Knight v Carter

[2015] NSWSC 609

Supreme Court

New South Wales

Medium Neutral Citation:	Knight v Carter [2015] NSWSC 609
Hearing dates:	24 April 2015
Date of orders:	22 May 2015
Decision date:	22 May 2015
Jurisdiction:	Equity Division
Before:	Bergin CJ in Eq
Decision:	No order as to costs.
Catchwords:	COSTS – settlement of proceedings after conclusion of evidence – various offers of settlement – reasonableness of conduct of parties   LEGAL PRACTITIONERS – Court’s expectation of legal practitioners in heated property disputes
Legislation Cited:	Conveyancing Act 1919
Cases Cited:	Calderbank v Calderbank [1975] 3 All ER 333 Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack & Ors [2003] NSWCA 302 Fordyce v Fordham & Anor [2006] NSWCA 274; (2006) 67 NSWLR 497 One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Category:	Costs
Parties:	Wayne Charles Knight (1st Plaintiff) Christine Mari-Anne Knight (2nd Plaintiff) Kathy Anne Carter (Defendant)
Representation:	Counsel: DW Robertson (Plaintiffs) D Neggo (Defendant)   Solicitors: Baker Deane & Nutt (Plaintiffs) Stacks Law Firm (Defendant)
File Number(s):	2015/66290
Publication restriction:	Nil

Judgment

1. The serene countryside of rural Wamboin, New South Wales, belies the turbulence of the heated dispute between two neighbours who live in the area. The dispute was between the plaintiffs, Wayne Charles Knight, and his wife, Christine Mari-Anne Knight, and their neighbour, Kathy Anne Carter. The plaintiffs have rights of carriageway and covenants over the defendant’s property.

2. The plaintiffs had enjoyed a co-operative and happy relationship with their previous neighbour. It was only in more recent times when the defendant and her husband purchased the neighbouring property that problems arose. This relationship soured very badly when the defendant decided to unilaterally cut off the plaintiffs’ access to the electricity supply to the bore pump that had been enjoyed for some years prior to the eruption of this dispute.

3. The plaintiffs had constructed the gates to their property on the boundary adjacent to the right of carriageway on the defendant’s land. They had also constructed a light post/intercom in the right of carriageway. This had been done with the consent of the previous owner of the defendant’s property but was not acceptable to the defendant.

4. The plaintiffs commenced proceedings by Summons filed on 4 March 2015 seeking a declaration that as the registered proprietors of their property, pursuant to a registered easement for water supply and registered positive covenant burdening the neighbouring land of the defendant, they are entitled to: (a) take and make use of water drawn from a bore and a dam on the defendant’s land; (b) take and make use of such water by means of the installation, use and operation of plant and equipment on the defendant’s land including pumps, pipes and electrical fittings; and (c) enter the defendant’s land and take anything onto it and carry out work to install, use, maintain and repair the plant and equipment, including but not limited to running an electricity supply underground from their land onto the defendant’s land for the purpose of supplying electricity to the plant and equipment at the bore and at the dam.

5. The plaintiffs also sought a declaration that they were entitled to install, use and maintain the light post/intercom on the right of carriageway.

6. On 13 March 2015 the proceedings were listed for final hearing on 24 April 2015 for one day. Also on 13 March 2015 agreement was reached in respect of the plaintiffs’ interlocutory application relating to what then had obviously become a rather heated relationship between the parties. Undertakings were given to the Court by the defendant that she would permit the plaintiffs to have access to electricity for the bore pump and to extract water.

7. At the hearing of the matter on 24 April 2015 Mr DW Robertson, of counsel, appeared for the plaintiffs and Mr D Neggo, of counsel, appeared for the defendant.

