Plaintiff v Defendant

1 This is an application for costs in an action that was resolved by consent declarations.

2 The plaintiff and defendant are neighbours. The plaintiff owns land the subject of three certificates of title issued under the Transfer of Land Act 1958 (Vic) ('the Act') on which are constructed three terrace houses ('the plaintiff's land').

3 The defendant owns land the subject of two certificates of title issued under the Act ('the defendant's land'). The defendant's land comprises:

• a house block on which a dwelling is constructed; and

• a linear strip approximately 14 metres long and 0.9 metres wide ('the subject land') which abuts the house block.

4 The subject land has a 0.9 metre frontage onto a street. There is a 0.9 metre-wide gate at the entrance to the subject land from the street ('the gate'). The gate has a lock on it ('the lock').

5 The plaintiff's land has a frontage to a street on its north and adjoins the subject land at its rear to the south.

6 The plaintiff's land and the subject land are shown on an approved plan of division ('the plan'). On the plan, the subject land is coloured brown and under a heading "Appropriations" it is stated that '[t]he land coloured brown is appropriated or set apart for easements of way & drainage.'

7 The certificate of title in respect of the subject land contains the following indorsements:

ENCUMBRANCES, CAVEATS AND NOTICES

Any encumbrances created by Section 98 Transfer of Land Act 1958 or Section 24 Subdivision Act 1988 and any other encumbrances shown or entered on the plan or imaged folio set out under DIAGRAM LOCATION below.

DIAGRAM LOCATION

SEE LP034385 FOR FURTHER DETAILS AND BOUNDARIES

8 The defendant acquired the defendant's land in 2004. The plaintiff already owned the plaintiff's land at that time.

9 On 22 November 2017 the plaintiff's solicitor wrote a letter to the defendant's solicitor asserting the existence of an easement over the subject land. On 1 December 2017 the defendant's solicitor responded denying the existence of an easement and in the alternative contending that any easement had been abandoned.

10 On 24 January 2018 the plaintiff's solicitor wrote a further letter to the defendant's solicitor asserting the existence of an easement and foreshadowing commencement of a proceeding in this Court for a declaration as to the existence of an easement and injunctive relief. On 6 February 2018 the defendant's solicitor responded denying the existence of the asserted rights.

11 On 26 March 2018 the plaintiff commenced this action against the defendant seeking a declaration as to the existence of an easement of way and drainage. The plaintiff pleaded a primary and alternative secondary case as to the scope of the rights of way and drainage and sought corresponding alternative declarations, an order for removal of any obstruction upon the subject land, an injunction and damages. On 3 May 2018 the defendant filed a defence denying the existence of an easement and pleading in the alternative that it had been abandoned.

12 On 19 September 2018 the plaintiff amended the statement of claim to plead, amongst other things, a new primary case as to the scope of the easement with the existing pleas becoming secondary and tertiary cases. On 14 September 2018 Judicial Registrar Matthews ordered that the plaintiff pay the defendant's costs thrown away by reason of the amendment.

13 On 27 February 2019 I listed the trial, to commence before me on 23 September 2019. Orders were made for written witness statements and preparation of a court book. Witness statements on behalf of the plaintiff were filed by 20 March 2019. Witness statements on behalf of the defendant were filed on 6 May 2019. A court book was filed on 28 June 2019.

14 On 19 March 2019 lawyers for the parties discussed a possible settlement. It was agreed that the plaintiff's lawyers would propose the minimum language that the plaintiff would be content to have incorporated into an instrument of easement and the defendant's solicitor would seek instructions in relation to it. This was confirmed by an email from the defendant's solicitor to the plaintiff's solicitor dated 27 March 2019.

15 On 8 April 2019 the defendant's solicitor sent an email to the plaintiff's solicitor offering to execute an instrument of easement on terms set out in an attached document.

