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[2026] NSWSC 758
Supreme Court of NSW
2026-06-30
Faulkner J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Laing & Anor v Port Macquarie-Hastings Council & Ors (No 2) [2026] NSWSC 758
Hearing dates: On the papers
Final submissions received 30 January 2026
Date of orders: 30 June 2026
Decision date: 30 June 2026
Jurisdiction: Equity - Real Property List
Before: Faulkner J
Decision: The First and Second Defendants to pay the Plaintiffs’ costs of the proceedings.
The First Defendant to pay the costs of the costs application.
Catchwords: COSTS – Party/Party – two defendants – one defendant filed a submitting appearance part way through proceedings – nature of the claim – status of a public road – declaratory relief necessary – costs ordered on a joint and several basis
Legislation Cited: Civil Procedure Act 2005 (NSW), s 98
Local Government Act 1919 (NSW)
Roads Act 1993 (NSW), ss 16, 17, 107, 145
Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited: Baker v Towle [2008] NSWCA 73
Church of the Foursquare Gospel (Australia) Ltd v New Hope Church Swansea Inc [2019] NSWSC 519
Harrison v Schipp [2001] NSWCA 13
Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) (2014) 86 NSWLR 645; [2014] NSWCA 317
Laing & Anor v Port Macquarie-Hastings Council & Ors [2025] NSWSC 1331
Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11
Scripture Union v Prime Industrial Pty Ltd [2006] NSWSC 38
Seller v Jones [2014] NSWCA 19
Shang v Zhang (No 2) [2007] NSWSC 1355
Category: Costs
Parties: Robert James Laing (First Plaintiff)
Tronmill Pty Limited (Second Plaintiff)
Port Macquarie-Hastings Council (First Defendant)
Sean Bernard McInherny (Second Defendant)
Peter Robert Bugden (Third Defendant)
Judith Anne Bugden (Fourth Defendant)
Cathrowe Nominees Pty Ltd (Fifth Defendant)
June Mary Freeman (Seventh Defendant)
Bernard Bede McInherny (Eighth Defendant)
Michael James McInherny (Ninth Defendant)
Representation: Counsel:
S Hanscomb (Plaintiffs)
G Farland / D de Mestre (First Defendant)
J Doyle (Second Defendant)
Solicitors:
HWLE Lawyers (Plaintiffs)
Marsdens Law Group (First Defendant)
Litigation Specialists (Second Defendant)
File Number(s): 2023/00207217
“The Court declares:
1. That Wharf Road, as it appears on Deposited Plan 1296248 running generally North to South from Telegraph Point Road to the Crown Reserve - as highlighted in yellow in Annexure A to these Orders (Wharf Road), is a public road for the purposes of the Roads Act 1993 (NSW).
2. That Wharf Road is vested in fee simple in the Port Macquarie-Hastings Council.
The Court orders that:
3. Within 90 days, the Second Defendant prepare and lodge with the Registrar-General a plan of subdivision, or such other plan as the Registrar-General is willing to accept, which delineates between Wharf Road and the residue of Lot 1 in Deposited Plan 1296248 (Residue Land) and do all such things required by the Registrar-General for the lodgement of that plan.
4. The Second, Eighth and Ninth Defendants lodge a Request 11R form enclosing a sealed copy of these Orders to the Registrar-General and include a request that, upon the registration of the plan of subdivision, the Registrar-General is to update the folio in respect of Wharf Road to:
a. name the First Defendant in the first schedule; and
b. place a public road notification in the second schedule.
- The First, Eighth and Ninth Defendants do all things necessary to enable the Second Defendant to prepare and lodge the plan required to be prepared and lodged by Order 3.
6. Subject to Order 3 and 4, and pursuant to section 138(3)(c) of the Real Property Act 1900 (NSW), the Registrar-General create:
a. a new folio of the Register in respect of Wharf Road; and
b. to the extent necessary and subject to the form of plan lodged in accordance with Order 3, a new folio in respect of the Residue Land.