8. The trial proceeded. Mr Knight was cross-examined. The defendant’s husband, Ashley Carter, was cross-examined. After all the evidence had been given the parties entered into a consent regime which included the making of declarations. A declaration was made that the plaintiffs, pursuant to an instrument created under s 88B of the Conveyancing Act 1919 and registered on 23 December 2008, were entitled to take and use the water drawn from the bore on the defendant’s land and to run water in pipes through the defendant’s land and connect an underground electricity supply to the bore as set out in the Short Minutes of Order. There was also a declaration that the plaintiffs were entitled to take and make use of the water drawn from the dam on the defendant’s land and to run water in the pipes from the dam on the defendant’s land to the plaintiffs’ land in accordance with the Short Minutes of Order.

9. The Court noted the parties’ agreement that by 23 October 2015 the plaintiffs will remove the light post/intercom and any wires attached to it from the defendant’s property. The Court also noted the parties’ agreement that each would only take and make use of water drawn from the dam for any purposes which could not be satisfied by obtaining water from the bore or when the water from the bore was unavailable. Leave was granted for the defendant to withdraw the undertakings given to the Court on 13 March 2015.

10. The Summons was otherwise dismissed. A regime was then entered into for the service of short outlines of submissions on costs, which regime concluded on 14 May 2015. The parties consented to the arguments on costs being dealt with on the papers.

THE SUBMISSIONS

11. In their written submissions, the plaintiffs contend that by the terms agreed in the Short Minutes of Order, the parties have agreed that the plaintiffs are entitled to most of the relief sought by them in the Summons. It was submitted that prior to the hearing on 24 April 2015 and up to 21 April 2015 the defendant had not conceded that the plaintiffs had any entitlement to any of the relief sought by them in the Summons. It was submitted that the defendant’s position prior to that time in respect of the bore pump was referred to in her solicitors’ letter of 5 February 2015 in the following terms:

There is NO easement [for] electricity supply and thus your clients have NO right to run power through my client’s land to the pump.

If your clients want an easement [for] electricity supply then they need to negotiate the terms and the consideration to obtain that easement for electricity supply. We expect that there will be a sum required as consideration and ALL costs incurred by our client in granting the easement and creating it on title will have to be paid by your clients. Unless that happens then our client has every right to cease to allow the current electrical lead which has been laid without conduit and at a depth which is dangerous and does not meet the required standards. ...

Our client will allow your clients until 28 February to negotiate and reach agreement for the granting of the easement for electricity supply. After that date the ability to provide electricity supply to the pump will be terminated.

12. The defendant’s original position in relation to the dam was referred to in her solicitors’ letter of 27 February 2015 as follows:

Unfortunately, due to poor drafting there needs to be an easement created to get the water from the dam because at present there is no easement to pipe the water from the dam. Presently, the only legal access to the dam water would be to suck the water from the dam by helicopter. Your clients need to negotiate this additional easements (sic) to get their rights established once and for all.

13. In respect of the light post/intercom, the plaintiffs’ solicitors wrote to the defendant’s solicitors on 17 February 2015 in the following terms:

We have been instructed however that on an entirely without prejudice basis, our clients will within six months relocate their gateway, and then at the same time remove the post which appears to be causing your client such offence.

14. On 16 April 2015 the defendant’s solicitors wrote to the plaintiffs’ solicitors advising that the defendant would consent to declarations not materially different from those sought in the Summons, excluding the relief sought in respect of the light post/intercom. The defendant’s solicitors proposed that there be no order as to costs and the Summons otherwise be dismissed. That offer was open until 5.00pm on 17 April 2015 and was made in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333.

15. On 17 April 2015 the plaintiffs’ solicitors responded advising that they would not be able to obtain instructions until after the weekend, on Monday 20 April 2015. In the meantime they advised that their costs were $17,000.

16. On 20 April 2015 the plaintiffs’ solicitors wrote to the defendant’s solicitors advising that the declarations, orders and notations set out in the defendant’s solicitors’ letter were “acceptable” to the plaintiffs “but only on the basis” that the defendant pay the plaintiffs’ reasonable costs incurred to date, being $17,000. The counter offer remained open until 21 April 2015. Agreement was not reached in relation to the payment of the plaintiffs’ costs.

17. The plaintiffs submitted that they acted reasonably in commencing the proceedings. They had attempted to resolve the dispute without resort to litigation by their solicitors’ correspondence. It was submitted that each time the plaintiffs’ solicitors sent a letter, the response was a denial of the rights which the plaintiffs were asserting that they had in respect of the bore and the dam.

