O'Connor v Kerr

History of the proceedings

1. The history of the proceedings can be drawn from the affidavits filed and the documents attached to the submissions filed by each of the parties, and can be summarised as follows:

• Prior to the commencement of the proceedings, the applicant wrote to the respondent in two separate but similar letters of 13 and 17 February 2015. These letters set out the applicant's concerns regarding the trees and asked the respondent a number of questions regarding them.
• On 25 February 2015 the respondent was sent a letter from the Department of Justice Community Justice Centres advising that Mr and Mrs O'Connor sought a mediation with the respondent.
• On 5 March 2015 the respondent wrote to the applicant providing details of the trees, denying the applicant's concerns about the trees but including a statement that she would remove the trees if they caused damage to her own property.
• On 30 June 2015 the applicant received a letter from the Community Justice Centres indicating that the respondent did not wish to mediate.
• The proceedings were then commenced by a Tree Dispute Application lodged at Gosford Local Court on 11 May 2015.

1. The Tree Dispute Application was vague in the terms of the orders sought, but copied those terms from the provisions of s 9 of the Trees Act. The application clearly sought orders under both Part 2 and Part 2A of the Trees Act.
2. The proceedings first came before the Court on 15 June 2015, at which time they were listed for the onsite hearing. At that time the Assistant Registrar also made a direction requiring the applicant to specify the orders sought and serve those proposed orders on the respondent and on the local council. This was done and the matter later progressed to the onsite hearing on 29 July 2015.
3. However, on 16 June 2015, the respondent's solicitor wrote to the applicant setting out their position in relation to the application. That letter included references to relevant provisions of the Trees Act and relevant case law. In that letter, the respondent invited the applicant to discontinue the proceedings and provided a date by which this could occur without the respondent seeking her costs. No response to the letter was received, and the respondent filed its evidence on 28 July 2015, one day prior to the onsite hearing.
4. Following the onsite hearing, the Commissioner dismissed the application in a judgment given on the same day. The application under Part 2 was dismissed because of the applicant's failure to establish that any of the trees were "in the near future" likely to cause damage to property (see O'Connor v Kerr [2015] NSWLEC 1285, [16-18]). The application under Part 2A was similarly dismissed as a result of the applicant's failure to establish that the hedge formed by the trees obstructed access to sunlight or views from his property at the time of the hearing (see O'Connor v Kerr [2015] NSWLEC 1285, [30-32]).

Power to make an order for costs

1. The power to make an order for costs arises under section 98 of the Civil Procedure Act 2005. In proceedings falling in Class 2 of the Court's jurisdiction, the discretion to award costs must be exercised in accordance with rule 3.7 of the Land and Environment Court Rules 2007. Rule 3.7(2) provides that "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." Rule 3.7(3) lists a number of circumstances in which it might be considered fair and reasonable to make an order for costs.

