On 26 February I delivered judgment in these proceedings, setting out my conclusions on the parties' claims and defences: Trentelman v The Owners - Strata Plan 76700; The Owners - Strata Plan 76700 v Trentelman [2021] NSWSC 155. I adjourned the proceedings to allow the parties to formulate orders giving effect to those conclusions and dealing with costs.
By arrangement between the parties, the proceedings came before me for argument on 30 March. As a result of issues which arose in the course of the argument, there was a further short hearing on 6 April. On that day I made final orders and reserved my decision on costs.
The parties subsequently agreed to a timetable for supplementary written submissions on costs. On 14 April I delivered reasons for the orders made on 6 April, on the basis that I would deliver my decision on costs after I had considered those submissions: Trentelman v The Owners - Strata Plan 76700 (No 2); The Owners - Strata Plan 76700 v Trentelman (No 2) [2021] NSWSC 377.
This judgment now deals with costs. It assumes familiarity with my February and April judgments, paragraphs of which are denoted "J1" and "J2" respectively. It uses the same abbreviations as I used in those judgments.
As noted at J1 [17]-[27], I was dealing with two lawsuits. In one the Strata Corporation was the plaintiff and Mrs Trentelman the defendant. In the other, Mrs Trentelman was the plaintiff, the Strata Corporation was the first defendant and the Registrar-General was the second defendant.
The Strata Corporation's lawsuit was commenced first. It began in the NSW Civil and Administrative Tribunal ("NCAT") on 30 November 2017. Mrs Trentelman's lawsuit was commenced in this Court on 12 October 2018. Shortly afterwards, on 17 October, NCAT ordered that the Strata Corporation's lawsuit be transferred to this Court. Later, orders were made for both lawsuits to be case managed and then heard together, with evidence in one being evidence in the other.
The hearing was initially fixed before me to begin on 9 March last year. Following the opening I adjourned the proceedings on the application of counsel for Mrs Trentelman (I discuss the reason for the adjournment in more detail at [12] below). The hearing was later re-fixed for May. The further course of the proceedings is summarised at J1 [12]-[16].
In its lawsuit, the Strata Corporation sought to obtain ownership of, or a perpetual right of access to, a swimming pool built on a lot owned by Mrs Trentelman: see J1 [26]. The Corporation also sought to remove an easement over its land which Mrs Trentelman had caused to be registered in her favour.
The Corporation's claim concerning the easement was defended by Mrs Trentelman until the first day of the scheduled hearing on 9 March last year, when she abandoned it before the hearing was adjourned. Subsequently Mrs Trentelman submitted to an order that she remove the easement from the register and pay the Corporation's costs solely referable to that order. This left the claim about the swimming pool to be fought out between the parties at the resumed hearing.
The Corporation's case alleged that promises were made before and at its 2014 AGM by Mrs Trentelman or on her behalf that she would "give" the residents the pool, or continued use of it in the future. The context for these alleged promises was Mrs Trentelman's wish to convert other development lots owned by her into ordinary lots under the RPA: see J1 [17]. A special resolution was passed at the AGM consenting to this step and it was later carried out.
The Corporation sought orders in the nature of specific performance so as to require Mrs Trentleman to grant the rights allegedly promised by her. The Corporation's case was put on two bases. The first was that the promise amounted to a contract binding on Mrs Trentelman. The other was that the promise was enforceable by means of "equitable estoppel".
In their written opening prior to the hearing, counsel for the Strata Corporation propounded the estoppel case as a promissory estoppel. But in the course of oral opening, in response to questions from the Bench, counsel indicated that the Corporation would rely upon proprietary estoppel as well. It was in response to this that counsel for Mrs Trentelman sought, and obtained, the adjournment of the hearing.
I ultimately found that a promise had been made in the terms alleged by the Corporation. I rejected the Corporation's contention that it was enforceable as a contract, but upheld the claim based on proprietary estoppel. I did not find it necessary to deal with promissory estoppel.
At the time of the 2014 AGM, there was a registered easement over Mrs Trentelman's land in favour of most of the residents' lots allowing them to use the swimming pool, but this expired in October 2017: see J1 [11]. I concluded that the best way in which to satisfy the equity was by requiring Mrs Trentelman to grant to the Corporation a further, perpetual, easement in substantially similar terms.