18. The plaintiffs submitted that the stance adopted by the defendant prior to the filing of the Summons and at all times up to 21 April 2015 was unreasonable. It was submitted that not only did the defendant deny that the plaintiffs had any rights but also denied the plaintiffs any access to the dam and to the bore to draw water pending the resolution of their dispute. The defendant took unilateral action to cut off the plaintiffs’ access to the bore pump with a note on the box housing the pump which read “I will unlock the pump box once we have reached agreement in regard to the power easement that you need to negotiate”. The plaintiffs submitted that notwithstanding this conduct by the defendant they did not commence proceedings immediately but rather sought to negotiate the position through their solicitors.

19. The plaintiffs submitted that it was necessary for them to file the Summons on 4 March 2015. It was not until 13 March 2015 after the plaintiffs were forced to file a Notice of Motion that they obtained some undertakings from the defendant in respect of their access.

20. In support of their claim that the defendant should pay the plaintiffs’ costs of the proceedings reliance was placed on the oft-cited passage of McHugh J’s judgment in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625. The plaintiffs contend that in this case the Court is able to conclude that the defendant has acted so unreasonably that, notwithstanding the settlement of the proceedings, the plaintiffs should obtain their costs of the proceedings. The plaintiffs also submitted that if the Court is satisfied that both parties have acted reasonably the Court would have a feeling of confidence that the plaintiffs were almost certain to have succeeded if the matter had been fully tried.

21. The plaintiffs also relied upon the following passage of Burchett J’s judgment in One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at [5]:

It is accepted that, in a case which terminates before there has been a hearing, the Court should not resolve the issue of costs by engaging in something in the nature of a hypothetical trial. … But this does not mean that the Court can never make an order for costs. Often, it will be unable to do so; but in other cases an examination of the reasonableness of the conduct of the parties, respectively, may provide the basis of an order, or “a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried”, as McHugh J put it in Ex parte Lai Qin at 625.

22. The plaintiffs submitted that the consent orders represent substantial success on the issues in dispute. It was conceded that the only issue on which the plaintiffs could be said to have “lost” is the light post/intercom in the right of carriageway. However the plaintiffs emphasise that their agreement to remove that post within six months was exactly what they had offered to do on 17 February 2015.

23. The defendant submitted that the appropriate order is that there be no order as to costs with the intention that each party bear their own costs of the proceedings.

24. The defendant submitted that any attempt to enquire into the reasonableness of the behaviour of the respective parties prior to the commencement of the proceedings would be fraught with difficulty in circumstances where the evidence, sensibly, did not focus on that issue and, in any event, would be unlikely to be of any significant assistance in determining the appropriate exercise of the costs discretion.

25. It was submitted that this is not a case of “effective surrender” by either party: One.Tel v Commissioner of Taxation at 553 [6]. It was also submitted that this is not a case where one party has had a substantial victory and the other a substantial loss: Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack & Ors [2003] NSWCA 302 per Davies AJA at [5].

26. It was submitted that the fact that neither party “won or lost” supports the contention that the appropriate outcome is that each party should be responsible for their own costs: Fordyce v Fordham & Anor [2006] NSWCA 274; (2006) 67 NSWLR 497 per McColl JA at 515 [97], Beazley and Santow JJA agreeing.

CONSIDERATION

27. Experience shows that quite often in disputes about property rights, parties become very anxious and at times quite passionate when they fear their neighbours might be taking advantage of them. As I indicated during the hearing of the matter, it is part of the role of the legal practitioner in such cases to assist the client by endeavouring to take some of the heat out of the dispute rather than writing provocative letters. The “helicopter” suggestion in the defendant’s solicitors’ letter of 27 February 2015 was most unedifying. The Court expects that solicitors will behave professionally and bring an objective approach to their clients’ problems so that the clients may understand the parameters of the dispute more realistically.