16 On 16 April 2019 the plaintiff's solicitor rejected the offer and proposed alternative terms in an instrument of easement. The instrument provided for an easement of way and drainage on certain terms, including that the easement of way was a full and free right to pass at all times and for all purposes by foot and vehicle and the easement of drainage was unrestricted, that the plaintiff could register the easement on the certificates of title, that the defendant may enclose the subject land by a gate with a lock provided that the defendant gave to the plaintiff a key to the lock and the defendant was to pay the plaintiff's costs in a fixed sum.

17 On 6 May 2019 the defendant's solicitor rejected the offer. The defendant offered instead to consent to a declaration as to the existence of the easement, to provide a key to the lock on the gate to allow access for the exercise of the easement according to law by or on behalf of the plaintiff and to pay the plaintiff's costs of action to date to be taxed if not agreed.

18 On 3 June 2019 the plaintiff's solicitor rejected the offer. The plaintiff essentially reiterated his previous offer of 16 April 2019 with elaboration on the terms of the right of way.

19 On 4 June 2019 the defendant served a formal open offer of compromise essentially reiterating her previous offer of 6 May 2019.

20 On 7 June 2019 the plaintiff's solicitor wrote to the defendant's solicitor rejecting the offer and stating that it was essential to the plaintiff that the scope of the easement be addressed in any settlement agreement. The plaintiff essentially reiterated his previous offer of 3 June 2019 but reduced the lump sum figure for costs.

21 On 11 June 2019 the defendant's solicitor responded rejecting the offer and reiterating the 4 June 2019 offer.

22 On 17 June 2019 the plaintiff served a formal open offer of compromise offering to consent to a declaration as to the existence of the easement, declarations that the plaintiff had "unrestricted" rights of way and drainage and a declaration that the defendant and her successors may retain a locked gate conditional on providing a key to the plaintiff and his successors. It was a term of the offer that the defendant pay the plaintiff's costs of action to date.

23 On 18 June 2019 the defendant's solicitor wrote to the plaintiff's solicitor taking issue with the declarations as to the scope of the easement, an aspect of the declaration as to the gate and key, and as to costs since 6 May 2019 and saying that otherwise the offer was acceptable. The defendant's solicitor foreshadowed an intention to request an urgent directions hearing at which the defendant would seek an order in terms of her offer dated 4 June 2019.

24 Correspondence passed between the solicitors for the parties in which the plaintiff opposed the defendant's proposed course.

25 On 28 June 2019 the defendant's solicitor sent an email to the Court requesting a listing for a hearing to determine which of the two offers of compromise should be accepted so as to bring the proceeding to an end.

26 On 31 July 2019 the defendant filed a summons seeking an order dismissing that part of the plaintiff's claim that sought a declaration as to the scope of the easement and filed submissions stating that the parties were in agreement as to declarations concerning the existence of the easement and the provision of a key but disagreed concerning a declaration sought by the plaintiff as to the terms of the easement.

27 On 7 August 2019 the plaintiff served submissions in opposition to the summary judgment application. Amongst other things the plaintiff said that he contended that the rights of way and drainage were unrestricted in the sense that the dominant tenement holder can freely access the easement at any time and without notice for the purposes of the easement.

28 On 8 August 2019 the defendant's summons came on before me. The defendant indicated that she was willing to agree to a declaration as to the scope of the easement to the extent of a declaration that the plaintiff and his successors have free access to the easement at any time and without notice. The issue about the gate and key had been resolved. It was ordered by consent that the parties negotiate as to a scope of easement declaration and if the parties were unable to resolve that issue it was to be listed for trial on 23 September 2019.

29 The parties negotiated and on 26 August 2019 agreed on the terms of declarations concerning the scope of the easement. On 3 September 2019 I made the declarations (with some agreed modifications) by consent. The parties could not agree about the costs of action and this was the subject of argument on 23 September 2019.

30 The plaintiff seeks an order that the defendant pay his costs of action on the standard basis. He contends that costs follow the event, he was successful in the action and the defendant should pay his costs of action on the standard basis. He also contends that the conduct of the defendant since 6 May 2019 was unreasonable.

