Young v King

(f) Construction of a retaining wall on the southern boundary; … (i) Underpinning of existing footings to the dwelling house." 13 I should have indicated that the application is itself a lengthy document and suffers from the regrettably common approach of seeking declarations which are merely findings of fact along the way to a prayer for ultimate relief. A number of declarations are sought in relation to the legal status of decisions made by the council by way of the grant of development consent. Declarations are also sought in relation to claims for damages said to flow from illegalities which have been committed. As it happens, the applicant has not pressed for any of the alternative relief. The local council is Warringah Shire Council but it has never been joined in the proceedings (see Cambridge Credit Corporation Ltd v Parkes Developments Pty Ltd [1974] 2 NSWLR 590). 14 The points of claim plead trespass, the challenge to development consents and construction certificates and alleges invalid conditions of consent. It also alleges a breach of the consent and claims damages, injunctions and other relief. 15 The solicitor for Mr and Mrs King filed a defence to the points of claim. The defence pleads in relation to para 3(e): "The Respondents admit that a footing has been constructed on the southern side at No 37 for the masonry dividing fence and as structural support for the replacement path, but say that such development is exempt under Schedule 1 "Fence" of WLEP [Warringah Local Environmental Plan] 2000 and otherwise deny that this development was unlawful." 16 The evidence before me does not enable me to know whether that pleading was made with the express knowledge of Mr King. I also do not know whether it was made with knowledge of the development application and accompanying plans, which had been lodged with the council and approved in February 2002. However, if the solicitors had inquired of Mr King they would have been made aware that the plan identified the relevant structure as a retaining wall and that the footing which had been constructed was the footing for that wall.. The relevant provisions of the local environmental plan have the consequence that a retaining wall is exempt if it has a maximum height of 900 millimetres above or below ground level and will be located at least 900 millimetres off any property boundary. In the present case, the retaining wall was proposed to be constructed on the boundary with the consequence that, in truth, there was no defence to the pleading that it had been constructed without consent. 17 With respect to para 3(f) of the points of claim, the same position exists. The footing was constructed for the purpose of the retaining wall, as the plan makes plain. Again, if inquiry had been made, it would have been obvious that the defence as pleaded could never be sustained. 18 The third matter is para 3(i) of the points of claim, which relates to the underpinning which had been carried out to the existing footings to the cottage at number 37. The defence admits that work had been carried out, but pleads: "such development was exempt under Schedule 1 'Minor Internal Alterations to Buildings' of WLEP 2000 and otherwise deny that this development was unlawful". 19 It is unnecessary to refer to the plans or to seek instructions in relation to this matter to understand that that defence could never have been sustained. Exemption is provided in the local environmental plan in relation to minor internal alterations, if they are: "non-structural work such as replacement of doors, wall/ceiling or floor linings or deteriorated frame members, and renovations of bathrooms, kitchens, inclusion of built in fixtures such as vanities, cupboards and wardrobes. Applies only to renovations or alterations of previously completed buildings. Works shall not change room configuration, reduce window arrangements for light/ventilation needs, reduce doorways for egress or enclosed open areas". 20 The work involved here was obviously structural and obviously external to the building. The pleading that it was minor internal alterations could never have succeeded. I shall return to those matters when I come to consider the ultimate course of these proceedings. 21 Before the proceedings had progressed to any degree, Mr and Mrs King wrote to Mrs Young indicating that they were prepared to seek mediation in an endeavour to settle the dispute. The letter was in the following terms: "Dear Margo, We'd like you to know that we are still willing to see an independent mediator to settle this dispute. We received the papers for going to Court on the 25th April which was a bit late and hasn't given us much time to seek advice, brainstorm a solution or send you some kind of offer. We are willing to go through the community justice centre or some other mediation service and have got some ideas of things we could offer you in return for you desisting proceedings. We believe that the only people who will benefit from court action will be the lawyers and it will cost both of us ridiculous amounts of money that would be much more usefully spent elsewhere. We want this upset to come to an end and we are very willing to negotiate with you. We hope that you too feel this way. We believe that we could still live in peace next door to each other. Imagine how good that would be! All things are possible! Please let us know before the court day if you are willing to try mediation." 22 As I will ultimately relate, the subsequent course of these proceedings sadly bears testimony to the insight which Mr and Mrs King had to the consequences which would flow from a continuation of their dispute in Court. 23 The offer to mediate was not taken up. However, on 9 May 2003 the solicitor for Mrs Young telephoned Mr Stephen Griffiths, the partner responsible for the matter on behalf of Mr and Mrs King. Mr Jason Hones gives evidence of the conversation. That evidence was not challenged and I accept it. Mr Hones said: "Stephen, my lady's concerns go to the water and drain and footing issues. We should try and get this matter resolved as quickly as possible. We don't want to become embroiled in another Gorczynski matter. Your people will need to rectify the retaining wall. But it might be my client will agree to not press any other matters if we can get an early resolution. What I don't want is for costs to be the issue we are arguing over. Possibly your client might obtain a licence from my client to carry out the works, alternatively to grant an easement, subject to compensation. I will send you an offer about this." 24 The reference to the Gorczynski matter is, I understand, a reference to some proceedings notorious in this Court, where much time and money was spent seeking a resolution. Again Mr Hones, as it happens correctly, identifies the possibility that at the end of the day these parties will end up arguing only about costs. 