Marks v Perham

Background

1. Briefly stated, Ms Johnstone, the applicants' solicitor, deposes to correspondence passing between the applicants (and on occasion their solicitors) and the respondent between 20 May and October 2019, which details the applicants' ongoing and developing concerns, commencing with letters seeking a "mutual agreeable solution with regard to [the respondent's] removal of the above trees ...", and, absent such agreement, indicating an intention to commence proceedings to seek orders for the removal of T5 and T7. While there was a suggestion in the correspondence in relation to mediation before the Community Justice Centre ('CJC'), it is apparent that that mediation was intended for the consideration of other matters of dispute between the parties not relating to T5 and T7. The later correspondence from the applicants' solicitors indicated that the applicants had obtained both legal and arboricultural advice.
2. In the respondent's affidavit, he deposes to the fact that subsequent to the proceedings being commenced on 7 August 2019, at a directions hearing before the Assistant Registrar on 24 September 2019, Ms Johnstone indicated that the applicants would not attend a mediation, and that no mediation took place prior to the hearing before the Commissioner on 5 December 2019. The respondent also deposes that a "final open offer" was made by the applicants on 1 October 2019, whereby the applicants' solicitors proposed that if an Application to Remove Trees was lodged with, and approved by, Willoughby City Council ('Council'), the applicants would discontinue the proceedings on the basis that each party pay its own costs; however, if the "final open offer" was not accepted and the applicants were successful in the proceedings, they would rely upon the letter (and previous correspondence) in an application for costs.
3. The correspondence shows that there was disaffection between the parties, apparently not solely related to T5 and T7.
4. The hearing of the motion for costs proceeded by audio visual link (AVL) on 1 May 2020 with Ms L A Walsh, of counsel, appearing for the applicants and Mr D W Robertson, of counsel, appearing for the respondent. Each of the parties provided detailed written and oral submissions.
5. In passing, I note that Mr Perham has been without legal representation until the present hearing of the motion for costs whereas the applicants have, at all material times including at the substantive hearing before the Commissioner, retained solicitors and have been represented by counsel.

Applicants' position

1. The applicants submit that it is fair and reasonable for the Court to make an order for costs for three reasons: first, the respondent acted unreasonably in circumstances leading up to the commencement of the proceedings; second, the respondent acted unreasonably during the conduct of the proceedings; and third, the respondent maintained a defence to the proceedings which did not have reasonable prospects of success.
2. The applicants submit that the correspondence, including letters of 20 May, 28 June, 10 July and 29 August 2019, shows that several attempts to resolve the proceedings were made by the applicants prior to hearing, which included an offer to assist and pay for the removal of the trees to avoid the costs of litigation.
3. The applicants submit that the respondent's response (and lack thereof) to the applicants' attempts to resolve the matter is indicative of the respondent's unreasonable position. The applicants further point to the ongoing denial by the respondent that the trees were in poor health, despite an expert arborist report prepared for the applicants being provided to the respondent to that effect in circumstances where the respondent had not relied upon any expert evidence.
4. The applicants also submit that the defence to the proceedings had no reasonable prospects of success and/or that it was otherwise unreasonable as, first, it was clear that the trees were in poor health and posed a risk of damage (a position maintained by the applicants and with which the Commissioner agreed) and thus resulted in the applicants' largely successful application; second, the respondent's position at hearing was unsupported by expert or objective evidence; third, the applicants' solicitor had advised the respondent that the applicants would be willing to pay for the removal of the trees and associated application to Council, which would be less than the cost of litigation; and fourth, the respondent had been put on notice by the applicants (both prior to and following the commencement of proceedings) that T5 and T7 were in poor health and posed a risk of damage, supported by expert evidence, and that the respondent's maintenance of his position was therefore unreasonable and without reasonable prospects of success.
5. The applicants submit that their unwillingness to participate in mediation in this Court was not unreasonable, given that mediation is not a requirement in Class 2 tree dispute matters and that any mediation was unlikely to be successful given the circumstances of the relationship between the parties.

Respondent's position

1. The respondent submits that the present circumstances do not justify the Court departing from the presumptive rule that no order be made for costs. In summary, the respondent submits first, that the applicants acted unreasonably in refusing requests to attend mediation; second, that the applicants were only partially successful in their application and the Court's refusal to order the removal of T5 demonstrates that such a position was not unreasonable; and third, that the respondent did not unreasonably reject any "offers" made by the applicants.
2. The respondent submits that the applicants' purported offers were merely "invitations to capitulate" and did not involve any element of compromise, as they required the removal of both trees at the respondent's expense. The respondent submits that the outcome of the substantive hearing was a better result than that offered by the applicants, as the offer required the removal of both trees whereas the result of the hearing before the Commissioner only required the removal of one tree and the pruning of the other.
3. The respondent further submits that his failure to accept the applicants' offer to make an application to Council to remove both trees and pay for the tree removal at their own expense was not unreasonable, as at that time the applicants had not provided the respondent with an expert arborist report to support the assertion that both trees were dead and dangerous.
4. The respondent submits that the applicants were "not interested" in mediation and that the applicants have not provided any reasons for their refusal to attend mediation. Although accepting that mediation is not a compulsory requirement, the respondent submits that, as the applicants are requesting the Court to exercise discretion in their favour, their refusal to attend mediation is a reason why such an order would not be "fair and reasonable" in the circumstances.
5. The respondent submits that, overall, he did not act unreasonably in defending the proceedings as he was entitled to do and, further, as the applicants were only partially successful in their originating application, the respondent's opposition to orders sought by the applicants has been vindicated by the Court's refusal to order the removal of T5.