28. Although the parties have referred to various cases in support of their respective submissions, it is important to focus on the circumstances of this particular case. The exercise of the Court’s discretion in relation to costs must be exercised judicially on the basis of what the Court thinks is just in the circumstances: Fordyce v Fordham & Anor at 513 [86].

29. Although the defendant submitted that it would be unhelpful to review the conduct of the parties prior to the commencement of the litigation in exercising a discretion as to costs, it is appropriate to have regard to the steps that the plaintiffs took to resolve the dispute without resorting to litigation. There is no doubt that the plaintiffs tried to broker some agreement in respect of their use of the electricity for the bore pump. It seems to me in all the circumstances that the defendant acted unreasonably in taking it upon herself to cut off access to the electricity and then dictating the basis upon which access would be granted in her note that she affixed to the pump box.

30. Although the proceedings were commenced on 4 March 2015 and the Notice of Motion was filed on 11 March 2015 the defendant persisted in her conduct until undertakings were given on 13 March 2015. The defendant’s conduct in this regard was in my view unreasonable and the plaintiffs were left with no option but to commence proceedings and indeed to bring the Notice of Motion for interlocutory relief.

31. Although the plaintiffs had made the offer to move their gates with the consequential removal of the light post/intercom from the right of carriageway, the claim for a declaration of an entitlement to maintain it was included in the Summons. As I indicated during the hearing it seemed to me that this was a weak part of the plaintiffs’ claim.

32. The differences between the plaintiffs and defendant in respect of the wording of the declarations (excluding the declaration in relation to the light post/intercom) were not great. Sensible movement occurred during the course of the hearing and discussions took place in relation to the most convenient way for the plaintiffs to access the water in the dam and the electricity for the pump. By mid-afternoon on the day of the hearing the parties had agreed on the issue of the plaintiffs’ entitlement to access the water in the dam and the electricity for the bore pump. The outstanding matter was the light post/intercom that was in the right of carriageway.

33. During further discussions the plaintiffs agreed to reinstate the offer that they had made on 17 February 2015 to move the gates on their property within six months and put the light post/intercom on their own property rather than on the right of carriageway. That offer was accepted by the defendant late in the afternoon on the day of the hearing.

34. Although the plaintiffs submitted that I would be confident that they would have been victorious on each of their claims had the matter proceeded to finality, I do not have that feeling of confidence. Certainly in respect of the access to water and electricity there is every likelihood and probability that the plaintiffs would have been victorious. However there were very serious doubts about the issue of the light post/intercom.

35. At the beginning of the trial the defendant accepted that declarations and orders as offered in the letter of 16 April 2015 as reflected in her counsel’s submissions should be made. At the conclusion of the evidence, counsel for the plaintiffs pressed for all declarations in the Summons including in respect of the light post/intercom (tr 47). Thereafter there was movement from both sides during the course of debate. That movement was sensible and reasonable. I regard the plaintiffs’ reinstatement of the offer to move the gates and the light post/intercom as commendable. The original offer had been made prior to the litigation and, if it had been accepted, it would have very much narrowed the issues between the parties.

36. The plaintiffs had made a very reasonable offer on 17 February 2015 in relation to the gates and the light post/intercom which had been rejected. However they included a claim for relief in respect of the light post/intercom in their Summons. On the other hand the defendant was willing from 16 April 2015 to agree to the declarations excluding the light post/intercom declaration. It would appear that when the plaintiffs indicated that the offer was acceptable subject to costs they once again abandoned the claim for relief in respect of the light post/intercom. The further costs after 20 April 2015, including the full day of the hearing, could have been avoided if the defendant’s offer had been accepted, subject to the argument as to costs.

37. In the circumstances I am not satisfied that it is appropriate to dissect the costs excluding the light post/intercom issue. Nor I am I satisfied that it is appropriate to dissect the costs incurred up to the various times the parties made their respective offers, nor to compare the costs before and after 20 April 2015.

38. I am satisfied in all the circumstances that justice dictates that there be no order as to costs on the understanding that each party pay their own costs.

27. I make no order as to costs.

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Decision last updated: 22 May 2015