Plaintiffs v Defendants

1 This proceeding concerns a lane located between 19 and 21 William Street, South Yarra, in the municipal district of Stonnington. The eastern end of the lane abuts William Street, and the western end abuts a walkway known as Lover's Walk that runs along a railway line between Toorak Road and Chapel Street.

2 The plaintiffs, John and Dimitra Anderson ('Andersons'), are the registered proprietors of 21 William Street. They claimed that public use of the lane resulted in numerous acts of nuisance that adversely affected their enjoyment of their property. They sought to prevent public access by erecting a fence across the lane, then commenced this proceeding initially only against the first defendant, City of Stonnington ('Stonnington'), seeking an interim injunction restraining Stonnington from removing the fence. The application for an interim injunction was dismissed.[1] The Andersons continued the proceeding seeking declarations that the lane was not a road within the meaning of relevant statutory provisions or the common law, and damages for nuisance.

3 The Andersons joined the registered owner of the lane, Victorian Rail Track ('VicTrack'), to the proceeding as second defendant.

4 The outcome of the Andersons' claims against the defendants hinged on whether the lane was a road. By agreement that issue, and the Andersons' application for declaratory relief, was determined as a preliminary question. Shortly before the trial commenced the parties filed an agreed statement of facts that included the following:

The Laneway has been used as a public pedestrian access to Lovers Walk without express leave or licence, which use is continuous and otherwise unexplained, since it was constructed as a laneway, or alternatively for a long period of time.

The trial judge held the lane was a 'public highway' within the meaning of the common law, and was therefore a 'road' as defined in the Road Management Act 2004.[2] On that basis the trial judge dismissed the claim for declaratory relief.[3] The Anderson's unsuccessfully appealed that decision.[4]

5 All that remained in the proceeding was the Andersons' claim in nuisance against VicTrack. That claim was eventually dismissed by consent after VicTrack had made an application for summary dismissal.

6 The Andersons then sought a special costs order that VicTrack pay their costs of the proceeding as well as the costs of Stonnington for which they were liable under the earlier court order. The Andersons argued there were two matters that justified costs orders being made in their favour despite them being wholly unsuccessful in the proceeding. First, they asserted that they brought and maintained the proceeding because they were misled by VicTrack into believing that the lane was not a road. Second, they argued VicTrack's late production on the first day of the principal trial of a 1917 plan of the lane ('1917 plan') justified the order they sought.

7 An Associate Judge dismissed the Andersons' application for costs, and made the following orders:[5]

1. Save for the costs referred to in paragraphs 2 and 4 below, the plaintiffs pay the second defendant's costs of the proceeding, including the costs dispute, on a standard basis, to be taxed in default of agreement.
2. The plaintiffs pay the second defendant's costs referred to in paragraph 2 of the orders made by Efthim AsJ on 21 June 2021, on an indemnity basis, to be taxed in default of agreement.
3. The second defendant's application for certification of counsel fees is disallowed.
4. The second defendant pay 90% of the plaintiffs' costs of the hearing on 8 September 2021, to be taxed in default of agreement.
5. The plaintiffs pay 10% of the second defendant's costs of the hearing on 8 September 2021, to be taxed in default of agreement.
6. The plaintiffs pay the second defendant's costs of the hearing on 24 June 2022 on a standard basis, to be taxed in default of agreement.
7. The proceeding be otherwise dismissed.

The Andersons apply for leave to appeal orders 1, 4, 5, 6 and 7.

8 There is no appeal from an order as to costs made by an Associate Judge except by leave.[6] In Spotless Group Ltd v Premier Building and Consulting Pty Ltd,[7] the Court of Appeal discussed the high threshold that must be satisfied by an applicant before leave is granted to appeal a decision on costs:

1. It is well established that an appellate Court will not, in the absence of strong reasons, interfere with the exercise of discretion by the Court below with respect to the question of costs. As Callaway JA said in Hanlon v Brookes:

It is almost invariably the case that the judge at first instance is better placed to deal with the costs after a long trial and counsel seeking leave ordinarily has a difficult task. The test is not whether we should have exercised the discretion in the same way as his Honour did but whether there was or were a ground or grounds on which he could reasonably do so.

1. This Court may disturb the costs orders made below where an error in principle is identified, where the judge acted on a manifestly erroneous view of the facts, or where the award is manifestly unreasonable. But the applicant must satisfy a high threshold for such a grant of leave. The test to be applied is not whether the Court of Appeal would have made the same order but whether there is a ground upon which the order by his Honour could reasonably be made. Some manifest error must be exposed to take the case out of the ordinary situation in which, wherever a discretion is to be exercised, minds may differ on the result. Ormiston JA recognised this high threshold in Transport Accident Commissioner v O'Reilly observing that:

It is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party.[8]

9 The orders made by the Associate Judge involved an exercise of discretion and therefore may only be set aside on appeal on the basis of an error of the kind described in House v King,[9] that is, that the Associate Judge acted on a wrong principle, mistook the facts, failed to take into account a relevant consideration, took into account an irrelevant consideration, or made a decision that was manifestly unreasonable.

10 The grounds of appeal set out in the amended notice of appeal are:

1. The Associate Justice erred in awarding the costs of the proceeding to [VicTrack].
2. The Associate Justice erred in not making the orders sought by the [Andersons] that [VicTrack] pay its costs of the proceeding, and indemnify the Plaintiffs for the costs that they had been ordered to pay [City of Stonnington] in the proceeding.

2A The Associate Justice erred in not finding that the Conduct amounted to a representation by [VicTrack] expressly or by inference that it had not divested itself of the legal ownership of the Laneway and that [VicTrack] implicitly represented to the [Andersons] that the Laneway was not a public highway nor a road.

1. The Associate Justice erred in not finding that the Conduct amounted to a representation by [VicTrack] expressly or by inference that they had not divested itself of the beneficial ownership (either in part or whole) of the Laneway and that [VicTrack] thereby implicitly represented to the [Andersons] that the Laneway was not a public highway nor a road.

2. The Associate Justice erred by instead making findings about whether or not there were express representations made by [VicTrack] to the [Andersons] about whether or not the Laneway was a public highway or a road. It was unnecessary for there to be an express representation about those matters for the representation to be inferred.

3. Further or alternatively, the Associate Justice also erred in making findings about whether or not there were representations made by [VicTrack] as to whether or not it legally owned the Laneway, which was an entirely irrelevant consideration. The relevant representation was whether or not [VicTrack] continued to beneficially own the Laneway. The ordinary consequence of a representation that [VicTrack] continued to beneficially own the Laneway (even if that representation was mistaken) was that the recipient of that representation would conclude that the Laneway was not a public highway (see [Anderson & Anor v City of Stonnington (2017) LGERA 176 ('Court of Appeal Decision')] at [40]).

4. The Associate Justice erred in not finding that it was a natural consequence of the making of the representation that the [Andersons] would build a fence, commence the proceeding, join [VicTrack] and maintain the proceeding.

5. The Associate Justice erred in finding that the engagement of lawyers necessarily precluded the [Andersons] from asserting that they had relied upon the Conduct in building the fence, commencing the proceeding, joining [VicTrack] and maintaining the proceeding in circumstances where it was a natural consequence of the making of the representation that it would affect the decision making process and advice of all those aware of the representation.

6. The Associate Justice erred in finding that [VicTrack's] defence (in which it had pleaded the Laneway was a public highway) necessarily precluded the [Andersons] from asserting that they had nonetheless continued to rely upon the representation to maintain the proceeding in circumstances where it was the representation and not the contradictory assertions in the defence which were operative upon the decision-making process and advice of all those aware of the representation.

7. The Associate Justice erred in relying upon later conduct by [VicTrack] (its letter of 10 November 2014 and its defence dated 13 March 2015 and the agreement by the [Andersons] to the Long User Agreed Fact shortly prior to trial) to deprive the (sic) [Andersons] of (sic) their costs prior to those events.

8. The Associate Justice erred in concluding that the agreement to the Long User Agreed Fact was determinative of the proceeding, and thereby precluded the [Andersons] from seeking costs against [VicTrack]. Whilst the Long User Agreed Fact was central to the reasoning of the Court, it was not solely determinative to the outcome of the proceeding. It only led to a rebuttal presumption.

9. In relation to the late introduction of the 1917 plan:

(a) the Associate Justice erred in concluding that any non-objection to its introduction into evidence precluded the [Andersons] from seeking costs in relation to its late introduction; and

(b) in not concluding that [VicTrack's] late introduction of the 1917 plan warranted a special costs order in favour of the Plaintiffs under the Civil Procedure Act 2010 (Vic).