7. Subject to Order 3 and 4, and pursuant to section 138(3)(c) of the Real Property Act 1900 (NSW), the Registrar-General record:
a. the First Defendant as the proprietor of Wharf Road;
b. that Wharf Road is a public road; and
c. the Second, Eighth and Ninth Defendants as the proprietors, in equal shares, of the Residue Land.
7A. The Second Defendant apply to the First Defendant for any consent necessary to permit the gate and fence lawfully to remain in its current location.
8. If no such consent is forthcoming within 120 days, then the Second Defendant is to remove the fence and gate located over Wharf Road within 7 days.
9. Grant leave to the First and Second Defendants to lodge submissions in chief on costs by 24 December 2025, such submissions are to consist of no more than three pages (including the signature block), along with any affidavit in support.
10. Grant leave to any party that wishes to make submissions in reply to the submissions on costs referred to in paragraph 9 to lodge submissions in reply by 30 January 2026, such submissions are to consist of no more than 2 pages (not including the signature block), along with any affidavit in support.
11. Costs subsequently to be determined on the papers.
12. Liberty to apply.”
Pursuant to the leave granted in Orders 9 and 10 the Plaintiffs and the First and Second Defendants lodged submissions and affidavits. This judgment concerns the costs of these proceedings.
The details of the case are set out in the principal judgment and are not repeated here except as they relate to costs. In brief, the proceedings concerned a public road on the Wharf Road Alignment running south from Telegraph Point Road to the banks of Hastings River inland from Port Macquarie. The Plaintiffs are the owners of one of the rural holdings along the road.
At trial, they successfully argued that Wharf Road is a public road for the purposes of the Roads Act 1993 (NSW). The First Defendant is the Port-Macquarie Hastings Council which initially played an active role in the proceedings. It filed a Defence and did not admit that Wharf Road is a public road. On 18 February 2025 it filed a submitting appearance save as to costs. The Second Defendant, Mr McInherny, also owns a rural holding along the road. He was the sole contradictor at trial. He denied that Wharf Road was a public road including because Wharf Road is not dedicated nor accepted by the public, that the land was mortgaged and could not therefore be dedicated and that the public road did not survive his indefeasibility of title when he subsequently became a registered proprietor of the Wharf Road Alignment. My consideration of Mr McInherny’s case is set out at [90]-[165] of the principal judgment. None of the arguments put forward by Mr McInherny were accepted at trial.
The effect of my reasons for judgment is that, as early as 1890, Wharf Road was dedicated as a public road at common law, which dedication was accepted by the conduct of the general public by no later than 1 January 1920 when the Local Government Act 1919 (NSW) commenced. Upon commencement of the Local Government Act 1919, Wharf Road vested in fee simple in the local council. Wharf Road continues to be a public road today.
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.
Uniform Civil Procedure Rules 2005 (NSW) r 42.1 establishes the general rule that costs follow the event. The “event” should prima facie be identified as a judgment for a party on the claim: Baker v Towle [2008] NSWCA 73 at [11] (Beazley JA, Basten JA and Mathews AJA agreeing). The rationale of UCPR 42.1 is that the successful party to proceedings should be compensated for the cost of bringing the proceedings: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at [3] (McHugh J). A costs order is not made to punish an unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J).
Rule 42.1 applies unless the Court otherwise orders. The residual discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation: Oshlack v Richmond River Council at [65].
The Plaintiffs were wholly successful in their claim. It is uncontroversial that the event which costs should follow is the declaration that Wharf Road is a public road vested in the Council in fee simple. Mr McInherny disputed the Plaintiffs’ claim. There is no dispute that he is to be ordered to pay the Plaintiffs’ costs of the proceedings. There is no suggestion that the order ought to be on an indemnity basis.
The outstanding issue is whether a costs order ought to be made against the Council and, if so, what order.
