Menassa v Shi

Supreme Court of NSW|2023-03-01|Before: Henry J

JUDGMENT

On 10 February 2023, I published reasons for granting the plaintiff's application for an easement to drain water to be imposed on the defendants' land pursuant to s 88K of the Conveyancing Act 1919 (NSW) (Conveyancing Act): Menassa v Shi [2023] NSWSC 54 (Judgment).
These reasons deal with the final orders to be made and the issue of costs. They assume familiarity with and adopt the same terms as those used in the Judgment.
In accordance with the Court's directions, on 24 February 2023, the plaintiff served a form of final orders that provide, amongst other things, for the easement to be registered within 21 days and for the plaintiff to pay the defendants' costs of the proceedings limited to the costs recoverable as a litigant in person.
The defendants disagree with the form of the plaintiff's proposed orders relating to the imposition of the easement, object to a direction that they co-operate with the plaintiff and seek an order that their costs be paid on an indemnity basis.
No party sought a further oral hearing and both parties are content for the issues to be determined on the papers.

Costs

The issue of costs is addressed by written submissions from Mr Shi on behalf of the defendants dated 24 February 2023 and from the plaintiff dated 27 February 2023 along with an accompanying short affidavit of the plaintiff's solicitor, Mr Harry Foteades, sworn 27 February 2023, which should be taken as read.
Section 88K(5) of the Conveyancing Act provides that the costs of the proceedings are to be payable by the plaintiff, subject to any order of the Court to the contrary.
The basis on which costs should be paid is the ordinary basis and not an indemnity basis, unless the conduct of the plaintiff for the order has been unreasonable such as to justify an order for indemnity costs: Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 171 LGERA 286; [2010] NSWLEC 2, at [183] and the cases there cited.
The discretion under s 88K(5) of the Conveyancing Act in respect of "unreasonableness" may be compared to the Court's discretion to award indemnity costs against a party. If a property owner (whether a claimant for an easement or the person against whom the easement is sought) obstructs the process or is unreasonably responsible for escalating costs, then a different order to that contemplated by s 88K(5) of the Conveyancing Act may be appropriate: Roma Loperman v WIN Corporation Pty Ltd [2020] NSWSC 1560, at [15]; Bilton v Lidgras (Costs) (2016) 18 BPR 36,379; [2016] NSWSC 1585, at [17].
The defendants submit that the plaintiff engaged in unreasonable conduct by lodging a Summons to claim a 1 metre wide easement along the defendants' property that disregarded the existence of the OSD tank, by failing to respond to the defendants' concern regarding the OSD tank until the plaintiff corrected his claim on the second day of the hearing by filing an Amended Summons for a proposed easement of variable width, and by failing to provide an engineering plan of the easement and requesting that the defendants participate in creating a joint engineering report about the proposed easement with his engineer.
The defendants also submit that their arguments were reasonable and achieved a better result, referring to terms favourable to them that were included in the Amended Summons and describing the main dispute in the proceedings as being the conflict between the OSD tank and the proposed easement.
The plaintiff submits that the matters raised by the defendants' submissions do not disclose a basis upon which a finding of unreasonable conduct on the plaintiff's part can be made, and that the defendants' submissions relate to matters considered by the Court and upon which various findings have been made, such as findings about correspondence relating to the OSD tank (Judgment, at [141]) and in respect of whether all reasonable attempts had been made to obtain the easement (Judgment, at [149]).
The plaintiff also submits that the defendants' conduct in retaining seven different firms of lawyers from February 2018 to May 2022, as identified in Mr Foteades' affidavit at [4]-[10], resulted in substantial unnecessary costs to both parties.
Having considered the submissions made by the parties, I have concluded that the Court should not exercise its discretion to make an order other than in accordance with s 88K(5) of the Conveyancing Act. This is primarily because I do not consider that the plaintiff engaged in conduct that was sufficiently unreasonable or delinquent to warrant an order for indemnity costs in favour of the defendants.
For the reasons set out in the Judgment at [157]-[158], I accept that the plaintiff could have identified the OSD tank on the defendants' property to Council earlier and sought a variable width easement as part of the DA process in 2020. Doing so may have limited some of the issues in dispute and reduced the overall cost to the parties.
However, the plaintiff's conduct is to be assessed in circumstances where the defendants' concerns about the OSD tank were not raised in any pre-litigation correspondence other than the email from their solicitor on 10 July 2018 (Judgment, at [141]). The plaintiff also took steps to deal with the OSD tank issue shortly after being served with the CitiSurv Detail Survey on 13 August 2021 (Judgment, at [54]) by lodging, on 19 August 2021, the s 4.55 Modification, which was approved on 27 October 2021, only a few months after the proceedings were commenced (Judgment at [55]-[56] and [61]).