Consideration

1. The Court's power to order costs is derived from s 98(1) of the Civil Procedure Act 2005 (NSW) and subject to the Land and Environment Court Rules 2007 (NSW) ('Court Rules').
2. Before turning to my consideration, it is appropriate to note that disputes under the Trees Act are conducted in Class 2 of the Court's jurisdiction to which the presumptive rule contained within r 3.7(2) of the Court Rules applies: "The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances."
3. Further, r 3.7(3) provides a non-exhaustive list of circumstances in which an order for costs may be fair and reasonable: "(3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following - (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question - (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents - (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable."
4. Relevant to the present matter, subrr 3.7(3)(c), (d) and (f) provide that unreasonable conduct by a party either before or in the conduct of proceedings, or the maintenance of a defence which was without reasonable prospect of success, may justify an order for costs.
5. Although the six indicia contained within in r 3.7(3) may provide some assistance when evaluating whether an order for costs is fair and reasonable, the power exercised by the Court is not confined to these matters and is instead in the broadest of terms. I refer to the comments of Biscoe J in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 ('Arden') at [9]: "All rational considerations are relevant to the formulation of that judgment. In the end, the question is whether, in the opinion of the Court, they are of sufficient weight to overcome the presumptive rule. Indicative guidelines for the exercise of the discretion are useful in promoting consistent decisions, but are not entitled to presumptive, let alone determinative, weight."
6. The principles applicable to the Court's exercise of the costs power under r 3.7 of the Court Rules are well-known: Liverpool City Council v Moorebank Recyclers Pty Limited; Benedict Industries Pty Ltd v Minister for Planning (No 4) [2017] NSWLEC 116 at [10]-[14], Dunford v Gosford City Council (No 3) [2015] NSWLEC 96 at [30], Burns v St Clair (No 2) [2015] NSWLEC 115 at [9]-[12], McLaren v Lewis (No 2) [2011] NSWLEC 176; (2011) 183 LGERA 344 ('McLaren') at [13]-[17], [21]-[24], Fox v Ginsberg (No 3) [2011] NSWLEC 139 at [9], and earlier, Grant v Kiama Municipal Council [2006] NSWLEC 70 at [15].
7. In considering the application of r 3.7 of the Court Rules, it is apposite to note that the "no discouragement" principle underlies this presumptive rule. Put simply, a person generally should not be discouraged from making or defending an application by the prospect of an adverse costs order: Arden at [10].
8. The no discouragement principle is particularly important in the context of applications made pursuant to the Trees Act, as such applications are subject to the Court's Practice Note Class 2 - Tree Applications which is designed to facilitate the just, quick and cheap resolution of tree disputes through an appropriate and easily accessible procedure.
9. In approaching the task before me, I consider that it is appropriate, first, to identify whether there is anything within the judgment of the Commissioner which indicates that an order for costs may be fair and reasonable; and second, to look to the conduct of the parties both before and during the hearing for any indication that such an order may be appropriate.
10. It is relevant to note that the Commissioner, based upon the expert evidence before him and his own specialised learning and experience, made discrete findings in accordance with, and as required by, the Trees Act. In making orders generally in favour of the applicants, the Commissioner found that the applicants had made reasonable efforts to reach agreement; that both trees were likely to cause damage or injury; that branches are likely to fall from both trees "in the near future"; and gave considered relief which involved the pruning of T5 and the removal of T7.
11. I note that the Commissioner made the following comment in relation to the ongoing discontent between the parties at [5] of his decision: "[The respondent] argued that [the applicants] did not make sufficient effort to come to an agreement. The applicants had withdrawn from proposed mediation. Mediation does not guarantee an outcome. This is not the first dispute involving trees between these parties. Based on my findings further below, I note that the applicants' concerns regarding the condition of the two trees were reasonable, and the responses they received from their neighbour signalled to them that they were unlikely to reach satisfactory resolution through mediation. I find that their effort was reasonable in the circumstances."
12. As such, in the circumstances I do not consider the applicants' reluctance to attend mediation necessarily precludes an order for costs in their favour.
13. There is nothing within the judgment of the Commissioner indicating that the conduct of the respondent was such that an order for costs against the respondent would be fair and reasonable in the circumstances. Further, I do not consider that the judgment is indicative that the respondent's position was either without reasonable prospects of success or was otherwise unreasonable. As such, the conduct of the respondent prior to the commencement of the proceedings and during the course of the proceedings, which may not have been known to the Commissioner at the time of the principal judgment, requires consideration.
