Mulder v Laura Holdings Pty Ltd

Supreme Court of NSW|2023-08-17|Before: Peden J, Basten JA, Preston CJ, Darke J

Judgment

The plaintiffs sought an easement pursuant to s 88K Conveyancing Act 1919 (NSW). A substantive judgment was given in favour of granting that easement: Mulder v Laura Holdings Pty Ltd [2023] NSWSC 812.
The substantive judgment ordered that, unless the plaintiffs sought a different costs order, they would be ordered to pay the defendant's costs in accordance with the usual order under s 88K(5).
The plaintiffs seek a different costs order, and the defendant resists any departure from the usual order. This judgment resolves that dispute.
In addition, the parties were ordered to confer with a view to agreeing final orders. While the parties proffered slightly different final orders other than as to costs, there was no significant difference and I have determined the appropriate form below.

Refusal to accept offer

While the Court may take into account an offer made in s 88K proceedings, in Shi v ABI-K at [98] Basten JA stated: … The statutory scheme is not consistent with the proposition that an applicant can obtain a right to costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement. The property owner is entitled to refuse to consent to the easement, thereby requiring the applicant to satisfy a court as to the various preconditions, including questions of the public interest, and that the grant of the easement is reasonably necessary in the sense provided by the section. Unless it has done more than reject reasonable offers of compensation, the property owner should not be put at risk of an adverse costs order in those circumstances.
Here, I do not think the plaintiffs' unaccepted offer assists them, because it was less than the total sum awarded by the Court. In Ryan, a case determined before Shi v ABI-K, the offer taken into account was for $1,000 more than the compensation awarded by the Court. The offer made the plaintiffs in this case was $1,000 less than the compensation awarded. Further, the easement ordered is subject to conditions that were not part of the offer made.
The defendant resisted the easement on the bases that the easement was not "reasonably necessary", the loss of amenity could not be adequately compensated and the plaintiffs had not taken all reasonable steps to obtain an alternative easement. None of those arguments were successful. However, the defendant was not obliged to accept the offer proffered, nor risk any type of adverse costs order for that reason alone.
Other additional unreasonable conduct would need to be demonstrated to warrant the outcome the plaintiffs seek.

Exorbitant costs

It is alarming that the defendant's costs are approximately $200,000 for a 2-day hearing concerning an access way to the plaintiffs' remote rural landlocked land, when neither the plaintiffs nor the defendants permanently reside on their properties.
By reason of the legislative drafting, the issue is whether those costs ought to be disallowed or reduced by reason of the defendant's unreasonable conduct in the litigation.
Mere quantum of costs is not an accepted reason not to award a defendant its legal costs in defending a s 88K application. For example, in McGrath v Metousis at [15] Darke J stated: That the defendant has apparently incurred costs in the order of $350,000 in relation to this case gives rise to considerable disquiet. As I noted in the principal judgment (at [81]), the defendant appeared implacably opposed to the easement. He has clearly defended the case strenuously, and in so doing has made extensive use of the services of Mr Baxendale. This has no doubt contributed in large measure to the total amount of costs incurred. However, I am unable to conclude that the large quantum of costs itself demonstrates unreasonable conduct on the part of the defendant, or is so disproportionate to the matters at issue that it establishes that the defendant has conducted his defence in a manner contrary to the overriding purpose referred to in s 56 of the Civil Procedure Act. In assessing the reasonableness of the defendant's conduct, it is necessary to focus more particularly upon what the defendant actually did in the conduct of his defence.
It is clear that costs in relation to particular evidence may be carved out as being unreasonably incurred and inappropriate to be borne by an applicant. Windeyer J took this course in relation to the costs of valuation in evidence in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15795. Darke J took a similar approach in McGrath v Metousis and did not allow the defendant's costs of preparing evidence that he considered "tenuous at best" (at [23]). He summarised it at [23]: This aspect of the case for compensation was in my view so untenable that it was unreasonable of the defendant to pursue it.
Further, Sackar J in Gordon v Lever [2019] NSWSC 571 at [23] acknowledged: A Court will always be able to exercise a discretion on costs if there are unnecessary costs incurred in relation to expert evidence. Clearly where expertise is duplicated and what is being done is simply adding an additional but identical voice to the litigation very few Courts would contemplate allowing the costs of the second expert.
I consider that the defendant ought not have its costs related to the claim for loss of amenity, including the expert evidence concerning that issue (see substantive judgment at [112]).
Further, I do not consider the defendant ought to have its costs of the expert evidence of Mr Haskew, in circumstances where the only parts of this report relied upon by the defendant was "navigate-ability in terms of erosion risk and other sort of impact from other weather events". The issues of maintenance and management of the proposed easement and the connected Crown roads were abandoned and no submission was made as to why erosion risk and impact from weather events would not fall within the concept of maintenance and management. In my view, the evidence of this expert did extend the length of the hearing: see eg Cuzeno Pty Ltd v Owners Strata Plan 65870 [2013] NSWSC 1385 at [151] (Darke J).
Otherwise, the plaintiffs have not suggested that the Court is in a position to make a properly informed decision about whether the defendant's costs are grossly excessive (see eg Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 at [42] (Palmer J)). It is therefore not possible to cap the defendant's costs, for example, as envisaged by ss 98(4)(c) and 98(4)(d) of the Civil Procedure Act.

Orders

For the above reasons and the reasons in the substantive judgment it is appropriate to make the following final orders: 1. Pursuant to s 88K Conveyancing Act 1919 (NSW), order that a right of carriageway 20 metres wide be imposed on the defendant's land in Lots 57 and 68 in Deposited Plan 753018 for the benefit of the plaintiffs' land comprised in Lot 90 in Deposited Plan 753018 on the same terms as are contained in Deposited Plan 649935 (right of carriageway), save that: 1. It is a condition that the right of carriageway is subject to the plaintiffs' obligation to close and re-lock any gates on the defendant's land which they are required to open in order to obtain access to the right of carriageway, and, that the defendant together with successors in title to provide the plaintiffs with 2 keys to any locked gates. 1. Direct the plaintiffs to prepare all necessary documents and forms in relation to the registration of the right of carriageway by the Registrar-General. 2. The right of carriageway is not to be registered with the Land Registry Service, until the plaintiffs have procured a registered right of way over Lots 101 and 102 in Deposited Plan 1190056, being the land currently owned by Agriwealth Capital Limited. 3. The plaintiffs pay the defendant's costs of the proceedings on the ordinary basis as agreed or assessed, save for the following costs: 1. Expert evidence of Mr Haskew; and 2. Preparation of evidence concerning loss of amenity, including Mr Johnstone's expert valuation evidence on that issue.

Amendments 29 August 2023 - Paragraphs [25] and [27(4)] amended to remove the costs of plaintiffs' expert pursuant to rule 36.17 Uniform Civil Procedure Rules 2005 (NSW). 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: 29 August 2023

Conveyancing Act 1919(NSW)ss 88K, 88K(5)

Civil Procedure Act 2005(NSW)ss 98(4)(c), 98(4)(d)

(2020) 102 NSWLR 490

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Cases Cited (13)