31 The defendant seeks an order that she pay the plaintiff's costs of action up to 6 May 2019 and the plaintiff pay her costs of action thereafter on the standard basis. Alternatively, she seeks an order that there be no order as to the costs of action. She contends that one of the two alternative orders sought is appropriate to reflect the fact that the action was compromised without a determination by the Court on the merits, the plaintiff changed his case over time as to the scope of the easement, he prolonged the proceeding beyond 6 May 2019 to achieve detailed declarations not previously sought, his conduct was unreasonable, and the defendant acted reasonably by making settlement offers and seeking resolution or determination of the outstanding issue concerning the scope of the easement.

32 It is common ground that, whatever order is made as to the costs of action, it is to be subject to the order made by Judicial Registrar Matthews on 14 September 2018.

33 Costs are in the discretion of the Court under section 24 of the Supreme Court Act 1986 (Vic). The discretion is unfettered but must be exercised judicially.[1]

34 As a general rule, costs follow the event.[2] This general rule applies when there is a determination by the Court of the merits of the proceeding and there is a manifestly successful party and unsuccessful party.

35 If the proceeding is resolved by compromise (without agreeing costs), at least in cases where the compromise entails that there is not a manifestly successful party, it cannot be said that there is an "event" which costs should follow.[3] In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin,[4] McHugh J said:

Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.[5]

36 If one party capitulates and concedes the case of the other, often it can be seen that there is an event and the capitulating party is the unsuccessful party.[6]

37 A relevant factor in exercising the discretion as to costs is the extent to which the costs in question have been caused or increased by the conduct of a party in, relating to or leading up to the action or application in question.[7] In a context where the matter proceeded to determination by the Court, in Oshlack v Richmond River Council,[8] McHugh J said:

The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:

"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct."

"Misconduct" in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.[9]

38 In a context where the matter resolved and did not proceed to determination by the Court, in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin,[10] McHugh J said:

In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation...

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.[11]

39 If an unsuccessful party offers to resolve the dispute on terms no less favourable than the successful party ultimately achieves and the successful party unreasonably rejects the offer, the successful party might be deprived of costs or ordered to pay the unsuccessful party's costs after a reasonable time after the offer.[12] Rule 26.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides for service of offers of compromise. Rule 26.08 provides that, unless the Court otherwise orders, if a plaintiff serves an offer of compromise and obtains a judgment no less favourable than the terms of the offer, the plaintiff is entitled to costs on an indemnity basis for the period from 11.00 a.m. on the second business day after the offer was served;[13] if a defendant serves an offer of compromise and the defendant succeeds in the action, the defendant is entitled to costs on an indemnity basis for the period from 11.00 a.m. on the second business day after the offer was served; if a defendant serves an offer of compromise and the plaintiff obtains a judgment not more favourable than the terms of the offer, the defendant is entitled to costs on the ordinarily applicable basis for the period from 11.00 a.m. on the second business day after the offer was served.

40 All of the factors to which reference has been made may be seen as part of ascertaining which party caused or contributed to the incurring of the costs in question.

41 The analysis can be divided into three stages. In the first stage, the parties were in dispute concerning the existence of an easement and the scope of the easement (if it existed) did not arise in any concrete way. In the second stage, the defendant conceded the existence of the easement and the parties were in dispute as to whether the plaintiff was entitled to a declaration concerning its scope. In the third stage, the parties negotiated and reached a compromise agreement on a declaration concerning the scope of the easement.

42 There may be some room for doubt about the precise boundaries between these stages but the distinction between the stages themselves is clear. I consider initially each stage in isolation before considering what overall is the appropriate costs order.

43 Before the commencement of the action, there was a dispute about the existence of an easement evidenced by the solicitors' letters between 22 November 2017 and 6 February 2018. On the evidence adduced before me, there was no discussion between, or adoption of positions by, the parties concerning the terms of any easement.