The following is a chronology of events relevant to the question of costs.
On 3 June 2022 a solicitor representing a concerned ratepayer wrote to the Council. He said that Wharf Road has for a great many years, by a great many parties, been treated as a public road and that his client was astonished to observe a newly constructed and installed gate on Wharf Road between Hastings Road and Freemans Road. The solicitor requested that the Council “take the necessary action to remedy this anomaly and complete the dedication of Wharf Road” in accordance with s 16 of the Roads Act 1993.
In September 2022 the Council called for formal submissions regarding the status of Wharf Road. On 12 September 2022 solicitors acting from Mr Bugden, the Freemans and the Plaintiffs responded as follows:
“Wharf Road is, and always has been, a public road for which present ownership, control and responsibility is vested in Council; and
In the unlikely event that Wharf Road is not owned by Council, it is Our Instructors' preference that by some means, Council will assume ownership of Wharf Road as a public road and ensure access to this road for the public in perpetuity.”
The Council replied on 9 February 2023 saying that it did not have any evidence or records of maintenance taking place on Wharf Road, any services being provided to Wharf Road or use of Wharf Road by the public at large and, therefore, ownership vested in the successors to the original subdivider.
These proceedings were commenced on 28 June 2023 when the Plaintiffs filed the Statement of Claim. The Council was named as the First Defendant. Mr McInherny was named as the Second Defendant. Six other local landowners were named as Defendants, none of which have ever been active. The Plaintiffs served on the Council the Statement of Claim on 30 June 2023. In that correspondence they said:
“Our clients are deeply frustrated with Council's inaction in respect of Wharf Road. It is a dispute which has its genesis in Council's failure to exercise its regulatory functions under the Roads Act 1993.”
The Council made requests for further and better particulars and documents in June and September 2023. Apart from publicly available title documents and more recent contracts, the particulars sought by the Council went to the allegations of public use of Wharf Road and maintenance by the Council. The Plaintiffs’ responded by saying that there were matters for evidence. Having regard to the terms of the allegations in paragraphs 16 and 18 of Statement of Claim and the nature of the matters alleged, the response of the Plaintiffs was reasonable.
As noted above, on 20 December 2023, the Council filed its Defence to the Amended Statement of Claim in which it did not admit that Wharf Road is a public road.
The parties participated in an unsuccessful private mediation on 19 December 2023, following which the Council stated that “sufficient evidence has not been provided in order to satisfy it that there has been public acceptance of Wharf Road”.
The Plaintiffs served their evidence in the proceedings in March 2024.
On 27 March 2024 the Plaintiffs made a without prejudice offer to resolve the proceedings (the March offer) as between the Plaintiffs and the Council on terms that:
(a) the Plaintiffs would relieve the Council from any costs liability that may be incurred as a result of an adjudicated outcome; and (b) the Plaintiffs would contribute to the upgrade of Wharf Road;
on the condition that the Council undertook to dedicate Wharf Road as a public road for the purposes of the Roads Act 1993. In response, the Council advised as follows:
“it has always been Council’s position that there was insufficient evidence to allow it to accept the dedication of Wharf Road. In the event that evidence became available it would at that time, reconsider its position. Council would appreciate the Plaintiffs’ assistance in this regard as concerns the Plaintiffs’ evidence.”
The Council and Mr McInherny served their evidence in July 2024.
The Plaintiffs made a further offer to resolve the proceedings on 1 October 2024 (the October offer). It referred to the evidence of the parties including council records, state archives, aerial imagery and significant affidavit evidence. The Plaintiffs’ offer was largely in the same terms as the March offer but included an estimate of the costs of upgrading Wharf Road, being $710,000. The Council did not accept the October offer.
