Stroud and Anor v CMZZJ Investments Pty Ltd (No 2)

File Number(s): 2024/00157376

Publication restriction: Nil

JUDGMENT

Introduction and outcome

1. In these Class 2 tree dispute proceedings, on 5 March 2025, I dismissed a notice of motion filed 6 June 2024 by the respondent, CMZZJ Investments Pty Ltd (‘CMZZJ’), which sought summary dismissal or strike-out of the substantive proceedings brought by the applicants, John Stroud and Karine Akbar, and costs of the motion were reserved: Stroud v CMZZJ Investments Pty Ltd [2025] NSWLEC 16 (‘earlier judgment’).

2. On 2 June 2025, the parties filed by consent a notice of discontinuance which contained a note as follows:

“Following the interlocutory decision of Robson J in these proceedings on 5 March 2025 (Stroud and Anor v CMZZJ Investments Pty Ltd [2025] NSWLEC 16), the Parties filed written submissions in relation to the costs of the Respondent’s Notice of Motion filed 6 [June] 2024. Robson J’s decision as to costs remains reserved and the Parties’ intention is for that decision to still be made notwithstanding the discontinuance of the substantive proceedings.”

3. The applicants now seek their costs of the motion filed 6 June 2024.

4. The parties have filed written submissions on costs and the matter has proceeded on the papers pursuant to my direction at [50] of the earlier judgment.

5. For the following reasons, I find that there should be no order for costs of the motion filed 6 June 2024.

Background

6. The factual background is noted at [4]-[6] of the earlier judgment and not repeated. For concision, I adopt the definitions used in the earlier judgment.

Applicants’ position

7. The applicants seek an order that CMZZJ pay the applicants’ costs in relation to CMZZJ’s notice of motion filed 6 June 2024. In summary, the applicants submit:

8. CMZZJ manifested an “unreasonable” attitude in pursuing its motion for summary dismissal or strike-out on the basis that the claim was frivolous and vexatious and/or that there was no reasonable cause of action and that the proceedings were incompetent based on consideration of the proper construction of the Trees (Disputes Between Neighbours) Act 2006 (NSW) (‘Trees Act’) as outlined in a letter dated 4 June 2024 from the applicants to CMZZJ’s solicitors.

9. CMZZJ “persisted” with its unreasonable attitude by filing the motion which caused the applicants to incur significant legal costs relating to the motion which the Court dismissed on 5 March 2025.

10. Had the history of the Trees Act and the case law detailed in the letter dated 4 June 2024 been properly considered by CMZZJ, CMZZJ would have been aware of the history of the legislative amendment which inserted s 4(4) into the Trees Act and which the Court clearly identified at [10] of the earlier judgment which effectively vested the Court with jurisdiction over the applicants’ claim.

11. The applicants have incurred additional and “unnecessary” legal costs from the “persistent” unreasonable actions of CMZZJ in the pursuit of the motion which from inception lacked any reasonable prospects of success. The applicants were put to unnecessary expense in defending an application of this kind under r 3.7(2) of the Land and Environment Court Rules 2007 (NSW) (‘Court Rules’).

12. CMZZJ’s actions in filing the motion and ignoring the case law were “always” unreasonable and ill-conceived.

13. As the costs paid by the applicants in relation to the motion amount to $9,204.80 in total (GST inclusive) and the unbilled costs attending to the earlier judgment and the preparation of submissions on costs are $2,280.00 (GST inclusive), the Court should order that CMZZJ pay the applicants’ costs which are approximately $11,484.80 (GST inclusive).

CMZZJ’s position

8. CMZZJ contends that no order for the costs of its notice of motion filed 6 June 2024 should be made and that if the Court was persuaded to award costs to the applicants, the costs claimed by the applicants (in the sum of approximately $11,484.80 (GST inclusive)) are excessive and a more appropriate amount would be no more than $3,000.00 (GST inclusive). In summary, CMZZJ submits:

9. Although the Court did not accept CMZZJ’s submission that because the Tree had been removed prior to the commencement of the substantive proceedings the Court did not have jurisdiction, the applicants do not detail the provisions they rely upon under r 3.7(3) of the Court Rules in their submissions. Conversely, CMZZJ relies upon r 3.7(3)(a)(i) and (ii) of the Court Rules in support of its contention that no order for costs should be made.

10. While the applicants’ letter dated 4 June 2024 referred to decided cases, CMZZJ proffered “contrary” arguments which (although ultimately unsuccessful) involved complex questions as to the intersection of the Court’s jurisdiction under the Trees Act and the common law causes of action in nuisance/tort, as well as the intent of the legislative amendment which inserted s 4(4) into the Trees Act.