11 The Andersons alleged the following errors of law. First, that the Associate Judge failed to take into account relevant considerations and took into account irrelevant considerations in relation to representations made to them by VicTrack as to the status of the lane. As to the former, the Andersons alleged the Associate Judge erred by failing to take into account whether:

1. [VicTrack] expressly or by inference represented to the [Andersons] that it had not divested itself of (a) the legal and (b) the beneficial ownership (either in part of whole) of the [lane];
2. [VicTrack] thereby implicitly represented to the [Andersons] that the lane was not a public highway, which as found by the Court of Appeal in [the Court of Appeal Decision] at [40] required a finding that [VicTrack] divested itself of any beneficial ownership of lane and as found by the Court of Appeal at [3] meant that the lane had vested in the Council;
3. [VicTrack] thereby implicitly represented to the [Andersons] that the lane was not a road within the definition of the Local Government Act 1989 (Vic), (see [Court of Appeal Decision] at [200]-[201]) nor within the definition of the Road Management Act 2004 (Vic) (see [Court of Appeal Decision] at [6], [10], [62], [81], [99]);
4. in reliance on the aforesaid representations, the [Andersons]:
   1. arranged for the construction of another fence to close the western end of the lane on about 29 August 2014;
   2. commenced this proceeding against the First Respondent (Council) on 18 September 2014 to restrain the Council from removing the fence; and
   3. added VicTrack as a defendant in this proceeding on 26 November 2014 and made a claim for damages for the tort of nuisance against VicTrack;
   4. maintained the proceeding,

12 The Andersons said in oral submissions in relation to this first alleged error of law:

Where we say Her Honour went wrong is that she was looking for that type of express representation, 'This land is not a public highway'. We say it didn't need to go that far. If VicTrack was saying, 'We have the legal ownership of the land, and we have the beneficial ownership of the land, we exercise control of the land', we say that's tantamount to a representation that it was not a public highway because those things could not have been correct if the land was, in fact, a public highway ...

So we say Her Honour was looking for the wrong type of representation. She was looking for that express representation, 'This is not a public highway. This is not a road'. That was where Her Honour's error lay. She shouldn't have been looking for that type of representation. She was addressing herself to the wrong question.

13 The second question of law identified by the Andersons was whether the Associate Judge acted unreasonably in making her findings, making the orders appealed from, and not making the costs orders sought by the Andersons. In their written submissions the Andersons said:

[49] Nonetheless, even on the findings made by the Associate Justice and the concessions made by VicTrack, the Associate Justice ought to have found that the representations were made by VicTrack to the Plaintiffs that the Laneway was neither a public highway nor a road. It was plainly unreasonable for the Associate Justice not to have reached that conclusion based on her findings and the concessions made.

The Andersons submitted the Associate Judge made further errors in failing to find that they relied on the representations made by VicTrack. In particular, they pointed to the following matters relied upon by the Associate Justice:

[52] ...

1. [the Anderson's] failure to plead reliance in the substantive proceeding: [Anderson v City of Stonnington ('Costs Ruling')][10] at [171], [173], [181]. The [Anderson's] failure to plead reliance at this point of time was not relevant as their reliance was not a relevant allegation in the substantive proceeding;
2. the conduct of [VicTrack] on or after 10 November 2014: [Costs Ruling] at [136], [170]. VicTrack's conduct after 10 November 2014 could not have been relevant to decisions made by the [Andersons] prior to that date, including the construction of the fence, and commencement of the proceeding. The letter sent by VicTrack on 10 November 2014 was in any event equivocal as to its position.
3. the content of [VicTrack's] defence filed on 13 March 2015: [Costs Ruling] at [172], [175], [176], [211] and [212]. The content of that defence could not have been relevant to decisions made by the [Andersons] prior to that date, including the joinder of [VicTrack]. The making of an allegation in [VicTrack's] defence that the Laneway was a public highway was inconsistent with its prior conduct.
4. [t]he fact that the [Andersons] were advised by lawyers: [Costs Ruling] at [171], [180]. The fact that the [Andersons] had retained lawyers did not preclude their reliance upon VicTrack's Conduct. To the contrary, the natural consequence of the representations would affect not only the [Andersons] but their lawyers.
5. [t]he [Anderson's] agreement to the Agreed Statement of Facts: [Costs Ruling] at [182]. The Long User Agreed Fact did not preclude the rebuttal of the public highway presumption.
6. If the further evidence in the affidavit of Demi Anderson sworn 6 March 2023 is accepted, then the Court will have evidence, contrary to the inference wrongly drawn by the Associate Justice ([Costs Ruling] at [150]) that the [Andersons] saw the 3 February 2015 VicTrack letter prior to the issue of the proceedings.

14 The remaining questions of law relate to the 1917 plan.

15 The Andersons argued the Associate Judge erred in relation to that matter by:

(a) finding no objection was taken by them to the introduction of the plan into evidence;

(b) not considering whether late discovery of the document justified an order for costs in favour of the Andersons whether or not objection was taken to its tender;

(c) relying on agreement between the parties to the long user agreed fact prior to the principal trial when that fact was not determinative of whether the lane was a public highway; and

(d) concluding, inaccurately, that the Andersons were impermissibly seeking to revisit previous determinations of the court.

16 The Andersons submitted that until VicTrack had made proper discovery that included the 1917 plan, they had no way of testing the allegations pleaded by VicTrack in its defence. They argued that VicTrack's failure to discover the 1917 plan as the true basis for their defence of the claim was a reason why the Andersons continued to prosecute the claim and is of central importance in relation to the question of costs.

17 VicTrack has been the registered owner of the land on which the lane is located since 1996. However, the Court of Appeal determined that because the lane is a public highway, and therefore a 'road' as defined in the Road Management Act 2004, it is vested in Stonnington as the 'responsible road authority' for that municipal district.[11]

18 At the costs hearing before the Associate Judge, the Andersons relied on what they said were representations made to them by VicTrack about the lane in the period from January 2013 to February 2015 as the basis for the following submission:

1. VicTrack's statements, in the context that it was the registered proprietor of the Laneway, led the Andersons to believe that:
   1. VicTrack was the owner of the Laneway;
   2. the public had no right to use the Laneway;
   3. the Laneway was not a road;
   4. nothing had been done by VicTrack to give the public any right to use the Laneway;
   5. VicTrack continued to control the use of the Laneway and make decisions with respect to its use, and
   6. no process had occurred which would give the public any right to use the Laneway.

The Andersons argued they were induced by VicTrack's representations to construct a fence across the lane in August 2014, issue this proceeding against Stonnington in September 2014, join VicTrack as a second defendant to the proceeding in February 2015, and continue the proceeding after that date. The Andersons argued on that basis that VicTrack should be ordered theirs and Stonnington's costs of the proceeding.

19 The Associate Judge set out in detail the background of the dispute between the Andersons, Stonnington and VicTrack.[12] I will not restate that background here.

20 The Andersons became registered proprietors of 21 William Street and began living at the property in April 2012. They immediately became concerned about graffiti and what they considered to be other acts of nuisance attributed to public use of the lane, and commenced correspondence first with Stonnington, and later with VicTrack about the lane.

21 The first representation relied on by the Andersons arose from conversations between the second plaintiff and Elise Quigley of VicTrack in January and February 2013, following which the Andersons applied to purchase the lane from VicTrack. The Associate Judge concluded there was no evidence Quigley represented to the Andersons that the lane was not a public highway, that VicTrack 'had an issue with the public's illegal access and public trespass', or that VicTrack 'had overlooked the land on their register and property portfolio'[13]. Her Honour concluded:

I do however find, on the basis of the affidavit evidence before me, that Ms Quigley said words to the effect that the laneway was owned by VicTrack and that the Council had a lease over Lovers Walk, but not the laneway.[14]

22 The second representation relied on by the Andersons occurred in a conversation with Mike Blackburn of VicTrack on 1 March 2013. The Associate Judge found Blackburn had said that VicTrack owned the lane, and that while Blackburn may have referred to installation of a gate across the lane as a hypothetical outcome, she was not satisfied he had ever recommended that a gate be installed.[15] The Andersons argued on this application for leave to appeal that the Associate Judge 'ought to have considered whether Blackburn was saying something of a lower order which would still have conveyed that the land was not a public highway; for example, about the control of the land.' They submitted that Blackburn's evidence and the Associate Judge's finding in effect countenanced the possibility of VicTrack giving approval for a gate being installed across the lane, indicating it had control. I reject this submission. A hypothetical outcome is one that is conjectural, theoretical or speculative, and not one that is necessarily possible or capable of being offered or achieved. That is the way in which the evidence and the findings of the Associate Judge should be understood.

