Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd

[2018] NSWLEC 39

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd [2018] NSWLEC 39

Hearing dates:

25 January 2018

Date of orders:

28 March 2018

Decision date:

28 March 2018

Jurisdiction:

Class 4

Before:

Moore J

Decision:

Orders at [108] to [111]

 

ADDENDUM

 

112   As there was no communication with the Associate to Moore J by close of business on Friday 13 April 2018, the order foreshadowed in [111] has been made as the final order of the Court in these proceedings.

 Amended 19 April 2018

Catchwords:

COSTS - various Calderbank offers in all proceedings - no basis arising from any of these offers to support any indemnity costs order in any aspect of the proceedings
COSTS - Supreme Court proceedings seeking imposition of an easement on adjoining land for creation of an Asset Protection Zone - presumption in s 88K(5) of the Conveyancing Act 1919 that the applicant for easement should pay the costs of the owner of the land proposed to be burdened by the easement - no basis to depart from that presumption - no basis to award costs on an indemnity basis - costs awarded to respondent on the ordinary basis
COSTS - cross-claim in Supreme Court proceedings seeking ordinary and exemplary damages for trespass - cross-claimant successful in obtaining exemplary damages order - ordinary damages not awarded in light of outcome of Land and Environment Court proceedings - costs follow the event - costs awarded to cross-claimant on the ordinary basis
COSTS - Land and Environment Court proceedings seeking removal of road erected without consent and revegetation of road corridor - applicant successful on principally contested elements - presumption that costs follow the event - no basis to depart from the presumption and apportion costs - respondents jointly and severally liable to pay applicant’s costs on the ordinary basis
COSTS - costs of the costs hearing - Caverstock Group Pty Limited only a party to the Land and Environment Court proceedings and played a minor part in the costs proceedings - not appropriate to make any costs order in the costs proceedings against it - costs of the costs proceedings to follow the event - Louisiana Properties Pty Ltd successful in the costs proceedings - appropriate to order Hakea Holdings Pty Ltd to pay costs of cost proceedings unless some other costs order in the costs proceedings is sought within 10 days

Legislation Cited:

Civil Procedure Act 2005, s 98(1)
Conveyancing Act 1919, ss 88K(5) and 89
Environmental Planning and Assessment Act 1979, ss 123 and 124
Uniform Civil Procedure Rules 2005, Pt 42 r 1
Wyong Local Environmental Plan 2013

Cases Cited:

117 York Street v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504
Calderbank v Calderbank [1975] 3 All ER 333
Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304
James v Surf Road Nominees Pty Ltd (No2) [2005] NSWCA 296
Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59
Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd (No 2) [2017] NSWLEC 147
Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd [2017] NSWLEC 37
Roads and Traffic Authority v McGregor & Anor (No 2) [2005] NSWCA 453
Sze Tu v Lowe (No 2) [2015] NSWCA 91
Tregoyd Gardens v Jervis (1997) 8 BPR 15,845

Category:

Costs

Parties:

Louisiana Properties Pty Ltd (Applicant in 322081 of 2016 and Respondent and Cross-claimant in 261922 of 2016 )
Hakea Holdings Pty Ltd (First Respondent in 322081 of 2016 and Applicant and Cross-defendant in 261922 of 2016)
Caverstock Group Pty Limited (Second Respondent in 322081 of 2016)
Central Coast Council (Third Respondent in 322081 of 2016 - submitting appearance)

Representation:

Counsel:
Mr C Ireland, barrister (Louisiana Properties Pty Ltd)
Mr T Hale SC/Mr J Tobin, barrister (Hakea Holdings Pty Ltd)
Mr A Carney, solicitor (Caverstock Group Pty Limited)

  Solicitors:
O’Brien Legal Pty Limited (Louisiana Properties Pty Ltd)
Watson Mangioni (Hakea Holdings Pty Ltd)
Carneys Lawyers (Caverstock Group Pty Limited)

File Number(s):

261922 and 322081 of 2016

Publication restriction:

No

TABLE OF CONTENTS

Introduction

The outcomes of the proceedings

Introduction

The Supreme Court proceedings

The Supreme Court cross-claim

Land and Environment Court proceedings

The costs contest

Introduction

The starting position (the Supreme Court proceedings)

The starting position (Supreme Court cross-claim)

The starting position (Land and Environment Court proceedings)

Hakea's closing position

Caverstock’s closing position

Hakea's offers

Introduction

The APZ easement condition

The residential development release trigger

The continuing terms of Hakea's offered draft easement

Louisiana’s response

Removal of “residential”

Hakea's response on “residential” in the draft easement instrument

Hakea’s compensation offers

Conclusion on Louisiana’s rejection of Hakea’s offers

Louisiana’s offers

Louisiana’s resistance to the granting of any easement

Overall conclusion on costs in the Supreme Court proceedings

The Supreme Court cross-claim

The Land and Environment Court proceedings

Introduction

Caverstock’s position

Conclusion on costs in the Land and Environment Court proceedings

Conclusion

Costs of the costs proceedings

Orders

Judgment

Introduction

1. Hakea Holdings Pty Ltd (Hakea) and Louisiana Properties Pty Ltd (Louisiana) own adjoining allotments to the west of the Wyong Health Campus (the health campus). Louisiana's property is immediately to the west of the health campus, whilst Hakea's property adjoins Louisiana's to its west. The two properties originally formed part of a single allotment, an allotment which was owned by Louisiana prior to Louisiana applying to the (then) Wyong Shire Council (now part of the Central Coast Council) (the Council) for development consent to subdivide the original allotment.