25 I will return in a moment to the narrative with respect to the dealings between the parties, but I should just briefly relate what ultimately happened. 26 The matter progressed through this Court and was fixed for hearing commencing last Monday, which was 16 February 2004. When the matter was called on, Mr Ian Hemmings, appearing for the applicant, briefly opened his case. I then invited Mr Griffiths, the solicitor for the respondents, to tell me the position in relation to his clients' defence. At that stage Mr Griffiths indicated that he conceded that the works referred to in paras 3(e), (f) and (i) of the points of claim were carried out without consent. The parties by that stage were apparently engaged through their experts in discussion about what work might need to be done to rectify any environmental problem on the site occasioned by the works already undertaken. The experts were meeting in the precincts of the Court. By 3 o'clock on the Monday afternoon the experts had agreed on the works which needed to be done. They involve the reconstruction of the drainage for the retaining wall to ensure that the capacity of the downstream drains from the wall itself are adequate to dispose of the water in times of heavy flow. Evidence was given about the likely cost of these works and Mr Springett, a civil and structural engineer engaged by the respondents, confirmed that the cost was of the order of $1000. 27 Accordingly, by the end of Monday, the dispute between these parties had been entirely resolved except in relation to matters of costs. As part of the compromise which the parties reached in relation to the whole matter, the applicant did not press for relief beyond that which was agreed to be involved in the works agreed upon by the experts. The matter was disposed of by the respondents giving an undertaking to carry out those works. 28 As a consequence, it was unnecessary for me to explore all of the evidence prepared for this matter. It was, however, necessary for me to receive and consider the evidence insofar as it related to the appropriate order for costs. In that respect, the applicant seeks costs in part on an indemnity basis. The respondents resist that application and say that the appropriate order is that each party should pay his or her own costs. 29 The necessity for carrying out the agreed works is to protect Mrs Young's property. In this respect, the experts are agreed that the drain which had been installed was inadequate. However, Mr Springett held to the view that because a drain had been installed at a lower level than the retaining wall and adjacent to the underpinning of the main house structure, the sub-surface water would have been drawn down, and the inadequate drain at the high level behind the retaining wall was of no consequence. 30 Dr Perrens, an experienced hydrological engineer, had a different view. Both Dr Perrens and Mr Springett gave oral evidence in relation to this aspect of the matter. Dr Perrens drew upon evidence from piezometer readings taken in May/June last year, following a wet period which was identified to be a "one in five event", and found the piezometer readings to show an elevated water table adjacent to Mrs Young's house. Although he accepts that the construction of the drain adjacent to the underpinning would have potentially beneficially altered the ground water movement on Mrs Young's property, he was nevertheless of the view that the construction of the footing of the retaining wall with inadequate drainage would have the consequence that water would be likely to back up behind the footing and rise to the surface, with the potential to cause damage to Mrs Young's house. There is evidence of water impact upon that dwelling at present, although the evidence does not enable me to find whether or not that has been occasioned by the movement of ground water since the construction of the footing for the retaining wall. Of course, since the footing was constructed, Sydney has experienced, as has much of New South Wales, a dry period. 31 The evidence of Mr Springett was that drawing upon the modelling which Dr Perrens had undertaken of the effect of the lower drain, it had altered the draw down curve so that it would not be possible in future for water to rise to the level which it may previously have done, and, accordingly, the works which had been undertaken in his opinion improved the situation. 32 Mr Springett was not a satisfactory witness. On many occasions he failed to answer the question he was asked, and proffered opinions which were plainly designed to advocate a position rather than fulfil his role as an expert for the Court, namely to assist the Court to resolve the problem. 33 Whereas Mr Springett was unsatisfactory, Dr Perrens was the opposite and, having regard also to his qualifications and experience, I accept his evidence on these matters. In particular I accept his analysis of the situation having regard to the elevated piezometer readings and his conclusion that the construction of the footing without adequate drainage would have the consequence in significant wet periods of locally raising the water table adjacent to the cottage. This would occur because an inadequate drain would not allow sub-surface water to be removed as efficiently as would otherwise have been the case. 34 Accordingly, I am satisfied that the works which the respondents have agreed to undertake were made necessary by reason of the construction of the retaining wall which, it has been conceded, was constructed without consent. The retaining wall operates to interrupt the flow of sub-surface water and, accordingly, unless adequately drained, the problems which Dr Perrens identified are likely to occur. 35 It follows that the applicant has succeeded in these proceedings. 36 Of course, there were many other matters pleaded and, as I have indicated, some in the alternative. There were also other issues which have not required resolution. However, the applicant has substantially succeeded in the proceedings and will obtain undertakings which provide relief in relation to the adverse impact upon the applicant's dwelling. The ordinary rule is that costs will follow the event and, but for any question of indemnity costs or other special consideration in the circumstances of this case, that is the appropriate order. 