11. The advancement of CMZZJ’s arguments above could not be said to constitute unreasonable conduct or involve persisting in a claim which did not have reasonable prospects of success for the purposes of r 3.7(3) of the Court Rules.

12. Although the Court preferred the applicants’ interpretation of s 4(4) of the Trees Act, the reasons at [39]-[48] of the earlier judgment did not simply involve relying on the decided cases referenced in the applicants’ letter of 4 June 2024.

Consideration

9. The Court’s power to order costs is derived from s 98(1) of the Civil Procedure Act 2005 (NSW) and is subject to the Court Rules.

10. Disputes under the Trees Act (including the notice of motion filed 6 June 2024) are conducted in Class 2 of the Court’s jurisdiction, to which the presumptive rule contained within r 3.7(2) of the Court Rules applies:

The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances.

11. Further, r 3.7(3) provides a non-exhaustive list of circumstances in which an order for costs may be fair and reasonable, being:

(3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following—

(a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question—

(i) in one way was, or was potentially, determinative of the proceedings, and

(ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings,

…

(c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings,

(d) that a party has acted unreasonably in the conduct of the proceedings,

(e) that a party has commenced or defended the proceedings for an improper purpose,

(f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where—

(i) the claim or defence (as appropriate) did not have reasonable prospects of success, or

(ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.

12. In considering the application of r 3.7 of the Court Rules, it is apposite to note that the “no discouragement” principle underlies the presumptive rule in r 3.7(2). Put simply, a person generally should not be discouraged from making or defending an application by the prospect of an adverse costs order: Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 (‘Arden’) at [10].

13. Although the indicia contained within r 3.7(3) of the Court Rules may provide some assistance when evaluating whether an order for costs is fair and reasonable, the power exercised by the Court is not confined to these matters and is instead available in the broadest of terms.

14. The principles applicable to the Court’s exercise of the costs power under r 3.7 of the Court Rules are well-known: Maurici v Kaldor [2025] NSWLEC 20 at [48]; Simo Popovac v Dominic Kennedy [2022] NSWLEC 9 at [26]-[35].

15. The no discouragement principle is particularly important in the context of applications made pursuant to the Trees Act, as these applications are subject to the Court’s Practice Note – Class 2 Tree Applications, which is designed to facilitate the just, quick and cheap resolution of tree disputes through an appropriate and easily accessible procedure. This principle also speaks to the fact that Class 2 proceedings are intended to be an efficient and cost-effective means of facilitating justice in tree disputes between neighbours and that the statutory regime has been designed to enable parties to represent themselves: Marks v Perham (No 2) [2020] NSWLEC 84 at [29], [39]; Fox v Ginsberg (No 3) [2011] NSWLEC 139 at [9]. Therefore, there must be considerations of “sufficient weight to overcome the presumptive rule”: Arden at [9].

16. In approaching the task before me, I have reconsidered the evidence and my reasons in the earlier judgment. For reasons which may be shortly stated, I do not consider the making of a costs order in favour of the applicants would be fair and reasonable.

17. First, the background material (including the past interactions between the parties) does not amount to unreasonable conduct on the part of CMZZJ. Although ultimately unsuccessful, the bringing of the application for summary dismissal does not of itself, in the present circumstances, amount to CMZZJ acting unreasonably. It cannot be said that CMZZJ’s arguments were unmaintainable or without any prospects of success, although the matter ultimately turned upon a somewhat literal interpretation of the relevant provision.

18. Second, the bringing of a claim to determine the proceedings on a preliminary point, which is argued with relative economy with the possible effect that it would be determinative of the substantive proceedings, is not per se unreasonable, irrespective of the result.

19. Third, although it is not unusual for costs to effectively follow the result of the application for summary dismissal, I consider that the presumptive rule in these Class 2 proceedings prevails. In circumstances where there was, at least, an argument based upon the interpretation of the relevant provision, and where, as noted above, the matter was brought on at an interlocutory stage (prior to a final hearing), the evidence is not indicative (and certainly not decisive) of a party acting unreasonably in the conduct of the proceedings.

Conclusion

20. For the above reasons, having dismissed the notice of motion filed 6 June 2024 in the earlier judgment, I find there is no evidence before me that would justify a departure from the presumptive rule in r 3.7(2) of the Court Rules. In these circumstances, there should be no order for costs such that each party is to bear their own costs.

Orders

21. The orders of the Court are:

22. No order as to costs.

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