This is the Court's fifth judgment in these proceedings. The Court's principal judgment was given on 13 October 2020: Vella v Nergl Developments Pty Ltd & Ors [2020] NSWSC 1405. The Court's second judgment was given on 9 June 2021: Vella v Nergl Developments Pty Ltd & Ors (No. 2) [2021] NSWSC 648. The Court of Appeal gave a judgment on 1 July 2021: Nergl Developments Pty Ltd v Vella [2021] NSWCA 131. I have since given my third judgment on 29 October 2021. A history of these various judgments is set out in my third judgment: Vella v Nergl Developments Pty Ltd & Ors (No. 3) [2021] NSWSC 1352, at [1] to [3].
This judgment should be read with all the Court's previous judgments. Events, matters, and persons are referred to in all my judgments in the same way.
The only issues which now remain, and which were the subject of argument today, are the final form of the Conveyancing Act 1919, s 88B instrument, and costs.
The first of these issues has now been resolved. The submissions put by the parties today about one final drafting difference concerning the Conveyancing Act, s 88B instrument, and a suggestion by the Court as to a possible wording about the difference, resolved this issue. The parties have supplied to the Court consent orders giving effect to an agreed set of terms for the Conveyancing Act, s 88B instrument. The Court will enter those orders today.
The other remaining issue is one of the costs of the proceedings. Some background to that issue is required. In the Court's second judgment, the Court made the following costs orders:
"(1) Order that the first and fourth defendants jointly and severally pay 80% of the plaintiff's costs of these proceedings up to 30 October 2019;
(2) Order that the first defendant pay 80% of the plaintiff's costs of these proceedings after 30 October 2019, excluding the costs of determining the costs of these proceedings ("the costs issues"); and
(3) Order that the plaintiff pay 60% of the common costs of the first and fourth defendants of the costs issues."
Although the Court of Appeal dismissed the appeal from the first and second judgments, it varied the costs orders made with the second judgment. The Court of Appeal substituted for my orders in the second judgment the following orders:
"The Court should make the following orders:
…
(3) Grant leave to the appellants to appeal from orders (1) and (2) made on 9 June 2021 with respect to the costs of the trial.
(4) Set aside orders (1) and (2) made on 9 June 2021 and in their place order that:
(a) Nergl and Kindelon are jointly and severally liable to pay to the plaintiff 80% of her costs of and relating to the proceedings in the Equity Division from 12 December 2018, up to an including 30 October 2019; and
(b) Nergl is to pay 80% of the plaintiff's costs of the proceedings in the Equity Division after 30 October 2019.
…
(6) Order Nergl to pay Ms Vella's costs in this Court."
The parties are at issue about the date from which I should now make a costs order. There is no issue between the parties that I have determined the question of costs up to the date of the principal judgment, 13 October 2020. But Nergl contends that I have not determined costs after that date, in any form, and that those costs are still at large. Mrs Vella contend that I have already determined costs up to the date of my second judgment by making the orders on 9 June 2021 set out above, giving them a claim of 80% of the costs up to that date.
Before proceeding to the contentions about what costs orders should be made after either 13 October 2020 or 9 June 2021, it is necessary for the Court to determine from what date the orders will operate. I have reached the view that the orders that I am to make today about costs should operate from 14 October 2020, the day after the principal judgment, but excluding costs issues already determined on 9 June 2021.
That order on 9 June 2021, in a very limited sense, does cover costs incurred by the parties after the principal judgment on 13 October 2020, but only in the limited sense of dealing with costs incurred in relation to arguing about costs issues. And that was only part of the work done by the parties since the principal judgment. I will leave that order in place. The orders that are made today as a result of these reasons will operate outside that existing Order (3) of 9 June 2021.
With that exclusion, the parties' submissions on the subject of costs since the time of the principal judgments may be shortly stated. Nergl submits that an appropriate outcome to reflect the fact that, as they submit, there has been mixed success in relation to various issues since the primary judgment, is that the Court should take a holistic and general approach to the exercise of its discretion, and make no order as to costs.
On the other side, Mrs Vella say that the Court should make an order substantially the same as that made with the principal judgment and that the Court should order Nergl to pay 80% of Mrs Vella's costs.
The Court has reached a view which differs from either of these positions for the reasons which follow. It is first necessary to briefly survey the range of issues which were considered after the principal judgment at a fairly high level of abstraction. There have been several directions hearings and contested hearings resulting in the second judgment and the third judgment.
Shortly after the principal judgment applications were made to amend orders under the slip rule, which were dealt with on 24 November 2020. There were from that early time many iterations from the Deed, and the s 88B instrument, including the linen plan forming part of that instrument.
Nergl made an interlocutory application in February 2021 which then resulted in extensive correspondence between Minter Ellison and Macpherson Kelley in relation to possible damage to the easement, and the need for that damage to be rectified, followed by an argument as to whether or not the caveat should be removed pending resolution of the issue of the alleged damage.
The Court gave its second judgment only dealing with questions of costs, before the proceedings went to the Court of Appeal from the Court's principal judgment and from the second judgment. The Court of Appeal gave its decision on 1 July 2021.
Shortly thereafter, on 16 July, the Court conducted a hearing about the question of whether the caveat should be removed, pending determination of the issue concerning the alleged damage to the easement with the permission of the Vella interests. A large number of disputes also arose between the parties about the form of the Deed and the s 88B instrument, the Court determined all those matters in its third judgment.