37 In order to understand the claim for indemnity costs, it is necessary to trace the history of the litigation, particularly settlement discussions which followed the conversation of 9 May 2003, to which I have previously adverted. In that conversation, Mr Hones indicated that he would send an offer. He did so by letter dated the same day. Relevant parts of that letter are as follows: "We refer to the above proceedings and our telephone conversation this morning. We have now taken instructions from our client concerning settling this matter before the incursion of legal costs make that task impossible. Our client maintains that your clients have caused underground water to be directed through her property. This was previously disposed of via a 4 inch agricultural drain which our client maintains your clients removed during the excavation works associated with the construction of the retaining wall and its footing. We are instructed that the consequence of these actions have caused at least one tree located in the front of our client's yard to die (or be in the stages of demise) and for continual dampness to remain in the northern boundary area of our client's property. Without prejudice, our client has instructed us that she is prepared to withdraw her challenge of the consent and enforcement action upon the following basis: 1. Your clients at their cost construct a drainage line within our client's property to discharge the sub surface water. Our client gives no consent to your clients to connect their stormwater to this drainage line; nor to divert sub surface water from their property into that line. 2. The drainage line be designed by our client's engineer prior to construction, and certified by our client's engineer following construction, at your client's cost. 3. Our client's property to be re-instated to its original condition as it was in 2001 and prior to your clients undertaking the works. 4. Access for the purpose of construction of the drainage line to be limited to suitably qualified and insured plumbers (or their employees) and subject to a deed of licence. 5. The deed of licence to be prepared by this firm, and the costs borne by your clients. 6. Your clients pay consideration in the sum of $30,000.00 to our client for the grant of the licence. 7 Your clients provide an irrevocable undertaking that they will not remove the existing brick wall between the respective properties; nor do anything to its surrounds/supports to warrant its removal. 8 Your clients reimburse our client for her: (a) Non legal costs incurred or expended by her to date (being consultant's costs and disbursements) in total; (b) Legal costs to date as assessed or agreed on a party/party basis. 9. Your clients provide security in the sum of $10,000.00 in respect of the works so as to ensure compliance with the conditions of consent. Your clients should irrevocably authorise that security to be called upon in the event of your clients, following 7 calendar days notice from our client, requiring compliance with a condition of consent, fail to comply with any such notice. Our client has instructed us to make this offer so as to avoid incurring, what will inevitably be, substantial legal fees if this matter proceeds to hearing. Obviously our client would prefer to settle this matter by mutual agreement with her neighbours. Our client has considered the commercial reality of maintaining these proceedings. She is clearly disinclined to continue pursuing them if the matter can be settled. Her offer reflects this understanding which we hope your clients will similarly appreciate. Our client's offer shall remain open to be accepted within the next 7 days, after which time it will lapse". 38 The offer was said to be made pursuant to, or in accordance with, the principles of Calderbank v Calderbank [1975] 3 All ER 333. As it happens, all the elements of the offer have not been achieved in these proceedings. 39 The offer was not accepted. However, as I have indicated, I am satisfied that a drainage problem had been created by the construction of the footing with inadequate drainage. 40 On 22 May 2003, Pike Pike and Fenwick Solicitors wrote on behalf of the respondents and made an offer. It was in the following terms: "Our client is prepared to pay to yours the sum of $2500.00 upon the following conditions: 1. The said $2500.00 is to be reimbursement for expenditure by your client for the purpose of extending her on-site detention pit to an appropriate size, or to disconnecting and blocking the outlet from the rear northern side of your client's dwelling to the undersized pit and putting in a new connection from the rear southern corner of the dwelling to join the stormwater pipe leading to Calca Crescent. 2. All works must be carried out to the approval of Warringah Council and in accordance with Council's requirements. 3. The said $2500.00 will be paid within seven days of the completion of the works on the provision to our client of confirmation from Warringah Council that the works have been satisfactorily completed. 4. All such works are to be concluded within 12 months from the date hereof". 41 That offer was made in the belief that the applicant's ground water problems were being caused by an inadequate stormwater detention facility within her own property. In their offer, the respondents were offering to fund the reconstruction of a water detention pit in the belief that it would resolve the applicant's problems. However, no offer was made in relation to the drainage of the footings or any other rearrangement of the drainage conditions on the respondent's property. As I have found that the footing for the retaining wall has had the effect of interrupting the sub-surface flows, I am satisfied that it was not unreasonable for the applicant to reject that offer. 