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Catchwords: COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion — Whether success or failure on separate claims should affect costs orders

Legislation Cited: Hunter Water Act 1991 (NSW), s 22
Civil Procedure Act 2005 (NSW), s 100, 101

Cases Cited: The Owners - Strata Plan No 16460 v Hunter Water Corporation [2025] NSWSC 1029
The Owners - Strata Plan No 16460 v Hunter Water Corporation [2025] NSWSC 947

Category: Costs

Parties: The Owners - Strata Plan No 16460 (Plaintiff)
Hunter Water Corporation (Defendant)

Representation: Counsel:
M J Dawson (Plaintiff)
V Chan (Plaintiff)
M T McCulloch SC (Defendant)
S J Maybury SC (Defendant)
Solicitors:
Mills Oakley (Plaintiff)
Makinson d'Apice Lawyers (Defendant)

File Number(s): 2020/77341

Publication restriction: No

JUDGMENT

1. I handed down the principal judgment in this matter on 10 September 2025 (The Owners - Strata Plan No 16460 v Hunter Water Corporation [2025] NSWSC 1029). I gave judgment for the plaintiffs in the sum of $1,161,841.92.

2. I ordered the defendant to pay the plaintiffs’ costs of the proceedings but gave leave to the parties to seek an alternative order, and also to make submissions on interest.

Costs

3. The plaintiffs are content with the order previously made. No Offers of Compromise or Calderbank letters were served or exchanged by the parties.

4. The defendant has submitted that there should be a different costs order. The defendant submitted that the plaintiffs should pay the defendant’s costs in respect of a particular argument (arising from s 22 of the Hunter Water Act 1991 (NSW)) and one third of the remainder of the plaintiff’s costs. The latter order arises from the plaintiffs losing one of the causes of action they had pursued.

5. Costs are in the discretion of the court, and the discretion is very wide. The purpose of a costs order should be to obtain a just result.

6. I think there is merit in the submission arising from s 22 but not in the submission concerning the loss of a cause of action.

7. The claim under s 22 was the subject of an application to amend the statement of claim which I dealt with on 20 August 2025 (The Owners - Strata Plan No 16460 v Hunter Water Corporation [2025] NSWSC 947). Section 22 allows for the payment of compensation by the defendant to “all persons who suffer damage by the exercise of the functions” of the defendant. I rejected the s 22 claim in the principal judgment.

8. When dealing with the application to amend the statement of claim I noted that the defendant’s position was that the s 22 claim was doomed to fail. I also noted that the reason for the amendment being late was “hardly a sound explanation”.

9. In my view the s 22 claim can be effectively severed from the whole of the proceedings and treated as a separate issue justifying a costs order in favour of the defendant.

10. In respect of the notice of motion to amend the proceedings I ordered that the plaintiffs were to pay any of the defendant’s costs occasioned by the amendment.

11. The s 22 issue took up only a small portion of the hearing. The hearing took place over 5 days. I think it would be fair and just to attribute a half day of hearing to the s 22 issue.

12. Turning to the balance of the proceedings, the plaintiffs’ damages claim effectively had two parts: firstly, there was compensation for the physical damage to the townhouses and secondly, there was a loss of value claim (referred to as a stigma claim). The latter claim arose from an assertion that insurance premiums associated with the townhouses had increased because of the history of flooding attached to the properties.

13. The physical damage claim succeeded entirely. The stigma claim failed.

14. In my view the two claims, as far as costs are concerned, should not be separated. They formed, unlike the s 22 claim, the original basis for the damages sought by the plaintiffs. The whole of the plaintiffs’ claim was disputed by the defendant on the basis that the plaintiffs were unable to establish nuisance or negligence on the part of the defendant. The defendant did not dispute the quantum of the physical damage claim and could have made a pre-hearing offer to settle the proceedings on the basis of the physical damage amount only.

15. The defendant made no attempt to resolve the matter on the basis of the physical damage claim, or any other basis. The plaintiff succeeded in the proceedings, and I think costs should follow the event.

Interest

16. The plaintiff seeks interest on the judgment amount and also on costs.

17. The amount of interest up to 19 August 2025 on the judgment sum (the commencement of the hearing) has been agreed at $513,435. The plaintiffs’ Short Minutes of Order do not seek any updating of this amount.

18. The defendant’s written submissions are silent on interest. The plaintiffs’ written submissions included specific submissions on interest on costs pursuant to s 101(4) and (5) of the Civil Procedure Act 2005 (NSW). I take the defendant’s silence as an acquiescence to the plaintiffs’ submissions.

Orders

19. I make the following orders:

20. Order 2 of the orders made on 10 September 2025 is varied so as to read:

(a) Subject to sub paragraph (b), the defendant is to pay the plaintiffs’ costs of the proceedings. (b) The plaintiffs are to pay the defendant’s costs equivalent to one half of a hearing day.

2. The defendant is to pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the amount of $541,914.95
3. The defendant is to pay interest on the plaintiff’s costs as assessed or agreed.

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