In light of this history, Nergl submit that the Court should order each party to pay her or its own costs after the principal judgment. In summary, Nergl submitted this on the following basis. Nergl had more success than Mrs Vella in relation to the issues of the slip rule. Although in relation to the Notice of Motion on the damages issue Mrs Vella had some success, the substance of those issues still remain undecided and the Court will deal with those as case management issues at a later date. And although Mrs Vella was successful in achieving an outcome that the caveats should be removed, Nergl submits that the underlying issues of alleged damage to the easement have not been resolved.
In contrast, Mrs Vella say she was substantially successful on the whole of the contentious issue about the caveats being removed, and that Nergl's degree of success on the questions of the Deed and the s 88B instrument, as exemplified by the third judgment, were as they say, not high.
Mrs Vella further submits, particularly in relation to the Deed and the 88B instrument that what has been exchanged between the parties really represents the working out of the mechanics of the Court's substantive judgment, and that the costs of working out of those mechanics should be borne by the parties in the same percentage as the costs that were ordered in respect of the principal judgment.
The applicable costs principles here are well-known. Where parties are successful on some issues, and not on others, it is generally undesirable for a Court to split costs as between individual issues, but rather to make a broad judgment, often somewhat impressionistic in nature, about the overall costs to simplify the parties' tasks in undertaking an assessment upon the costs orders: Avopiling Pty Ltd v Bosevski (2018) 98 NSWLR 171; [2018] NSWCA 146 at [172].
The Court can do that in this case. The Court has reached a percentage figure for the costs after the principal judgment, excluding Order (3) of the second judgment. The following observations inform the Court's judgment in reaching this percentage figure.
The slip rule issues did not take a great deal of time. Although there was some success by Nergl on those issues, they were ultimately not a matter of large significance.
The question of whether the caveat should be removed occupied the parties' attention, both in correspondence and in submissions. The degree of that occupation of the parties' time to some extent can be assessed by reference to my third judgment. That was a judgment of some 19 pages, and some 71 paragraphs. Of that text, paragraphs [13] to [45] were occupied with the question of removing the caveats. And paragraphs [46] to [69], being slightly less than half the length of the judgment, are occupied with settling the Deed and the 88B instrument.
The parties took entrenched positions about the question of removal of the caveats. That issue occupied some considerable time in the parties' correspondence with one another. It is also evident that much of the parties' time was actively spent in trying to sort out their differences in relation to the Deed and the s 88B instrument. And although my judgment reflects slightly less emphasis on the latter issue, it was evident to the Court that the parties in their preparation for the hearing had taken a lot of time on that issue to try and resolve their differences. Indeed, they did so in relation to the Deed before the matter came to Court. And as a result, the Court was only required to resolve residual drafting issues in relation to the s 88B instrument.
The Court has been able to look at the positions the parties initially took on drafting questions, the concessions that were made, and the issues that ultimately had to be resolved in the third judgment about the Deed and the s 88B instrument. In the Court's view, it is a somewhat simplistic analysis to say that working out the final drafting of the Deed and the s 88B instrument is just working out the "mechanics" of the Court's substantive judgments, such that the same costs order should apply to that process of "mechanics" for the benefit of the plaintiffs as it did for the principal judgment.
The negotiation of a form of final relief is a somewhat new and different process to the contest about the substantive liability issues that led to the grant of relief in the principal judgment. Both parties in this case would have to acknowledge that the process in which they were engaged in negotiating the s 88B instrument and the Deed were very different from the nature of the contest that took place before the Court gave the principal judgment.
Nergl took, in the Court's view, a reasonable position on the drafting of these instruments. At no stage in the third judgment did the Court say that Nergl was arguing for a draft wording from an unreasonable standpoint. The differences which existed between these parties were those that could be held by reasonable parties looking at the legal issues from their own perspective.
Moreover, in working out the final form of orders, Nergl was quite entitled to defend what they perceived were a form of orders acceptable to them. They are not required to defend what they regard as fair and just in the final form of draft relief documents on the basis that defending their rights must be done effectively at their own expense, upon the same 80% costs percentage determined in the principal judgment.
So that invites fresh analysis by the Court of a drafting process that has occupied a substantial part of what has happened since the principal judgment.
But placed against that, Mrs Vella was substantially successful on her contentions about the removal of the caveats. Mr Gaffney submits that the associated damages issues are not finally determined. But perhaps the best way of putting what has happened is that whether some damage to the easement has occurred and by whom is a matter of trial management. And this trial management would have had to occur whoever won this case. The Court would have had to deal with these issues to ensure that Anshun principles (Port of Melbourne Authority v Anshun (1981) 147 CLR 589; [1981] HCA 45) were appropriately considered. That should not necessarily be at either parties' expense. But the underlying contest about removal of the caveats was one on which Mrs Vella was successful, and that should be recognised.
So with those considerations in mind, the Court needs to come to an impressionistic view of what costs order should be made for the period since the principal judgment. And I have reached the view that Mrs Vella shall recover 40% of her costs for that period against Nergl, and consistently with the third judgment, not Nergl and Kindelon. And that order excludes Order (3) of the orders made in my second judgment.
[2]
Conclusion and Orders
For these reasons the Court makes the following orders, in accordance with the short minutes of order initialled by the Court, dated today and placed with the Court papers. The short minutes of order are copied below:
1. The Court notes that the parties have agreed on the form of the s 88B instrument in accordance with "Attachment A".
For these reasons, the Court otherwise makes the following orders:
1. Order that the first defendant pay 40% of the plaintiff's costs of these proceedings incurred between 14 October 2020 and today but excluding the costs provided for in Order (3) of the orders made on 9 June 2021.
Annexure A - s 88B Instrument (15.12.21)_Redacted (156352, pdf)
[3]
Amendments
20 December 2021 - Attachment A correctly attached
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Decision last updated: 20 December 2021