The parties participated in an informal settlement conference on 8 October 2024. Ensuing correspondence by the Council relevantly said the following:
“17. It has always been Coun[cil]’s position that it would be guided by the evidence. This position has been communicated to the parties on numerous occasions, including at the first mediation, prior to any evidence having been served
18. Having regard to the evidence now served in the proceedings and the discussions at both mediations, the First Defendant has formed the view that the Plaintiff will likely succeed on the relief sought in the Statement of Claim.
19. Consequently, and as advised at the recent mediation, our client is considering filing a submitting appearance.
20. We also note that the Offer has now expired and the First Defendant intends to enter into further discussions with the Plaintiff in this regard. By informing the parties of its position, the First Defendant otherwise invites all parties to provide their view on the Offer, with a view of an agreement being reached between all parties.”
The Plaintiffs made again an offer to resolve the proceedings in November 2024 on the same terms as the October offer.
The Council entered a submitting appearance save as to costs on 18 February 2025.
On 24 March 2025, representatives for the Plaintiffs made a without prejudice offer to Mr McInherny to settle the dispute on terms that the Plaintiffs will pay Mr McInherny $10,000 and Mr McInherny will enter a submitting appearance in exchange for an agreement between the two parties that each party will bear its own costs in the proceedings. Mr McInherny rejected the offer.
The Plaintiffs contacted the Council on 24 April 2025 stating that “the costs of the litigation will be greatly reduced if the matter is able to be resolved” and sought the “Council’s agreement that it will not seek any costs in these Proceedings in the event the Proceedings are resolved and discontinued” as against both the Plaintiffs and Mr McInherny. The Plaintiffs said that they were “in the course of negotiating a right of way with Mr McInherny” and required that confirmation before the progression of such negotiations. The Council responded on 1 May 2025 seeking further particulars of the proposal to settle the matter. The solicitors for the Plaintiffs told the Council that if it were not willing to agree not to seek costs against the Plaintiffs it will “likely derail any deal, and the Plaintiffs will proceed to hearing”. The Council’s agreement was not forthcoming until the first day of the trial on 24 June 2025.
On the first day of the trial the solicitors acting for the Council informed the Plaintiffs that it would not seek costs against either the Plaintiffs or Mr McInherny in the event that a settlement can be reached “provided that the beneficiaries to the right of carriageway include all landowners who rely on Wharf Road access”. The matter did not resolve.
The trial took place on 24-26 June 2025.
The Plaintiffs, the Council and Mr McInherny have filed submissions and affidavits have been served by the Plaintiffs and the Council which proves the background information set out above. None of the six other Defendants have sought a costs order in his or her favour and no costs order is sought against any of them.
In summary, the parties’ respective position as to costs are as follows:
(a) the Plaintiffs seek a costs order against the Council; (b) the Council submits that no order as to costs ought to be made against it, nor does it seek any costs order in its favour; and (c) Mr McInherny submits that the Council ought also to be ordered to pay the Plaintiffs’ costs.
Having succeeded in their claim, the Plaintiffs submit that the general rule should apply and that the Council should be ordered to pay at least half of the Plaintiffs’ costs until the entry of its submitting appearance on 18 February 2025.
The Plaintiffs first point to numerous occasions before the proceedings commenced when the Council’s conduct demonstrated that it would be necessary for the Plaintiffs to bring these proceedings, including denials that the Council is obliged to maintain Wharf Road, denials that Wharf Road is a public road and a refusal to accept dedication of Wharf Road as a public road. The Plaintiffs point to evidence that the Council ought to have known otherwise, including minutes of the Council meeting on 27 September 1999 which stated that “the former Shire Council maintained Wharf Road until 1980” and advice received by the Council on 31 December 2021 from its solicitors that “it is in Council’s best interests to take formal ownership of these roads by dedicating the roads as public roads”. Having regard to its own prior conduct and its own records, the Plaintiffs further submit that there is no explanation why the Council did not file a submitting appearance until 18 February 2025 by which time there was nothing left to do but run the hearing.
