Submissions of the O'Keefes
23 Counsel for the O'Keefes was content, save for one aspect, to rely on their filed written submissions.
24 That one aspect was in relation to the Ecclestons' contentions on the preliminary point of law. Counsel for the O'Keefes asserted that initially the question was raised before Sheahan J who transferred the question for determination by the trial judge, namely Lloyd J. There was nothing unreasonable in this course of conduct.
25 That Lloyd J declined to hear and determine separately the point of law, the O'Keefes argued, was strongly suggestive of the fact that the appeal did not involve, as the central issue, a question of law which was potentially determinative of the proceedings and which was preliminary to an evaluation of the merits of the appeal (r 3.7(3)(a)).
26 Furthermore, to the extent that the Ecclestons submitted that the preliminary point of law was raised unreasonably late, the O'Keefes argued that it was brought before the Court at the earliest opportunity. It was not until the expert evidence of the Corporation (Dr Outhet) was served, late, that the issue was able to be identified. Thus the O'Keefes were not dilatory in agitating the preliminary point of law.
Consideration
27 In my view the application for costs by the Ecclestons ought to be refused for the reasons below.
28 First, while it is true that legal issues played a significant part in the appeal before Lloyd J, I do not accept that consideration of the merits was such a "small part" of the proceedings before his Honour that a departure from the presumptive rule contained in r 3.7 is, without more, warranted.
29 As the judgment of Lloyd J itself demonstrates, three of the issues concern questions of merit, one of the issues was a mixed question of law and fact and four of the issues raised for determination concern questions of law. A proper reading of his Honour's judgment reveals that having identified the issues in this way, this is how they were determined by his Honour. Accordingly, his Honour was required to determine both the lawfulness and the merits of whether or not a water licence ought to be issued.
30 Further, to characterise the appeal as a mere "dispute between neighbours" as the Ecclestons did, is to misstate the nature of the appeal. The decision of Lloyd J confirms that the appeal was one going to both the merits of the application and the power of the Board to issue the licence, and in so doing, paid considerable regard to the issues between the experts engaged by the Corporation and the O'Keefes (see [14]-[63], [84], [102] and [109] of the judgment). Thus, his Honour found that "on the merits the application for the licence should be granted" and that he was "satisfied that, on the merits, the application for licence should be granted" (see [102] and [109] of the judgment and also [84] emphasis added).
31 Second, to the extent that the Ecclestons are critical of the O'Keefes for bringing the appeal given the earlier decision of Windeyer J, it was because of the finding by Windeyer J that the easement was unenforceable absent a water licence that the O'Keefes made the application to the Board. Having been unsuccessful before the Board, there was nothing inappropriate about the O'Keefes seeking to appeal the Board's decision to this Court. They were entitled to do so in the Class 3 jurisdiction of the Court.
32 The appeal was, by its very nature, a merits appeal from a decision made with respect to the granting of a water licence. While undoubtedly containing questions of law, it is incorrect to describe the appeal as an "adversarial argument" enlivening the general rule that costs follow the event. This is not the case.
33 Third, in relation to the submission that the principle of proportionality in litigation ought to apply, no authority was put before the Court to illustrate the practical operation of this principle or indeed the ambit of its application in the context of r 3.7. For the reasons already explained, the O'Keefes did not have, as was submitted by the Ecclestons, the entire benefit of Windeyer J's judgment in the Supreme Court given his Honour's findings. They were compelled to make an application for a water licence in order to take the benefit of the easement and were entitled to appeal the decision of the Board which effectively refused them the licence. They did not, in my view, act unreasonably in doing so. To find otherwise, through the vehicle of costs sanctions, would be to displace the no discouragement principle which underpins the basis of r 3.7 (see Arden at [10] and the authorities cited thereat).
34 Fourth, criticism was made by the Ecclestons of the attempt by the O'Keefes to raise a preliminary question of law approximately two weeks before the hearing was due to commence. Yet it is this very question of law which the Ecclestons now complain "engulfed the hearing" before Lloyd J.
35 Again, I see nothing about the behaviour of the O'Keefes in this regard that would warrant displacement of the presumptive rule. It was not submitted by the Ecclestons that the preliminary point of law could have been identified earlier by the O'Keefes. That said, the O'Keefes acted promptly to raise the issue before the Court. There is some force in the submission of the O'Keefes that Lloyd J's refusal may be inferred as indicative of the trial judge's view that the proceedings did not involve as a central issue only a question of law (or even a question of mixed fact and law) that would be determinative of the proceedings (see r 3.7(3)(a)).
36 Finally, I reject the submission that that O'Keefes acted unreasonably in the conduct of the appeal. Merely because the O'Keefes did not succeed does not make the appeal unreasonable. Nor does it mean that they did not have reasonable prospects of success. A fair reading of his Honour's judgment is not suggestive of an appeal with limited prospects of success as was submitted by the Ecclestons.
37 Moreover, to the extent that a large part of the hearing was taken up with the expert evidence of Dr Goldney which, it was argued, was ultimately not relevant, is not correct. Dr Goldney gave concurrent evidence, having prepared a joint report at the request of the Corporation's expert. The report was tendered. Counsel for the Ecclestons cross examined Dr Goldney, as did counsel for the Corporation. His Honour's judgment considered in detail the evidence given by both Dr Goldney and Dr Outhet (see [14], [23], [33], [44], [48] and [61] of the judgment). I accept the submission of the O'Keefes that read as a whole, Lloyd J's judgment demonstrates the relevance of the expert evidence, which includes Dr Goldney's evidence, to a number of significant issues for determination (see the judgment at [14]-[63]).
Conclusion and Orders
38 In all the circumstances I do not find that it would be fair and reasonable to displace the statutory rule that the Court is not to make an order for costs. It follows that the notice of motion is dismissed with costs.