2. Louisiana had also obtained development consent from the Council for the construction of an aged persons’ facility and a medical centre on the original single parcel. After the subdivision, the proposed aged care facility site was on the allotment now owned by Hakea, whilst the medical centre site was on the allotment which remained in Louisiana's hands.

3. Although not the original purchaser of the western allotment from Louisiana, Hakea later became the owner of this allotment. Hakea applied to the Council for development consent to construct an aged persons’ facility on what had become its land. This facility, although generally within the footprint of the facility for which Louisiana had obtained development consent, was, nonetheless, larger in scale. Hakea constructed its aged persons’ facility.

4. When the Council granted Hakea development consent for its proposed aged persons’ facility, as is customary, the consent imposed a range of conditions requiring to be satisfied. Two of those conditions gave rise to litigation between Hakea and Louisiana. This decision deals with determination of costs issues arising out of the litigation.

5. The first relevant condition required Hakea, because its land was mapped as bushfire-prone, to establish an Asset Protection Zone (APZ) to protect its aged care facility from bushfire risk. As portion of that APZ needed to be located on the land which remained in Louisiana's ownership, the Council’s relevant condition required that Hakea obtain an easement from Louisiana that would permit Hakea to establish the APZ on Louisiana's land prior to Hakea being granted an occupation certificate for its aged care facility.

6. Negotiations between Hakea and Louisiana for an easement for the purposes of establishing the APZ broke down. As a consequence, Hakea commenced proceedings in the Supreme Court pursuant to s 88K of the Conveyancing Act 1919 (the Conveyancing Act) seeking that the Supreme Court order that Louisiana grant Hakea the necessary easement.

7. The second relevant condition imposed by the Council was one that required Hakea to obtain flood-free access to the health campus land. This flood-free access was required as Louisiana Road (the road by which Hakea and Louisiana both obtained road access) was, at the time of granting development consent, flood-affected. Hakea engaged Caverstock Group Pty Limited (Caverstock) to construct a road across Louisiana's property to the boundary of that property in the health campus land. That road, although constructed generally (but certainly not entirely) along the alignment of the road for which Louisiana had development consent for the purposes of servicing its approved medical centre, was, nonetheless, constructed by Caverstock at Hakea’s instigation without Louisiana's agreement.

8. As a result of the construction of the road, Louisiana initiated a cross-claim in trespass against Hakea in the Supreme Court proceedings and, separately, commenced proceedings in the Land and Environment Court (the Court). The proceedings in this Court were commenced pursuant to s 123 of the Environmental Planning and Assessment Act 1979 (the EP&A Act) seeking, effectively, that Hakea and Caverstock be required to remove the road and revegetate its road corridor.

9. The Supreme Court proceedings were transferred to the Court so that both matters could be dealt with expeditiously and in a consistent, common-finding fashion.

10. The Supreme Court and the Land and Environment Court proceedings were heard together over six days in December 2016. On 29 March 2017, I gave a decision concerning Hakea's application for an easement to establish the required APZ and concerning an aspect of Louisiana's cross-claim, that aspect being whether or not Hakea should pay Louisiana exemplary damages for the trespass by Hakea and Caverstock on Louisiana's land (see Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd [2017] NSWLEC 37 (my first decision)).

11. In my first decision, I also held that there was no lawful basis upon which Hakea could have commissioned Caverstock to construct the road which Caverstock had erected on Louisiana's property. The consequence of this determination was that, for the purposes of the Land and Environment Court proceedings, it was necessary to proceed to a further hearing on the question of what orders (if any) were appropriate to be made pursuant to s 124 of the EP&A Act.

12. As the question of discretion was inextricably linked with the question of whether or not Louisiana was entitled to ordinary damages for trespass on its cross-claim in the Supreme Court (the two potential remedies being in the alternative), a further hearing was held to address the question of discretion in the Land and Environment Court proceedings. That hearing was held on 4 and 5 September 2017 and I handed down my decision on 2 November 2017 (see Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd (No 2) [2017] NSWLEC 147 (my second decision)).

13. In my second decision, I concluded that the appropriate outcome was that Hakea and Caverstock were to be required to meet the costs of removing the road which had been constructed on Louisiana’s land and of revegetation of the road corridor.

14. For reasons set out later, this is a simplistic summary of the Land and Environment Court proceedings as Louisiana had also pleaded a number of other matters, some of which were not pursued by Louisiana and others upon which Louisiana was unsuccessful.

The outcomes of the proceedings

Introduction

15. It is appropriate to set out, with respect to each of the three elements that were heard and determined by me, what was, in simple terms, the nature of the outcomes of the proceedings. Although now put in this fashion, the more nuanced nature of these is discussed, further, as appropriate, in my more detailed consideration of the costs issues which have been raised by Hakea and Louisiana.

The Supreme Court proceedings

16. Hakea succeeded in its application that Louisiana be required to grant an easement over Louisiana's land to the extent necessary to establish the APZ, mandated by the Council in Hakea’s conditions of consent as a necessary prerequisite for the granting of an occupation certificate for the aged care facility constructed by Hakea on Hakea's land.

17. However, as will need to be considered further in more detail, the terms of the easement instrument, as finally mandated in my first decision, were not those proposed by Hakea and the area encompassed by the easement, although over the area of Louisiana's land proposed by Hakea rather than the more expansive area proposed by Louisiana (for compensation valuation and calculation purposes), nonetheless, was modified so that a small portion of the area covered by the APZ easement was to be in perpetuity rather than being able to be extinguished in the event that Louisiana actually undertook development of the medical centre for which it had earlier received development consent from the Council.

