence. The appellant should now pay the respondent's costs of preparing and registering the transfer of easement.
The costs of the contempt motion raise different considerations. Seeking to deal with the matter by way of a contempt motion, rather than seeking a variation of the original orders, was an ill-considered step. As the judge made plain, the penalty sought would not have been imposed in any event. Further, given the procedural history and in particular some nine years of non-communication, there would have been a lively issue, had the contempt charge been contested, as to whether a declaration should have been made. The procedural orders, being the only orders standing, were proposed by the trial judge and, in effect, not opposed by either party. There should be no order as to the costs of the contempt motion in the Land and Environment Court.

Costs in this Court

Although the respondent asserted that the only purpose of the proceedings was to maintain the costs orders, she has been largely unsuccessful in that regard. The primary basis upon which the appellant challenged the orders below (though not the only basis) was the alleged procedural unfairness in refusing the application for an adjournment. She has been unsuccessful in that regard, but has nevertheless overturned the orders relating to contempt. The appropriate outcome in relation to the costs of the proceedings in this Court is to deny orders in favour of either party.
It may be noted that the respondent made an unsuccessful application for security for the costs of the appeal. That motion was made at a time when the appellant was acting for herself and the notice filed disclosed no grounds. Once the appellant sought leave to file an amended notice of appeal, which leave was granted, the application for security for costs was doomed to fail. The costs of the interlocutory motions were left to be costs in the appeal. It is appropriate that there be no order as to the costs of the respective interlocutory motions.

Orders

The Court should make the following orders: (1) Allow the appeal and set aside orders 2, 7, 8 and 9 made in the Land and Environment Court on 29 October 2014 and entered on 15 May 2015. (2) Order that the appellant pay the respondent's costs of preparing and registering the transfer granting an easement. (3) Direct that those costs may be set off against the payment for the easement required to be paid by the respondent under the 2004 consent orders. (4) Make no order as to the costs of the contempt motion in the Land and Environment Court. (5) Make no order as to the costs of the proceedings in this Court.
MACFARLAN JA: I agree with Basten JA.
SACKVILLE AJA: I agree with Basten JA.

Endnotes

Grustein v Hasapaki [2014] NSWLEC 173 ("adjournment judgment").
Grustein v Hasapaki (No 2) [2014] NSWLEC 174 ("contempt judgment").
Land and Environment Court Act 1979 (NSW), s 57.
Contempt judgment at [30].
Contempt judgment at [32].
Contempt judgment at [33].
Contempt judgment at [34].
Tcpt, 29/10/14, p 9(15)-(20).
Tcpt, p 10(23).
Tcpt, p 10(29)-(40), (emphasis added).
Tcpt, p 11(23)-(30), (emphasis added).
Adjournment judgment. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 October 2015

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