Secondly the Plaintiffs submit that they provided the Council with a fulsome explanation of the legal basis for their claim in response to requests for further and better particulars. They cite the following exchanges:
(a) in September 2022 solicitors for the Plaintiffs set out their case in a submission to the Council; (b) on 6 April 2023 the Plaintiffs served statutory declarations of Mr Freeman and Ms Barrie; (c) on July and September 2023 the Plaintiffs provided further and better particulars in response to requests made by the Council; (d) on 12 December 2023 the Plaintiffs served a position paper and mediation bundle which substantially accorded with their position at the trial; and (e) in March 2024 the Plaintiffs served their evidence to be relied upon at the trial.
The contentions made in these documents demonstrated the Plaintiffs’ likely success at trial. It follows that any suggestion by the Council that it would have filed a submitting appearance earlier but for failures by the Plaintiffs to provide sufficient information should not be accepted.
Thirdly the Plaintiffs submit that the Council cannot absolve itself of adverse costs consequences because of “its obstinate lack of engagement with the Plaintiffs’ historical investigations”. They submit that by failing to conduct a proper search of its own records until July 2024 (by service of the Affidavit of Mr Fish), the Council forced the Plaintiffs to occasion unnecessary costs (by retaining an expert historian).
Fourthly the Plaintiffs contend that the Council significantly increased the costs incurred by the Plaintiffs because the Council failed to accede to without prejudice offers of compromise.
The Council submits that it ought not to be ordered to pay the Plaintiffs’ costs. In support of that position it first submits that it filed its submitting appearance after “several” unanswered requests for particulars and documents. It submits that but for the “belated provision of information” by the Plaintiffs, it would have entered a submitting appearance earlier.
Secondly the Council submits that it made numerous attempts to resolve the dispute. It relies on the following conduct:
(a) a letter by its solicitors in response to the March offer in which it specified that it has insufficient evidence to consider its position but, upon such evidence becoming available, it would reconsider its position (set out above at [20]); (b) a letter by its solicitors in response to the October offer in which it advised the Plaintiffs that it “is considering” a submitting appearance and asked the other parties whether they “would be willing to engage in discussions” (set out above at [23]); and (c) a letter by its solicitors on the first day of the hearing in which it stated that the “Council would endeavour to assist” in reaching an agreed solution and confirmed that it would not seek costs against the Plaintiffs in the event that a settlement can be reached (set out above at [28]).
Turning then to Mr McInherny’s submissions, he contends that the Council has a greater responsibility for the “cause” of the litigation. Mr McInherny submitted in oral submissions on 9 December 2025 that it would be “inappropriate” for the Council to escape a costs order prior to its submitting appearance on 18 February 2025. Mr McInherny says that up until the time the Council filed its submitting appearance he had “said nothing” about the status of Wharf Road because its case was one of indefeasibility.
Mr McInherny also points to conduct before the proceedings. He submits that he relied upon historic and repeated denials by the Council that Wharf Road was a public road when spending money on and carrying out works to maintain and upgrade Wharf Road. He submits that he would not have applied for a certificate of title over Lot 1 of DP 1296248 and that the Registrar-General would not have issued Certificate of Title Volume 5345 Folio 227, and subsequently Computer Folio 1/1296248, but for the Council’s denial. As such, the “event” which “caused” the Plaintiffs to incur costs was the Council’s decades long rejection of calls for it to acknowledge its status as a roads authority and owner of Wharf Road. For that reason, Mr McInherny contends that he ought to pay no costs, or 20% of the costs, until the Council filed its submitting appearance.
The Council has put two reasons why it ought not to be ordered to pay the Plaintiffs’ costs up to the time when it filed its submitting appearance. Its main contention is that it asked the Plaintiffs for further information about the contention that Wharf Road was a public road and that the Plaintiffs gave responses which were not adequate. Superficially this is an unattractive argument because, apart from publicly available title documents and an advertisement (which had already been provided), the relevant information related to the Council’s own activities and the public use of Wharf Road prior to 1920. The Council was in at least as good a position as the Plaintiffs to obtain the information. However, once the Plaintiffs had commenced proceedings in which they had taken on the burden of proving the facts, the Council was entitled to put the Plaintiffs to that work.