The Supreme Court cross-claim

18. For reasons set out in my first decision, I concluded that Louisiana was entitled to $30,000 in exemplary damages from Hakea. I deferred determining whether or not Louisiana was entitled to damages on an ordinary basis as the outcome of the claim for ordinary damages was contingent on the determination I was to make, following a subsequent hearing, in the Land and Environment Court proceedings.

19. As can be seen from my second decision, the nature of the relief granted in the exercise of my discretion under s 124 of the EP&A Act, being the result arising from the Land and Environment Court proceedings, rendered it inappropriate to consider awarding any damages on an ordinary basis to Louisiana in its Supreme Court proceedings cross-claim.

20. As a consequence, the ordinary damages element of the Supreme Court cross-claim was dismissed as part of the orders made following my second decision.

Land and Environment Court proceedings

21. In the Land and Environment Court proceedings, I determined that it was appropriate to require Hakea and Caverstock to meet the cost of the removal of the road across Louisiana's land that had been constructed by Caverstock at Hakea's request.

22. I also concluded that it was appropriate to require that, after the road proper had been removed, the road corridor was to be revegetated and that the cost of that revegetation was to be met, also, by Hakea and Caverstock. A mechanism that permitted those works to be undertaken by Louisiana, but funded by Hakea and Caverstock (to a monetary limit set in my second decision), was provided for in the orders subsequently made to give effect to that decision.

The costs contest

Introduction

23. Hakea and Louisiana are in contest as to what should be the appropriate costs order made as a result of each of:

1. the Supreme Court proceedings;

2. the Supreme Court proceedings cross-claim; and

3. the Land and Environment Court proceedings.

24. Caverstock, only involved in the Land and Environment Court proceedings, also contests what should be the appropriate costs order made in the proceedings to which it was a party. Caverstock provided short written submissions concerning the Land and Environment Court proceedings, but was, otherwise, content to adopt Hakea's submissions concerning the costs of those proceedings. It will be necessary, separately, to discuss the position that arises with respect to Caverstock.

25. However, at this time, it is appropriate to note that, although Louisiana made a number of offers of compromise to Hakea (described as being Calderbank offers - Calderbank v Calderbank [1975] 3 All ER 333), there is no evidence that Louisiana made any offers of compromise to Caverstock or that Caverstock made any offers of compromise to Louisiana.

The starting position (the Supreme Court proceedings)

26. Hakea's application for the imposition of the APZ easement was made, as I have earlier noted, pursuant to s 88K of the Conveyancing Act. This provision deals, in s 88K(5), with the question of how the costs burden for proceedings seeking the imposition of an easement might ordinarily fall. The relevant element is in the following terms:

(5)   The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.

27. The question of whether or not I should engage the discretion, contained in the concluding words of this provision, and set aside the presumptive position is the basis of the dispute between Hakea and Louisiana concerning costs in the Supreme Court proceedings.

28. As a subsidiary argument in the Supreme Court costs dispute, Mr Ireland, counsel for Louisiana, submitted that any costs order I might make in the Supreme Court proceedings in favour of Louisiana should be one made on an indemnity basis. He made this submission relying on a decision by Hamilton J in Tregoyd Gardens v Jervis (1997) 8 BPR 15,845 where, at 15,856, his Honour ordered that the respondent’s costs in that s 88K proceeding should be paid on an indemnity basis. His Honour's reasons for decision do not disclose the reasoning by why his Honour reached that conclusion.

29. However, other decisions concerning costs in s 88K easement proceedings have either expressly nominated that such costs orders should be “as agreed or assessed” or have been silent on that point (thus leading, in my view, to the presumption that such costs would be as agreed or assessed). In the decision of Hodgson CJ in Equity, 117 York Street v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504in, his Honour observed, at 523:

In my opinion, the provisions of s 88K(5) are not such as to indicate that an indemnity costs order should be made as of course in favour of a defendant.

30. The decision of Hamilton J would seem to me to be an outlier and not to be followed as an ordinary course outcome. Absent properly established and cogent reasons to persuade me that I should depart from an ordinary course position, if I make (as I propose to do) an order in Louisiana’s favour pursuant to s 88K(5), the only appropriate basis upon which such an order might be contemplated to be made would be on an as agreed or assessed basis. Such an approach is consistent with the position in the Uniform Civil Procedure Rules 2005 (the UCPR) discussed below.

The starting position (Supreme Court cross-claim)

31. In the Supreme Court cross-claim, the provisions of s 88K(5) are not applicable. The cross-claim litigation is to be regarded as conventional civil litigation, with the costs outcome to be considered in light of the relevant provisions of the Civil Procedure Act 2005 (the Civil Procedure Act) and the UCPR. The Civil Procedure Act provides, in s 98(1), that:

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a)   costs are in the discretion of the court, and

(b)   the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c)   the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

32. The UCPR provides, in Pt 42 r 1, that:

42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

33. What might be the ordinary position with respect to the cross-claim and, if that was to be the presumption of a costs order in favour of Louisiana, whether the “otherwise order” power was appropriate to be engaged, is a matter which I deal with in my subsequent detailed consideration of the costs position in each of the remaining elements of the proceedings which I have determined.

The starting position (Land and Environment Court proceedings)

34. The provisions of the Civil Procedure Act set out above in the context of the Supreme Court cross-claim are also applicable to the costs consideration in the Land and Environment Court proceedings.

34. In these proceedings, as I have earlier described, Louisiana succeeded in obtaining an outcome that required Hakea and Caverstock to meet the costs of removal of the road which Caverstock had constructed, across Louisiana's land at Hakea's instigation, and that the corridor of the removed road should be revegetated. This, it might be thought, would provide an appropriate foundation for the presumption that Louisiana should have a costs order of some nature in its favour in these proceedings. However, issues of offers (from Hakea to Louisiana and vice versa) arise for consideration as to what would be the appropriate costs outcome in these proceedings.

