Bottos v CityLink Melbourne Ltd [No 2]
[2021] VSC 813
•8 December 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2018 01383
| NEILO STEFANO BOTTOS & ADRIAN LLOYD BOTTOS | Plaintiffs |
| v | |
| CITYLINK MELBOURNE LTD (ACN 070 810 678) | Defendant |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 8 December 2021 |
CASE MAY BE CITED AS: | Bottos v CityLink Melbourne Ltd [No 2] |
MEDIUM NEUTRAL CITATION: | [2021] VSC 813 |
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PRACTICE AND PROCEDURE – Costs – Where trial costs payable by plaintiffs following offer of compromise by defendant – Whether plaintiffs should be entitled to costs only on the County Court scale – Apportionment of costs – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 63.04, 63.24, 63.25.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M Clarke QC and Mr M Sharkey | Antony Sdrinis & Co |
| For the Defendant | Mr S Horgan QC and Ms A Hando | Herbert Smith Freehills |
HIS HONOUR:
The Bottos brothers owned a property in Brunswick West. CityLink built a noise wall along the boundary of the property. The posts of the noise wall and their supporting structures encroached a small distance into the Bottos brothers’ property. There was also a larger encroachment consisting of an extruding lump of concrete that was referred to as ‘the spillage’. These encroachments interfered, in different ways, with the Bottos brothers’ development of the property. When CityLink was informed about the presence of the spillage, it removed it at its own cost, albeit after a period of delay. The posts of the noise wall and their supporting structures remained. In this proceeding, the Bottos brothers sought damages from CityLink for trespass. Their claimed damages were assessed by reference to the alleged effect on the progress of their development by the various encroachments. They sought damages of $1,133,383.[1] They also sought an order that CityLink remove those parts of the noise wall that remained on their property. On 16 September 2021, I published reasons in which I expressed my conclusions that only the spillage had constituted an actionable trespass.[2] I concluded that CityLink had adversely possessed the land occupied by the posts of the noise wall and their supporting structures. I assessed the damages that resulted from the spillage at $69,035 plus interest. The parties have agreed on the interest that is payable.
[1]This figure is taken from the Bottos brothers’ supplementary written submission at [5].
[2]Bottos v CityLink Melbourne Ltd [2021] VSC 585.
On 28 May 2021, CityLink served an offer of compromise in which it offered to pay to the Bottos brothers $320,000 plus costs. The Bottos brothers have (sensibly) not resisted an order that they pay to CityLink its costs as from 11am on 1 June 2021 on the standard basis.[3] The parties have not, however, reached agreement on the appropriate costs order that should be made in respect of costs incurred prior to that point in time.
[3]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 26.08(3).
Should costs be on the County Court Scale?
As CityLink points out, the amount that I have found payable is less than $100,000. Rule 63.24 of the Supreme Court (General Civil Procedure) Rules 2015 provides as follows:
[W]here in a proceeding for debt or damages the plaintiff recovers … an amount … not exceeding $100 000, the plaintiff shall, unless the Court otherwise orders, be entitled only to the costs to which the plaintiff would have been entitled if the plaintiff had brought the proceeding in the County Court less an amount equal to the additional costs properly incurred by the defendant by reason of the proceeding having been brought in the Supreme Court instead of the County Court …
Unless I ‘otherwise order’, and CityLink contends that I should not otherwise order, this rule will apply. Perhaps for the avoidance of doubt, however, CityLink seeks an order that in substance repeats the position established by the rule.
Rule 63.24 is expressed to apply only to a proceeding ‘for debt or damages’. Although damages were sought in this proceeding, the Bottos brothers also sought an order that the noise wall be removed to the extent that it was on their property. It is certainly arguable that the inclusion of that claim means that this proceeding cannot be described as ‘a proceeding for debt or damages’. Moreover, r 63.25 provides that r 63.24 applies ‘with any necessary modification’ where the plaintiff obtains relief other than for the recovery of a debt or damages. Rule 63.25, however, does not apply by reference to the value of the relief obtained; rather, it applies only if ‘any amount in dispute in the proceeding or the value of any property to which the relief relates does not exceed $100 000’. That is, it has regard to the amount at stake, as it were. The noise wall is a substantial structure and I am prepared to assume that the part of it alongside the Bottos brothers’ property has a value of more than $100,000, and that it would cost more than $100,000 to move it. The rules do not clearly address the situation that arises where a plaintiff commences a proceeding that includes a claim for non-monetary relief where the ‘amount in dispute’ is more than $100,000, but the plaintiff fails to obtain that relief. It seems there may be a lacuna in the rules.
However, I do not have to resolve the question as to whether or not r 63.24 would apply, or how r 63.25 would apply, to this proceeding because I have determined that even if either of those rules were engaged I would ‘otherwise order’ so as to preclude their application.