23 The third representation, the Andersons said, was contained in a letter to them from VicTrack dated 7 March 2013. The Associate Judge found that letter to be consistent with VicTrack representing that it owned the lane, but was not satisfied that it amounted to a representation that VicTrack consented to or recommended the Andersons erecting a fence across the lane.[16]

24 In oral submissions, the Andersons criticised the findings by the Associate Judge about these representations:

despite some of the findings that she makes through this decision that VicTrack did, in fact, represent that it owned the land or exercised some degree of control over the land, because she didn't find the express representation as to the land being a public highway or a road, she said the representations were not made out.

So this [representation 3] is an example where she has made a finding that we say ought to have been sufficient, but because she's concentrated on looking for the express representation rather than the implicit representation, she doesn't find that the representations impliedly infer that this land was not a public highway or a road. ...

And, again, we say if Her Honour had concentrated on what that implicitly conveyed to the plaintiffs then she would've come to a different conclusion. But she was focusing again, looking for some sort of magic express representation that this land was not a public highway, not a road, we say, again addressing herself to the wrong question.

25 The fourth representation is alleged to arise from a letter VicTrack sent on 21 November 2013 in response to an offer, made by the Andersons via their solicitors, to purchase the lane. The VicTrack letter read:

I refer to your letter of 14 November 2013 on behalf of your clients regarding their application to purchase Lot 86 at South Yarra as shown on the attached plan.

VicTrack notes your view that the land remains privately owned by VicTrack but questions your assertion that Council has no role in this matter. Lot 86 has been used as a public thoroughfare and we understand that Council considers that it should remain open as it provides an additional exit from Lovers Walk which reduces risk to users of that laneway.

If you can obtain Council support to the permanent closure to prevent access through Lot 86, VicTrack would be prepared to consider this matter further.

I find the VicTrack 21 Nov 13 letter is consistent with the earlier representations by VicTrack that it owned the laneway. It is responsive to an offer by the Andersons to purchase the laneway and offers to consider the matter further if they obtain approval from the Council to permanently close the laneway.[17]

26 The Andersons first erected a fence across the lane on 27 November 2013. Two days later they sent an email to VicTrack that included:

We are writing to inform you that we have taken measures to protect ourselves and our property from the various nefarious activities that ceaselessly occur in the carriageway between No's 19 and 21 William Street. We have erected a fence for the safety of ourselves, our neighbours and the general neighbourhood.

...

We have received expert advice, both legal and from a highly reputable Land Surveyor, that Council has no authority over this carriageway.

27 The Associate Judge dealt with this evidence as follows:

At this point in the chronology it is useful to add that on 29 November 2013, the Andersons wrote by email to VicTrack informing it that they had erected a fence for safety reasons. Further, the email stated that the Andersons had received expert advice that Council had no authority over the carriageway.[18]

28 The Associate Judge referred to a letter VicTrack received on about 16 December 2013 in which Stonnington said it had made a formal demand of the Andersons that they remove the fence. The letter includes:[19]

I note that you refer in your letter of 21 November 2013 to the owners of 21 William St having obtained legal advice that Council has no jurisdiction over Lot 86 as it is wholly owned under title by VicTrack. This view is completely wrong, of course, as has been advised to the 21 William St owners' solicitors in the past 10 days. As you know, a road may be a public thoroughfare even though, as in this case, the title to the road is in the name of another party.

Your letter of 21 November 2013 to the 21 Williams St owners' then solicitors sets out Council's position very clearly on this laneway - i.e. that Council considers it should remain open. Council will therefore take whatever action it deems necessary to ensure that this laneway continues to be available for public use and will keep you informed of developments.

29 The Council removed the fence from the lane in December 2013.

30 The Anderson's evidence was that they erected the fence due to safety concerns and they believed the lane was not a road and the public had no right to use it. Mrs Anderson said:

On 9 January 2014, after council removed our fence, and I obtained further confirmation from the Titles Office that the land was not a road, I called and spoke with Mike Blackburn. He confirmed that nothing had changed with the status of the land. I informed him that we will be seeking damages from Council for damaging our property. He commented whether Victorian Rail Track should be seeking damages from us for the posts that were installed. I explained that we did not install the posts that they were there and that had nothing to do with us. I explained that they would have been there from when the owners of No. 19 installed a fence (in 2007) due to an attempted rape incident on their grounds. I informed him that Council were claiming the land was a road, he interrupted me and said 'oh no!' everyone in council knew that the land was not a road, they knew that railway lot 86 was a separate parcel of land to Lovers Walk. I explained that I also had it confirmed by Michael Shleurink at the Subdivision Department of the Titles office that it was not a road who would be happy to talk to anyone about it. Mike Blackburn advised that they would like to sell to us the land, they recognised that we already had a registered interest in the land but he had to follow the orders of his management. He advised that when Victorian Rail Track approached Council, Council was making the assertion that the land was a road and Victorian Rail Track did not want to be the ones in a dispute with them so they aligned themselves with Council.

31 An email sent by the Andersons to Blackburn on 13 January 2014 read in part:

Dear Mike,

Thank you for your time on Friday afternoon (9 Jan 2014). I appreciate you clarifying and confirming the few points below regarding the carriageway between 19/21 William St, South Yarra.

1. There is no lease on this land (carriageway) referred to as Lot 86. Nothing had changed with this land from the time we first approached VicTrack. Whereas, the path that runs parallel to the railway line, known as Lovers Walk, is under lease to Council as previously confirmed.

2. I mentioned that Council were trying to claim this carriageway as a 'road'. You confirmed that "oh no, everyone was very clear that Lot 86 was a separate parcel of land" from the land known as Lovers Walk. You advised that their claim was one of long user rights.

On the basis of the above the Andersons made the following submission to the Associate Judge:

The Anderson 13 Jan 14 email is consistent with Mrs Anderson's affidavit. She deposes that she informed Mr Blackburn that the Council confirmed the land was a road. As described above, she deposes that Mr Blackburn interrupted her and said "Oh no" and "everyone in Council knew that the land was not a road". Read in context of the email confirming the discussion between Mrs Anderson and Mr Blackburn, the "oh no" must be a denial of the claim attributed to Council that the laneway was a road. The phrase makes no sense if it is connected with the phrase "everyone was very clear that Lot 86 was a separate parcel of land".

32 Blackburn's evidence about his conversation with the second plaintiff was:

On or about 9 January 2014, I spoke to the Second Plaintiff. During that conversation, I confirmed that the Laneway was not the subject of a lease, whereas the land known as Lovers' Walk was leased to the First Defendant. I also advised the Second Plaintiff that the First Defendant's claim that the Laneway was a road was based on long term use of the Laneway.

On 13 January 2014, at approximately 10:48 am, I received an email from the Second Plaintiff outlining the matters that were discussed during my conversation with her on 9 January 2014.

Blackburn denied saying to Mrs Anderson the lane was not a road.

33 The Associate Judge rejected the Andersons' submission, and said she was not satisfied that Blackburn represented to them that the lane was not a road.[20]

34 The seventh representation was alleged to have been made by Lou Cicchelli, a lawyer working for VicTrack, in conversations with Mrs Anderson. The Andersons allege Cicchelli told them that an easement on the title of the lane gave the Andersons 'a statutory right of exclusive (to the exclusion of the general public) use.' The Andersons relied on a contemporaneous email from Mrs Anderson to Cicchelli that stated:

The comments you made that an easement on title (being appurtenant to title) is a statutory right that gives the beneficiaries of the easement exclusive use of the easement are consistent with the advice we have received from our legal counsel, from Land Victoria, our land surveyor and as can be seen from all other sources.

35 The Associate Judge was not satisfied Cicchelli made the alleged representation, and said:

The Anderson 9 May 14 email No 1 is self-serving, containing their summary of the conversation with Mr Cicchelli. Given that Mr Cicchelli disputes the evidence regarding the representations that he allegedly made, I do not rely on the emails sent by Mrs Anderson to make a contrary finding. Nor am I prepared to infer that he agreed with the Anderson 9 May 14 email No 1, the Anderson 9 May 14 email No 2, or Anderson 9 May 14 email No 3 summary on the basis that he did not respond to it or dispute the contents of the emails sent to him. No such inference should be drawn. The allegations are not proven.[21]

36 The Andersons erected a second fence across the lane in late August 2014. On 12 September 2014 VicTrack wrote to the Andersons' solicitor stating its support for the council's requirement for the fence to be removed, and requesting this be promptly done. The Associate Judge made the following findings about VicTrack's letter:

I reject the Andersons' submission that the VicTrack 12 Sep 14 letter refers to VicTrack's ownership of the land. It does not. It refers to VicTrack's interest in the land without precision. It refers also to the concerns about access to the railway reserve. However, it may be fairly inferred that VicTrack are asserting an interest that gives it an element of control over the land as it refers to the second fence being erected without VicTrack's approval. The letter also states that the Council has written to the Andersons requiring the fence be removed by 19 September 2014 and that VicTrack supports that requirement.[22]

37 Before me, the Andersons argued the Associate Judge's finding that the 12 September letter contained a representation by VicTrack that it exercised an element of control over the lane should have been sufficient to show VicTrack was representing that the lane was not a public highway.