Hakea's closing position

36. The closing position to me by Mr Hale SC, for Hakea, was that, rather than making separate costs determinations (which might potentially lead to complex and expensive assessment processes), an appropriate position might be that I should conclude that, on an overall balance across all three elements of the proceedings where costs considerations now arise, the appropriate order should be that there be no order for costs in any element of the proceedings as between Hakea and Louisiana.

37. Given that I have concluded, for the reasons set out with respect to each of the three potential costs-ordering elements that were involved in the first and second phases of my hearing of the dispute between Hakea and Louisiana, that costs should be awarded in Louisiana's favour in each instance, the suggestion by Mr Hale, that there should be no order for costs in any of the elements, is irrelevant.

Caverstock’s closing position

38. Given the short nature of the written submissions made on behalf of Caverstock, and the fact that, in response to an enquiry from me, the solicitor appearing for Caverstock during the costs hearing indicated that Caverstock adopted Hakea's submissions (as relevant), I have taken this to be an adoption by Caverstock of the “each party bear its own costs” position, insofar as any costs issues concerning Caverstock arose in the Land and Environment Court proceedings.

Hakea's offers

Introduction

39. Hakea's first offer to Louisiana, made on 28 November 2016 in proposed settlement of the Supreme Court proceedings, was not accepted by Louisiana.

40. Hakea made a second, separate offer to Louisiana, also on 28 November 2016, in proposed settlement of the Land and Environment Court proceedings. This offer was not accepted by Louisiana. This offer proposed that Louisiana capitulate on the proposed prayers (6) to (9) of Louisiana’s Further Amended Summons, filed on 26 October 2016, but that there be no order for costs arising if Louisiana did so. It is sufficient to set this offer aside to note that prayer (7) was (although not in the precise terms pleaded) generally resolved in Louisiana’s favour - rendering the offer of no utility in founding a Calderbank offer based on it.

41. Hakea made a further offer to Louisiana on 22 August 2017 in the Land and Environment Court proceedings. This offer in the Land and Environment Court proceedings is, for the reasons discussed below at [68] to [71], not able to be compared validly with the outcomes of my determinations in my second decision concerning the removal of the road and the revegetation of the road corridor. For the reasons there set out, the 22 June 2017 Total Earth Care quotation can provide neither party with a valid basis for pressing Calderbank liability in the Land and Environment Court proceedings.

42. Hakea's first offer to Louisiana was relied upon by Hakea to provide a reason why the presumption in s 88K(5) of the Conveyancing Act should be set aside. All the offers are also relied upon, as I understood it, by Mr Hale for the “no costs, walk away” position discussed above. Because I have concluded that Louisiana's rejection of the first of these offers, noted in [39], was reasonable in the circumstances because of one critical aspect of what was proposed by Hakea, it is necessary to explain why that is so - but it also renders unnecessary the undertaking of any broader comparative analysis of the outcomes of the proceedings when compared to the general terms of Hakea's first offer in the Supreme Court proceedings.

The APZ easement condition

43. I have earlier noted that, as one of the conditions of development consent attaching to the approval that the Council gave to Hakea's aged care facility was condition 78 which mandated that Hakea obtain the APZ easement from Louisiana, that condition of consent was in the following terms:

78   Prior to the issue of the Final Occupation Certificate, compliance with the Bush Fire Safety Authority issued by the NSW Rural Fire Service as outlined in its correspondence dated 5 August 2013 as follows:

Asset Protection Zones

The intent of measures is to minimise the risk of bush fire attack and provide protection for emergency services personnel, residents and others assisting fire fighting activities. To achieve this, the following conditions shall apply:

A:   At the commencement of building works and in perpetuity the property around the proposed building to a distance of 50 metres to the east and south and to the property boundary to the north and west, shall be maintained as an inner protection area (IPA) as outlined within section 4.1.3 and Appendix 5 of ‘Planning for Bush Fire Protection 2006’ and the NSW Rural Fire Service’s document ‘Standards for asset protection zones’.

B:   The balance of the asset protection zone (APZ) not achievable on Lot 101 is to be provided on adjoining Lot 102 DP 1091897 for the full distance of the required APZ. In accordance with section 88B of the ‘Conveyancing Act 1919’ an easement is to be registered benefiting Lot 101 and burdening Lot 102 requiring the provision of this APZ which shall be maintained as outlined within section 4.1.3 and Appendix 5 of ‘Planning for Bush Fire Protection 2006’ and the NSW Rural Fire Service’s document ‘Standards for asset protection zones’. This easement can be extinguished upon commencement of any future residential development on adjacent lots, but only if the hazard is removed as part of the proposal. [emphasis added by me].

44. Although one of the directors of Louisiana, Mr Haxsell, countersigned a letter to the Council indicating that Louisiana was prepared to grant Hakea an easement to satisfy the condition, the letter made it clear that detailed negotiation of the terms under which the easement would be granted then remained to be negotiated.

The residential development release trigger

45. As can be seen from the above condition of consent, the Council's condition proposed that the trigger for the release of the easement was the carrying out of development, inter alia, on the Louisiana's land that would have the effect of rendering unnecessary an APZ to protect Hakea's aged care facility. However, importantly, the Council requirement was not one which merely required that there be development which achieved that outcome, the condition specifically required that the nature of that development was to be residential.

46. However, as was drawn to Hakea's attention by Louisiana early on, Louisiana's land (and Hakea's land) was, at all relevant times, zoned SP2 ‑ Health Services Facility under the Wyong Local Environmental Plan 2013 (the LEP). The Land Use Table in the LEP, for the SP2 zone, prohibited development for residential purposes. As a consequence, any easement granted by Louisiana to Hakea which contained a removal-triggering provision compliant with the terms of the Council’s condition would impose an insuperable barrier to having the easement removed when Louisiana's land was developed.