CityLink submitted that the Court may only depart from the position set out in r 63.24 in ‘special circumstances’. It relied on O’Doherty v McMahon.[4] The Court in that case identified the object of a similar rule to be to ‘protect the defendant against the unnecessary expense of higher costs in a court which is not appropriate for the case’.[5] It then stated that the discretion to order otherwise was ‘to enable the court to order greater costs where the case has about it some special characteristic justifying the ordering of greater costs’. It decided that it was not sufficient if the only basis relied upon was that the plaintiff or his or her solicitors ‘might reasonably consider that the plaintiff would or might recover an amount in excess of’ the threshold figure. I do not read this case as establishing a specific condition that there must be ‘special circumstances’ before the Court may ‘otherwise order’. Where the rules intend to impose such a specific condition, they do so explicitly.[6] More importantly, to impose such a condition would impermissibly fetter the broad discretion in the Court to make costs orders that do substantial justice as between the parties.[7] ‘There is only one immutable rule in relation to costs, and that is that there are no immutable rules.’[8] Rather, I interpret this decision as meaning that there must be a principled reason for making an order that has the effect of removing the operation of r 63.24. Any principled reason must accommodate the principle underlying r 63.24 that parties ought not to litigate in the Supreme Court if it would have been more appropriate that they litigate in the County Court.
[4][1971] VR 625.
[5]Ibid 628 (Winneke CJ, Gowans and Menhennitt JJ).
[6]See, eg, Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 56.02(3), 63.82(2)(a).
[7]See, eg, Chen v Chan [2009] VSCA 233, [10] (Maxwell P, Redlich JA and J Forrest AJA).
[8]Taylor v Pace Developments Ltd [1991] BCC 406, 408 (Lloyd LJ). See also Major Engineering Pty Ltd v Helios Electroheat Pty Ltd (No 2) [2006] VSCA 114, [5] (Chernov and Ashley JJA and Mandie AJA).
CityLink contended that the fact that the Bottos brothers enjoyed only partial success was a reason for which I ought not to ‘otherwise order’ under rule 63.24. I do not agree. The reasons for which costs consequences may flow from recovering damages of less than $100,000 are conceptually distinct from the reasons for which costs consequences may flow from proving only some of several issues in dispute.
In exploring whether the Bottos brothers ought to have commenced this proceeding in the County Court, it is worthwhile considering what would have happened if either party had applied to transfer this proceeding to the County Court under the Courts (Case Transfer) Act 1991. It is not clear to me that, if the Bottos brothers had applied to transfer the proceeding to the County Court, CityLink would have agreed to that course. Had it resisted such a transfer, I consider it likely that the proceeding would not have been transferred. Although not directly relevant, this is, to my mind, illustrative.
In my view, it was appropriate for the Bottos brothers to commence this proceeding in this Court. The amounts at stake in the claim were substantial, the potential cost to CityLink in the event that it were ordered to remove its noise wall would have been very great, the proceeding concerned a substantial piece of governmental infrastructure, and the legal and factual issues were complex. That is not to say, of course, that the case could not have been determined by a judge of the County Court. Rather, in my view, having regard to the issues that were raised in this proceeding and the amounts at stake, the Bottos brothers ought not to be penalised for having commenced the proceeding in this Court rather than in the County Court. As such, assuming that r 63.24 applies, I would ‘otherwise order’.
I should add that, were I mistaken in my view expressed in para 7 above that O’Doherty v McMahon[9] read properly does not impose a requirement that there be a ‘special circumstance’ before the Court may ‘otherwise order’ under r 63.24, I consider that the fact that the proceeding concerned the presence of a large structure forming part of major government infrastructure that was partly on the Bottos brothers’ land, and the possible need to remove it at considerable cost, would be a ‘special circumstance’ for the purpose of that rule.
[9][1971] VR 625.
Should the Bottos brothers get all of their costs up to 1 June 2021?
The Bottos brothers submitted that the potential application of r 63.24 means that the Court’s general discretion as to costs is ‘not enlivened in this proceeding’. I disagree. The general discretion confirmed by s 24 of the Supreme Court Act 1986 survives the imposition of a default position in the circumstances described in r 63.24. There is no basis for thinking that the establishment of a default position in r 63.24, which applies unless the Court ‘otherwise orders’, removes from the Court the discretion to make whatever costs order it considers does substantial justice as between the parties, particularly if the Court has ‘otherwise ordered’ for the purpose of r 63.24.
Rule 63.04(1) confirms that the Court ‘may make an order for costs in relation to a particular question in or a particular part of a proceeding’. Rule 63.04(2) says that if the Court does make an order under sub-r (1), it ‘shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding’. The apportionment is made primarily as a matter of ‘impression and evaluation’.[10]
[10]Mandie v Memart Nominees Pty Ltd [No 2] [2020] VSCA 320, [26]–[28] (Tate, Niall and Emerton JJA); Chen v Chan [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA); Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261, 272 (Gummow, French and Hill JJ). See also McFadzean v Construction, Forestry, Mining and Energy Union (2007) 20 VR 250, 291–2 [158] (Warren CJ, Nettle and Redlich JJA).