Submissions

1. Both parties have filed an outline of submissions attaching quite a number of documents.
2. At the forefront of the respondent's submissions is that the applicant has been deceptive, misleading and dishonest in commencing and conducting the proceedings. In support of those submissions, the respondent relies on the fact that the application was dismissed on all grounds. No other evidence is relied on in support of that submission, other than evidence of the history of the deteriorating relationship between the parties.
3. The respondent also submits that there was never any factual basis upon which the tree dispute application could have succeeded. The respondent says that it was clear from the outset that there was no basis upon which the Court could make any orders under the Trees Act. As such, the respondent submits that the applicant commenced and carried on an action that had no reasonable prospects of success, and that these are circumstances in which the Court should find that it is fair and reasonable for a costs order to be made in her favour. Whilst she accepts that she should absorb the initial costs of getting advice on the application, the respondent says that the applicant should pay her costs of defending the application beyond 17 June 2015.
4. Further, the respondent submits that by way of her solicitor's letter of 16 June 2015, the applicant was put on notice of the issues concerning the application and was given a reasonable opportunity to discontinue the proceedings. The respondent submits that the failure of the applicant to respond to that letter by the date by which a response was requested meant that she was unnecessarily put to the cost of defending proceedings that had no reasonable prospects of success. In those circumstances, the respondent seeks her costs of the proceedings from the date immediately after the letter.
5. The respondent also submits that the applicant acted unreasonably in failing to give her 21 days notice of the orders sought in the proceedings. The respondent relies on s 8 of the Trees Act, which requires that an applicant give the respondent 21 days notice of the orders sought under the Act. This also was an issue raised by the respondent in the letter of 16 June 2015.
6. Finally, the respondent submits that it was not appropriate for the applicant to commence and continue the proceedings in circumstances where she had agreed to the ongoing maintenance of the trees. The respondent therefore says that as a result of the applicant doing so, she has suffered legal costs that should be reimbursed by an order requiring the applicant to pay those costs.
7. In the supporting written submissions, reference was also made by the respondent to an order for indemnity costs on the basis that the letter of 16 June 2015 was a Calderbank offer. The letter invited the applicant to discontinue the proceedings and if he did so by 4:30pm on 23 June 2015 then the respondent would not seek an order for costs. The respondent submits that the applicant's failure to accept that offer warrants the making of an order for indemnity costs. The costs sought are in the sum of $6,171 plus $440 for the cost of retaining an arborist for the preparation of an expert report.
8. The applicant makes a number of submissions in opposition of the respondent's application for costs. Firstly, the applicant submits that the notice of motion that sought costs was filed more than 28 days following the decision of Commissioner Fakes and that it therefore should be dismissed on that basis. In that respect, the applicant relies on paragraph 55 of the Practice Note - Class 2 Tree Applications, which provides that "[w]here a Commissioner has heard and determined a tree application, any party seeking an order for costs of the proceedings must apply for costs by notice of motion filed within 28 days of the final orders in the proceedings."
9. Secondly, the applicant submits that the respondent made a conscious and deliberate decision to engage legal representation where none was required, and that it is not fair and reasonable for him to bear the burden and consequences of that decision.
10. The applicant also submits that he did not consider that the letter of 16 June 2015 to be a reasonable offer and says that he considered it an attempt to intimidate him into agreeing not to proceed with the application. The applicant says that the letter did not resolve any of his concerns regarding the trees and it was therefore not reasonable for him to accept the invitation to discontinue the proceedings contained therein. Further, the applicant says that in accordance with Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17, the letter contained a closing date for a response that was less than 28 days from the date of the letter and that therefore he was not given a reasonable period to respond.
11. The applicant also draws to my attention the fact that the respondent did not comply with the directions made by the Court in the proceedings. The applicant received the respondent's evidence only 2 days prior to the hearing, and he therefore submits that he was forced to proceed to the hearing.
12. The applicant says that he commenced the proceedings in the honest belief that the Trees Act and the jurisdiction of the Court operated to prevent future damage and the future impact of hedges on views and access to sunlight.
13. The applicant indicates that he still remains concerned about the ongoing maintenance of the trees. He is concerned that future owners of the property will not maintain the trees, and that the trees were planted with the purpose of growing to a height much greater than that which the respondent says she intends for them to grow.
14. The applicant also says that the issues could have been resolved prior to it going to hearing if the respondent had agreed to mediate or discuss the proposal to maintain the trees, therefore avoiding the costs that were ultimately incurred by the respondent.
15. The applicant also submits that it is not appropriate for a costs order to be made in circumstances where he says that the respondent's defence of the application under the Trees Act was likely to be funded by a third party. This assertion is based on his evidence that the respondent is on Centrelink payments.