38 The Andersons commenced this proceeding by issuing an originating motion on 18 September 2014 seeking to restrain Stonnington from removing the fence they had caused to be erected across the lane. On 29 September 2014 John Dixon J made orders dismissing the Andersons' summons seeking interim relief and ordering they file and serve a statement of claim.

39 There was a conversation between the Mrs Anderson and Sally Burgess of VicTrack on 7 or 10 November 2014 ('November conversation'). The Andersons made the following submissions to the Associate Judge:

1. Mrs Anderson deposes that Ms Burgess told her that VicTrack maintained the beneficial ownership of the laneway.

On 10 November 2014 I had a call with Sally Burgess. She now claimed the land was a 'road' under the Road Management Act as it had been included in Council's Road Register. I asked if that was done under Victorian Rail Track's instructions, consent, permission or agreement. She advised it was not. I asked if Council sought their consent to add the land to the Road Register. She claimed they did not, and she thought they did not need to under the Road Management Act. She also commented that they treated the land as Crown land. I asked her, when to her knowledge it was added to the Road Register. She advised in 2004. I advised there was evidence this was not correct and this claim was questionable. She commented that it was a 'road' under the Road Management Act because of dedication and/or acceptance by the public. I asked who dedicated it to the public, was it Victorian Rail Track? She commented that it was the 'and/or acceptance by the public'. I advised that continual trespass, even for a very long period of time, does not create a public road. She advised 'we shall see'. Then she categorically asserted that Victorian Rail Track will still hold the freehold title and they were not going to lose their land. She asserted that they will continue to remain the owners of the land, it was just that they will no longer be responsible for the management of it.[23]

This is the only reference to beneficial ownership of the land in the Anderson's evidence and submissions to the Associate Judge.

40 Burgess' evidence about the November conversation included that she informed Mrs Anderson that:

146. ...

1. land can become a public highway by dedication and use under common law or created under legislation such as the Road Act;
2. creation under common law requires dedication which may be, but does not need be, some formal act of dedication;

...

1. the fact that a piece of land has been open to public use for some time is evidence of dedication, in the absence of any contrary evidence explaining that use;
2. since 1993, the fee simple in all land over which there is a public highway has vested by operation of State legislation in the relevant municipal council, other than highways over land owned by a public authority such as VicTrack;
3. VicTrack therefore remained the freehold owner of the Laneway and Lovers Walk; and
4. pursuant to the Road Act, the First Defendant was responsible for the management and maintenance of the Laneway.[24]

Burgess denied that she told the second plaintiff that VicTrack had beneficial ownership of the lane.

41 The Associate Judge dealt with the conversation as follows:

1. I am not satisfied, on the basis of the affidavit evidence, that Ms Burgess represented to Mrs Anderson in their conversation on or about 7 or 10 November 2014 that VicTrack had beneficial ownership of the laneway. ...
2. The evidence of both Mrs Anderson and Ms Burgess is consistent with their conversation on or about 7 or 10 November 2014 including an assertion by Ms Burgess, on behalf of VicTrack, that the laneway was a road. Further, that the laneway may be a public highway. Mrs Andersons' own evidence, cited above, is consistent with this understanding save to say that she refers to 'public road' rather than 'public highway'.[25]

42 The Associate Judge found the conversation was confirmed in a letter from VicTrack to the Andersons dated 10 November 2014 that was reproduced in the reasons:[26]

Thank you for meeting with myself and Mike Blackburn from VicTrack, Madeleine Grove from City of Stonnington (Council) and Martin Bourke and Phil Cooper from Victoria Police on 29 October 2014 at the Prahran Town Hall.·

At that meeting, I undertook to discuss with Council options that might be acceptable to both VicTrack and Council to assess the behavioural issues you report to be occurring in recent times. The judgment of the court on 15 October 2014 noted that a structural change to the intersection might be explored.

On 6 November 2014, VicTrack and Council met at Council's offices and discussed the intersection between the laneway and Lover's [sic] Walk and agreed that a determination on whether the laneway is a public highway will inform the possibility of the structural change being a fence.

As this matter is yet to be determined, VicTrack and Council agreed that this option would pre-empt the decision of the court.

If it is determined by the court that the laneway is currently a public highway, as listed on the Council's Register of Public Roads, then VicTrack will have no direct control over the usage and management of the laneway.

VicTrack and Council are, however, willing to investigate options such as lighting, CCTV and signage. Advice is currently being sought from Victoria Police regarding lighting and associated options around Lover's [sic] Walk and the laneway. Council is currently following up with Victoria Police when this advice might be available. ...

43 The Andersons submitted on this application that the 10 November letter was 'entirely equivocal as to VicTrack's position' and that the letter did not communicate any material change of position by VicTrack because it:

did not fairly indicate to the Andersons that VicTrack was asserting that it was not a highway. All it was saying is if it was determined by the court that it was a public highway, then it would not have control over the land. We say that's not relevantly a material different position to that conveyed in the September letter.

...

It wasn't VicTrack stating, 'We concede to council's position that we don't have the ownership of beneficial interest in the land.' All it's saying is 'We agree that that's an issue that's currently before the court, and the issue of our control will be determined by that court.' And we think Her Honour has made too great an emphasis on that letter in terms of stating - - -

44 On 26 November 2014 the Andersons filed a statement of claim in the proceeding against Stonnington and applied to join VicTrack as a second defendant.

45 On 3 February 2015 VicTrack wrote to Stonnington about works necessary to reinstate the lane following removal of the fence erected by the Andersons in August 2014. The letter read:

On behalf of the Victorian Rail Track Corporation, the registered owner of the land known as Railway Lot 86 South Yarra and described as part of Certificate of Title Volume 9990 Folio 084 (Land), and pursuant to the VicTrack Delegations Policy (version 5.1), I hereby consent t[o] the City of Stonnington carrying out, at its own cost, all works it deems necessary to reinstate to its original state, as far as practicable, the area across which a fence was recently installed by the owners of an adjoining property (Authorised Works).

VicTrack acknowledges receipt of the notification of the Authorised Works received via email today.

46 In an affidavit made in support of the costs application, Mrs Anderson said that as a result of VicTrack's letter of 3 February 2015 to Stonnington, the Andersons 'continued to believe that VicTrack owned the laneway and that they continued to exert control over it, despite the defence saying otherwise'. VicTrack addressed this issue in written submissions filed in advance of the costs hearing:

(a) that letter is from VicTrack to the Council and is not marked as copied to the plaintiffs;

(b) Mrs Anderson does not give evidence that the plaintiffs saw that letter prior to issuing proceedings; and

(c) accordingly, the Court cannot conclude that the plaintiffs relied on that letter or, if they did, at what stage in the proceedings the letter came to their attention.

47 The Associate Judge dealt with the 3 February letter as follows:

Mrs Anderson gives evidence that she was aware of the VicTrack 3 Feb 15 letter to Council as a copy was forwarded to her solicitors. She does not state the date she became aware of it. I decline to draw the inference that the Andersons became aware of the letter prior to joining VicTrack to the proceeding. Accordingly, I decline to draw the inference that it was relied upon to join VicTrack to the proceeding. However, even if the Andersons were aware of the letter prior to joining VicTrack, it would have been reasonable to consider that letter alongside the VicTrack 10 Nov 14 letter which clearly articulated VicTrack's position.[27]

48 The Associate Judge summarised her conclusions about the alleged representations as follows:

1. In conclusion, I find that prior to the proceeding commencing, VicTrack made representations to the Andersons that it was the owner of the laneway. I find that by the VicTrack 12 Sep 14 letter it represented that it had an element of control over the laneway and made decisions with respect to the use of the laneway. Evidently, it consulted the Council about the management of the laneway. As outlined above, by Ms Burgess, VicTrack represented that the Council was responsible for the maintenance of the laneway.
2. I find that the Andersons have not proven that VicTrack made the other representations alleged, namely that the public had no right to use the laneway, the laneway was not a road, nothing had been done by VicTrack to give the public any right to use the laneway, and no process had occurred which would give the public any right to use the laneway.
3. Turning now to the question of whether the proven representations induced the Andersons to undertake certain actions.[28]

49 The Andersons filed an amended statement of claim joining VicTrack as a second defendant to the proceeding on 12 February 2015. In effect, the only amendment to the pleading was to change references to VicTrack to the second defendant.