There was no dispute, in this case, that CityLink’s noise wall had encroached into the Bottos brothers’ property, and that those encroachments had affected the Bottos brothers’ development. As noted above, I found CityLink liable for a trespass constituted by what was referred to as the ‘spillage’. However, I concluded, in CityLink’s favour, that the posts of the noise wall and the supporting structures of the noise wall were not actionable trespasses. In order to reach this conclusion, I rejected the Bottos brothers’ arguments that:
(a) CityLink, in erecting the wall, had not intended to possess the land occupied by the noise wall to the exclusion of others, and that the possession was not ‘manifest and open’;
(b) CityLink was unable to adversely possess land by reason of its position as a tenant of the Crown;
(c) the Crown was unable to adversely possess land;
(d) CityLink was estopped from contending that it had adversely possessed the land occupied by the noise wall;
(e) their application for a planning permit brought to an end CityLink’s period of possession; and
(f) CityLink by its correspondence with the planning authorities had acknowledged the Bottos brothers’ title to the land.
Also, much of the evidence relating to the financial impact on the Bottos brothers’ development considered the different encroachments together rather than the effect of the spillage considered alone. Following my request that the parties prepare submissions that dealt with the situation if only the spillage was an actionable trespass, the Bottos brothers submitted that the loss would be $972,675. In assessing damages on that basis at just over $69,000, I rejected the Bottos brothers arguments that the spillage was a sufficient cause of many of the problems that beset the development and caused the Bottos brothers significant loss.
On the other hand, in accepting the Bottos brothers’ argument that the spillage was an actionable trespass, I rejected CityLink’s argument that the spillage by its presence manifested the necessary intention to dispossess, and did dispossess, the Bottos brothers of the space occupied by it.
CityLink contended that because of its success in most of the issues in dispute I ought to order that it pay only 40% of the Bottos brothers’ costs incurred up to 1 June 2021. I disagree. Such a figure may have been appropriate if it were influenced simply by the relative number of issues on which the parties succeeded. But the assessment is not that simple. Rather, in my view, the better approach is to consider the extent to which the inclusion of the issues upon which the Bottos brothers failed significantly increased the costs beyond that which they would have been in any event. To the extent that the Bottos brothers are to be disentitled to (or notionally to pay) the costs associated with the issues upon which they failed, what is significant is the extent to which the inclusion of those issues added to the costs that would otherwise have been incurred — that is, the extent to which there are ‘non-common’ costs of those issues.[11]
[11]See, eg, Willis v Wilson [1922] VLR 453, 462–3, 465–6 (Cussen J).
Although the Bottos brothers failed in many of their legal arguments, they succeeded in establishing that the spillage was an actionable trespass. It seems to me that the complex legal issues relating to adverse possession that were ventilated in respect of the posts of the noise wall and their supporting structures would at least in large part have had to have been ventilated in the claim insofar as it related to the spillage in any event. I consider that the Bottos brothers are broadly entitled to their costs of these legal arguments, but some allowance ought to be made for the inclusion of the additional legal issues upon which they failed.
Similarly, although much of the evidence that was led focussed on the encroachments together, it does not follow that the costs of the Bottos brothers’ evidence ought not, at least in significant part, to be recoverable. Even if the Bottos brothers had limited their claim to the losses that flowed from the spillage, they would have been required to lead expert and other evidence that dealt with the effects of that period of delay, and CityLink would have required evidence in response. To a considerable extent, that evidence would have had to consider the development in a broader context and the various problems that beset it in order to identify the extent to which the spillage did so. The complexity of the damages assessment makes that point. Similarly, once the effect on the development of the spillage (but not the other encroachments) was in issue, it seems to me that the discovery and the costs associated with that would in large part have had to have been incurred. So, although I am satisfied that the inclusion of the claims based on the noise wall posts and support structures added somewhat to the cost of the preparation of the matter for trial, it did not do so to as large an extent as it might at first appear.
As noted above, it is ultimately a matter of impression and I must endeavour to reach a fair and just assessment in all the circumstances that does substantial justice as between parties.[12] Taking all these matters into account, with a broad brush, I consider it is fair that CityLink pay 70% of the Bottos brothers’ costs up to 1 June 2021.
[12]Chen v Chan [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
CityLink has contended that many of the costs incurred ought not to be recoverable because of delays on the part of the Bottos brothers and various changes and amendments to their case that they made in the preparation for trial. In my view this is a matter for taxation. My ruling that CityLink ought to pay 70% of the Bottos brothers’ costs is not intended to preclude CityLink from contending in any taxation that a particular item ought not to be recovered at all because it was unnecessarily or unreasonably incurred or for like reason. It is, however, intended to preclude any argument that a particular item ought not to be recovered because it was relevant only to an issue upon which CityLink was successful; this latter argument is supplanted by my apportionment.
Accordingly, I propose to order that:
(a) the defendant pay to the plaintiffs damages in the sum of $69,035 together with interest of (a sum to be determined) pursuant to s 59 of the Supreme Court Act 1986;
(b) the plaintiffs’ claim otherwise be dismissed;
(c) the defendant pay 70% of the plaintiffs’ costs of the proceeding up to 11am on 1 June 2021, to be taxed on the standard basis in default of agreement; and
(d) the plaintiffs pay the defendant’s costs of the proceeding thereafter, to be taxed on the standard basis in default of agreement.
I will insert the interest sum into the order to be made on receipt from the parties of the updated sum calculated as at 8 December 2021.
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