It follows that I do not accept the defendants' submission that the plaintiff failed to deal with the defendants' concerns about the OSD tank until he filed the Amended Summons on the second day of the hearing. The Amended Summons regularised what had been apparent for some time, namely that the plaintiff was seeking the imposition of a variable width easement at the location of the OSD tank. The defendants were aware of this by 4 November 2021, when the plaintiff served them with a copy of the Modified Consent, noting that the defendants had received notice of the plaintiff's s 4.55 Modification application by letter from the Council dated 30 August 2021 and Mr Casemore's valuation report prepared on 12 November 2021 was based on the proposed variable width easement. The plaintiff's proposal for a variable width easement was confirmed again by the contents of Mr Foteades' affidavit of 6 April 2022, Mr Eltobbagi and Mr Azar's reports which were served on 6 April 2022, the May Modification which was served on 3 June 2022, and the plaintiff's written submissions.
It is correct that the plaintiff did not press for an easement in the terms he initially sought in the Summons as filed and that he changed his position to seek a variable width easement, including terms that provided for a drainage system with a 225mm diameter pipe. However, the mere fact that parties' positions change during the course of litigation is not unusual and, in this case, I am not persuaded that the plaintiff's change caused the defendants any real prejudice. Relevantly, the defendants did not contend or seek to establish that the plaintiff's conduct resulted in them incurring excessive or wasted costs in the proceedings.
The defendants were on notice of the change to a variable width easement for some time and, as they accept, the Amended Summons included terms that were more favourable to them (see terms (2) and (3) of Annexure C to the Amended Summons which provide that other than the installation of the boundary pit, the existing site characteristics shall not be altered to ensure no negative impact to the defendants' property and that the easement does not permit the use of the surface of the easement area for emergency overflow path). Those terms were included in the Amended Summons, not because of arguments made by the defendants in their written submissions or during the hearing, but because the terms reflected the form of the interallotment drainage easement included in the deferred commencement development condition 2(a) of the Modified Consent and the May Modification, as explained in the Judgment at [85].
At all times, the defendants resisted the imposition of the variable width easement. They raised various arguments beyond the OSD tank, including that there was a viable alternative at 91B Raimonde, the variable width easement did not meet Council's Engineering Design Guidelines, it would adversely impact the vegetation on their property, the plaintiff had not made all reasonable attempts to obtain the easement and Council had engaged in an irregular process. Given that these arguments were raised and not accepted by the Court (Judgment, at [113], [122], [118], [149] and [162]-[163]), I do not accept the defendants' submission that the main issue was the OSD tank or that their arguments were reasonable and achieved a better result.
For the reasons set out in the Judgment at [86], [106], [140], [144]-[146] and [159], I also do not accept the defendants' submission that the plaintiff acted unreasonably in relation to the engineering plan and joint expert process. I also note that the Court directed the parties to engage in that process, it was not the plaintiff's request. Further, and contrary to the defendants' contention, their solicitor's submission dated 9 June 2021 did not request an engineering plan to be provided but sought at least eight weeks to serve evidence and referred to the Revised Stormwater Plans not having been supplied in support of that request.
As to the defendants' submission that the plaintiff's "offer base[d] on the original Summons …is unlawful… [and] invalid" and that they had the "right to refuse any invalid offer" and that the offer amount should not be compared with the compensation amount in the Judgment because they contained different easement terms, I accept that the defendants had a right to refuse any offers made by the plaintiff although I am not persuaded that the offers themselves were unlawful or invalid. The making of those offers and the defendants' responses to them (or lack of response) were relevant considerations in determining whether all reasonable attempts had been made for the purposes of s 88K(2) of the Conveyancing Act. However they are not, in my view, factors that weigh in favour of granting an indemnity costs order for the defendants in this case.
It is also relevant to the Court's exercise of its discretion whether to make an order "to the contrary" under s 88K(5) of the Conveyancing Act to consider the defendants' conduct in light of the general duties of parties to civil proceedings, as set out in s 56(3) of the Civil Procedure Act 2005 (NSW).
While not determinative, another factor that tends against the defendants' application for indemnity costs is that the defendants did not seek to have their engineer participate in the joint expert process directed by the Court. It would have been a simple matter to request a revised timetable if the timing of the May Modification impacted the delivery of the joint report and it is reasonable to expect that had the engineers engaged in the joint expert process, they would have dealt with matters the subject of Mr Eltobbagi's evidence (such as the proposal for the installation of the 225mm pipe), and may have limited the issues in dispute at the hearing (Judgment, at [86] and [106]).
As to the plaintiff's submission, I do not consider that the defendants' conduct in having four separate firms of legal representatives on the record during the course of these proceedings is significant to the issue of whether costs should be paid by the plaintiff on an indemnity basis. That said, it is appropriate to record that, for the periods when the defendants were not legally represented, the defendants should expect that they will only be entitled to recover their costs as litigants in person: Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293 (Shi v ABI-K), at [98].
For these reasons, I refuse the defendants' application for indemnity costs and will order the plaintiff to pay costs on an ordinary basis as agreed or assessed.