44 Between 26 March 2018 (when the action was commenced) and 19 March 2019 (when the defendant first expressed a willingness to agree to the existence of an easement), the principal issue in the action, and focus of the parties, was the existence, and continued existence, of an easement.

45 On 6 May 2019 the defendant made a Calderbank offer in which she offered to consent to a declaration as to the existence of the easement, to provide a key to the lock on the gate and to pay the plaintiff's costs of action to date.

46 On 4 June 2019 the defendant made an open offer of compromise in essentially the same terms and on 18 June 2019 she proposed to seek an order in terms of that offer. On 31 July 2019 she filed submissions stating that the parties were in agreement as to declarations concerning the existence of the easement and the provision of a key but disagreed concerning a declaration sought by the plaintiff as to the terms of the easement.

47 I address below the identification of the date on which the defendant capitulated on the issue of the existence of the easement. Whatever be that precise date, there is no doubt that the defendant did capitulate on that issue and that she had earlier objectively been wrong in denying the existence of the easement. If this period were to be considered in isolation, the defendant should pay the plaintiff's costs of action up to the point of her capitulation on the issue of the existence of the easement.

48 Between 7 May and 7 August 2019, the principal focus of the parties was on the declarations sought by the plaintiff concerning the scope of the easement. The plaintiff maintained an entitlement to a declaration concerning the scope of the easement. The defendant maintained that the plaintiff was not entitled to any declaration as to scope.

49 The question whether the plaintiff was entitled to a declaration concerning the scope of the easement was the subject of the defendant's summary judgment application. If the parties had not ultimately resolved the matter, that question would have been an issue at trial.

50 The plaintiff contends that this is a case in which the Court can and should determine the hypothetical question for the purpose of a costs order. The plaintiff contends that he was clearly entitled to a declaration as to the scope of the easement. The defendant takes issue with both of those propositions.

51 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin,[14] McHugh J said:

The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action...

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.[15]

52 This is not a case in which it can be confidently determined that the plaintiff would have succeeded on the issue whether the Court should make a declaration as to the scope of the easement. The dispute that led to the institution of the action was about the existence of the easement. No dispute arose before the action commenced as to the scope of the easement. No factual circumstance arose giving rise to any dispute whether, if the easement existed, the plaintiff could use the subject land in a particular way. Courts have consistently expressed grave reservations about giving advisory opinions (leaving aside Constitutional considerations that may have application to federal jurisdiction).

53 The abstract nature of the question as to the terms of the easement is illustrated by the communications between the parties from 19 March 2019 onwards. The parties initially discussed entering into an instrument of easement and exchanged alternative drafts as to the terms of the easement. This reflected the fact that the easement is expressed in the barest and most general terms, namely a "right of way and drainage". Each party could legitimately adopt different positions in attempting to spell out the scope of the easement.

54 If the matter had proceeded to trial on the issue whether the plaintiff was entitled to a declaration as to the scope of the easement, there is a very real possibility, if not a likelihood, that the Court would have declined to grant a declaration on the basis that the plaintiff was seeking an advisory opinion and that, if a dispute arose in future in concrete circumstances about the scope of the easement, that dispute could then be the subject of litigation.

55 The plaintiff cites Mantec Thoroughbreds Pty Ltd v Batur[16] as an example of a case in which the Court granted a declaration concerning the scope of an easement. However, in that case there was no dispute about the existence of the easement and there was a concrete dispute concerning its scope. The easement was approximately ten metres wide and 400 metres long and provided access to the Baturs' rural property from Bungower Road, Moorooduc. Before the easement was created in 1998, a dam had been constructed in 1970 on what became Mantec's property which reduced the usable width of the land the subject of the easement generally to approximately five metres and to approximately two metres at its narrowest point. After creation of the easement, Mantec erected fences which reduced the usable width of the land the subject of the easement in other places to approximately six metres and erected a gate across the land the subject of the easement at Bungower Road. The Baturs sought declarations that Mantec was obliged to alter the dam, or alternatively the Baturs were entitled to alter it, so that it did not encroach on the land the subject of the easement and that Mantec was obliged to remove the fences and gates.

