73 Rein AJ in Owners Strata Plan (application for an easement under s 88K Conveyancing Act) identified relevant principles on costs at [12] and [14]:
[12] From these cases the following principles can be extracted:
(1) that there is a statutory indication that generally the person upon whose land the easement is imposed will be entitled to his or her costs;
(2) that notwithstanding (1), the Court has a discretion to:
(a) order the defendant to pay the plaintiff's costs (per Austin J in Mitchell v Boutagy);
(b) order the defendant to pay some of the plaintiff's costs (per Young J in Wilson and per Windeyer J in Goodwin);
where there is conduct of an unreasonable nature on the part of the defendant (including the nature of the arguments maintained at the hearing).
[14] In my view the concept of "unreasonableness" in this context embraces the type of conduct which enlivens the discretion of the Court to award indemnity costs against a party. In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248, Sheppard J cited with approval the words of French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (FCA, 3/05/91, unreported), in which it was said that the categories of case in which discretion may be exercised are not closed. Sheppard J then said at ALR 257:
"it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo ); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata ) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata ); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson [1987] 10 NSWLR 525; Maitland Hospital v Fisher (No 2) [1992] 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records ). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis."
74 A number of the criteria for awarding costs summarised by Rein AJ are relied on by the Applicant as applicable to one or both of the Respondents in this case (see par 15(a), (c), (d), (e) and (f)). Rein AJ also referred to 117 York and Mitchell v Boutagy, when he found that unreasonable conduct in general can be an exception to the usual result in a s 88K matter that a defendant/respondent is generally entitled to costs.
75 In 117 York, another application under s 88K of the Conveyancing Act, it was held that the entitlement of a defendant/respondent to costs would only be lost if there had been unreasonable conduct by it which made the proceedings more expensive (at 523F per Hodgson J). In that case the defendant was seeking indemnity costs. Hodgson J ordered that the plaintiff pay the defendant's costs on the usual basis, that is, not on an indemnity basis. In Mitchell, also considering an application under s 88K, Austin J interpreted the costs provision under s 88K(5) as reflective of legislative policy that a respondent, being required to grant an easement against its will, should generally have its costs borne by the applicant except in circumstances of unreasonableness on the part of the respondent, in which case the court, in its discretion, may order to the contrary (at [60]). His Honour recognised that an offer made by the plaintiff in that case for compensation, which had been rejected by the defendant, did not carry as much significance as it ordinarily would because of this legislative policy. The defendant was not unreasonable in rejecting the offer in reliance on this policy. His Honour, however, in granting the defendant's costs in that matter, noted at [67] that if, in the court's assessment, "it is unreasonable for the owner of the servient tenement to disregard or not favourably respond to a letter of offer, then a contrary order may well be justified." In Mitchell the plaintiff was ordered to pay, inter alia, the costs of the proceedings on the usual basis.
76 The Fourth Respondent submitted that these s 88K cases did not apply because s 40(5) provides him with the right to have his objection heard by the Court and s 88K does not have an equivalent provision. While that is a correct observation in relation to s 88K, I do not agree that s 40(5) means that an objector to the grant of an easement sought under s 40 is entitled to have his objection heard by the Court regardless of his conduct in the litigation and the making of settlement offers by an applicant, for example. An objector relying on s 40(5) must still behave reasonably as must any litigant before a court if s 40(8) is to apply in his or her favour. This finding also applies in relation to a similar submission from the Tenth Respondent that the Court is statutorily obliged to consider the Respondents objections. The purpose of s 40(5) is to provide a statutory basis for any objector to an easement to be a party in a s 40 application. A party to litigation is always bound by the rules of court as a general proposition. The necessity for this approach was also identified by Rein AJ in Owners Strata Plan at [31] because there would otherwise be no incentive to settle if parties believed they would get their costs paid by an applicant seeking an easement regardless of anything they did.
77 I consider the principles identified in Owners Strata Plan, Mitchell v Boutagy and 117 York can inform the Court's attitude to the application of s 40(8). Ultimately the Court must consider the conduct of the litigation to determine whether any parties have acted unreasonably in deciding how costs ought be awarded in light of s 40(8).
78 There is no doubt the Applicant has faced considerable opposition to its application for an easement from both Respondents. Given that s 40(8) specifies that the Applicant would usually pay the Respondents' costs I have to determine in the circumstances of this case whether the Respondents' behaviour in this litigation has been so unreasonable that I should not award any costs or disbursements in their favour and make no order as to costs but rather make cost orders in the Applicant's favour. The Applicant has been represented throughout by a solicitor and one or two counsel while the Fourth Respondent represented himself throughout and the Tenth Respondent was largely represented by her agent. I must consider the relevant conduct of the parties within the litigation to determine if any of the criteria identified in Owners Strata Plan arise (see [14] quotation at par 73).
79 The correspondence and conduct of the Applicant, its solicitor and the Respondents shows parties in considerable personal conflict over the issues within the litigation. The level of antagonism generated between the parties has also lead to unnecessarily detailed evidence and submissions about who said what to whom to a far greater extent than is usual or appropriate in a costs application. The Applicant's evidence and submissions raise various communications between the parties and are extensively countered by the Respondents. The specific and minute details of this evidence and submissions is not necessary to resolve for this costs application. Each party argues that the history of the litigation demonstrates how unreasonably the opposing party has behaved. Apart from observing that an unfortunate tone arises in the correspondence from all parties I am not going to dissect in the detail it has been presented by them the precise outcome of each instance in which one party alleges another party has presented incorrect evidence or misled the Court.