Consideration

1. There is no prohibition that prevents the respondent from filing a notice of motion for costs after the expiry of the 28 days stipulated by Practice Note - Class 2 Tree Applications. Her failure to do so is not fatal to the application for costs. The respondent filed the notice of motion only a week or so after the expiry of the 28 day period and I am therefore prepared to consider the merits of the application.
2. Firstly, contrary to what was contended by the respondent, I do not accept that the applicant commenced the proceedings maliciously or in a deceitful manner. Through two different means the applicant sought to resolve the issue of the trees with the respondent prior to the commencement of the proceedings. The first was by way of the letters dated 13 and 17 February 2015. In each of those letters, the applicant sought to seek a solution to problems he thought might eventuate following the planting of the trees. The second means by which the applicant sought to resolve the issue of the trees with the respondent prior to the commencement of the proceedings was to seek a mediation with the Community Justice Centres. Whilst I accept that the respondent's letter of 5 March 2015 responded to the applicant's concerns, that letter did not propose any solution that might resolve future problems that could arise. Further, the respondent declined to participate in a mediation. I accept that this put the applicant in a position where he felt that the only way he might be able to resolve the issues was to commence proceedings in court, even though the factual basis on which they were commenced did not ultimately invoke the jurisdiction of the Court to make orders concerning the trees.
3. Secondly, I do not accept the respondent's submission that the applicant was required to give prior notice of the commencement of the proceedings or of the orders that might be sought in the proceedings prior to their commencement. Section 8 of the Trees Act, and the 21 day period set out therein, applies to the service of the Tree Dispute Application (and the orders sought contained therein) on a respondent prior to the first directions hearing. That is, a respondent must have had 21 days notice of the application to the Court and the orders sought prior the first directions hearing, with that notice being given by service of the Tree Dispute Application on them. Section 8 does not operate to require a waiting period of 21 days following the sending of a letter to a prospective respondent prior to the commencement of proceedings. Although it would have been a preferred outcome for the parties to continue corresponding on the issue of the trees in the hope of reaching an agreed outcome rather than commencing court proceedings, the respondent's submission that he was required to do so and that he was required to provide 21 days notice of prospective proceedings is unfounded.
4. Further, I do not accept that the applicant's failure to specify the precise orders sought is sufficient ground on which it would be reasonable to subject him to an adverse costs order. The applicant represented himself at the time of commencing the proceedings and did not understand the specificity required in the 'orders sought' part of the Tree Dispute Application. The respondent was aware of the trees of concern by way of the applicant's letters of 13 and 17 February 2015, as well as in the Tree Dispute Application, and a direction was made at the first directions hearing to require the applicant to specify the orders sought in sufficient time ahead of the hearing.
5. However, the applicant's application under the Trees Act proved unfounded. Fundamental to the applicant's prospects of success in the proceedings was that the trees must "in the near future" be likely to cause damage to property (s 10(2)) for orders to be made under Part 2, or must form a hedge at least 2.5m tall (s 14A(1)) and be severely obstructing sunlight to a window or a view from a dwelling (s 14E(2)) for orders to be made under Part 2A.
6. It was clear that the applicant failed to put on any evidence in the proceedings that established that the trees were likely to cause damage to his property "in the near future", or within 12 months pursuant to the meaning of 'near future' established in Yang v Scerri [2007] NSWLEC 592. The arborist's report relied upon by the applicant was silent on whether damage to the applicant's property was likely to occur within the 12 months following the report. This report was focussed on the longer term maintenance of the trees and longer term problems that may arise if the trees were not properly maintained. At the hearing, so remote was the prospect of damage by the trees that both arborists agreed that the trees were not likely to cause damage in the next 12 months. The Court therefore had no jurisdiction to make orders under Part 2 of the Trees Act.
7. Similarly, in relation to Part 2A of the Trees Act, the applicant in his Tree Dispute Application indicated that there was not at that time any blocking of sunlight or obstruction of views. This concession meant that there was no basis upon which orders should have been sought under Part 2A.
8. It is therefore clear that the applicant commenced and carried on proceedings that did not have reasonable prospects of success. Although the applicant represented himself and may have been optimistic about the Court's power to make orders under the Trees Act, there is a large volume of material available online regarding commencing proceedings under the Trees Act. That material includes information regarding what the court must be satisfied of before having the power to make orders.
9. Even if the applicant had not been aware of the matters requiring satisfaction before the Court can make orders, or of the 12 month period set out in Yang v Scerri, these things were made abundantly clear to him in the letter from the respondent's solicitor on 16 June 2015. I do not accept the applicant's submission that the letter was a threat or designed to intimidate him. That letter clearly outlined the relevant case law relating to the meaning of "near future" on page 2, as well as the matters that had to be established for the application under Part 2A on page 3. The applicant's decision to continue the proceedings upon receipt of this letter without putting on evidence to satisfy those matters meant that he continued the proceedings without reasonable prospects of success. This falls squarely within the provisions of rule 3.7(3)(f) and is therefore a circumstance in which it is fair and reasonable for a costs order to be made.