50 Paragraph 3 of the amended statement of claim reads:

3. Victorian Rail Track The Second Defendant:

1. is established by statute;
2. is capable of being sued; and
3. is the registered proprietor of all of the land described in Certificate of Title Volume 9990 Folio 084 (Railway Land) is vested in Victorian Rail Track.

PARTICULARS

Sections 8(1), 8(2)(c) and 40(1) of the Rail Corporations Act 1996, section 233 of the Transport (Compliance and Miscellaneous) Act 1983 and section 116 of the Transport Integration Act 2010.

In paragraph 267 of the amended statement of claim, the Andersons pleaded:

By reason of the matters alleged at paragraph 3 to 22 and 244 the Easement Land:

1. is not a 'road' within the meaning of the Local Government Act 1989;
2. is not a 'road' within the meaning of the Road Management Act 2004;
3. is not a 'road' within the meaning of the common law
4. is not a 'public highway' within the meaning of the common law.

51 VicTrack filed its defence to the Andersons' amended statement of claim on 13 March 2015. In that defence it admitted paragraph 3 of the amended statement of claim. In response to paragraph 267 of the statement of claim, VicTrack pleaded:

(a) insufficient particulars to sub-paragraphs 267(a) to (c) have been provided to allow the second defendant to properly plead to them; and

(b) the Easement Land is a public highway within the meaning of the common law. The acts of dedication of the Easement Land as a public highway and acceptance by the public are either presumed or inferred from the following:

1. the subdivision by the Victorian Railways Commissioner of existing lots to create the Easement Land;

2. the designation of the Easement Land as a road on the title to the plaintiffs' land;

3. the Easement Land is a laneway that connects William Street and Lover's Walk;

4. the Easement Land is walled or fenced off from adjoining land;

5. the Easement Land is constructed of bluestone pavers;

6. the Easement Land has the physical appearance of a road or laneway;

7. the Easement Land has had those characteristics since the laneway was constructed on it on a date between 1883 and 1920, or alternatively for a long period of time;

8. the Easement Land has been used as a public pedestrian access to Lover's Walk without express leave or licence, which use is continuous and otherwise unexplained, since it was constructed as a laneway on a date between 1883 and 1920, or alternatively for a long period of time;

9. the Easement Land is generally considered to be and is regarded as a public highway by nearby residents;

10. any interruption by the plaintiffs with the use of the Easement Land by the public was:

    1. without right;
    2. temporary; and
       1. after the dedication of the Easement Land as a public highway was accepted by the public;
    3. the Easement Land was recorded on the public register of roads by the first defendant and has been maintained by the first defendant at its expense for a long period of time; and

Particulars

The duration of the first defendant's maintenance is not currently known to the second defendant. A copy of the first defendant's public register of roads is available for inspection at the office of the second defendant's solicitor by appointment.

1. easement rights can exist over land that has been dedicated as a public highway.

52 The Associate Judge was not satisfied the Andersons were induced by VicTrack's representations to build the second fence, to commence the proceeding or to later add VicTrack as a defendant and continue the proceeding.[29] The reasons of the Associate Judge for that conclusion include:

1. The VicTrack 10 Nov 14 letter was sent prior to the Andersons joining VicTrack to the proceeding and prior to the statement of claim. It set out VicTrack's position, which need not be reiterated again here.
2. Plainly, the Andersons relied upon legal advice to commence the proceedings and later join VicTrack to the proceedings. I reject their submission that I should instead find the normal and natural consequence of the alleged representations was that they were acted upon. Their pleadings were prepared by legal practitioners. Given the Andersons were legally represented, and their pleadings did not rely upon the representations, I am not satisfied that they were induced by VicTrack's representations to commence the litigation.[30]

1. The iterations of the statement of claim are inconsistent with the Andersons relying upon VicTrack's representations that it owned the land. Paragraph 3(c) of the original statement of claim alleged ownership, but by virtue of statutory provisions. It does not refer to and rely upon any representations made by VicTrack. Moreover, as with the statement of claim, both the ASOC and the FASOC rely upon highly technical particulars regarding the allegations of the laneway being owned and vested in VicTrack. This is consistent with the Andersons relying upon legal advice, not VicTrack's representations. It must be recalled that, as described above, as early as 20 September 2013 the Andersons obtained legal advice that the laneway was privately owned by VicTrack, and relied upon that legal advice to assert to VicTrack that it was.

54 The Associate Judge rejected the Andersons' submission that the pleaded defence could not be relied on by VicTrack as demonstrating its position in respect of the lane. The Associate Judge said:[32]

1. Pausing there, the Andersons were plainly on notice that VicTrack contended the laneway was a public highway, as it was pleaded in VicTrack's defence. By paragraph 101(b) of its defence, VicTrack pleaded the easement land to be a laneway connecting William Street and Lovers Walk, and that it was a public highway within the meaning of the common law. It pleaded the act of dedication as a public highway and that acceptance by the public could be presumed or inferred from various factors including that it:

... has been used as a public pedestrian access to Lovers Walk without express leave or licence, which use is continuous and otherwise unexplained, since it was constructed as a laneway on a date between 1883 and 1920, or alternatively for a long period of time.

55 The principal trial commenced before McMillan J on 9 March 2016. On 1 July 2016 her Honour delivered a judgment in which she concluded the lane was a public highway at common law because it had been dedicated as such through long and continuous use by the public with the acquiescence of its owners.[33]

56 Discovery made by VicTrack prior to the trial did not include the 1917 plan. VicTrack produced and sought to rely on the plan on the first day of trial.

57 VicTrack accepted the 1917 plan was always discoverable, but said it was only located when the search of another database was prompted by a new allegation raised by the Andersons on the first day of trial.

58 At the hearing before me the Andersons submitted that they had objected to the tender of the 1917 plan at the principal trial before McMillan J. In fact the transcript of the second day of the trial demonstrates that the Andersons sought to rely on the 1917 plan as showing fencing that was inconsistent with the public highway claim by Stonnington and VicTrack. Counsel for the Andersons then referred to documents that had been produced during the trial, including the 1917 plan, and said 'we've been getting this material since 2014 on a drip'. There was then the following discussion with the trial judge:

HER HONOUR: Well Mr Stavris, this was only a new issue raised by you yesterday.

MR STAVRIS: No Your Honour, that's not correct.

HER HONOUR: That's why this material's been put in.

MR STAVRIS: That's not correct. The photographs that my client procured from the archives and from the library were discovered as soon as we got them over a year ago.

HER HONOUR: No, no, it's a new allegation. It's different to the agreed facts.

The transcript shows that the Andersons did not object to the tender of the 1917 plan.

59 The Andersons sought to introduce further evidence on this application for leave to appeal to establish that the letter from VicTrack to Stonnington dated 3 February 2015 was provided to them by their solicitors on 5 February 2015.

60 The further evidence was an email from the Andersons' solicitors to them on 5 February 2015 that read:

The letter we received from Council attached a written consent from VicTrack for Council to perform works on the easement land at Council's cost (see attached).

I would be of the opinion that this in fact indicates that Council do not have the care and management of the easement land and they necessarily require the consent of the registered proprietor to perform any works on/to it.

61 VicTrack opposed the application to rely on further evidence.

62 The court has power to receive further evidence on an appeal from an associate judge.[34] In Chiodo Investments Pty Ltd v Rilac Pty Ltd ('Chiodo'),[35] John Dixon J observed that 'Rule 77.06.9 does not grant to a party to an appeal the right to reconstitute the evidentiary base of the application'.[36] His Honour referred to the observation by Chernov JA in Foody v Horewood,[37] recited as follows in Apostolidis v Kalenik (No 2) ('Apostolidis'):[38]

As Chernov JA observed in Foody v Horewood, the question of whether to admit fresh evidence is largely one of discretion and degree bearing in mind the public interests in finality of litigation and, at the same time, the requirements of justice of the case in hand. Generally speaking, fresh evidence ought not to be admitted when it bears upon matters falling within the field or area of uncertainty in which the trial judge's estimate has previously been made. Exceptionally, however, it may be admitted, if some basic assumption, common to both sides, has been falsified by a subsequent event. More precisely, as Lord Wilberforce observed in Mulholland v Mitchell, courts will allow fresh evidence where to refuse it would affront common sense, or a sense of justice, always keeping in mind that it should be an exceptional event.