42 A further offer was made by the solicitors for the applicant in a letter dated 9 September 2003. In that letter the solicitor writes: "We have now taken instructions from our client concerning settling this matter. As you know our client has maintained for some time now that your clients have caused underground water to be directed onto or through her property through the construction of, inter alia, their retaining wall and footing. You should now be in possession of our client's expert reports that confirms the consequence of these actions have caused at least one tree located in the front of our client's yard to die (or be in the stages of demise) and for continual dampness to remain to the northern boundary area of our client's property. Without prejudice, our client has instructed us that she is prepared to withdraw her challenge of the consented enforcement action upon the following basis: 1. Your clients at their cost construct a drainage line within their property to discharge the sub surface water. 2. The drainage line referred to in (1) above be designed: (a) By a suitably qualified engineer prior to construction and engaged by our client at their cost; (b) Certified by our client's engineer (or an engineer appointed by our client) prior to and following construction at your clients cost; and (c) Approved prior to construction by, and to, Warringah Council's satisfaction. 3. Our client's property to be re-instated to its original condition as it was in 2001 and prior to your clients undertaking the illegal/unlawful/trespass works. 4. Your clients pay our client's costs to date as assessed or agreed on a party/party basis. Our client has instructed us to make this offer so as to avoid incurring, what will inevitably be, substantial legal fees if this matter proceeds to hearing. Obviously our client would prefer to settle this matter by mutual agreement with her neighbours. Our client has considered the commercial reality of maintaining these proceedings. She is clearly disinclined to continue pursuing them if the matter can be settled. Her offer reflects this understanding, which we hope your clients will similarly appreciate". 43 As it happens, the ultimate resolution of the drainage problem is consistent with the offer which was then made. However, there is one further matter to which I should advert. 44 At the time this offer was made, the applicant's experts were not aware of the nature, if any, of the drainage which had been placed adjacent to the underpinning of the main part of the cottage. Accordingly, they were not aware whether there was a drain in that location which could function to draw down the ground water on the respondent's property and also on the applicant's property. The presence of that drain was a feature of later discussions, which included a dispute in relation to a notice to produce which sought a video taken of the works during the course of their construction. The applicant requested that video but the request was declined unless the applicant was prepared to pay the cost of editing the video to remove material irrelevant to the construction activities. Although the parties exchanged correspondence about production of the video, it was not ultimately provided until last Friday, 13 February, and was shown to the applicant's experts on the afternoon of Monday, 16 February, after the proceedings had commenced. That video apparently confirms the presence of a drain adjacent to the underpinning which has a beneficial impact upon the sub-surface waters. However, as I have indicated, I am satisfied that although that drain has a benefit, the footing which has been constructed with inadequate drainage at a higher level is likely to have a detrimental effect. 45 The respondents' solicitors responded to the applicant's second offer by letter on 11 September 2003, asking for an estimate of the applicant's costs to date. The evidence does not suggest that letter was responded to and, consistent with the original letter, Hones Lawyers withdrew the offer on 15 September 2003. On 1 October 2003 a formal offer of compromise was made by the applicant's solicitors. In the letter accompanying the formal offer, the solicitors wrote: "1. If this matter proceeds to hearing our client believes that she will establish that: (a) The works that have been described as 'Unlawful Works' will be proven to be unlawful as known under the Environmental Planning Assessment Act 1979; (b) The unlawful works will be found to have been undertaken in circumstances where development consent was required, but not obtained; (c) The works that have been described as 'Trespass Works' will be proven to have occurred on our client's land without either her consent or the consent of the Council; (d) Your clients will be shown to have breached a number of the conditions of development consent; (e) The works undertaken by your clients will be shown to have caused, or have the potential of causing, damage to our client's property. 2. Our client will persuade the Court that it should exercise its discretion and refuse the orders sought in her application. 3. The Court will, at the very least, make orders in accordance with items 1.1 to 1.6 of our client's offer. Your clients will therefore be in a worse position than had they accepted this offer. 4. Our client will be entitled to the cost of the proceedings, and in this regard if the offer is not accepted this should be on the basis of indemnity costs". 46 The offer of compromise read as follows: "1. The applicant offers to compromise her claims in these proceedings by the making of the following orders: 1.1 The respondents at their cost arrange for: (a) the construction of a drainage line wholly within their property known as 37 Calca Crescent Forestville ('No 37') to discharge subsurface water such works to be carried out by a licensed professional plumber or if other ancillary works are required to be carried out by suitably qualified tradespeople; (b) re-instatement of the applicants land known as 35 Calca Crescent Forestville ('No 35') to its original condition as it was in 2001 and in this regard this includes without limitation levelling and turfing the ground level on the northern boundary of No 35; and (c) the construction of a retaining wall wholly contained within No 37 to support the applicants land such works to be carried out by suitably qualified tradespeople. 1.2 The drainage line and or other ancillary works referred to in order 1.1 above be: (a) Designed and certified by a suitably qualified engineer prior to construction and engaged by the respondents at their cost; (b) Approved prior to construction by, and to, the satisfaction of the applicants engineer (or an engineer appointed by the applicant), at the respondents costs; and (c) Approved prior to construction by, and to, Warringah Council's satisfaction. 1.3 The works referred to in order 1.1 shall include, without limitation, the removal of the concrete footings and retaining wall located on the southern boundary of NO 37 so as to accommodate the drainage line proposed by order 1.1 above. 