Mrs Trentelman's lawsuit centred on the Pool Notation introduced by the December 2014 plan of subdivision which purported to make the pool structures part of the common property: see J1 [19]-[20]. Counsel for Mrs Trentelman challenged the Notation on two bases. The first was that, as a matter of construction of the relevant legislation, the plan of subdivision was ineffective to convert the pool structures to common property: J1 [315]. The second was that the Pool Notation involved an error and should be removed from the register pursuant to RPA, s 12(1)(d): J1 [316].
Early in the hearing, counsel for the Strata Corporation conceded that, in its registered form, the Pool Notation was of little, if any, practical value. This was because, if valid, it only applied to the pool structures themselves, not the air above them or the soil beneath them. Nevertheless counsel did not concede that Mrs Trentelman's claims for relief should be granted, and those claims were the subject of evidence and argument.
As I described at J1 [14]-[16], in the course of supplementary closing submissions, counsel contended that the Notation should be rectified so as to confer ownership on the Strata Corporation as common property of not only the pool structures but also the air above and soil below. Counsel sought leave, out of time, to bring a cross-claim to this effect. This was opposed by Mrs Trentelman on both procedural and substantive grounds.
Mrs Trentelman's claim of mistake failed on the facts. I did not accept that the Notation had been created unintentionally. I therefore rejected Mrs Trentelman's application to have it removed from the register: J1 [325]. While I allowed the Strata Corporation the leave it required to propound its cross-claim for rectification, I concluded that the cross-claim did not succeed. Essentially this was because, although I was satisfied that a mistake had been made in the conveyancing, I could not be satisfied what the precise intention had been: J1 [331].
I found it unnecessary to decide whether the Notation complied with the terms of the relevant legislation: J1 [324]. In the end I rejected Mrs Trentelman's claim for a declaration that the Notation was legally ineffective to confer ownership of the pool structures themselves on the Strata Corporation as common property. I did so because I considered that there was insufficient utility in going into the question: see J2 [58]-[59].
[2]
Costs in Strata Corporation's lawsuit
Counsel for Mrs Trentelman conceded that the Strata Corporation has succeeded in obtaining relief concerning the pool. Counsel accepted that in the ordinary course this would entitle the Corporation to a costs order in its favour. But counsel submitted that there were reasons why that entitlement should be qualified.
Counsel noted that the Corporation's contract claim had failed. But counsel fastened especially upon the adjournment on the first day of the scheduled hearing. The argument was two-fold. First, counsel submitted that the Corporation should pay Mrs Trentelman's costs thrown away by reason of the adjournment. Second, counsel submitted that in such circumstances the Corporation should pay all of the costs of the proceedings up until 9 March 2020.
In support of the second submission, counsel relied on the following statement of the English Court of Appeal in Beoco v Alfa Laval Co Ltd [1995] QB 137 at 154:
As a general rule, where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to costs of the action down to the date of the amendment.
For their part, counsel for the Strata Corporation denied that there had been any real justification for an adjournment. Counsel pointed out that the Corporation did not modify its pleadings. The Corporation had always relied upon "equitable estoppel". All that happened in the course of the opening was that it became clear that this included proprietary estoppel as well as promissory estoppel. Counsel pointed out that the boundary between these two doctrines can be an elusive one, and that I never rejected the argument based on promissory estoppel.
In general, pleadings are required only to identify the material facts, and it is not necessary to plead the legal effect of those facts. It is true that the Strata Corporation did not modify its pleadings, but, as I recounted at J1 [303], it was not until final argument that its claim was fully articulated. The Strata Corporation never actually pleaded its full case on detriment, although no point was ultimately taken about this.
It is also true that I did not reject the claim based on promissory estoppel. Having said that, in view of the Court of Appeal authority to the effect that promissory estoppel must be negative in substance (Saleh v Romanous (2010) 79 NSWLR 453 at 462 [74]), it is difficult to see how promissory estoppel could have succeeded in this case.