John Dixon J said that observation was apposite to an application to introduce new evidence on an appeal such as this, subject to reading in place of 'the public interest in finality of litigation' the need to give effect to the overarching purpose of the Civil Procedure Act 2010 (Vic).[39] John Dixon J said:[40]

In the ordinary case, an appeal will be determined on the evidence that was before the associate judge, but there will be exceptional cases where to refuse to admit fresh evidence would affront common sense or a sense of justice and would not further the overarching purpose of civil litigation.

63 Chiodo concerned an application for security for costs by the defendant. The application was dismissed at first instance by an associate judge relying on evidence that the plaintiff was the registered proprietor of real estate with equity of over $400,000. John Dixon J noted the notice of appeal squarely raised the issue of whether the plaintiff had beneficial ownership of the properties and said 'the defendant first explained precisely how that issue was to be put on the appeal in its written outline of submissions dated 1 February 2023, which clearly communicated to the plaintiff that this issue was central to the appeal.'[41] Five days later the plaintiff filed a further affidavit stating the properties were not held on trust and that it was beneficially entitled to the equity. His Honour concluded that evidence was not put before the primary judge because the issue was not identified as relevant. His Honour said:[42]

1. ... For the defendant to now prosecute an appeal centrally based on the proposition that the threshold question of its entitlement to security for costs is established because the plaintiff has failed to provide evidence as to whether it was beneficially interested in those properties is an affront to common sense. The defendant's approach denies the plaintiff a fair opportunity to address the contested fact. To permit that to occur by refusing to allow the plaintiff to address the issue by an affidavit, unless the plaintiff satisfied the Clark v Stingel principles, would constitute a failure to facilitate the just resolution of the real issues in dispute on the application.
2. There are no other relevant discretionary considerations. I do not consider that the plaintiff unreasonably delayed in serving the further affidavit, approximately five days after the defendant's outline of submissions identified how the issue was to be argued on appeal. ...

64 The differences between the circumstances in Chiodo and those in this case are obvious. VicTrack served written submissions squarely raising the issue of the stage at which the 3 February 2015 letter came to the attention of the Andersons. There was an opportunity for the Andersons to address that matter by producing the further evidence on which they now seek to rely prior to or during the hearing before the Associate Judge. In fact, Mrs Anderson only made an affidavit exhibiting that evidence in March this year, over nine months after the decision of the Associate Judge.

65 A second material difference to Chiodo relates to the stage of proceedings. Because the proceedings in Chiodo were ongoing, consideration of the public interest in the finality of litigation did not loom large. However, in this case, the determination of costs by the Associate Judge was the final step in a protracted proceeding.

66 This is not an exceptional case where refusing to admit the further evidence would affront common sense or a sense of justice. Further, the refusal to admit the evidence is consistent with the overarching purpose of civil litigation.[43]

67 The Andersons relied on two decisions that they argued supported their application for costs against VicTrack. The first, Verna Trading Pty Ltd v New India Assurance Co Ltd ('Verna'),[44] concerned a claim by an assured to indemnity against the loss arising from theft of goods in transit to it from Hong Kong, where they were purchased, to Melbourne, where they were shipped. The claim failed because the goods had reached the final destination in Melbourne and were in temporary storage when they were stolen. However, the trial judge concluded that the defendant's conduct from the time it was notified of the claim up to the second day of trial was such that it should pay the plaintiff's costs up to and including the first day of trial on a solicitor/client basis.

68 The plaintiff in Verna notified the defendant insurer of its claim within days of discovering its goods had been stolen. An investigator was appointed promptly and delivered a report to the defendant. Despite this, and repeated requests by the plaintiff, the defendant simply withheld payment of the claim without explanation. On appeal, Kaye J observed:[45]

By its failure over a prolonged period to respond adequately or at all, the respondent might have induced in the appellant's mind the reasonable belief that the respondent did not have a valid defence to the claim for indemnity under the policy. Furthermore, by September 1988 the appellant might have properly concluded that the respondent would not satisfy its claim unless compelled to do so by a judgment of the court.

In its defence, the defendant failed to make admissions of facts that were within its knowledge or that of its investigator. The unmeritorious denials by the defendant included matters such as incorporation, that the goods had been shipped from Hong Kong to Melbourne, that they had been stolen, and that there was a contract of insurance. It was only on the first day of trial that the defendant applied for leave to amend its defence in a form that articulated the real basis of its opposition to the plaintiff's claim. Those matters were further clarified on the second day of trial. In that context, Kaye J said:[46]

In my view the combination of the circumstances leading up to the issue of the writ were very exceptional. Those circumstances could have been avoided had the respondent, acting responsibly, made proper and frank responses to the appellant's request for settlement by payment of its claim. In the event the respondent by its conduct after receiving the investigator's report brought about the litigation, which might have been rendered unnecessary had it disclosed its real reasons for withholding settlement.

In my opinion, the circumstances leading up to the commencement of the proceedings and until the second day of the hearing formed a proper basis for his Honour's exercise of discretion by ordering the respondent to pay the appellant's costs incurred to that date, and the conduct of the defence including the manner in which it was pleaded was proper ground for the exercise of discretion denying the respondent its costs.

69 Kaye J referred to the statement by Atkin LJ in Ritter v Godfrey:[47]

... "In the case of a wholly successful defendant, in my opinion the judge must give the defendant his costs unless there is evidence that the defendant (1) brought about the litigation, or (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which the plaintiff complains."[48]

Kaye J concluded that while 'a basis for the exercise of discretion denying a successful defendant costs might be if his or her conduct fell within one of the three categories identified by Aitkin LJ', 'the general discretion of a trial judge as to costs ought not be fettered by the rules formulated by Atkin LJ'.[49] His Honour observed that more compelling reasons are required to justify the exercise of discretion by ordering that a successful defendant is not only denied costs but is compelled to pay the whole or part of the plaintiff's costs of the proceeding.[50]

70 The Associate Judge distinguished the present case from Verna:[51]

As held above, it is not proven that the Andersons were induced by VicTrack's representations to commence the litigation. Further, well before trial, and certainly by the time VicTrack filed its defence, the Andersons were on notice of its defence. I reject the submission that VicTrack's defence was not relevant. In Verna, the defendant's original unmeritorious defence, and its failure to disclose the real basis for defending the claim until the second day of trial, were factors that attracted the costs orders against it.

71 The second decision relied on by the Andersons is Murray and Kingston City Council (No 2) ('Murray').[52] The plaintiff in Murray was a self-represented ratepayer who commenced a proceeding in the County Court of Victoria challenging the municipal valuation of her residential property as communicated in a rate and valuation notice issued to her by the defendant. The proceeding was transferred to the Supreme Court because a Master of the County Court determined that court did not have jurisdiction. Ultimately the proceeding was dismissed in the Supreme Court because the appropriate avenue for review was an application to VCAT pursuant to the Valuation of Land Act 1960 (Vic), and the Supreme Court lacked jurisdiction. Eames JA, with whom Buchanan JA and Coldrey AJA agreed, observed in relation to information on the council's rate notice:

I consider that a misreading of the information provided on the back page of the notice was entirely understandable, because the council's rate notice, in my view, was seriously misleading.[53]

Thus, whilst the general principles as to costs of a successful party were very relevant in this case, there were two significant factors that were also relevant to that question. In the first place, the appellant had been misled by the respondent's own form as to her right of appeal. Secondly, and with the effect of the original misleading information still propelling her proceeding in the County Court, it was the suggestion then made by the master in the County Court that the Supreme Court might have jurisdiction which caused the proceedings to be transferred to the Supreme Court.[54]

His Honour concluded that the primary cause of the proceedings being issued in the County Court was the misleading character of the rate notice.[55] On that basis the Court ordered that each party bear its own costs of the proceeding.

72 The Associate Judge said in relation to Murray:

The circumstances in Murray are different to those here. The Andersons were legally represented. As held above, they did not rely upon VicTrack's representations to commence their proceedings or to join VicTrack to the proceeding. Their decisions were their own, informed no doubt by the legal advice they received.[56]

73 The Associate Judge adopted the following summary by Daly AsJ in Konstandellos v Harplex Pty Ltd (No 2) ('Konstandellos'):[57]

The reasoning of Kaye J in Verna has been followed on numerous occasions in this jurisdiction. In Pamamull v Abrizzi (Sales) Pty Ltd (No 3), the Court of Appeal stated that:

a successful appellant will be entitled to costs unless there are good reasons, or special circumstances, to order otherwise.

In Loizou v Derrimut Enterprise Pty Ltd (No 2) ('Loizou'), Whelan J ordered that the successful defendants be deprived of its costs owing to a number of 'unusual features' of the case. In particular, his Honour found that one of the defendants had, by his conduct, among other things, induced the plaintiff to bring the proceeding. His Honour referred to the reasoning of Kaye J in Verna, and stated that:

even more extraordinary circumstances must be found to exist before a successful defendant would be ordered to pay the plaintiff's costs.