47. It is appropriate to note that, in response to concerns raised by Louisiana (that development that was potentially easement-releasing if carried out on Louisiana's land was required to be residential and that such development was prohibited), Hakea applied to the Council to modify the condition to remove the requirement that the development be residential. In response, the Council agreed to that modification and, from that time, the condition no longer required that any development on Louisiana's land that was potentially triggering of easement removal needed to be residential in nature. This was effected by striking through the word “residential” in the condition set out earlier.

The continuing terms of Hakea's offered draft easement

48. Although the Council's modification of the condition removed the requirement that the removal-triggering development be residential in nature, this was not reflected in the draft easement instrument which was advanced by Hakea and which formed an element of any offer made by Hakea to Louisiana.

49. Indeed, in the orders which transferred the Supreme Court proceedings to this Court, a copy of Hakea's proposed easement instrument was appended. That easement instrument included, as cl 4, the following:

4   This easement can be extinguished upon commencement of any future proposed residential development of the Lot Burdened but only if the bushfire hazard is removed as part of the proposal. [emphasis added by me]

Louisiana’s response

50. Clearly, as was the subject of discussion during the course of the hearing in December 2016 (leading to my first decision), any provision in an easement instrument creating an APZ easement on Louisiana's land that continued to have that release-trigger provision contingent on residential development on Louisiana's land remained unacceptable to Louisiana (and entirely unnecessary for the purposes of satisfying the Council’s modified condition of consent).

Removal of “residential”

51. During the course of the proceedings leading to my first decision, as part of a range of changes made to the terms of what eventually became the instrument creating the easement, I determined that Louisiana should grant to Hakea, as a result of Hakea's s 88K application, the word “residential” was removed from the relevant provision. This rendered that aspect of the draft easement instrument acceptable to Louisiana. Although Hakea invited Louisiana to propose changes, I have no evidence that, at any time prior to that alteration being made during the course of the hearing, Hakea had ever communicated to Louisiana that it was now able and prepared to make that specific change to the proposed easement instrument.

Hakea's response on “residential” in the draft easement instrument

52. Mr Hale submitted that this defect in the easement instrument should not be regarded as a reasonable basis for Louisiana having rejected Hakea's offers. He submitted that s 89 of the Conveyancing Act provided a ready mechanism by which Louisiana would have been able to approach the Supreme Court to seek release from the easement after Louisiana's land had been developed - even though such development would have been, of necessity, not residential in nature before it could have been approved by the Council.

Hakea’s compensation offers

53. Hakea made a number of offers to Louisiana, with the financial element peaking in an offer made in late November 2016 proposing that Hakea pay Louisiana $350,000 as compensation if Louisiana agreed to the proposed APZ easement. This amount is, self-evidently, very significantly greater than the amount of compensation ($53,000) determined by me as being appropriate in my first decision.

54. However, whilst superficially attractive to support a proposition that Louisiana's rejection of this compensation was unreasonable, each of the increasing financial offers made by Hakea was accompanied by a draft form of easement which included cl 4 in the terms incorporating residential development on Louisiana's land as a release-triggering provision in circumstances where, as far as Louisiana was aware, the requirement had been imposed by the Council and was incapable of satisfaction as a consequence of the restrictions arising from the nature of development permitted in the SP2 zone.

55. Although, for some months prior to the making of the final offer, the Council's condition had been modified on an application made by Hakea, the proposed terms of the proffered easement had not been amended by Hakea to reflect this. As discussed, it was not unreasonable of Louisiana to reject each and every offer made by Hakea whilstever that offer was accompanied by a draft easement instrument that incorporated cl 4 or was drafted in the offensive fashion.

Conclusion on Louisiana’s rejection of Hakea’s offers

56. Whilst I accept that the s 89 avenue for release would have been available to Louisiana had the easement instrument clause proposed by Hakea (including the word “residential”) been given effect, I do not accept that this provides an appropriate basis for me to ignore Hakea's persistent proposal that the word “residential” be incorporated in the easement instrument. Hakea was on notice that that term incorporating the word “residential” was unacceptable to Louisiana and Hakea, itself, had rendered that word unnecessary by virtue of Council's approval of Hakea's modification application - this modification having effected removal from the condition of the word “residential” some four months or more earlier - but had not revised its offered easement terms or advised Louisiana of the alteration to the relevant condition.

57. Requiring Louisiana to seek court approval to modify the easement instrument would have been unreasonable under the circumstances, when the remedy to remove this barrier to agreement to the terms of an easement instrument lay entirely in Hakea's hands and could have been effected by an amendment to the terms of the proposed instrument in a fashion which would still have been in complete satisfaction of the Council’s modified condition of consent.

58. In this context, because the terms of the proposed easement (the continuing inclusion of “residential” in cl 4) were so unreasonable as to warrant Louisiana’s rejection of the proposed easement on this basis alone, the comparative generosity of the financial compensation offered by Hakea, when compared to the much more modest compensation determined by me to be appropriate, does not render Louisiana’s rejection of Hakea’s offers unreasonable.

59. It therefore follows that I am satisfied that Louisiana's non-acceptance of Hakea's offers was entirely reasonable and that that rejection cannot found any departure from the s 88K(5) presumption that Hakea should pay Louisiana's costs of the Supreme Court proceedings.