56 Habersberger J held that, because the dam pre-existed the creation of the easement, Mantec was not obliged to alter it[17] but the Baturs were entitled to alter it at their own expense provided that the works did not unreasonably interfere with the use and enjoyment of the land by Mantec.[18] Habersberger J held that the fences[19] and gate[20] did not presently constitute a substantial obstruction of the Baturs' rights under the easement given the existence of the dam. Habersberger J indicated a willingness to make declarations to that effect but declined to determine the hypothetical question whether the fences or the gate would constitute a substantial construction if the dam were altered.[21]

57 Mantec Thoroughbreds Pty Ltd v Batur therefore does not support the plaintiff's contention that the Court would have made a declaration concerning the scope of the easement in the present case and tends to support the opposite proposition.

58 The defendant's conduct in resisting the making of a declaration concerning the scope of the easement cannot be characterised as unreasonable. Nor can the plaintiff's conduct in asserting an entitlement to such a declaration be characterised as unreasonable.

59 The plaintiff points to the fact that the defendant's application for summary judgment was not granted. However, for the reasons given above, it does not follow that the defendant would not have been successful ultimately on the issue whether the Court should make a declaration concerning the scope of the easement. In addition, when the defendant issued the summons seeking summary judgment, the parties had reached an impasse and the defendant's application and the resultant hearing on 8 August 2019 resulted in the Court encouraging the parties to negotiate on wording of a declaration concerning the scope of the easement, which resulted in the matter being resolved.

60 The defendant contends that it was not until 7 August 2018 when the plaintiff served submissions in opposition to the summary judgment application that the plaintiff articulated his concerns that the easement not be restricted in terms of time or the requirement of giving prior notice.

61 Each party contends that the conduct of their opponent in relation to the negotiation or non-negotiation of terms as to the scope of the easement was unreasonable. I reject both sets of contentions.

62 In all of the circumstances, having regard to the positions taken by and conduct of the parties, if this period were to be considered in isolation, this is a case in which each party should bear their own costs.

63 After 8 August 2019 the parties negotiated a compromise agreement on the wording of a declaration concerning the scope of the easement. This entailed compromise by both parties. Considered in isolation, both parties acted reasonably in this period and there is no reason why each party should not bear their own costs.

64 The final resolution involved genuine compromise by both parties compared to their earlier positions and offers. Neither party bettered any offer made before 8 August 2019.

65 Each party implicitly recognises that they did not better their previous offers. Indeed, if either party had bettered their previous offer of compromise, that party would prima facie have been entitled under rule 26.08 to an order for costs since shortly after the offer of compromise. Neither party relies on rule 26.08.

66 Nevertheless, each party asserts that the other party acted unreasonably in making and rejecting offers.

67 The declarations as to the scope of the right of way and right of drainage respectively that were ultimately made by consent were in the following terms (references to "the Road" are references to the subject land):

1. each of the Dominant Tenement Holders... and their tenants, licensees, servants, agents, contractors and workmen have the full and free right and liberty at all times and for the purpose of way with or without vehicles, tools, materials, machinery and equipment to go pass and repass on and over the Road or any part thereof;
2. each of the Dominant Tenement Holders... from time to time and their tenants and the occupiers ... have the full and free right and liberty for the purpose of drainage to discharge stormwater to the surface of the Road and discharge sewerage and waste water into a reticulation drain under the Road and (subject always to compliance with all statutory and regulatory requirements) at any time to break the surface of, dig, open up and use the road for the purpose of laying down, fixing, taking up, repairing, re-laying or examining existing drains or drainage pipes and of using and maintaining those drains and drainage pipes for drainage purposes and to enter the Road at any time (if necessary with vehicles and equipment) for any of those purposes.

68 It can be seen that the terms of the declarations are much more detailed than the bare reference in the plan to rights of way and drainage.