1.4 The respondents to: (a) Make an application to the Warringah Council in respect of the works proposed in these orders (the 'Works') within 14 days following the date these orders are made and to do all things necessary without limitation to obtain a development approval and construction certificate for those works; (b) Commence the Works within 7 days following the granting of a consent for those works; (c) Complete the Works within 21 days following the granting of consent for those works; (d) To inform the applicant of the date the Works are to be commenced no later than 5 days prior to commencement of the Works; and (e) Ensure the Works are appropriately insured, and where the Works involve works on NO 35 to note on any such insurance the applicants interest in the Works. 1.5 The respondents to provide to the applicant a written irrevocable undertaking that the Works shall not be removed, demolished or altered in any way without first obtaining the applicants consent for so long as the applicant is the owner of No 35. 1.6 The respondents pay the applicants costs of the proceedings as assessed or agreed on a party/party basis. 2. This offer has been made in accordance with Part 22 Division 1 of the Supreme Court Rules 1970. 3. This offer: (a) is not a compromise on the applicants entitlement, under the rules or an order, to costs; and (b) does not purport to negative or limit the operation of Part 52A rule 22 of the Supreme Court rules. 4. This offer is open to be accepted at any time within 28 days from the date of service. 1 October 2003" 47 The offer was not accepted and counsel for the applicant submits that, at the very least, the failure to accept that offer would justify from that point in time, an order for indemnity costs. 48 There are, in my opinion, various reasons why that submission could not be accepted. However, the fundamental reason why it should be rejected is that cl 1.5 of the offer sought a written irrevocable undertaking that the works contemplated as being constructed should not be removed, demolished or altered in any way without first obtaining the applicant's consent, for so long as the applicant is the owner of number 35. I am satisfied that that request was unreasonable. Although it would be necessary in the future for any work on number 37 to ensure the integrity of and not cause damage to number 35, I do not think it reasonable that the capacity to alter the works would depend entirely upon the consent of Mrs Young. 49 In any event, the applicant has not achieved in these proceedings orders reflecting all of the matters set forward in cl 1.1, 1.2 and 1.3. The undertaking which has been proffered will attend to the necessary drainage matters, but questions of reinstatement, turfing, levelling, removal of concrete footings and so on have not been provided for. 50 The proceedings came before Cowdroy J on 18 September 2003. By that time, difficulties in relation to the notice to produce had emerged, and his Honour was required to resolve those difficulties. At the same time, his Honour addressed the course which the proceedings were taking and, as I understand it, expressed concern that the parties were expending considerable money in relation to a dispute for which those moneys might end up being wasted. He made a direction on that day in the following terms: "The parties are to meet with their legal representatives within 14 days to determine the factual matters of the proceedings with a view for possible settlement". 51 That direction was made in the context of the fact that this Court does not presently have the power which the Supreme Court has to require parties to mediate. However, I am satisfied that his Honour had in contemplation and was directing the parties to take whatever steps they could to endeavour to settle the matter instead of further escalating the costs, as would necessarily occur if the matter proceeded to a hearing. 52 Mindful of the fact that the offer of compromise communicated on 1 October 2003 remained open for twenty-eight days, the next relevant step in the proceedings is a telephone call on 14 October 2003 from Mr Hones to Ms Adrienne Vella, a solicitor employed by Mr Griffiths' firm. Ms Vella appears to have had conduct of this matter but, as will appear in the transcript from exchanges between Mr Griffiths and myself, she referred at least some matters to Mr Griffiths for his guidance. 53 Mr Hones says that in the conversation he said to Ms Vella: "Adrienne, I have spoken to my client, and she has instructed me that she is willing to enter into mediation. In order for this to bring about a settlement we recommend Jerrold Cripps to facilitate the mediation. He has vast experience in LEC matters and I believe he would be able to produce a settlement. Can you obtain instructions? I would propose that each of our clients pay half of his fees. The mediation should reduce the costs of running a fully fledged appeal". 54 According to Mr Hones' affidavit, Ms Vella replied: "I will get instructions". 55 Ms Vella has given evidence in these proceedings. In her affidavit, she says of this conversation: "On 14 October 2003, I had a telephone conversation with Jason Hones. I understood that the primary reason for Jason's phone call was to advise me that he was going on holidays shortly and that his father would attend the callover on 21 October 2003. He wanted me to agree to an extension of time for him to file his evidence in reply. I agreed to that and we discussed at some length mutually convenient dates to list the matter for hearing. We discussed at least four other issues during that telephone conversation. I deny the version of that conversation given by Mr Hones in his Affidavit at paragraph 22. It is my recollection that during the conversation, Mr Hones said, inter alia, words to the effect: 'In relation to the Court's directions that the legal representatives meet up and mediate, I recommend we get a facilitator Jerrold Cripps. He would be very useful although he is not cheap'. I did not understand that this suggestion by Mr Hones to retain Mr Cripps, which occurred in the course of our discussion of numerous matters, was put to me as an offer of mediation of the whole matter on behalf of Mr Hones' client, necessitating a response on my clients' part. I thought it was a suggestion of one practitioner to another". 