Louisiana’s offers

60. Louisiana also made offers to Hakea. There were two such offers made, as disclosed by the attachments to the affidavit of Mr Patrick O'Brien dated 13 December 2017. Copies of the relevant correspondence were annexed to that affidavit. The offers were made on 8 December 2016 and 29 August 2017.

61. Each of the offers contained a number of elements across the Supreme Court and Land and Environment Court proceedings. Each of the offers might be described as containing a mosaic of elements proposed as settlement terms. The mosaic contained in the second offer differed from that which had been proposed in the first offer.

62. Hakea did not accept either of the offers.

63. The position advanced by Louisiana in these costs proceedings is that I should conclude that Louisiana has achieved a better outcome as a result of my first and second decisions and that, as a consequence, should I accept that that was the appropriate conclusion to draw after comparing the overall outcome of both proceedings (including the Supreme Court proceedings, the cross-claim), this would give rise to some appropriately determined indemnity costs order in Louisiana's favour.

64. For the purpose of responding to this broad proposition, it is sufficient for me to observe that, when the actual determined outcomes of my first and second decisions are read together (as a determined mosaic, as it were), there is no sufficient pattern disclosed by my determinations that would permit me to conclude that the first of Louisiana's offers was, in a pattern sense, sufficiently similar to my determinations to warrant a conclusion as proposed by Louisiana.

65. I do not accept the proposition that simply translating each of Louisiana's offers and my determinations into some total equivalent monetary amount and then comparing them to draw the conclusion that Louisiana seeks is appropriate and I have certainly not been taken to any authority that would provide a foundation for such a proposition. I am, therefore, not prepared to conclude that Louisiana has, in the necessary sense, achieved a better outcome in each of these proceedings than was contained in the first of the offers made.

66. Indeed, simply comparing the first of Louisiana’s offers and the outcomes of my determinations in monetary terms is fundamentally mistaken, in my view. Whilst comparative money amounts may be available, if outcomes are to be calculated exclusively in that fashion, I do not consider that that approach is appropriate when the outcome of the Land and Environment Court proceedings (although able to be ascertained in monetary terms) was not a monetary outcome but was one of a practical implementation and environmental outcome. A purely monetary comparison has no regard for this, nor does it have any regard for what will be the ancillary environmental outcome to be obtained by revegetating the road corridor (a road corridor which is to be revegetated with plants from an ecologically endangered community species assemblage).

67. The second of Louisiana's Calderbank offers differed significantly from the first, financially based one. This offer, too, was one stated to be a single package designed, if accepted, to settle the Supreme Court proceedings and its related cross-claim together with the Land and Environment Court proceedings. With respect to the Supreme Court proceedings and the cross‑claim, the offer proposed to be the outcome in each is that which I have determined to be appropriate.

68. With respect to the Land and Environment Court proceedings, this second offer proposed that there be a functional outcome involving removal of the road. This functional outcome was proposed in the following terms:

(a)   completion by TEC of the works set out in the quote titled “Hamlyn Terrace - Road Removal” (“the quote”) on page 24 of the exhibit marked “EA-2” to the affidavit sworn by Ergys Alliu on 22 June 2017 (“the exhibit”) in accordance with the methodology set out under the subheading “Road Removal” on page 21 of the exhibit (“the methodology”);

69. Although my second decision also determined a functional outcome for the road by removal (and revegetation of the road corridor once removal had been effected), as advanced by Louisiana in its second Calderbank offer, funding liability for this to occur:

• was proposed to lie entirely with Hakea rather than in combination with Caverstock; and

• was to be a funding liability basis for Hakea and a removal methodology which were derived from a Total Earth Care affidavit dated 22 June 2017 from Mr Ergys Alliu.

70. For reasons set out in my second decision, between [92] and [95], this 22 June 2017 affidavit was not read in the proceedings. Nor was this affidavit sought to be tendered during the course of the costs hearing for the purposes of demonstrating the terms of (1)(a) of Louisiana's second Calderbank offer.

71. As a consequence, I have no evidence which would permit me to assess whether the mosaic pattern of money and the implementation measure proposed by Louisiana's second Calderbank offer was or was not, in its overall effect, a better result than Louisiana had achieved in the Land and Environment Court proceedings.

72. In addition, separately, the fact that this offer was made exclusively to Hakea also renders it impossible for me to assess what would have been the outcome of this offer (if accepted by Hakea) when compared to the outcome in the Land and Environment Court proceedings as the functional outcome I determined in my second decision was that Hakea and Caverstock were jointly and severally liable for the cost of removal of the road and revegetation of the road corridor.

70. Whatever might be the commercial outcome of the liabilities imposed on Hakea and Caverstock jointly, they are not a matter for my consideration in these proceedings.

71. As a final observation on this point, I observe that the offers were made in combination, and, as I read them, not on a basis that would have permitted Hakea to accept an offer in one set of proceedings, to settle the outcome of those proceedings, whilst continuing to litigate the other. I have certainly approached my assessment on that basis.

Louisiana’s resistance to the granting of any easement

75. Hakea also proposed that Louisiana's pressing of seven bases as reasons why the easement should not be granted (contentions dealt with in my first decision, between [49] and [88], and rejected) provided a basis for engaging the “otherwise order” provision in s 88K(5) of the Conveyancing Act.

76. I am unable to accept this proposition. Although unsuccessful on these propositions of general objection, there was a genuine contest between Hakea and Louisiana about a number of matters of significance concerning the APZ easement sought by Hakea. These concern the area that was necessary to be encompassed by the operative provisions of an easement and the value of the compensation necessary to attach to the area required for the APZ. These matters were the subject of competing expert evidence and, in reality, comprised the dominant issues requiring determination. Whilst Louisiana may have failed on each of the general bases upon which it resisted the imposition of an easement (and, on some of them, failed on the basis that they were entirely without merit), it cannot be said that, overall, the matters pressed by Mr Ireland on behalf of Louisiana were so lacking in merit that they ought not, in total, to have been raised at all.

