Stanford v Pittwater Aquatic Club Co-Operative Limited

Supreme Court of NSW|2024-08-09|Before: Peden J, Preston CJ

JUDGMENT

On 12 July 2024, I delivered the principal judgment in this matter, granting the plaintiffs, Mr and Mrs Stanford, an easement over the defendant's land in Mona Vale, NSW, pursuant to s 88K Conveyancing Act 1919 (NSW): Stanford v Pittwater Aquatic Club Co-Operative Limited [2024] NSWSC 849 (Stanford v Pittwater). This judgment assumes familiarity with that judgment.
In addition to granting the easement, I made orders pursuant to s 88K(5) Conveyancing Act, requiring the Stanfords to pay to the defendant, Pittwater Aquatic Club Co-Operative Limited, its reasonable costs of the proceedings, as agreed or assessed. However, I also granted liberty to apply to either party to seek a variation of the costs order.
This judgment concerns an application which has since been brought by the Stanfords, that the Court should depart from the position prescribed by s 88K(5) and, instead, order that there be no order as to costs and the parties each bear their own costs of the proceedings.
In support of the application, the Stanfords essentially submit that the Club unreasonably increased the costs of the proceedings by advancing positive arguments that failed and leading voluminous and "largely irrelevant" evidence.
The Stanfords rely on the affidavit of Gregory John Dunstan, solicitor, sworn 26 July 2024. Mr Dunstan gives evidence of various solicitor correspondence, in which he expressed concerns as the scope, relevance and cost consequences of the defendant's evidence. Mr Dunstan also gives evidence concerning offers made by the plaintiffs to purchase an easement from the defendant.
The Club's essential submission is that, while parts of its evidence and submissions were rejected, it was entitled to put the Stanfords to proof without suffering a departure from the usual costs order under s 88K(5).
The Club relies on the affidavit of Damien Gerard Briggs, solicitor, sworn 2 August 2024. Mr Briggs' evidence canvasses the evidence to which the Stanfords did and did not object, details the circumstances which led to the issuance of a subpoena to the Northern Beaches Council, and describes the circumstances in which Ms Stanford ceased to press the point that the plaintiffs could not accept the Club's offer of a license, due to an inability to obtain insurance.

Principles

In Jeffrey v Adams [2023] NSWSC 1270 at [143]-[145], I set out the relevant principles governing the situation where a plaintiff is successful in obtaining a s 88K order, and seeks a costs order alternative to s 88K(5): The relevant principles concerning the operation of s 88K(5) are well known. For example, in Rainbowforce at [181]-[183] Preston CJ at LEC stated (citations omitted): 181 Section 88K(5) of the Conveyancing Act provides that the costs of the proceedings are payable by the applicant for the order unless the Court orders to the contrary. This creates an entitlement in the person affected by imposition of the easement "to have the costs of having it determined by the Court whether the circumstances appropriate for the grant of an easement are established, and the costs of assessing appropriate compensation" ... 182 This entitlement will only be lost if and in so far as the person affected has engaged in unreasonable conduct, such as making the proceedings more expensive… 183 The basis on which costs should be paid is the ordinary basis and not an indemnity basis, unless the conduct of the applicant for the order has been such as to justify an order for indemnity costs… Darke J further elaborated in McGrath v Mestousis (No 2) [2018] NSWSC 32 at [7]-[8] (citations omitted): [7] It is well established that an order to the contrary as envisaged by s 88K(5) may be made where the defendant has engaged in unreasonable conduct, including conduct that has made the proceedings more expensive … [8] In considering the reasonableness of the defendant's conduct, it is necessary to bear in mind that the conduct occurred in response to an application which, if successful, would result in the creation of an interest in the defendant's property. It has been held that s 88K bears a confiscatory nature … In Studholme at [188], Basten JA stated: It is not possible to prescribe the circumstances in which an owner of land will be deprived of his or her costs in resisting an application under s 88K of the Conveyancing Act. Further, departure from the general rule does not entail a particular result. For example, if the court were satisfied that the land owner had acted so unreasonably so as to warrant a departure from s 88K(5), there would be a number of options open. The court could (i) deprive the applicant of some part of his or her costs; (ii) deprive the applicant of all of his or her costs so that neither party would pay costs; (iii) order that the owner pay some part of the applicant's costs; (iv) order that the owner pay all of the applicant's costs to be assessed on the ordinary basis, or (v) order that the owner pay some or all of the applicant's costs to be assessed on an indemnity basis. These options are in ascending order of departure from the statutory position and require increasing degrees of unreasonableness on the part of the owner.