They were entitled to do so, but that entitlement does not relieve the Council of its responsibility to pay the Plaintiffs costs if, as has happened, the Plaintiffs were successful in their work and proved the public road. There was nothing in the provision of information to the Council which fairly deprives the Plaintiffs of their entitlement to compensation for the expense to which they were put.
The Council’s second argument as to why it ought not to be ordered to pay the Plaintiffs’ costs is said to be the “numerous attempts by the [Council] to resolve the dispute commercially”. When the communications between the solicitors are read as a whole this argument is unattractive both in form and substance. The correspondence shows a persistent and methodical process of engagement by the solicitors acting for the Plaintiffs by which the Plaintiffs sought to resolve the dispute with initiative, flexibility and money. Multiple letters were written to the solicitors acting for the Council in which the merit of the Plaintiffs’ claim was put forward with clarity, including on 1 October 2024 and 20 November 2024. On each occasion the costs consequences of the dispute not being resolved were set out, including the costs consequences for the Council. The Plaintiffs’ costs were quantified. No material response was given by the Council.
There being no reason to depart from the general position prescribed by UCPR 42.1, the Council is to be ordered to pay the Plaintiffs’ costs at least until 18 February 2025.
“The true position is that the question should be approached not by reference to prima facie expectations but according to an appraisal of the circumstances of the case. In particular, attention must be paid to the context in which the submitting appearance was filed. Pertinent, in that connection, are the following observations of Beazley JA (as she then was) in Nyman v Valmas [1997] NSWCA 235:
"In my opinion, the filing of a submitting appearance does not denote consent to the orders sought. A submitting appearance (both at first instance and in this Court) may be filed for a variety of reasons. The typical situation is where a party has no vested interest in the outcome of proceedings. This typically occurs in statutory appeals where a necessary respondent is the Court or Tribunal from which the appeal is brought. Another is where a party holds funds as a stakeholder or on trust. However, the occasions where a submitting appearance is filed are by no means limited to such obvious circumstances. A party might submit where the costs of appeal outweigh the amount in dispute so that it was too prohibitive or simply not worth the while of a party to contest the matter. The procedure provided by the submitting appearance is a means of facilitating notice to the Court that the party does not propose to put any argument to the court."”
“the filing of a submitting appearance by a party occupying a true adversarial position in a commercial dispute and concerned with nothing but its own economic welfare cannot be allowed to operate as some form of insulation from the costs consequences of requiring the appellant's claim to proceed to curial determination rather than cooperating in a consensual resolution of it.”
In Seller v Jones [2014] NSWCA 19 at [59] McColl JA stated that in considering whether to make a costs order against a submitting defendant, the Court should take into account the contextual circumstances of the litigation and the conduct of the parties. At [92] Basten JA agreed with the orders of McColl JA to dismiss an appeal against a costs order which had been made against a submitting defendant because “it was the activities of [the submitting defendant] which had created the need for the litigation”.
In the first instance it may be said that after the Council filed its submitting appearance the cause of the Plaintiffs incurring further costs was the position taken by Mr McInherny to continue to defend the case. However, the position is more complex. There are several related reasons.
The nature of the dispute was the status of Wharf Road which, if the Plaintiffs were correct, is vested in fee simple in the Council by virtue of, most recently, s 145 of the Roads Act 1993. That state of affairs not only gave the Council certain rights but also certain responsibilities. An example of the responsibilities which is pertinent to this case is the role given to the relevant road authority in the removal of obstructions to a public road as contemplated by s 107. Mr McInherny had built a gate across Wharf Road. The costs incurred by the Plaintiffs in these proceedings have assisted the Council to perform its obligations.