14. Having read the correspondence between the parties, including the correspondence from the applicants' solicitor, it is clear that the applicants were attempting to resolve the matter without litigation and had conducted themselves and instructed their solicitor with that goal in mind. Whether this conduct was affected in some way by previous disputation between the parties, or whether the respondent simply wanted to have the Court decide the matter, is unclear. However, it is clear there had been some history between the parties which may explain the applicants' reluctance to participate in mediation. Further, the respondent did reply to three of the four letters sent to him by, or on behalf of, the applicants, although not in terms acceptable to the applicants.
15. There is little in the evidence now before the Court that suggests that the respondent's conduct was such to lead me to the view that it would be fair and reasonable to order the respondent to pay the whole (or part) of the applicants' costs.
16. In considering the conduct of the respondent prior to the commencement of proceedings, I note the comments of Preston CJ of LEC in McLaren where his Honour stated: "[23] I do not consider the evidence has established that Mrs McLaren's bringing of an application under the Trees Act was vexatious or vindictive. Having brought the application, Mrs McLaren was entitled to have it heard by the Court. I do not consider it vexatious or vindictive to not acquiesce to Mr Lewis' plea that the case be dropped before Mrs McLaren's application had even been heard. … [24] The fact that Mrs McLaren was ultimately unsuccessful in her application under the Trees Act is not sufficient in itself. Mr Lewis' bare warnings without substantiation by reference to evidence in the proceedings or reasoning, given only a few days before the hearing, that he considered Mrs McLaren would lose, that she should drop the case but if she didn't drop the case, he would be asking for her to pay his costs, are also not sufficient in the circumstances."
17. Similarly, the respondent in the present matter, who at that time did not have legal representation or expert advice, was entitled to have the matter proceed to hearing in the specialised jurisdiction of the Court before a suitably qualified Commissioner without the risk of an adverse costs order being made against him, absent what may be considered inappropriate or otherwise unreasonable conduct.
18. In the circumstances and noting that disputes under the Trees Act are specifically adjudicated through a relatively informal and efficient procedure to resolve what are mostly neighbourhood disagreements without necessarily requiring legal representation, I consider that the respondent's decision simply to allow the proceedings to follow their course, particularly in circumstances where the decision to commence proceedings was of the applicants' own making, is not in and of itself indicative that a costs order against the respondent would be fair and reasonable. To do otherwise would risk falling foul of the "no discouragement" principle: Arden at [10] (Biscoe J citing Spigelman CJ in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 at [71]-[74]).
19. More specifically, considering the communication and conduct between the parties through the lens of their previous, possibly unfortunate, intercourse concerning unrelated issues, I understand that a level of frustration may have resided with the applicants in their dealings with the respondent. However, I do not consider that the respondent's conduct, such as the failure to reply to some of the letters from the applicants, considered on its own or in combination with other matters raised by the applicants, to be determinative that the respondent acted unreasonably leading up to the proceedings, in the conduct of the proceedings, or that the defence itself was unreasonable, simply because the applicants had a different view of the matter and had provided an expert arborist report (and apparently obtained legal advice) in support of their position. Again, similarly to McLaren, it cannot be said to be vexatious or vindictive to refuse a request that the case be dropped before hearing, particularly in circumstances where the applicants' offers only proffered the complete removal of both trees, although I acknowledge that the applicants enjoyed substantial success.
20. I note that the applicants' careful submissions that the respondent's decision to maintain his defence was unreasonable (citing subrr 3.7(3)(f)(i) and (ii) of the Court Rules) are not without some force, and I accept that the Commissioner found that, at least, T7 was in such poor condition that it was likely to cause damage in the near future, that significant pruning was required to be carried out in relation to T5, and/or that branches were likely to fall from the trees. However, in circumstances where the respondent was without legal representation; apparently desired to use the trees on his property as an anchor for climbing vines; and where the mere preservation of at least a portion of T5 or T7 represented a better result than what had been otherwise offered by the applicants, I do not find the applicants' submission that the respondent's defence did not have reasonable prospects of success, or that it was so unreasonable to maintain, determinative such that it would be fair and reasonable to make an order for costs against the respondent.
21. I am also of the view that the mere fact that a litigant may have conducted themselves in a reasonable and considered fashion does not, on its own, elevate conduct by another party to a level which may be considered disentitlingly unreasonable, especially in circumstances where the other party is not legally represented.
22. Given the circumstances of the relationship between the parties, the nature of the correspondence between them, and the principles upon which adjudication of disputes under the Trees Act are based, I do not consider it would be fair and reasonable in the circumstances to make any order as to costs.

Orders

1. The orders of the Court are: 1. Notice of motion filed 14 February 2020 is dismissed. 2. No order as to costs of and in relation to that notice of motion.

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