10. I do not accept that the respondent's failure to comply with the timetable in the proceedings by filing its evidence only a day before the hearing is disentitling conduct that would prevent a costs order being made in her favour. In its letter of 16 June 2015, the respondent fully articulated its position regarding the applicant's failure to establish likely damage "in the near future" or to demonstrate current obstruction of views or of access to sunlight.
11. I also do not consider the submission made by the applicant raising questions regarding who might be funding the legal representation to be relevant to my determination of the question of costs. An order for costs reimburses a party to proceedings for the legal costs incurred by that party in those proceedings, regardless who actually pays the bill.
12. I am not satisfied that an order should be made for the payment of indemnity costs on the basis of the letter being marked as a Calderbank letter. Whilst the letter is consistent with the common law principles regarding a Calderbank letter, the discretion to make an order for indemnity costs is still governed by rule 3.7 of the Land and Environment Court Rules 2007 and the requirement that an order be considered "fair and reasonable" in the circumstances. In circumstances where the applicant represented himself, and where this was likely the first time that the applicant was made aware of the matters that were required to be satisfied by him before orders could be made, I am not satisfied that it would be fair and reasonable for an indemnity costs order to be made.
13. Nonetheless I am satisfied that it is fair and reasonable for the applicant to reimburse the respondent for costs incurred by her in defending an application that had no reasonable prospects of success. This includes the cost of engaging the arborist to prepare the expert report in the proceedings. My view is that the costs payable should be from 24 June 2015, being the date immediately after the date by which the respondent had asked the applicant to respond to the invitation to discontinue the proceedings contained in its letter of 16 June 2015. It is at that point that the applicant chose to continue the proceedings despite there being no reasonable prospects of success.
14. However, other than the cost of engaging the arborist, I am not satisfied that the applicant should fully reimburse the respondent's costs of the proceedings from this date. In that respect, I accept the submission that the respondent was not required to engage legal representation in the proceedings. The necessity of legal representation in applications made under the Trees Act was considered by Her Honour Justice Pain in Fox v Ginsberg (No 3) [2011] NSWLEC 139. At [9] Her Honour said: "Class 2 proceedings are intended to provide a cost effective and efficient means of delivering justice in tree disputes between neighbours within the limits identified by the Act. The presumption is that each party will pay his or her own costs and that is an important presumption in Class 2 proceedings when considering what is fair and reasonable. It is preferable that parties represent themselves rather than engage a lawyer and reduce the need for expert reports wherever possible." And at [13]: "As stated above, I make no assumption in tree dispute matters that legal representation is essential and I am not satisfied that it was on this occasion. I do not intend any criticism of the Applicant or her solicitor in making this finding but I am emphasising that in matters of this type legal representation is not the norm and will not automatically be compensated."
15. In these proceedings there is evidence that the respondent is medicated for a mental condition, and that the previous history of proceedings between the applicant and respondent on an apprehended violence order prompted her to obtain legal representation. Whilst this might provide an explanation for the respondent obtaining legal representation, there was nothing complicated or legally difficult about the proceedings that meant that legal representation was essential in the proceedings. The respondent had a friend assisting her in the costs application and similarly could have been similarly successful in the proceedings with that same assistance and without legal representation. There is no evidence that a different outcome would have eventuated for the respondent if she had not obtained legal representation, or that the process was simpler and easier as a result of retaining a solicitor to prepare documents.
16. Consistent with the decision of Pain J in Fox v Ginsberg (No 3), I am of the view that the costs order should be reduced to 50% of the costs incurred to reflect that the fact that legal representation was not essential to defend the proceedings. This of course does not apply to the disbursement for engaging the arborist, which is a cost that would have been incurred even if the respondent was not legally represented.
17. Whilst it is preferable for the Court to fix the costs payable under such an order, on the evidence that is before me I could not be satisfied that the legal professional costs incurred by the respondent are fair and reasonable without undertaking a proper assessment of those costs. In such circumstances, it is not the role of the Court to carry out the assessment of the costs. As such, I am of the view that the costs order should be as agreed or assessed. This means that if the parties are unable to agree on a sum payable for costs, they will need to have the costs assessed by a costs assessor. The evidence of the respondent is that the cost of the arborist was $440. I will order the payment of that in full.
18. The respondent has successfully established that the applicant unreasonably carried on proceedings and that therefore I should make a costs order in her favour. Accordingly, I am of the view that the respondent should receive the benefit of an order for the payment of any legal professional costs incurred in making the costs application. Although the respondent appeared in person at the hearing of the costs application and filed the documents in her own name, it appears that she may have obtained some assistance from her solicitor in preparing those documents and that is what the costs order relates to.
19. The Court orders that: 1. The applicant pay 50% of the respondent's costs of the proceedings from 23 June 2015 to 29 July 2015, as agreed or assessed. 2. The applicant pay the respondent the sum of $440 for the cost of engaging the arborist to provide an expert report in the proceedings. 3. The applicant pay the respondent's legal professional costs of the notice of motion filed 1 September 2015, as agreed or assessed. Joanne Gray Registrar 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: 23 December 2015