69 The plaintiff's case as pleaded was that he was entitled to a declaration that he had an "unrestricted" right of way and an "unrestricted" right of drainage over and under the subject land. He would not have obtained a declaration in such terms. In Rodwell v GR Evans & Co Pty Ltd,[22] Holland J said:

However wide the words used, the ambit of a right of way will be construed having regard to the state of affairs at the time of the grant and the purposes of the grant and an excessive or unreasonable user may be restrained by the court on the ground of going beyond the presumed intention of the parties.[23]

70 For example, the plaintiff is not entitled to pass up and down the subject land continuously 24 hours a day. Such use would be excessive and unreasonable.

71 The plaintiff's offers dated 16 April, 3 June and 7 June 2019 were each expressed in terms of the parties executing an instrument of easement. The plaintiff could not have obtained an order in the action for the execution of an instrument of easement and the action was not resolved on that basis. The plaintiff's open offer dated 17 June 2019 was expressed in terms of consent declarations, but the declarations were expressed in the same terms as his pleading, namely that he has an "unrestricted" right of way and an "unrestricted" right of drainage over and under the subject land. For the reasons given above, he would not have obtained such declarations and the consent declarations that were made were in more specific and limited terms. It is clear that, by the consent declarations, the plaintiff did not better or equal his offers.

72 The defendant's offers dated 6 May, 4, 11 and 18 June 2019 did not include a declaration as to the scope of the easement. It is clear that, by the consent declarations, the defendant did not better or equal her offers.

73 Each party complains about the conduct of the other in relation to negotiations. However, neither party acted unreasonably either before or after 8 August 2019 in relation to the scope (as opposed to the existence) of the easement.

74 The declaration as to provision of a key to the gate that was ultimately made by consent was in the following terms (references to "the Road" are references to the subject land):

The Defendant and her successors in title, transferees and assigns of the Road may retain and maintain the existing locked gate at the western end of the Road or at any time replace the existing locked gate with a replacement locked gate subject to and conditional upon the Defendant and any successor in title, transferee or assign of the Road forthwith providing to the Plaintiff and his successors in title, transferees and assigns ... a key to the existing locked gate or any replacement locked gate for the purpose of ingress to and egress from and the use of the Road by the Plaintiff and his successors in title, transferees, assigns, servants, agents and invitees pursuant to the easement of way and drainage.

75 The plaintiff in his statement of claim sought an order that the defendant remove all obstructions on the subject land. However, it is clearly established that the servient tenement holder is entitled to erect a gate.[24] In Mantec Thoroughbreds Pty Ltd v Batur[25] Habersberger J held that the servient tenement holder was entitled to keep the gate locked subject to providing a key to the dominant tenement holder to allow access.[26]

76 The offer by the defendant dated 6 May 2019 included a term that the defendant provide to the plaintiff a key to the locked gate so that access can be gained to the plaintiff's land for the exercise of the easement of way and drainage according to law by or on behalf of the plaintiff and his successors in title, servants, agents and invitees.

77 The offer by the plaintiff dated 3 June 2019 was in similar terms but added a provision that the defendant would, if she were to replace the gate or lock, deliver to the plaintiff or his transferees or assigns a key to the replacement gate or lock. The defendant's open offer dated 4 June reiterated the offer of 6 May but I infer that it was prepared before receipt of the plaintiff's offer dated 3 June.

78 The plaintiff's open offer dated 17 June 2019 was in the following terms:

The Defendant and her successors in title, transferees and assigns of the Road may retain and maintain the existing locked gate at the western end of the Road or at any time replace the existing locked gate with a replacement locked gate subject to and conditional upon the Defendant and any successor in title, transferee or assign of the Road forthwith providing to the Plaintiff and his successors in title, transferees and assigns ... a key to the existing locked gate or any replacement locked gate for the purpose of ingress to and egress from and the use of the Road by the Plaintiff and his successors in title, transferees, assigns, servants, agents and invitees pursuant to the easement of way and drainage.