77. On balance, I do not consider that the way Louisiana ran its case on the merits of Hakea’s easement application in the Supreme Court proceedings was so lacking in merit or engaged so much time on futile matters that there should be any departure from the presumption arising from the statutory provision that Louisiana should have its costs of the Supreme Court proceedings on an ordinary basis.

Overall conclusion on costs in the Supreme Court proceedings

78. Taken overall, I have therefore concluded that the position adopted by Louisiana, and its conduct in the Supreme Court proceedings, does not warrant any departure from the s 88K(5) presumption that Hakea should pay Louisiana's costs of the Supreme Court proceedings.

The Supreme Court cross-claim

79. There were two aspects to the Supreme Court cross-claim which inform, in my assessment, how I should conclude that the costs burden should fall for this aspect of the proceedings.

80. First, as earlier noted in my summary of outcomes, Louisiana succeeded on the element of the cross-claim seeking an award of exemplary damages for the trespass by Caverstock at Hakea’s instigation in the construction of the road across Louisiana’s land.

81. Second, although, in the final outcome, ordinary damages were not awarded on the cross-claim as a consequence of my decision in the Land and Environment Court proceedings, nonetheless, Louisiana established what could have been the proper factual and legal foundation for an award of damages on an ordinary basis in the cross-claim.

82. In circumstances where, as earlier noted, this bundle of litigation arose out of vigorously contested proceedings in a commercial context where an early element had been the possibility that Hakea might purchase the adjacent property owned by Louisiana, there was nothing that could be described as unreasonable in Louisiana's initiation of its cross-claim, nor any aspect of the way cross-claim was litigated, that could found a conclusion that the presumption in Pt 42 r 1 of the UCPR that costs should “follow the event” should be displaced by the making of some other order.

83. As “the event”, in this context, was Louisiana's success on the contested issues in the cross-claim, Louisiana should have its costs of the cross-claim on an as agreed or assessed basis.

The Land and Environment Court proceedings

Introduction

84. In conventional civil litigation, costs are ordinarily expected to follow the event (Pt 42 r 1 of the UCPR and Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 (Latoudis v Casey )). Costs are compensatory for the party in whose favour they are awarded and are certainly not to be regarded as punitive of the unsuccessful party (Latoudis v Casey at [13] per Mason CJ).

85. However, s 98(1) of the Civil Procedure Act makes it clear that there is discretion to order otherwise in the circumstances of a particular case.

86. Apportionment can be appropriate in some circumstances. In an instance such as this, where apportionment is proposed, I would need to be satisfied that there was some particular and proper basis arising from these proceedings that would cause me to depart from the general principle (Sze Tu v Lowe (No 2) [2015] NSWCA 91 (Sze Tu)).

87. In Sze Tu, Gleeson JA (Meagher and Barrett JJA concurring) wrote, at [39]:

How “the event” should be defined will depend upon the nature of the litigation. Generally the “event” refers to the event of the claim and may be understood as referring to the practical result of a particular claim.

88. An unsuccessful party can be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues - see James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [32]; and Roads and Traffic Authority v McGregor & Anor (No2) [2005] NSWCA 453 at [17].

89. A summary of the general principles providing guidance on departing from the general rule (of costs following the event) was set out in Sze Tu at [40] - quoting from Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik Australia) at [38]. That summary [citations omitted] was:

•   Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

•   In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument.

•   If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue

•   Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed.

•   A separable issue can relate to “any disputed question of fact or law” before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.

•   Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation.

90. Louisiana raised a number of matters in its pleadings commencing the Land and Environment Court proceedings. Although other matters were pleaded, there can be no doubt that the principal contested issue arising out of the matters relating to the road which had been constructed by Caverstock at Hakea's instigation were:

1. Whether there was any basis upon which Hakea had a right to cause Caverstock to construct the road across Louisiana's land; and

2. After my finding that there was no such right, how should I exercise my discretion with respect to Louisiana's proposal that the road should be removed and that the road corridor, post removal of the road, should be revegetated.

91. On these matters, Louisiana succeeded in their entirety.

92. However, the issue then arises, in my consideration of the principles set out above, whether there should be some apportionment of the costs in the Land and Environment Court proceedings as a consequence of Louisiana not succeeding on all the issues originally pleaded by it in commencing these proceedings. The matters which caused me to conclude that it is not appropriate to make any apportionment are as follows:

1. The functional “event” dealt with in the elements of my first and second decisions that arise out of Louisiana's commencement of the Land and Environment Court proceedings was undoubtedly what should be the fate of the road (and the road corridor) in light of Caverstock constructing the road at Hakea’s instigation. The outcome of my first and second decisions on this matter meant that Louisiana was, functionally, entirely successful in the outcome which constituted the “event”; and

2. To the extent that Louisiana may have not pursued or not succeeded on other elements pleaded by it, they did not in any significant fashion prolong either phase of the hearing with the time, in either phase, devoted to the issues raised by Louisiana's Land and Environment Court pleadings being devoted, virtually entirely, to the road and road corridor issues and, for the second phase of the hearing, how my discretion should be exercised in light of the evidence and my conclusions to be drawn from it.

93. In reaching this conclusion, applying the last of the Bostik Australia points above and having regard to the first of them, there is nothing (arising from the remaining points) which causes me to conclude that there were any contested matters of sufficient magnitude or time to warrant displacing the Pt 42 r 1 UCPR presumption.