More recently, in Khodr v G4 Custodial Services Pty Ltd, Keogh J referred to the following statement in Dal Pont's Law of Costs:

The strength of the 'costs follow the event' 'rule' is highlighted by case authority that a judge who proceeds as if there were an open discretion on costs unhindered by the rule 'would almost certainly be regarded as erring in law', and acting arbitrarily rather than judicially. It is emphasised by judicial remarks branding a departure from the rule as 'extremely rare' and as an 'exceptional measure', justified only by 'special circumstances', 'substantial grounds', 'some definite principle' or for 'good reason'.

An order that a successful party pay the costs of an unsuccessful opponent, it has been said, 'can rarely, if ever, be justified'. Judges have, to this end, branded the jurisdiction to make such an order as restricted to cases variously described as 'strong and exceptional', 'most exceptional', and 'very exceptional'.

What can be gleaned from the authorities is that, where a party seeks an order that a successful party, especially a defendant, be deprived of their costs, there must be good reason to do so, or there must be special or unusual circumstances. However, where an unsuccessful party seeks an order that the successful party pay its costs, there must be compelling reasons, or exceptional circumstances to make such an order. The latter requirement necessarily extends to an order of the nature sought by the plaintiffs in this application: that is, an order that a successful defendant indemnify them for their liability to pay the costs of another successful defendant.

74 In Konstandellos, Daly AsJ concluded the unsuccessful plaintiffs had not established a causal nexus between the impugned conduct on behalf of the defendant and their decision to issue proceedings.[58] In this case, referring to the outcome of the ruling by Daly AsJ, the Associate Judge concluded:

Similarly here, the Andersons have failed to establish a nexus between the proven representations made by VicTrack and their decision to issue proceedings and join VicTrack. Further, any misapprehension as to VicTrack's position must have been cured by the time it filed its defence, if not beforehand, by the VicTrack 10 Nov 14 letter.[59]

75 At the costs hearing and again before me the Andersons submitted that the late discovery of the 1917 plan was relevant to the costs discretion because the plan was relied on by the Court of Appeal in reaching a decision that was adverse to them. The Associate Judge dealt with this issue in the following way:

The late production of the 1917 plan at trial is not conduct that is so exceptional it warrants the unsuccessful party being awarded costs. This is particularly so in circumstances where there was no objection by the Andersons to the 1917 plan being admitted into evidence. Moreover, the importance of the 1917 plan is overshadowed by the long user agreed fact, which was highly significant to the determination of the issue by both the trial judge and Court of Appeal. I reject the Andersons' submission that the long user agreed fact is irrelevant to the costs dispute. It informed the nature of the dispute in the proceeding. It is impermissible to revisit previous determinations by the Court for the purposes of determining this costs dispute.[60]

76 The reasoning of the Associate Judge is plainly correct. The Court of Appeal referred to the long user agreed fact as being highly significant to the outcome of the principal trial.[61] The Court noted that in order for a public highway to be created at common law 'a competent landowner must have manifested an intention to dedicate the land as a public highway'.[62] The Court explained, in relation to that requirement:[63]

An inference of an intention to dedicate may arise from the manner in which the public uses the land, such as from open, unconcealed and uninterrupted user of the land as a right of way by the public with the acquiescence of the landowner. A finding that the landowner has acquiesced in the use of the land by the public requires a finding that he or she had knowledge of the user. However, proof of actual knowledge is not required. Long and interrupted user of the land by the public gives rise to a presumption of dedication such that, in the absence of evidence to rebut it, the inference will be drawn that the user was with the knowledge and acquiescence of the owner.

77 The Court concluded the legal consequences of the long user agreed fact were:[64]

(a) It gave rise to a presumption that the Lane had been dedicated as a public highway since it was constructed in approximately 1917 or alternatively 'for a long period of time'.

(b) The presumption was founded on an inference that an owner of the Lane had knowledge of the public's user and acquiesced in that user. That inference arose even if the owner in question could not be identified.

(c) While the presumption was not conclusive, it was sufficient evidence to enable the judge to find that the Lane was dedicated as a public highway unless the applicants could point to evidence that rebutted the presumption. Evidence showing that the public's use of the Lane was explicable by permission or licence, or some other reason that was inconsistent with its dedication as a public highway, would have sufficed as rebuttal evidence.

(d) If, properly construed, the Long User Agreed Fact meant that the Lane was dedicated as a public highway well before VicTrack acquired ownership on 30 June 1996, VicTrack's knowledge and conduct relating to the public's use of the Lane were irrelevant to its ongoing status as a public highway. This is because, once an owner has dedicated land as a public highway, the dedication cannot be reversed by subsequent owners.

78 The Court addressed the Andersons' submissions that the presumption of dedication was rebutted:[65]

It follows that, if the analysis is confined to the period prior to 1996, there is insufficient evidence to rebut the presumption of dedication of the Lane as a public highway. That analysis and conclusion would apply irrespective of whether it is assumed that the Lane was constructed in 1917 (at the time of the 'land record plan' dated 29 May 1917 that is referred to at [20] above), prior to that year, or subsequently, in 1920 (at the time of the granting of the 1920 Easement).

79 The Court then considered the period after 30 June 1996, when VicTrack became the owner of the lane:[66]

1. On its terms, the Long User Agreed Fact is applicable to the post-1996 period. This means that, since 1996, the public has used the Lane 'without express leave or licence' and that use has been 'continuous and otherwise unexplained'. In our view, such use constitutes long, uninterrupted user which is sufficient to give rise to the presumption of dedication. Thus, in the absence of rebuttal evidence, the inference to be drawn is that VicTrack has known of the use and has acquiesced in that use. Accordingly, in the absence of rebuttal evidence, dedication can be established without positive proof of VicTrack's knowledge of the use or of any overt conduct constituting acquiescence.
2. The only rebuttal evidence upon which the applicants relied in the post-1996 period was the discussions in 2013 between VicTrack and the applicants for a possible sale of the Lane to them. However, these discussions do not assist the applicants. This is because there is inherent in the applicants' reliance on the 2013 discussions as rebuttal evidence the unsustainable proposition that the Lane had not been dedicated as a public highway between 1996 and 2013 and thus remained in the unencumbered beneficial ownership of VicTrack.
3. As we have already explained, the Long User Agreed Fact had the effect of giving rise to a presumption of dedication well before 2013. This meant that any conduct by VicTrack in 2013 which was inconsistent with dedication - whether in deliberate defiance of the prior dedication or in ignorance of it - could not affect the status of the Lane as a public highway.
4. In any event, the evidence of the 2013 dealings between VicTrack and the applicants merely established that, for an initial period, some officers were willing to countenance a sale of the Lane to the applicants, probably due to ignorance of the status of the Lane as a public highway through dedication. However, following further investigation, VicTrack determined that the Lane was not available for sale.

80 The reasons of the Court of Appeal show that the public highway conclusion was not dependent on the 1917 plan, and was also made based on use 'for a long period of time', including use from 1996 when VicTrack became owner of the land. The reference by the Associate Judge to the impermissibility of revisiting previous determinations should be understood as an answer to the Andersons' attempt to make the 1917 plan central to the outcome of the principal dispute when it was clearly not.

81 The Associate Judge turned her mind to whether late production of the 1917 plan justified the costs orders sought by the Andersons. There is no merit to the Anderson's submission about the matter. The lack of objection to tender of the 1917 plan was a relevant consideration for the Associate Judge to take into account in the exercise of the broad costs discretion.

82 For the following reasons, taking account of all the relevant circumstances, it is difficult to see how the Associate Judge could have reached a different conclusion as to costs.

83 First, at least from late 2013, the Andersons were legally represented at all times. The email to VicTrack referred to at paragraph 26 above, expressly said the Andersons had received expert advice from lawyers and a land surveyor.

84 Second, the Andersons' actions were inconsistent with them having relied on representations made by VicTrack and as a result being induced to take the steps they did in relation to the lane. If anything, the evidence suggests the Andersons proceeded with a level of distrust of both Stonnington and VicTrack from 2013. The Andersons engaged their own lawyers and expert to advise them and act for them in relation to the lane. They made unilateral decisions to act by erecting fences across the laneway in November 2013 and again in August 2014. Whether they were acting in accordance with the advice of their lawyers and expert is unclear. However, there is no basis for an argument that the Andersons' actions were guided by reliance on what had been said by VicTrack about ownership and control of the lane.