79 On 18 June 2019 the defendant took issue with the imposition of a requirement on the defendant's successor in title, transferee or assignee and said that, if they restricted the plaintiff's access in future, the plaintiff or his successors would have appropriate rights at law pursuant to the easement to remedy the situation.

80 On 31 July 2019 the defendant expressed a preparedness to agree to the wording of a declaration in the terms proposed by the plaintiff on 17 June subject to inclusion of the words "according to law" and on 8 August she expressed a preparedness to agree unconditionally to the wording proposed by the plaintiff.

81 The plaintiff contends that he was successful on the wording proposed in his offer of 17 June 2019 and further that the conduct of the defendant in initially resisting that wording was unreasonable. I reject that contention.

82 First, by way of context, the issue in relation to the wording of a declaration in relation to the gate was minor compared to the issue in relation to a declaration concerning the scope of the easement. The costs incurred in relation to the gate declaration would be relatively small.

83 Secondly, the plaintiff only proposed that the declaration extend to the defendant's successors in title, transferees and assigns on 17 June 2019. While the defendant initially opposed that extension, she agreed to it on 31 July subject to a minor caveat and agreed unconditionally on 8 August.

84 Thirdly, it was not unreasonable for the defendant to oppose an extension of the declaration to refer to her successors in title, transferees and assigns. It was strongly arguable by the defendant that it was sufficient that the declaration address the present situation in relation to the existing gate and lock and that, if the defendant's successors in title were to obstruct access in future by, for example, replacing the gate or lock, the plaintiff could bring an action against them for interference with his easement. If the issue had proceeded to trial, there is a very real possibility, if not a likelihood, that the Court would have declined to grant a declaration referring to prospective future action by the defendant's successors in title, transferees or assigns.

85 The defendant should pay the plaintiff's costs of action on the standard basis up to the point at which the defendant conceded the existence of the easement. The parties should bear their own costs since that point. On balance, the dividing line should be drawn at 6 May 2019 for a combination of the following reasons.

86 First, it is clear that the defendant conceded the existence of an easement at the latest by 4 June 2019 when she made the open offer of compromise, after which it would have been untenable for her to deny the existence of the easement in the action. The evidence adduced at the costs hearing indicates that, after the defendant made the offer on 6 May 2019, both parties proceeded on the basis that the issue was now the scope rather than the existence of the easement and the legal work undertaken and costs incurred by the parties thereafter related to that issue rather than the existence of the easement. The fact that the defendant was effectively conceding the existence of the easement (albeit at that point the communications were on a without prejudice save as to costs basis) is confirmed by the fact that the defendant offered not only to provide a key to the gate but also to pay the plaintiff's costs of action up to 6 May 2019.

87 It is true that the parties subsequently agreed the content of a court book for the trial and the plaintiff filed the court book on 28 June 2019. However, it was still necessary to prepare a court book because the balance of the issues (apart from the existence of the easement), including the declarations sought by the plaintiff as to the scope of the easement, still needed to proceed to trial in the absence of a complete resolution.

88 Secondly, if an order is made that the defendant pay the plaintiff's costs up to 6 May 2019, those costs will include matters which the plaintiff did not ultimately pursue and on which he was not likely to have been successful if the matter had proceeded to trial. The plaintiff sought damages for a substantial diminution in the capital value of his land and the parties incurred the costs of obtaining valuation evidence. The plaintiff did not ultimately pursue a claim for damages and was never likely to obtain such damages because declaratory and if necessary injunctive relief would have resulted in his land not suffering any diminution in value. The plaintiff also pleaded, initially as his primary case and after amendment as his secondary case, that the right of way and drainage amounted to a "right of carriageway" within the meaning of section 98 and the Twelfth Schedule to the Act. The plaintiff was unlikely to succeed in this contention. In Mantec Thoroughbreds Pty Ltd v Batur,[27] Habersberger J held that a "right of way" did not amount to a "right of carriageway" within the meaning of those provisions.[28] The position is even stronger in the present case where the right of way is only 0.9 metres wide.