Further, the nature of the case was such that the appropriate relief included a declaration. As a public road, Wharf Road has significance beyond the immediate parties to the proceedings. Remedial steps were also said to be necessary which involved the Registrar-General who is not a party to the proceedings. The significance of the need for declaratory relief is that the Court will not make a declaration by consent without first being satisfied that there is a proper basis for doing so: Church of the Foursquare Gospel (Australia) Ltd v New Hope Church Swansea Inc [2019] NSWSC 519 at [14]-[17] (Bell P). Even if there was no opposition from any of the Defendants, a hearing would have been required in these proceedings unless the Council took its own steps to become the registered proprietor of the Wharf Road Alignment. It may be accepted that, had all the parties agreed, the hearing may not have been as extensive as the contested hearing which ultimately occurred but, given the nature and antiquity of the issues, the hearing would have been substantive. In any event, the Council did not take steps which may have obviated the need for the proceedings, either in part or entirely. The Council’s activities are fairly described as having contributed to the need for the proceedings, including the final hearing.
Another way of looking at the issue is that in view of the Council not taking steps to become the registered proprietor, Mr McInherney’s resistance was not the sole cause of the Plaintiffs being put to the cost of the proceedings after the Council filed its submitting appearance.
Further, the correspondence between the solicitors makes plain that by the time the Council filed its submitting appearance significant costs had been incurred. The Plaintiffs’ own costs were large. I assume that the Council’s costs were lower but some costs must have been incurred by it. It had sought particulars, filed a Defence, filed some evidence and attended two mediations. The solicitors for the Plaintiffs repeatedly asked the Council to agree to a resolution on terms which did not require payment of the Council’s costs. It was not until the first day of the hearing that the Council communicated its willingness to forego its own costs. The solicitor acting for the Plaintiffs accepts that there were other barriers to an agreed resolution, but the Council’s attitude to its costs meant that it contributed to the prolongation of the proceedings after it filed its submitting appearance. The evidence does not reveal when on 24 June 2025 the Council first communicated its position on costs. In any event, the case had been worked up and the three-day hearing commenced on that date.
A further relevant consideration is that the Plaintiffs made a number of offers to the Council to settle the proceedings on terms which would have seen the Plaintiffs bear their own costs. They also offered to contribute to the cost of upgrading Wharf Road. Such offers were made on 27 March 2024, 1 October 2024 and 20 November 2024. In return, the Council was asked to undertake to dedicate most but not all of Wharf Road under ss 16 and 17 of the Roads Act 1993. The Council did not make a material response to any of these offers. It is not necessary to decide whether the result of the proceedings is less favourable to the Council before taking these unaccepted offers into account. The Plaintiffs do not rely upon these offers alone. They are additional circumstances which are relevant to the determination whether a costs order ought fairly to be made against the Council for the period after 18 February 2025.
On the whole, the circumstances in which the Council filed its submitting appearance on 18 February 2025 does not warrant an exercise of the Court’s discretion otherwise to order. The Council is to be ordered to pay the Plaintiffs’ costs of the proceedings.
In reaching that conclusion I have considered the Council’s activities before the proceedings commenced. Both the Plaintiffs and Mr McInherny drew attention to the Council’s adoption of the position in the early decades of the present century that Wharf Road is not a public road. Mr McInherny in particular submitted that the Council’s conduct had caused both he and the Registrar-General to believe that Wharf Road is not a public road. The Plaintiffs’ proceedings are said to have been made necessary by that conduct. Beyond what is said above about the context of the proceedings, care must be taken before a costs order is made based on pre-litigation conduct. The costs which are the subject of a costs order are the costs of conducting the proceedings. It is wrong in principle to base an order for costs on conduct which is separate to the proceedings in which the costs were incurred: Harrison v S**chipp [2001] NSWCA 13 at [134]-[136] (Giles JA, Handley and Fitzgerald JJA agreeing).
