Tabachnik v Owners Corporation Strata Plan 18597 [2012] NSWLEC 203 | Case summary

Judgment (6 paragraphs)

[1]

Introduction 1Before the court today in this pending class 3 encroachment case, involving adjoining lands in Holdsworth Street, Woollahra, is an application by the applicants to amend their initiating process, and their contentions. 2Their Notice of Motion ('NOM') in this regard follows an unsuccessful attempt to resolve the matter through a s 34 conciliation conference. 3The relevant principles for the exercise of the court's discretion on amendment rely on the provisions in ss 56-60 of the Civil Procedure Act 2005, and the High Court's judgment in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175. 4Central to this court's decision is the reality, extent, and (possibly) incurability, of the prejudice alleged to flow to the respondent if leave is granted, compared with the utility of the amendment(s) sought, and the prejudice caused to the applicants by refusal. 5The chronology of past events and the likely future passage of the matter are, therefore, often relevant. 6The respondent's position is that, in substance, the amendments are not opposed, but, for reasons to which I will return, the amendments perhaps should not be made today, and, whenever they are made, the respondent should have an order in its favour for various costs it has incurred.

Background 7The class 3 application filed on 4 May 2012 sought the following relief: Such orders as the Court may deem just with respect to: 1.The removal of the encroachment. 2.Rectification of property damage caused by the encroachment. 3.In the alternative to order 2, payment of compensation for loss and damage that will be incurred by the adjoining owner. 4.Costs. 8At the first directions hearing on 1 June 2012, Pepper J referred the matter, by consent, to a s 34 conciliation conference appointed for 27 July 2012. 9The original contentions, filed in the applicants' Statement of Facts and Contentions ('SFC'), on 25 June 2012, were framed as follows: The Applicants contend that: 1.As a consequence of the Respondent's negligence, the Applicants have suffered loss and damage in the following form: a.cracking to their brick boundary wall; b.seizure of their entry gate; c.dislodgement of their wrought iron balustrade; d.cracking to floor tiles 2.The damage to the Applicants' property arises as a direct result of the negligent construction by the Respondents of an encroaching slab without proper survey and without the provision, in accordance with sound building practice, of separation material between concrete and brick surfaces. 3.As a consequence of the chemical bond between concrete and brickwork negligently caused by the Respondent, shrinkage of the slab and settlement of the footing induces rotation and cracking to the Applicants' boundary walls and consequential damage to other property elements. 4.As long as the chemical bond between concrete and brickwork remains, so does the potential for ongoing damage to the Applicants' property remain. 5.The Applicants have acted reasonably in making numerous attempts to resolve the matter in accordance with the pre-litigation requirements of section 18E of the Civil Procedure Act 2005. The Respondent has acted unreasonably in rejecting those attempts. 6.The Applicants contend that such orders as the Court may deem just should be made with respect to: a.the removal of the encroachment; b.rectification of property damage caused by the encroachment; c.in the alternative to (b), payment of compensation for loss and damage that will be incurred by the Applicants; d.costs. 10The respondent filed its SFC, in reply to the applicants', on 13 July 2012. 11The matter did not resolve at the s 34 conference conducted by Commissioner Hussey, on 27 July, and extensive correspondence followed between solicitors, before the second directions hearing, before Pepper J, on 17 August. 12That correspondence, mostly annexed to Mr Aronstan's affidavit sworn 16 August, with copies of other items handed up to the court today, focussed on legal and jurisdictional issues apparently discussed at the s 34 conference, and the effect of Bignold J's decision in Wherry v Trustees of the Sisters of Charity of Australia [2000] NSWLEC 252; (2000) 111 LGERA 216, and/or Harrison J's March 2012 decision in Hill v Higgins [2012] NSWSC 270. 13After the s 34 conference, the applicants sought counsel's advice, and formulated the original version of the amendments currently before the court. The respondent viewed those proposed amendments favourably, provided (affidavit p6): ... an order is made in our client's favour for costs thrown away by the amendments. In our view, such costs would include not only the preparation of the relevant part of the Statement of Facts and Contentions, but also the costs of appearing at the conciliation conference. 14The applicants' solicitor pointed out in reply that the s 34 conference was required by the court, not by their application, and continued (p8): We do not agree that it is correct to contend that your client's costs of preparing any part of its Statement have been 'thrown away' by the amendments. With respect, we do not construe your letter as setting out any reasons for this contention, nor have you identified the 'relevant part' of that Statement to which you refer. Please provide the foregoing details, along with itemised details as to the question of costs requested below. In our view, the appropriate order consequential upon the Court granting our client leave to amend its Application and Statement as indicated (if such leave were granted) would be 'no order as to costs', or at the highest 'an order that costs be costs in the cause'. The outcome of the substantive dispute at hearing would be material to the issue of the exercise of the Court's costs discretion in relation to this amendment. However, in the interests of the 'just, quick and cheap' resolution of this present issue, we note you have not provided any estimate of your client's costs thrown away either for the s34 conference or drafting the 'relevant part' of the Statement. As a consequence, our client is unable to properly assess your offer. We request an itemised estimate of these costs. 15The respondent's solicitor replied (p9): For the avoidance of doubt, our client does not oppose your clients' filing the amended documents in the terms provided to us, on the basis that your clients pay our client's costs thrown away by the amendment. We anticipate that the Court will not grant leave to your clients to amend without an order as to costs to that effect. Clearly our respective clients have a differing view as to what those costs thrown away will be, but that is a matter which can be determined at a later stage and need not interfere with the filing of the amended documents or the smooth progression of the matter. It is a matter for your clients as to whether or not they file an application in relation to the proposed amendments, but the only matter in issue at the hearing of the motion will be the question of costs thrown away. If your client agrees to pay the costs thrown away as a result of the proposed amendments then in our view no motion is necessary as the necessary orders can be made by consent. 16The applicants responded (p10): Could you kindly advise as to whether your client will consent to the costs order being 'costs reserved'. This will allow for the matter of costs to be argued at a later date, without, as you say, delaying the progression of the substantive matter. The order giving the Applicant leave to amend a reserved costs order could then be made as Orders 1 and 2 by consent at the next directions hearing. 17Agreement on costs was not reached, no estimates/particulars of costs have been provided, and the respondent added to the debate (on 14 August, see affidavit p11) by seeking to impose on its consent a condition that it was "provided without prejudice to our entitlement and intention to apply to strike parts of the amendments out". 18In response (pp13-14), the applicants revised their draft amendments, and foreshadowed (1) separate Supreme Court proceedings for trespass, and (2) an application to transfer those proceedings to this court. 19On 10 August 2012, the applicants filed the following materials, all dated 7 August 2012: 1.An affidavit by the first applicant. 2.A report by Quantity Surveyor Ian Berson. 3.A report by Surveyor Mike Morris. 4.A report by Consulting Engineer Alan Wright. 20On 17 August, Pepper J gave the following directions, by consent: 1.Applicant to file and serve notice of motion and affidavit in support seeking leave to rely on Amended Class 3 Application and Amended Statement of Facts and Contentions by 4.00pm on the 20 August 2012. 2.Leave granted to the parties to approach the Registrar forthwith to obtain a hearing date (1/2-1 day). 3.Liberty to restore on 3 days notice. 21The present NOM was filed on 20 August, and the applicants also issued a Supreme Court Statement of Claim in trespass on the same day. 22Tomorrow (4 September 2012), pursuant to a NOM filed by the applicant on 29 August, the Supreme Court will be asked to transfer those proceedings to this court. 23Hence Mr Neggo's suggestion that I might prefer to defer a decision on the present amendments, especially as the respondent says it intends joining in the Supreme Court matter one or more parties who was/were involved in the work that is alleged to have created the encroachment, and caused the alleged damage to the applicants' land. 24Mr Neggo also speculated that the Supreme Court may decide that the current proceedings in this court be transferred to it, rather than the reverse. He contends that it is conceivable that any combination of such eventualities (transfer, joinder of parties, etc) may necessitate further alterations to the applicants' documents. (This suggestion had been made by the respondent's solicitor in his letter of 29 August).