Determination

Applying these principles, I consider the Club has engaged in sufficiently unreasonable conduct to justify an order that each party bear their own costs of the proceeding. I reach this conclusion largely because I accept the submissions and evidence of the Stanfords, for the reasons below.
It may be accepted that losing on a point in a s 88K application does not necessarily mean that the defendant has acted unreasonably in raising it: Swann v Spiropoulos; Von der Heyde v Spiropoulos [2006] NSWSC 1016 at [20] (Campbell J). It may also be accepted that the Club was entitled to put the Stanfords to proof without disturbing the usual order as to costs in s 88K(5). However, I consider that the Club went beyond that.
A key plank in the Club's case, for example, was that there were viable alternative uses for the Tip, for which it could not be adequately compensated. It pressed this claim notwithstanding the fact that correspondence from the then-president of the Club in 2008 made clear that Club was "currently unable to find a worthwhile use" for the Tip: Stanford v Pittwater at [57(1)].
It continued to press this claim even after the Club's current president, Mr Steele, conceded that the best alternative use of the Tip which could currently be envisaged - which would have involved placing a few kayak stands or boats on the Tip - was unworkable, and that the Tip could in any case be used for this purpose with the imposition of an easement: Stanford v Pittwater at [57(2)]. The position adopted by the Club wasted the parties' costs.
The Club also argued, and led evidence to demonstrate, that the Stanfords failed to comply with an alleged requirement of the 1996 development consent, to landscape the hardstand ramp in the rear yard. This evidence was not accepted: Stanford v Pittwater at [65]. Furthermore, Counsel for the Club ultimately appeared to concede that the issue was not relevant to the determination of the case: Stanford v Pittwater at [66].
The Stanfords were nevertheless put to the cost of dealing with this issue in evidence, cross-examination and submissions. In these circumstances, the Club's submission that "it is not unusual or unreasonable for a party to adduce evidence of the approvals that have been issued …" is not to the point.
The Club also led evidence, which was not accepted, concerning the alleged need for a development consent from the Council, for use by the Stanfords of the proposed easement. It led this evidence notwithstanding that "obtaining a development consent … is not a bar to the grant of an easement": City of Canterbury v Saad (2013) 17 BPR 32,207 at 32,217; [2013] NSWCA 251 at [57] (Beazley P, Meagher and Leeming JJA agreeing), citing Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 15 BPR 29,367 at 29,385; [2010] NSWLEC 2 at [83] (Preston CJ of LEC).
The Club also led this evidence in circumstances where the land the subject of the proposed easement had been used by the Stanfords for decades, including under a license from the Club, without any apparent objection being raised by the Council: Stanford v Pittwater at [42]. The Club also made a submission that the easement was not reasonably necessary, since Stanfords could choose to accept its offer for a 10 year license to use the land the subject of the easement: Stanford v Pittwater at [72]. This submission was in tension with its reliance on the need for development consent.
More generally, the Club led much expert and lay evidence which was irrelevant to the proceedings. The expert report of Mr Player, for instance, contained irrelevant evidence concerning the "highest and best use" of the Club's land. I do not accept the Club's vague and unelaborated submission that this evidence "could not objectively be seen as unnecessary costs, or unreasonable conduct".
The lay evidence of the Stanfords' neighbour, Mr Hall, also traversed various irrelevant matters, including the Stanford's use of Mr Hall's pool. The affidavits of the Club's president, Mr Steele, similarly deposed to irrelevant matters, such as Mr Stanford's personal involvement with the Club and the Club's proposal to develop its marina. I do not accept the Club's vague submissions as to the supposed relevance of this evidence.
It is also significant that the Club issued a subpoena to the Northern Beaches Council, dated 23 February 2023, for significant amounts of material concerning the Stanfords' and their neighbours' use of their land, going back over 60 years. As the Stanfords point out, this subpoena was issued over their warnings as to the costs consequences of doing so, and notwithstanding the fact that reasonable necessity under s 88K is, in any case, to be assessed at the time of hearing: Gordon v Lever (No 2) (2019) 101 NSWLR 427 at [40] (Bell P, Payne JA and Emmett AJA agreeing).
Mr Briggs gives evidence that the Stanfords provided material concerning the 1996 development consent at a site meeting in May 2022, but did not provide the plans concerning the suspended concrete parking slab. He gives evidence that those plans "only became known to the defendant by its own enquiries which ultimately resulted in the issue of a subpoena to the council". Therefore, it appears that at the time of issuing the subpoena, the Club was aware that the 1996 development consent included plans for a suspended concrete parking slab. In circumstances where the Club was already armed with this information, I do not consider that incurring the costs associated with the subpoena was a reasonable means of putting the plaintiff to proof. I do not accept the Club's submission that it was "entitled to understand the approvals of the plaintiffs' and adjoining lands".
Finally, I note that the Club makes a vague submission that it intended to rely on materials, in over 240 pages of the Court Book, to challenge evidence in two paragraphs of Ms Stanford's evidence. The evidence in those two paragraphs was to the effect that the plaintiffs could not agree to a license to use the Club's land, because they could not obtain insurance. The plaintiffs ceased to press this point before the commencement of the hearing. The particular pages of the Court book are, however, contrary to the Club's submission and not relevant to the issue whether the plaintiffs could obtain insurance. No further submissions were made to substantiate this point. In these circumstances, I reject the Club's submission.

Conclusion and orders

For the above reasons, I consider the Club engaged in sufficiently unreasonable conduct to justify departure from the usual order as to costs under s 88K Conveyancing Act.
The appropriate order is: 1. Vary order 5 made on 12 July 2024 to an order that each party pay their own costs of the proceeding.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 August 2024

(2019) 101 NSWLR 427

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