In any event, although it is not always necessary to plead the legal consequence of facts, it is necessary to do so to avoid surprise. In my view the Corporation's failure to articulate clearly that it was relying on proprietary estoppel before the first scheduled day of the hearing was a form of surprise. Counsel for Mrs Trentelman was entitled to seek an adjournment. In my view that needs to be reflected in the costs order I make.
On the other hand, it does not follow that the Strata Corporation should be deprived of its general costs up to 9 March 2020. The facts of Beoco were different. In that case the plaintiff obtained leave to amend so as to add a wholly new claim for damages that could not be assessed at the trial of its existing claim. The existing claim failed, but the alternative claim succeeded with judgment being entered for damages to be assessed.
In the present case, by contrast, the proprietary estoppel argument did not require any additional evidence. It rested on substantially the same factual basis as the promissory estoppel argument. The Corporation succeeded on the factual issues (see J1 [310]). And although the Corporation failed on the contract case, this was only one of a number of different legal formulations of what was effectively the same claim for relief, based on the promises made by Mrs Trentelman.
Nor should it be overlooked that the Corporation succeeded on its claim concerning the easement. Although a costs order has already been made against Mrs Trentelman, and that costs order will not be affected by any costs order I now make, it was limited to costs solely referable to the easement claim.
In the end the Corporation substantially succeeded on both of its claims. In my view it would be wrong to deprive the Corporation of its general costs for the period up to 9 March 2020.
Counsel for Mrs Trentelman also pointed out that it was not until late in the day that the recording of the July 2015 AGM was produced and tendered. Counsel submitted that this recording played a significant part in my decision.
In my opinion Mrs Trentelman has no valid basis for complaint. The recording exposed the evidence that she and her husband gave about the events at that meeting as being clearly incorrect. The most charitable possible interpretation of events is that by the time of the trial they had forgotten what had been said at that meeting. This was something they should have acknowledged in their affidavits. There was nothing at all illegitimate about producing the recording so as to contradict their affidavit account, and the existence of the recordings was clearly disclosed in affidavit evidence filed in March 2020, well before they gave evidence.
In these circumstances, I think it is appropriate to order that the costs thrown away by reason of the adjournment be borne by the Strata Corporation. But otherwise the Strata Corporation should receive a costs order in its favour for the whole of the proceedings.
[3]
Costs in Mrs Trentelman's lawsuit
Counsel for Mrs Trentelman characterised the two lawsuits as having between them constituted three proceedings, each of which should be treated as a separate "event" for the purpose of determining costs. These proceedings were:
1. the Strata Corporation's lawsuit;
2. Mrs Trentelman's lawsuit; and
3. the Strata Corporation's cross-claim in Mrs Trentelman's lawsuit.
I have already addressed the submissions for Mrs Trentelman on the costs of the Strata Corporation's lawsuit. So far as the costs of her lawsuit were concerned, counsel laid heavy emphasis on the concession made by counsel for the Corporation that upholding the Pool Notation in the form in which it was registered would be of little, if any, practical benefit, to the Corporation. Counsel for Mrs Trentelman also pointed to the fact that in my final orders I required the Corporation, as a condition of making an order requiring Mrs Trentelman to register a new easement in its favour, to take the Pool Notation off the title (J2 62(b)).
Counsel submitted that as a matter of substance Mrs Trentelman had succeeded on the claim in her lawsuit. The Strata Corporation's cross-claim, by contrast, had clearly failed. As I understood it, counsel contended that Mrs Trentelman should receive costs orders in her favour covering both the claim and the cross-claim.
For their part, counsel for the Strata Corporation submitted that the proceedings should be seen as, in effect, part of a wider dispute originally constituted by the Strata Corporation's lawsuit. Counsel observed that Mrs Trentelman's originating claim could, had the Strata Corporation proceedings been transferred to this Court in time, been brought by way of cross-claim. In substance, they argued the unsuccessful cross-claim in the proceedings was simply another way in which the Strata Corporation propounded its case for access to the pool. Seen in the broad, that case was ultimately successful.
I discussed the principles which apply to the award of costs in cases where the defendant cross-claims back against the plaintiff and there is success and failure on both sides (as where both cross-claims succeed or both cross-claims fail) in Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336 at [30]-[45]. In particular I referred to the decisions of the House of Lords in Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC 88 and of Dixon J, sitting at first instance in the High Court, in Smith v Madden (1946) 73 CLR 129.