56 She also annexes a file note of the conversation in which she says: "Re directions to meet up + mediate, he recommends we get a facilitator, Gerald Kripps, [sic] but not cheap". 57 For present purposes, I do not understand there to be any significant difference between the two accounts of the conversation. Ms Vella recalls the words being that the legal representatives meet up and mediate. If that be the case, in the context in which these proceedings were now placed and having regard to the fact that it was suggested that that process be facilitated by Mr Cripps, it could only have meant that Mr Hones was making an offer that Mr Cripps be engaged to mediate the whole proceedings, rather than simply to agree on the facts. Perhaps the parties also contemplated that Mr Cripps would be utilised for the purpose of endeavouring to settle the facts as Cowdroy J had required, but there was little point in retaining a person with the eminence and capacity of Mr Cripps to assist in that function alone. 58 Although Mr Hones made the offer that Mr Cripps be engaged to assist the parties, that offer was not referred for consideration to Mr and Mrs King by their solicitors. I was informed from the bar table by Mr Griffiths that Ms Vella spoke to him about the matter and that Mr Griffiths indicated the offer should be rejected. Mr Griffiths told me that he was of the view that mediation was likely to be expensive. He suggested that, in his understanding, costs in the order of $100,000 for mediation might be incurred, and he did not accordingly consider mediation an appropriate course to pursue. 59 Be that as it may, the mediation offer, as I have indicated, was not referred to Mr and Mrs King. Instead it was rejected by the solicitors, who wrote on 21 October in the following terms: "We refer to your telephone conversation with the writer on 14 October 2003. We note your client's renewed request for our client's video footage pursuant to her notice to produce, to which we are seeking instructions. With respect to your suggestion that the parties appoint a facilitator, we are instructed that our client rejects this course of action. We do not believe that the Court's directions require a facilitator and nor do we believe that such a course would be helpful in defining the issues in dispute". 60 There are at least two matters arising from the letter. Firstly, the request which was made by the applicant's solicitors to mediate was not referred to the respondents. Accordingly, as I understand the position, it was not correct to say that the solicitors had been instructed to reject the suggested course of action. Secondly, while the letter correctly identifies that the Court has not required a facilitator, it incorrectly indicates that the Court's concern was with defining the issues in dispute. As expressed by Cowdroy J's direction of 18 September 2003, the Court was concerned with defining the factual matters with a view to possible settlement of the proceedings. That concern of Cowdroy J is not adverted to in this letter. 61 Evidence has been given by Mr King in these proceedings touching upon this aspect of the matter. As I have already indicated, Mr King wrote on 5 May 2003 offering to mediate. He gave evidence in these proceedings by affidavit in which he says that he had conversations on more than one occasion during the past year, about the fact that it may have been open to the parties to have the proceedings mediated. He says: "2. I remember inquiring about the likely costs of mediation and having some concerns about the potential costs of same and the prospect that no successful outcome might be achieved. 3. I do not recall refusing outright any request for mediation but at all times I had a level of concern about the costs of same. 4. I have a vague recollection of a conversation with my solicitors when I was quoted $10 - $15,000.00 as the likely costs of a mediation and saying, 'I certainly don't want that'." 62 Mr King also gave evidence that the disposition reflected in his letter of 5 May, that he was prepared to mediate the matter, remained his position throughout. 63 For a number of years now, courts have been concerned to ensure that those who practise before them endeavour to do what they can to minimise the burden of litigation upon persons who have become embroiled in a dispute. The courts are conscious of the enormous burden, both financial and emotional, which litigation can bring upon those who participate in it. The correspondence in this case underscores the extent to which the court's concerns can be realised in particular cases. In recent years, courts have moved to ensure that parties are encouraged to mediate instead of having their disputes resolved by the court, where very often there will be one satisfied party and one unsatisfied party. Courts have consequently sought to ensure that parties are informed of, and advised in relation to, opportunities which might exist for an amicable resolution of their disputes. In its various forms, alternative dispute resolution is available to parties. Sometimes that may involve a complex process. This will, for example, be the case in relation to complex commercial matters where millions of dollars may be at stake. However, when, as here, the conflict is a domestic dispute in relation to modest works carried out by one neighbour on their property, but which is said to impact adversely on the next door neighbour's property, the mediation process can, and obviously must, be tailored to have regard to the nature and likely quantum of the dispute. A good mediator will be conscious of the costs of the mediation process itself and will endeavour to ensure that the processes are tailored to ensure that those costs do not become disproportionate to the dispute between the parties. 64 Beyond the court's concern, the professional bodies responsible for overseeing the competence and integrity of those who are certified to practise in the courts, impose rules upon practitioners. The Bar Association provides rules, as does the Law Society. Of relevance to the present matter are the Law Society's rules in relation to advocates. Firstly, under the heading "Efficient administration of justice", rule A.15A provides: "A practitioner must seek to ensure that work which the practitioner is retained to do in relation to a case is done so as to: (a) confine the case to identify issues which are genuinely in dispute." 