89 Thirdly I reject the defendant's contention that, if a dividing line is to be drawn, it should be drawn at 27 March 2019 when her solicitor wrote to the plaintiff's solicitor confirming that the plaintiff's lawyers would propose the minimum language that the plaintiff would be content to have incorporated into an instrument of easement and the defendant's solicitor would seek instructions in relation to it. This was merely confirmation of a preliminary discussion about settlement, not a capitulation by the defendant as to the existence of the easement. Likewise, I reject the plaintiff's contention that, if a dividing line is to be drawn, it should be drawn at 8 August 2019 when the defendant indicated a preparedness to agree to a declaration concerning the scope of the easement. This was long after the point at which the parties had moved from a dispute concerning the existence of the easement to a dispute concerning a declaration about its scope.

90 Taking a broad axe approach, it is appropriate to order that the defendant pay the plaintiff's costs of action up to 6 May 2019 and that the parties bear their own costs thereafter. This includes the costs argument which took place on 23 September 2019. Neither party succeeded in obtaining the costs order that they sought at that hearing. Although the defendant was prepared to agree at the hearing to a costs order in terms of the order that I have determined should be made, by that point the parties had already largely incurred the costs of preparing for and attending at the costs hearing.

91 I propose to make the following orders upon delivery of these reasons:

1. The defendant is to pay the plaintiff's costs of action on the standard basis up to and including 6 May 2019.

2. Each party is to bear their own costs after 6 May 2019.

3. These orders do not derogate from the order made by Judicial Registrar Matthews on 14 September 2018 that the plaintiff pay the defendant's costs thrown away by reason of the amendment of the statement of claim.

[1] Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] VicRp 12; [1991] 1 VR 129 at 174-175 per Ormiston J; Transport Accident Commission v O'Reilly, Cavanagh, Moore & Davey [1998] VSCA 106, [1999] 2 VR 436 at [9]- [10] per Tadgell JA (with whom Callaway JA agreed); Loizou v Derrimut Enterprise Pty Ltd (No 2) [2004] VSC 548 at [14] per Whelan J.

[2] Transport Accident Commission v O'Reilly, Cavanagh, Moore & Davey [1998] VSCA 106, [1999] 2 VR 436 at [10]- [11] per Tadgell JA (with whom Callaway JA agreed) and [46] per Ormiston JA; Kheirs Financial Services Pty Ltd & Anor v Aussie Home Loans Pty Ltd & Anor [2010] VSCA 355, (2010) 31 VR 46 at [15] per Maxwell P, Tate JA and Habersberger AJA.

[3] JT Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 at 1124 per Lord Denning MR (with whom Winn and Cross LJJ agreed); Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 625 per McHugh J.

[4] [1997] HCA 6; (1997) 186 CLR 622.

[6] One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270, (2000) 101 FCR 548 at [6] per Burchett J.

[7] Bostock v Ramsey Urban District Council [1900] 2 QB 616 at 622 per A. L. Smith LJ; Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874 per Devlin J; Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] VicRp 12; [1991] 1 VR 129 at 154-155 per Kaye J.

[8] [1998] HCA 11, (1998) 193 CLR 72.

[10] [1997] HCA 6; (1997) 186 CLR 622.

[12] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [69] per McHugh J; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 at [23]- [25] per Warren CJ, Maxwell P and Harper AJA.

[13] The rule operates differently for personal injury claims, which are not relevant in the present case.

[14] [1997] HCA 6; (1997) 186 CLR 622.

[16] [2009] VSC 351, (2009) 25 VR 507.

[24] Pettey v Parsons [1914] 2 Ch 653 at 662 per Lord Cozens-Hardy MR, 666-667 per Swinfen Eady LJ and 668 per Pickford LJ.

[25] [2009] VSC 351, (2009) 25 VR 507.

[27] [2009] VSC 351, (2009) 25 VR 507.