In reaching this conclusion I have borne in mind that the purpose of a costs order is to compensate the Plaintiffs for the costs they have incurred in conducting these proceedings. It is no part of a costs order to punish a party.
“28. In my view, where a plaintiff succeeds as against two or more defendants, the ordinary rule that costs follow the event means that the plaintiff should have its costs as against all defendants. That is because the plaintiff, as the successful party, is prima facie entitled to its costs of the action (that being the effect of the application of the general principle) and should not be the party to lose out if one of the unsuccessful defendants cannot or will not meet its share of the costs burden. The cases were considered by Gzell J in Rushcutters Bay Smash Repairs Pty Limited v H McKenna Netmakers Pty Limited [2003] NSWSC 670. His Honour accepted that the general principle was as I have stated it.
- The cases do recognise a situation where the general rule may not apply. That is where one defendant conducts a separate and distinct defence which leads to the incurring of costs that should not be attributed to the joint conduct of the defendants in the defence of the action: Thiess Watkins White Constructions Ltd (in liq*) v Witan Nominees (1985) Pty Limited* [1992] 2 Qd R 452. Gzell J referred with approval to that proposition in Rushcutters Bay Smash Repairs at para [14]. Again, I agree.”
As McDougall J explained, joint and several costs orders against multiple defendants better conform to the purpose of costs orders, namely to compensate the plaintiffs for the costs which have been incurred. A plaintiff’s compensation will not be subject to, for example, one of the defendants becoming insolvent. In accordance with the usual equitable principles, once a plaintiff has been paid the defendants may seek contribution amongst themselves without further concerning the plaintiff.
It is true that Mr McInherny conducted a defence which was separate and distinct from the Council’s defence, in the sense that the Council did not ultimately conduct any defence. But again, the case concerned a public road. The result of the case would bind the Council in the same way as it would bind Mr McInherney. It was not a case where one defendant could conduct a defence in the hope of achieving an outcome which suited it but not the other defendant. In that sense, Mr McInherny’s defence was not separate and distinct from the position taken by the Council.
The Court has a discretion whether to order defendants to pay a plaintiff’s costs other than on a joint and several basis. It may be accepted that the discretion is to be exercised having regard to what is fair and reasonable in all the circumstances. No submissions have been directed to, and it is not otherwise apparent, why it would be fair and reasonable for the Plaintiffs to be exposed to the peril of either Mr McInherny or the Council not meeting a costs order against it. The costs orders are to be made on a joint and several basis.
Mr McInherny submits that the costs orders now to be made ought exclude any costs incurred in relation to a Cross Claim filed by the Bugdens. On 23 June 2025 the Bugdens discontinued their Cross Claim against Mr McInherny and his brothers with no order as to costs. All the McInherny brothers consented to those orders. No party has submitted that those orders ought to be vacated or varied.
Mr McInherny’s submissions to do not reveal how the Budgens’ Cross Claim may affect the costs position as between him and the Plaintiffs. Nor do they explain what is sought. In those circumstances it has not been shown why there ought to be a variation to the orders the Court will otherwise make.
The Plaintiffs submit that they should be awarded their costs in relation to the costs application, in the first instance against the Council or apportioned with Mr McInherny. The Council submits that the parties bear their own costs in relation to the costs application. Mr McInherny makes no submission on the costs of the costs application.
Costs of the application are to follow the event. The Plaintiffs have succeeded in obtaining an order for costs. Mr McInherny has also succeeded in resisting the Council’s submissions that it ought not be subject to a costs orders. The Council is to pay the costs of the costs application.
I make the following orders:
The First and Second Defendants to pay the Plaintiffs’ costs of the proceedings.
The First Defendant to pay the costs of the costs application.
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Laing & Anor
Port Macquarie-Hastings Council & Ors (No 2)
[1990] HCA 59
[1998] HCA 11
(2014) 86 NSWLR 645
(1990) 170 CLR 534
(1998) 193 CLR 72