85 Third, in the lead-up to the Andersons commencing the proceeding, a range of views had been expressed about the status of the lane. The Andersons were aware from at least December 2013 that Stonnington's position was the lane was a public highway. That was the basis on which Stonnington required removal of the first fence erected across the lane by the Andersons. They were also aware of Stonnington's position that the lane should remain open and available for public use and that VicTrack ultimately supported this position. It was in this context the Andersons commenced the proceedings in September 2014. It was clearly open to the Associate Judge to find that they did so relying on their own legal advice, and that they had not been induced to erect the second fence or initiate the proceeding by VicTrack's representations as to its ownership or control of the lane.

86 Fourth, it is clear that the Andersons were aware from the time of the November conversation that VicTrack supported Stonnington's position that the lane was a road.

87 Fifth, the Associate Judge correctly observed that the detailed and highly technical pleadings filed by the Andersons were consistent with them having relied on the advice of their lawyer, and not the representations by VicTrack. The Andersons allege on this application that the representations by VicTrack were inconsistent with a claim that the lane was a road. It was open to the Associate Judge to conclude that the absence of reference to the VicTrack representation in the pleading was inconsistent with the Andersons having been induced by them to commence the proceeding.

88 Sixth, I reject the submission that VicTrack's letter of 3 February 2015 to Stonnington, a copy of which was provided to the Andersons' solicitors, represented a material retreat from the position articulated by VicTrack in conversation with and correspondence to the Andersons around 10 November 2014. All that was said by the 3 February 2015 letter is that as registered owner of the lane VicTrack consented to the council carrying out reinstatement works. The letter is not inconsistent with the November conversation and correspondence. The conclusion of the Associate Judge that if the Andersons were aware of the letter it would have been reasonable for them to consider it alongside the earlier letter of 10 November was open and reasonable. Further, I accept VicTrack's submission that the 5 February email to the Andersons from their solicitor attaching VicTrack's letter indicates that the Andersons received independent legal advice about the relevance of the letter. Had I allowed the 5 February 2015 email into evidence to prove the Andersons received the 3 February letter on that day, I would have concluded the evidence made no difference to the outcome of this application and in no way undermined the ruling or orders of the Associate Judge.

89 Seventh, in its defence VicTrack pleaded, expressly and in some detail, that the lane was a public highway. I reject the Andersons' submission that VicTrack's pleading left its position in relation to the lane uncertain because of its earlier admission to paragraph 3 of the amended statement of claim that the lane was vested in it. The admission in paragraph 3 of the defence simply related to the operation of certain statutory provisions.

90 Eighth, the Andersons were aware from late 2013 that long public use was a basis for Stonnington's claim that the lane was a road. The relevance of long public use of the lane was discussed by Burgess and the Andersons in the November conversation. VicTrack pleaded in its defence that long public use of the lane was a fact relevant to it being a public highway. The parties agreed to the long user agreed fact shortly before the principal trial commenced. The long user agreed fact was critical to the outcome of the trial and the subsequent appeal. Unlike the situation in Verna, the basis on which the Andersons' claim in this proceeding failed was communicated to them well before the proceeding commenced, and repeatedly thereafter.

91 Ninth, I reject the submission that the Associate Judge impermissibly relied on later events to conclude that the Andersons were not induced by the VicTrack representations to erect the August 2014 fence, commence the proceeding or join VicTrack as a party. A fair reading of the reasons shows the Associate Judge was not satisfied that the Andersons were induced by the representations at any relevant stage of events.

92 Tenth, the late discovery of the 1917 plan is not a matter that weighs heavily in favour of the Andersons. I accept VicTrack was not aware of the plan's existence until motivated by matters that arose on the first day of trial to search a different document repository. The Andersons did not object to the tender of the 1917 plan at trial, allege they were prejudiced by its late production, or seek time to respond to it. In fact they relied on the plan, arguing that it depicted a fence across the lane. Further, it is clear that the outcome of the principal trial and the appeal did not depend on the plan.

93 The Associate Judge accurately set out the principles to be applied on this application for costs. There were clearly grounds upon which the costs orders by the Associate Judge could reasonably be made. The Andersons have not established any manifest error by the Associate Judge. Leave to appeal the decision and orders of the Associate Judge will be refused.

94 I now turn briefly to consider each proposed ground of appeal.

95 These grounds do not disclose an error of law. For the above reasons they are without merit.

96 The case made to the Associate Judge by the Andersons in relation to the VicTrack representations is set out in paragraph 18 above. The reasons of the Associate Judge responded to that case, and to the submissions advanced by the Andersons.

97 The Associate Judge dealt with the only evidence and submission advanced by the Andersons as to beneficial ownership of the lane in the passage set out in paragraph 41 above.

98 The Associate Judge dealt with each representation alleged by the Andersons in the terms it was alleged. The Associate Judge accepted some of the alleged representations as to ownership and control. The Andersons did not make submissions to the Associate Judge about what representations were implicit or should be inferred from VicTrack's conduct, or as to the relevance of a distinction between representations as to legal ownership and representations about beneficial ownership. The arguments put to me about those matters are little more than a lawyer's construct.

99 The case made by the Andersons meant that it was relevant for the Associate Judge to consider whether VicTrack had represented in terms that the lane was not a road or public highway. I refer in particular to the Andersons' submissions set out at 18 and 31 above.

100 What was relevant on the argument before the Associate Judge was first, what was the conduct by VicTrack and second, whether the Andersons were in fact misled by that conduct and thereby induced to commence and continue the proceeding. The reasons of the Associate Judge dealt with those matters.

101 This ground seeks to reagitate the findings of fact and is without merit.

102 There are obvious difficulties with this ground. First, the Andersons lead no evidence that their lawyers were in fact misled by any representation made by VicTrack. It is very difficult to understand how lawyers engaged by the Andersons could have been misled in circumstances where Stonnington was asserting that the lane was a public highway, and where those lawyers could be expected to make their own investigations about an issue that was clearly contentious in order to provide independent advice to the Andersons. Second, the fact that the Andersons engaged lawyers from late 2013 was clearly a relevant consideration that weighed against the costs orders sought by the Andersons. Third, the Associate Judge did not find 'that the engagement of lawyers necessarily precluded' the Andersons from asserting that they were induced by VicTrack's representations to commence the proceeding. Rather, the Associate Judge was not satisfied in the circumstances of the case that the Andersons were induced by VicTrack's representations to commence the proceeding. Those circumstances included a finding that the Andersons relied on legal advice.

103 The Andersons have not met the threshold for the grant of leave to appeal from the orders of the Associate Judge. The appeal would have failed had leave been granted. The application for leave to appeal will be dismissed. I will hear from the parties as to any consequential orders.

[1] Anderson v City of Stonnington [2014] VSC 519.

[2] Road Management Act 2004 s 3(1); Anderson v City of Stonnington (2016) 217 LGERA 179, [82], [86] ('Anderson Preliminary Determination').

[3] Anderson Preliminary Determination (n 2) [91].

[4] Anderson & Anor v City of Stonnington & Anor (2017) LGERA 176 ('Court of Appeal Decision').

[5] Anderson v City of Stonnington [2022] VSC 216 ('Costs Ruling').

[6] Supreme Court Act 1986 (Vic) s 17A(2)(b).

[7] [2008] VSCA 115; Raptis v City of Melbourne [2017] VSC 488, [12].

[8] [2008] VSCA 115 (Redlich JA) (citations omitted).

[9] (1936) 55 CLR 499, 505.

[11] Court of Appeal Decision (n 4) [3], [99] (Warren CJ, Maxwell P and Kyrou JA).

[12] Costs Ruling (n 5) [10]-[39].

[33] Anderson Preliminary Determination (n 2).

[34] Supreme Court (General Civil Procedure Rules) 2015 (Vic) r 77.06.9(2)(a).

[35] [2023] VSC 32 ('Chiodo').

[37] (2007) 62 ACSR 576.

[38] [2011] VSCA 307; (2011) 35 VR 563 ('Apostolidis') 581-2 [56] (citations omitted).

[43] Civil Procedure Act 2010 (Vic) s 7.

[44] [1991] VicRp 12; [1991] 1 VR 129 ('Verna').

[47] (1920) 2 KB 47; All ER Rep 714, 60.

[51] Costs Ruling (n 5) [211] (citations omitted).

[52] [2004] VSCA 249; (2004) 9 VR 261 ('Murray').

[56] Costs Ruling (n 5) [218] (citations omitted).

[57] [2018] VSC 702 ('Konstandellos') [30]-[33]; Costs Ruling (n 5) [221] (citations omitted).

[61] Court of Appeal Decision (n 4) [17] (Warren CJ, Maxwell P and Kyrou JA).