94. Therefore, there is nothing arising of any significance in the context of the amount of time required to address the Land and Environment Court proceeding issues which would warrant departure from the presumption that costs should follow the event with respect to these proceedings.

Caverstock’s position

95. Although the role played by Caverstock was largely one which deferred to, and adopted the submissions made on behalf of, Hakea, nonetheless, Caverstock took the role of an active contradictor in the Land and Environment Court proceedings (even if only by adoption of Hakea’s submissions). Therefore, Caverstock is to be treated in the same fashion as Hakea in the Land and Environment Court proceedings (noting that Caverstock was not a party to the Supreme Court proceedings and Louisiana did not seek to have Caverstock joined to Louisiana's cross-claim in the Supreme Court proceedings).

96. It therefore follows that, with respect to the Land and Environment Court proceedings, Caverstock should be jointly and severally liable with Hakea for Louisiana's costs in these proceedings.

Conclusion on costs in the Land and Environment Court proceedings

97. Although Louisiana did not succeed on all issues originally pleaded by it in the Land and Environment Court proceedings, it did succeed on the principally contested issues concerning the removal of the road and the revegetation of the road corridor. There is nothing to warrant departure from the Pt 42 r 1 UCPR presumption that costs should follow the event - the relevant “event” of substance being success on the road issues (Sze Tu at [39]). The result of this conclusion is that Hakea and Caverstock are to be jointly and severally liable to pay Louisiana's costs of the Land and Environment Court proceedings.

Conclusion

98. Louisiana and Hakea exchanged various offers proposing compromised outcomes for some or all of the aspects of the various proceedings. For the reasons earlier set out, I am satisfied that no offer by either of them (and the resultant non-acceptance by the other) provides any proper basis for any order for costs in any aspect of this litigation to be on other than the ordinary basis, that is that any costs liability should be on an as agreed or assessed basis.

99. In the Supreme Court proceedings, I have concluded that there is no basis that should cause me to depart from presumption created by s 88K(5) of the Conveyancing Act to depart from the position that Hakea should pay Louisiana's costs of those proceedings. As a consequence, Hakea is to be ordered to pay Louisiana's costs of the Supreme Court proceedings as agreed or assessed.

100. In the Supreme Court cross-claim element of the proceedings, I am satisfied that there is no basis to displace the presumption that costs follow the event. It follows that Hakea should pay Louisiana's costs of this element of the proceedings. Hakea is, therefore, to be ordered to pay Louisiana's costs of the Supreme Court cross-claim as agreed or assessed.

101. With respect to the Land and Environment Court proceedings, for the reasons earlier set out, apportionment of the costs of these proceedings on an issues basis (or indeed, any other basis) is inappropriate. There is no basis in these proceedings, however, for any order for costs to be made on other than the ordinary, as agreed or assessed basis.

102. For reasons set out in my second decision, I determined that Caverstock was to be jointly and severally liable with Hakea for funding the removal of the road and the revegetation of the road corridor. This adverse outcome for Caverstock means that, equally, there should be an adverse outcome on costs for Caverstock in the Land and Environment Court proceedings.

103. It therefore follows that Hakea and Caverstock should be jointly and severally liable for the payment of Louisiana's costs of the Land and Environment Court proceedings on an ordinary basis. The question of how, in reality, that joint and several liability should be satisfied is purely a matter for commercial resolution between Hakea and Caverstock.

Costs of the costs proceedings

104. Although Louisiana has not succeeded in any of the contested elements of these costs proceedings where Louisiana has sought some element of indemnity costs, Louisiana has also succeeded in resisting the submissions that there should be some departure from the relevant assumption that Louisiana should have its costs of the various proceedings on an ordinary basis.

105. Unless there has been some further offer by Hakea or Louisiana that would cause the seeking of some order for costs on the costs proceedings on other than an ordinary basis, then Louisiana should have its costs of the costs proceedings on that basis.

106. However, as Caverstock played only a marginal role in the costs proceedings and my analysis of Caverstock’s costs exposure has constituted but a minor (and, indeed consequentially inevitable) element when compared to the role of Hakea in these costs proceedings, I am satisfied that Hakea alone should bear the costs of the costs proceedings.

107. The orders provide that this is to be the costs outcome of the costs hearing unless Hakea or Louisiana advises my Associate within 10 days of this decision that it wishes to be heard to propose some alternative order on the costs of the costs hearing.

Orders

108. In Matter No 322081 of 2016, the order of the Court is:

1. The Applicant is to pay the costs of the Respondent as agreed or assessed on a party-party basis.

109. In the cross-claim in Matter No 322081 of 2016, the order of the Court is:

1. The Respondent on the cross-claim is to pay the costs of the Applicant on the cross-claim as agreed or assessed on a party-party basis.

110. In Matter No 261922 of 2016, the order of the Court is:

1. The Respondents are, jointly and severally, to pay the costs of the Applicant as agreed or assessed on a party-party basis.

111. Unless Louisiana or Hakea notifies my Associate by the close of business on Friday 13 April 2018 that it wishes to be heard to propose some alternative costs order for the costs hearing, the final order of the Court will be:

1. Hakea Holdings Pty Ltd is to pay to Louisiana Properties Pty Ltd the costs of the costs hearing as agreed or assessed on a party-party basis.

ADDENDUM

112. As there was no communication with the Associate to Moore J by close of business on Friday 13 April 2018, the order foreshadowed in [111] has been made as the final order of the Court in these proceedings.

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Amendments

19 April 2018 - ADDENDUM

112 As there was no communication with the Associate to Moore J by close of business on Friday 13 April 2018, the order foreshadowed in [111] has been made as the final order of the Court in these proceedings.

Amended 19 April 2018

Decision last updated: 19 April 2018