Form of orders

Section 88K of the Conveyancing Act relevantly provides: (3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88(1) (a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies. … (7) An easement imposed under this section, a release of such an easement or any modification of such an easement by a deed or dealing takes effect-- (a) if the land burdened is under the Real Property Act 1900, when the Registrar-General registers a dealing in the form approved under that Act setting out particulars of the easement, or of the release or modification, by making such recordings in the Register kept under that Act as the Registrar-General considers appropriate, or…
The particulars required by s 88(1)(a)-(d) of the Conveyancing Act are: details of the land that will benefit from the easement; details of the land that will be burdened by the easement; and the persons (if any) having the right to release, vary or modify the easement.
The form of orders proposed by the plaintiff in relation to the easement, other than on costs, are as follows: (1) Orders, pursuant to s 88K of the Conveyancing Act 1919 (NSW), that an easement to drain water be imposed on Lot 682 in Deposited Plan 853609 for the benefit of Lot 67 in Deposited Plan 31228, in the terms contained in the document annexed and marked "A". (2) Orders pursuant to s 88K(4) of the Conveyancing Act that the plaintiff pay compensation to the defendants for the imposition of the easement, such compensation to be in the sum of $26,500 and paid no later than 21 days from the date the defendants provide to the legal representative of the plaintiff directions as to payment. (3) Orders that the said easement be registered within 21 days, and directs that the parties co-operate in doing all that is necessary to enable that to occur. … (5) Reserve liberty to apply in relation to the registration of Annexure A.
In accordance with the Judgment at [191], the form of orders also records the Court noting an undertaking proffered by the plaintiff.
The issues raised by the defendants with the proposed orders are set out in nine emails sent on 24 February 2023 between Mr Shi and the plaintiff's solicitor that were copied to my Chambers, including an email from the plaintiff's solicitor attaching the proposed form of orders, all of which should be taken as read (and I have marked as MFI-1 on this application).
In summary, the defendants do not agree with proposed orders (1) and (3).
Based on Mr Shi's emails sent at 12:50pm and 2:25pm, it appears that the defendants' objection to order (1) is because the document annexed and marked "A" to the proposed form of orders was not in the exact format as the document annexed to the Amended Summons as it was marked "A", not "D". Mr Shi asserted that if the plaintiff registered the wrong document, the defendants would take legal action against him.
In my view, Mr Shi's objection to order (1) is misplaced. As the plaintiff's solicitor explained (in his email sent at 2:16pm), the operative terms of the easement and the easement plan upon which the Court granted an easement were not amended in any substantive manner. The only amendments that had been made were to normalise the annexure references to commence at "A" (rather than use "C" and "D" as per the Amended Summons), to include references to "or Dominant Tenement" and "or Servient Tenement" in addition to "Lot Benefitted" and "Lot Burdened" for clarity and to avoid any confusion, and to remove references to "Transfer Granting Easement" (which were referred to in annexures C and D to the Amended Summons) as NSW Land Registry Services (NSW LRS) might require the easement to be lodged in the form of a s 88B instrument instead of a "Transfer Granting Easement" dealing.
In my view, these changes were appropriately made. For reasons that I will come to, I consider that the references to "Transfer Granting Easement" should be removed and that the orders to be made should reflect the draft form initially proposed by the plaintiff rather than the orders he later prepared that sought to replicate the "exact format" set out in the Amended Summons (as sent at 2:16pm).
As to the objections to proposed order (3), Mr Shi submits that the plaintiff has obtained a Court order to register the easement, the defendants' cooperation is not necessary and the defendants cannot provide any assistance. He also says that to register the easement the plaintiff needs a Court order and a "Request" (Form 11R), which does not require the defendants' signature (as transferor), and that the plaintiff has used the wrong form in Annexure A to the proposed form of orders (emails sent at 1:20pm and 4:21pm).
The Registrar General's Guidelines, accessible via the NSW LRS website, set out the procedure for recording on title a new easement, such as one created by a Court order. They record the following: 1. a new easement may be created by registration of a "Transfer Granting Easement" (Form 01TG) with NSW LRS, which requires a description of the particulars of the easement and execution by both the transferor, transferee and any mortgagee; 2. for easements created by an order of the Court (such as pursuant to s 88K of the Conveyancing Act), the order must identify the site of the easement by reference to a deposited plan of survey suitable for lodgement with NSW LRS or a compiled/sketch plan annexed to a "Request" (Form 11R) may, with the prior approval of the Registrar General, be acceptable; 3. an easement imposed by the Court only takes effect once it is registered by the Registrar General. For Torrens title land, the Court order should be annexed to a "Request" (Form 11R) requiring the Registrar General to give effect to the orders. Form 11R requires a short description of the nature of the request and full details of the request (such as the name of the Court that has issued the orders, the Court file number and the date of the orders), and execution by the applicant only; and 4. where a Court order is served without a "Request" (Form 11R), the form will be completed by the Examining Officer and accepted for lodgement (see section headed "Order of Court or injunction").
Based on the contents of these Guidelines, there is some merit to Mr Shi's submission that his signature may not be required on a "Transfer Granting Easement" instrument and the easement imposed by this Court may be registered utilising a "Request" (Form 11R) together with the final orders of the Court. As the easement will be imposed on the defendants' land by order of the Court, there seems to be no reason of principle why registration of such an easement would require a transfer instrument to be completed, although I note that such an approach had been used in other cases, see for example, the final orders made in Shi v ABI-K on 28 August 2014 and in McGrath v Mestousis [2017] NSWSC 995 on 21 August 2017.
Further, I would not make the orders proposed by the plaintiff (as attached to the email sent at 2:16pm) as Annexure A to those orders does not include a Form 01TG, which is required to be completed if the easement is to be registered by way of a "Transfer Granting Easement".
In any event, there is another difficulty with proposed order (3) which is that it requires the easement to be registered within 21 days. Leaving to one side that I do not consider it appropriate to make orders that could be interpretated as requiring the NSW LRS and Registrar General to take steps within that timeframe, deferred commencement development condition 1(a) of the May Modification provides that the easement should not be registered until Council has advised that the revised survey plan of the easement has been accepted, and there is no evidence that this step has occurred nor any indication of how long it will take.
Accordingly, I will not make order (3) in the terms proposed by the plaintiff but will direct him to prepare the necessary documents and forms, such as the "Request" (Form 11R), in relation to registration of the easement by the Registrar General, and also order that he pay the costs of doing so. If it transpires that registration cannot be achieved that way and the defendants' signature is required on a "Transfer Granting Easement" (Form 01TG), the plaintiff may utilise the liberty to apply on three days' notice.
As to order (1), I will make an order in terms similar to those initially proposed by the plaintiff, but with some amendments for clarity, consistency and to ensure that the orders comply with the requirements of ss 88K(3) and (7) of the Conveyancing Act, as follows: 1. the orders and annexures use a defined term, "Easement to Drain Water", for ease of reference; 2. the documents annexed to the orders are described as "Annexure "A" - Easement terms" and "Annexure "B" - Easement Plan" respectively, for clarity; 3. the references to "transferor" or "transferee" in the annexures have been deleted; 4. the references to defined terms "Lot Benefitted" and "Lot Burdened" have been removed and replaced with the terms "Dominant Tenement" and "Servient Tenement" respectively, for consistency; 5. the words "land within folio identifier" have been included in the definitions for "Dominant Tenement" and "Servient Tenement", for clarity; and 6. the reference to "Easement Area" has been removed and replaced with the term "Easement Site", for consistency.