65 There is also imposed by rule A.17A a duty to a client. In express terms, that rule provides: "A practitioner must inform the client or the instructing practitioner about the alternatives to fully contested adjudication of the case which are reasonably available to the client, unless the practitioner believes on reasonable grounds that the client already has such an understanding of those alternatives as to permit the client to make decisions about the client's best interests in relation to the litigation." 66 I accept that in the present case Mr King had an understanding that mediation was available. This is made plain by the fact that he offered to mediate the matter. I also accept that Mr King had an understanding, whether or not well informed I do not know, that mediation in some circumstances could cost in the order of $10,000 to $15,000. I accept that he was concerned that if money was spent in that manner, it may be wasted and increase the burden of costs in the litigation. 67 However, the offer made by the applicant's solicitor was specific. The offer suggested that Mr Cripps - the former Chief Judge of this Court, a former judge of appeal, and known to the profession to have profound experience in this area of the law and in the resolution of disputes - was suggested as the mediator. It was unknown what the costs of engaging Mr Cripps might be, but that could, of course, only have been understood once he had been approached. The offer was to share the costs. 68 By not telling their clients of the offer which had been made, the solicitors for the respondents denied Mr and Mrs King the opportunity to consider the particular offer, to be advised of the expertise of Mr Cripps, and to consider whether, in all the circumstances, mediation under Mr Cripps' guidance might be appropriate. 69 The solicitors continued to discuss the preparation of a document which agreed relevant facts. As it happened, their endeavours in this respect failed, and Cowdroy J's direction was not complied with. 70 By letter dated 24 December 2003, Pike Pike and Fenwick made a Calderbank offer. Paragraph 1 of that offer provides: "The respondents will at their cost install an agricultural pipe, in addition to the existing agricultural pipe, behind the masonry wall located on their property at 37 Calca Crescent Forestville … along the common boundary with 35 Calca Crescent Forestville." 71 Other facilities were to be provided. The offer concluded in relation to costs by the following offer: "Each party to pay their own costs, apart from the costs order made by the Land & Environment Court on 2 September 2003." 72 The offer was not accepted and, as I understand the position, the works which the respondents have now agreed to do are different to those provided in that letter. However, that letter does indicate a preparedness at that stage of the proceedings on the respondents' part to accept the burden of carrying out further works at their cost to address drainage issues. Having regard to the essential content of each offer of compromise, it is regrettable that the opportunity was not seized for the parties to be brought together with an experienced person to see whether, although they had in mind different works, after discussion they could have reached common ground. Whether facilitated by an experienced person such as Mr Cripps or merely by the meeting of the representatives appropriately advised, the opportunity for compromise appears to have presented itself on a number of occasions but was not taken. 73 There is one further matter to which I should advert. In his affidavit, Mr Hones deposes to a conversation with Ms Vella, which he says occurred on about 24 July outside the court. He says that he said to Ms Vella: "As you know our client's case rises or falls on whether or not there is environmental harm caused to her property as a consequence of your client's works. Obviously we accept we have to prove the works are unlawful, but for the sake of argument let's assume they are. It is really a simple task of working out whether your client's drainage operates properly. We have a geotech who has given a preliminary view that the works have caused an increase in the water table. He used to work with GHD as a senior engineer. I have spoken to him and he is confident that if you contact one of his colleagues at GHD between the 2 of them they will be able to agree who is right and who is wrong. Without telling you how to run your case, I think it would be a good idea if you got a geotech to confer with our guy." 74 According to Mr Hones' affidavit, Ms Vella replied: "We don't agree that the works are unlawful or that they have caused any harm. But I will speak to Stephen and get instructions." 75 The evidence is silent as to whether there was any further response to that suggestion. 76 Ms Vella swore an affidavit in which she refers to the same conversation but denies the words attributed to her. She says that Mr Hones said words to the effect: "We have engaged a geotech from GHD who has a preliminary view that the works carried out by your clients are unlawful and have raised the water table." 77 She says that she said: "We have not engaged a geotech or any experts yet, but I anticipate we will be engaging a drainage engineer shortly. I will let you know." 78 Ms Vella denies Mr Hones' suggestion that Ms Vella should engage a geotech to confer with his geotech. 79 Neither of the solicitors has been cross-examined and I am not able to determine where the substance of that conversation lies from their differing accounts of it. However, what is plain is that this matter required at an early stage for competent persons on either side to meet with a view to determining whether or not there was a problem and, if so, whether there was a solution. As is now apparent, there was a problem for which the solution was to do works costing in the order of $1,000. 80 This case presents considerable difficulties. The correspondence reveals a level of animosity between the parties which grew both prior to and during the course of the litigation. The matters raised in the points of claim provide a comprehensive account of problems perceived with the respondent's building works. I have already adverted to some of the problems which arise from the defence which was filed. It is not possible to know with any certainty what the fate of these proceedings would have been if, instead of denials being made, it had been accepted that some of the works, being those works relevant to the alleged drainage problems, were conceded to have been constructed without consent. It is also not possible to say with any certainty what may have occurred if a competent mediator had been engaged at an early stage. 