Costs Issues 30I turn, therefore, to the various questions of costs which have arisen today. 31The solicitor for the respondent said in his letter of 29 August: In relation to the question of costs, we are prepared to recommend to our client that they consent to your clients' filing and serving an Amended Application and Statement of Facts and Contentions with an order that your clients pay our client's costs thrown away by the amendments. Whether those costs include the costs of the s.34 conciliation conference (and in our view they do), can be left to the assessor of those costs in the event that the order is enforced. We reserve the right to tender this letter to either the Supreme Court of New South Wales or the Land & Environment Court of New South Wales on the question of costs. 32The applicants stated in reply (29 August, item 4) that they "do not propose to further amend their [SFC]", and they reaffirmed (in item 6) that they would argue before me that the costs of the amendment be "costs in the cause". 33Clearly the applicants ought normally pay the respondent's "costs thrown away" as a consequence of the amendment they sought, pursuant to either inter-parties agreement, or a specific order of the court (often by consent). 34It is not for the court to express a view at this stage on quantum at this stage, if no agreement is reached on it - there is an assessment process available if required. 35The applicants have been prepared to negotiate quantum, but wish to contest any suggestion that the "costs thrown away" because of the amendment ought include the costs of a s 34 process, particularly as that process predated their seeking of the amendment. 36The respondent claims that the s 34 process failed because of the allegedly defective way in which the applicants formulated their claim, but concedes that there is scope for argument on that part of its costs claim. 37The applicants do not concede that their claim for relief - as distinct from the information provided in their filed contentions in support of a grant of relief - included any cause(s) of action beyond the jurisdiction of this court. They submit that it is simpler for all concerned if all questions of costs are reserved, pending the final outcome of the proceedings as a whole. 38In any event, any question of the costs of the s 34 process is, rightly, contentious. 39There is also a hint in the correspondence that the respondent expected its "costs thrown away" to be settled, and possibly even paid, before its consent to the amendments became operative, but its position was put in a far more acceptable way by counsel at today's hearing. 40I am prepared to make a limited order about "costs thrown away", reserving the question of the s 34 costs and specifying neither a time nor any costs limit on when the applicants may make their (approved) amendments. That will leave the opportunity to resolve the quantum issue while progress is made, as a priority, on the substantive issues between the parties. 41In addition, I should observe that, in view of all the circumstances I have noted in this judgment, there is clearly scope for a serious argument about who should bear what costs in respect of today's hearing.

Tabachnik v Owners Corporation Strata Plan 18597

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