In my view a distinction needs to be drawn between two distinct stages of the analysis. The first question is to determine whether the claim and the cross-claim should be seen as separate events for the purpose of applying the general rule that costs follow the event. If they are treated as separate events, so that each party receives an order in its favour and an order against it, but there are factual or legal issues which are common to both, then a second question arises. That second question is how the costs attributable to the common issues should be allocated for the purpose of the conflicting costs orders.
It is true that both lawsuits can be seen as having arisen ultimately out of one dispute about access to the swimming pool. But it does not follow that all of the proceedings should be treated as a single event.
Usually, it seems to me, an event can be equated with a prayer for relief, or a group of related or alternative prayers for relief, made by a party. In the Strata Corporation's lawsuit, its claim was for an order compelling the transfer of the Pool Land or the grant of an easement to fulfil a promise made by Mrs Trentelman's promise. The Strata Corporation's cross-claim in Mrs Trentelman's lawsuit was different. The claim was that the promise had been fulfilled (as a matter of the parties' actual intention) and rectification of the Pool Notation should be ordered to give effect to that intention.
Reflecting this difference, the material facts for the claim and the cross-claim centred on different events at periods of time. For the claim, it was the making of the promise in July 2014 and the passing of resolutions in reliance on that promise. For the cross-claim, it was the preparation and lodgement of the Pool Notation in December 2014.
For these reasons I do not consider that the Strata Corporation's lawsuit and Mrs Trentelman's lawsuit should be treated as having given rise to the same event. Moreover, once Mrs Trentelman's lawsuit is separated from the Corporation's, I think that the claim and the cross-claim should be treated as separate events. Mrs Trentelman's claim for removal of the Pool Notation, or a declaration of its invalidity, and the Corporation's cross-claim for its rectification were logically distinct. So much is shown by the fact that both were refused.
Nor do I accept that Mrs Trentelman's claim "really" succeeded despite the refusal of relief. Mrs Trentelman failed to establish her contention that the inclusion of the Pool Notation was a mistake. And her claim for a declaration also failed. The fact that I did not decide the issue of statutory interpretation and refused the claim for a declaration on discretionary grounds does not make any difference; the claim still failed. The condition requiring removal of the Pool Notation which I imposed on the relief in favour of the Corporation in its lawsuit was more a matter of neatness than anything else. Had the Corporation failed, the Pool Notation would have remained on the title in accordance with my conclusion that it was not mistaken and there was insufficient practical reason to determine its validity.
For these reasons, both Mrs Trentelman's claim and the Strata Corporation's cross-claim should be dismissed with costs. The remaining question is how costs common to the two claims should be allocated.
As appears from the discussion in Southern Oil (No 2), the usual rule where the plaintiff's claim and the defendant's cross-claim are both dismissed appears to be that costs specific to the claim or cross-claim follow that claim, but the costs which are common both to the claim and the cross-claim follow the outcome of the claim. Mixed costs must be divided between the categories.
Clearly it is open to the court to depart from this rule by "apportioning" costs between the claim and the cross-claim or otherwise. But I see no reason to do so in this case. Considering Mrs Trentelman's lawsuit on its own, as I think I should, her claim was, in substance as well as in form, the initiating cause of the litigation. The cross-claim was ancillary. Mrs Trentelman should bear the Strata Corporation's costs of the lawsuit except those solely referable to the cross-claim, and the Corporation should only bear her costs which are solely referable to defending the cross-claim.
[4]
Orders
The costs orders I make are:
2018/328341
1. Order that the costs thrown away by reason of the adjournment of the hearing from 9 March to 4 May 2020 be paid by the plaintiff.
2. Order that the defendant pay the plaintiff's costs of the proceedings.
2018/312426
(1) Order that the costs thrown away by reason of the adjournment of the hearing from 9 March to 4 May 2020, as between the plaintiff and the first defendant, be paid by the first defendant.
(2) Order that the plaintiff pay the first defendant's costs of the proceedings, except those solely referable to its cross-claim.
(3) Order that the first defendant pay the plaintiff's costs solely referable to defence of the cross-claim.
[5]
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Decision last updated: 21 May 2021