81 However, as I have indicated, the ordinary rule is that costs will be awarded in favour of the party who succeeds in litigation. In this case, the applicant has succeeded. By concession, she has established relevant breaches of the planning law and has obtained an undertaking that the works necessary to deal with the consequences of some of those works will be undertaken. There may be occasions when, after a contest, it is found that an applicant has succeeded in some parts of the litigation but has failed in others. In such a case it may be appropriate for the court to contemplate an order which provides that the successful party should not obtain an order for all of his or her costs but should be confined to part of the costs of the proceedings. There may also be cases where the conduct of the applicant or respondent who may have succeeded is such as to disentitle that party to an order for the whole of the costs. 82 In the present matter, having regard to the material before me, I am satisfied that it is appropriate to make an order that the respondents pay the applicant's costs of these proceedings. As I have already indicated however, I am not persuaded that an order for indemnity costs in any respect would be appropriate. 83 When I became aware of the evidence of the conversation between Ms Vella and Mr Hones in October 2003 and was informed that the respondents had not been consulted in relation to that matter, I expressed concerns about whether or not the conduct of the solicitors was appropriate and whether or not I should consider making an order that the solicitors pay part of any costs order in favour of the applicants. I sought submissions about these matters. 84 The Supreme Court Act 1970 (NSW) makes express provision for the Supreme Court to make an order directing a solicitor to indemnify any party in relation to costs: see s 76C. Express provision for liability of a solicitor is also made in the Supreme Court Rules 1970 in Part 52A rule 43 in circumstances where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the court that a solicitor is responsible. Provisions to that effect are not found in the Land and Environment Court Act 1979 (NSW), although s 69(2) provides that the court may, subject to the rules and any other Act, determine by whom and to what extent costs are to be paid. This power has been interpreted and applied as permitting the court to make orders for indemnity costs and to order non- parties to proceedings to bear a costs burden. 85 Without traversing the principles upon which the latter decisions are based (see Wyong Shire Council v Smith unreported, NSWLEC, Bignold J, 24 December 1992; Tinda Creek Spiritual & Environment Centre v Baulkham Hills Shire Council (1998) 100 LGERA 432), I am satisfied that a power to make an order in relation to a solicitor is not presently available to a judge of this Court. The Supreme Court has a supervisory role in relation to legal practitioners and their professional conduct. This Court is a court of statutory jurisdiction and, although it has implied powers - some refer to them as inherent powers (see Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13) - on any view, they do not extend to the supervision of the conduct of the legal profession. Accordingly, insofar as that rule underpins any capacity in the Supreme Court to order a solicitor to pay the costs of proceedings, it is not available to this Court. In my opinion, before such an order could be made, express statutory provision would be necessary. 86 During the course of the proceedings I also expressed concerns about the conduct of the solicitors for the respondents in relation to the filing and maintenance of a defence which, at least in certain fundamental respects, I am satisfied could never have been sustained. As I have indicated in the course of my reasons, the plans drawn up by Mr King for the building works on his property made plain that what was proposed was a retaining wall for which the footing was constructed before consent was obtained from the council. Being a retaining wall to be constructed on the boundary of the property, it was not exempt development under the Local Environmental Plan. In addition, the work by way of underpinning the existing cottage could never be described as "minor internal alteration" even though this was pleaded in the defence (para 3(i)). 87 To that extent, from the material available to me, the defence could never have been sustained. I have come to that conclusion mindful of the fact that a consultant was engaged to proffer an opinion about those matters. However, the issues properly understood were not matters for expert evidence, but matters for the solicitors to assess having regard to the known facts and the relevant provisions of the LEP. 88 I am also concerned that the offer to engage Mr Cripps to facilitate the mediation of this matter was never referred to the respondents for their consideration and instruction. Having regard to their previous preparedness to mediate, and as the evidence discloses their continuing disposition towards resolution of the matter before it went to court, the offer to have Mr Cripps appointed to facilitate the matter should have been communicated to the clients. Having regard to the obligation of the legal profession, to their clients and to the court, to ensure that everything reasonable is done to confine litigation, the opportunity that was presented by that offer is one that should at least have been communicated. 89 Furthermore, as I have already indicated, when the offer was rejected, it was rejected with the statement that "we are instructed that our clients reject this course of action." That statement was not correct. 90 It is not the role of this Court to pass judgment in relation to the conduct of legal practitioners. That is a matter for the appropriate authorities. However, in the circumstances, I propose to refer my reasons for decision to the relevant body, which I understand to be the Law Society of NSW, for further consideration. 91 It remains then necessary to make the formal orders which are:

1. I note the undertaking of the respondents provided in the document which I have initialled and dated and placed with the papers 2. By consent of the parties, the proceedings are dismissed. 3. I order the respondents to pay the applicant's costs. 4. I reserve liberty to any party to apply generally. **********

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