Orders

For these reasons, I make the following orders and notations: 1. Pursuant to section 88K of the Conveyancing Act 1919 (NSW), order that an easement to drain water 1 metre wide and variable width be imposed on the defendants' land comprised in Lot 682 in Deposited Plan 853609 for the benefit of the plaintiff's land comprised in Lot 67 in Deposited Plan 31228 on the terms annexed and marked "A" and over the area depicted in the easement plan annexed and marked "B" to these orders (Easement to Drain Water). 2. Pursuant to section 88K(4) of the Conveyancing Act 1919 (NSW), order that the plaintiff pay compensation to the defendants for the imposition of the Easement to Drain Water in the sum of $26,500 within 21 days from the date the defendants provide to the legal representative of the plaintiff directions as to payment. 3. Direct the plaintiff to prepare all necessary documents and forms in relation to registration of the Easement to Drain Water by the Registrar General. 4. Order that the plaintiff is to bear all the costs of obtaining registration of the Easement to Drain Water. 5. Order that the plaintiff is to pay the defendants' costs of the proceedings on an ordinary basis as agreed or assessed. 6. Grant liberty to apply on three days' notice in relation to the registration of the Easement to Drain Water. 7. The Court notes the undertaking of the plaintiff to provide the defendants with written notice by letter delivered to the defendants' mailbox no less than seven days prior to initial works commencing within the easement area.

Amendments 02 March 2023 - 2 March 2023 - Annexure B updated with clearer version 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: 02 March 2023

(2010) 171 LGERA 286

At a glance

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Judgment (5 paragraphs)

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