Muhibbah Engineering (M) BHD v Trust Co Ltd
[2009] NSWCA 205
•27 July 2009
New South Wales
Court of Appeal
CITATION: Muhibbah Engineering (M) BHD & Anor v Trust Company Ltd & Anor [2009] NSWCA 205 HEARING DATE(S): 13/07/09
JUDGMENT DATE:
27 July 2009JUDGMENT OF: Young JA at 1; Handley AJA at 19; Sackville AJA at 47 DECISION: Appeal dismissed with costs. CATCHWORDS: COSTS - proceedings for breach of injunction - settled on undertakings without admissions - no hearing on merits - judge orders defendant to pay costs of proceedings - judge concluding defendant acted unreasonably - conclusion open without hearing on merits. LEGISLATION CITED: Civil Procedure Act 2005 (NSW) s 98
Conveyancing Act, s 88KCASES CITED: Chapman v Luminis Pty Ltd [2003] FCAFC 162
ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270
R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13PARTIES: Muhibbah Engineering (M) BHD - Apellant
The Trust Company Limited - RespondentFILE NUMBER(S): CA 40330/08 COUNSEL: G A Sirtes SC - Appellant
D A Stack - RespondentSOLICITORS: Gray & Perkins, Sydney - Appellant
Deacons, Sydney - RespondentLOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): SC 5922/2007 LOWER COURT JUDICIAL OFFICER: Debelle AJ LOWER COURT DATE OF DECISION: 11/09/2008
CA 40330/08
Monday 27 July 2009YOUNG JA
HANDLEY AJA
SACKVILLE AJA
Catchwords
COSTS - proceedings for breach of injunction - settled on undertakings without admissions - no hearing on merits - judge orders defendant to pay costs of proceedings - judge concluding defendant acted unreasonably - conclusion open without hearing on merits.
On 12 December 2007 White J made orders restraining the appellant from allowing stormwater to discharge from its pipes on to the respondents’ property. Contempt proceedings were commenced on 4 April 2008 alleging repeated breaches. The proceedings were heard on 10 September 2008. It was common ground that a permanent solution to the drainage problem had not yet been achieved. At the end of counsel's opening, before any evidence was read, the judge intervened in an endeavour to assist the parties to work out a permanent solution. His intervention was successful and the appellant gave undertakings without admissions which were intended to achieve that result. The parties could not agree on costs, and without hearing the contempt proceedings on their merits, or taking evidence, the judge ordered the appellant to pay the costs of the motion. On appeal by leave granted Held By majority: Having heard the parties’ submissions on costs the judge was entitled to conclude that the appellant had acted unreasonably and to make the costs order he did: Re Minister for Immigration and Ethnic Affairs ex parte Lai Quin (1997) 186 CLR 622, 624 applied.
Order
Appeal dismissed with costs.
CA 40330/08
Monday 27 July 2009YOUNG JA
HANDLEY AJA
SACKVILLE AJA
1 YOUNG JA: I have read in draft the reasons of Handley AJA and Sackville AJA.
2 I agree with Handley AJA: I will briefly say why.
3 Both parties knew that Debelle AJ was considering what was the proper order for costs that should be made and that the judge was to make that order on what was told him by counsel and the materials to which they referred him.
4 Neither side looked upon what the judge was doing as a solemn farce.
5 Further, the judge was not involved in an exercise of finding facts on evidence as to whether there had been a contempt.
6 It is important to realise that, although a motion for contempt may have its end in punishment, its object, indeed the principal object of the party filing it may be to obtain compliance with the original order or to obtain a more satisfactory order.
7 It would seem that the respondent actually succeeded in achieving this advantage by the present motion.
8 That fact in itself is significant and puts this case into the category of one where the party seeking costs has, to a degree, succeeded.
9 Both parties understood that the judge was not undertaking a trial of the issue that had been settled, but rather whether one of the parties had acted so unreasonably that the other party should have an order for costs.
10 The respondent’s complaint was that the injunction granted was to prevent water flowing onto its land from pipes on the appellants’ land.
11 Although the judge did not make an explicit finding of unreasonable conduct in the appellants, it is fairly clear that he considered, on the material before him, that, despite the injunction, the appellants had merely made a very temporary diversion of water and had not moved with sufficient despatch to achieve a permanent solution by making an application for an easement over adjoining land under s 88K of the Conveyancing Act 1919.
12 When Mr Stack, who appeared for the respondent was asked by Sackville AJA how the primary judge was made aware of matters, Mr Stack replied:
- “Because Mr Sirtes (counsel for the appellant) made certain statements which were consistent with the opening which indeed were proper to make.”
13 That was a good answer. In his opening, Mr Stack referred to a number of facts with reference to documents. None of this was challenged by Mr Sirtes.
14 Whilst it may well have been prudent for the primary judge to identify what was in evidence before him and to have read at least formally the affidavits relied upon, where the parties appear to wish to cut corners, the judge may dispense with “formalities”.
15 It may be too that the judge ought to have provided more extensive reasons. However, here again what was provided is sufficient to enable us to see the reason for his decision.
16 I should add that it is important that people be encouraged to settle their disputes.
17 If people know that, in a case like the present, no order for costs can be made because no evidence has been formally presented, there will be less financial impetus towards settlement.
18 If parties made a settlement subject to the Court considering what is the appropriate order for costs, the Court must resolve the matter of costs, justly, but simply and as cheaply as possible.
19 HANDLEY AJA: This is an appeal by leave from an order for costs made by Debelle AJ on 11 September 2008 in contempt proceedings against the appellants. The respondent complained of breaches of injunctions intended to prevent the escape of stormwater on to its land. The parties are neighbouring landowners at Prestons in Western Sydney, the appellants’ property being on higher ground.
20 The respondent, considering itself aggrieved by the discharge of stormwater from a 300 mm pipe and two 900 mm pipes which terminated about 1 m from its property, commenced proceedings in the Equity Division in December 2007 to restrain alleged nuisances on the appellants’ land. On 12 December White J made the following orders:
- "(1) On and from 22 December 2007 the defendants are restrained from allowing water to Discharge … from the Pipes on to the Goodman Property.
- (2) In Order to give the effect to Order (1) above by the 22 December 2007 the defendant(s) do all things necessary to prevent the Discharge on to the Goodman Property."
21 The Goodman Property is that owned by the respondent. The formal court document does not state that the orders were made by consent, but the appellants’ submissions in this Court assert that they were (para 6) and this was not challenged.
22 In April 2008 the respondent brought contempt proceedings which alleged that stormwater had repeatedly escaped from the appellants’ land since 22 December 2007 and the appellants had not done all things necessary to prevent this.
23 Counsel for the respondent had opened its case on the motion, and was about to start reading evidence when the Judge intervened in an attempt to help the parties work out a practical solution.
24 His intervention was successful, and by consent and without admissions undertakings were later given which were intended to achieve the diversion of the stormwater to a creek through a pipe over a neighbour's property in a drainage easement to be obtained, if necessary, pursuant to s 88K of the Conveyancing Act.
25 The parties’ agreement to this solution did not extend to the costs of the motion and this had to be decided by the Judge. The respondent asked for its costs while the appellants submitted that the parties should bear their own. After hearing counsel, but without any of the affidavits being read, or any oral or documentary evidence, the Judge ordered the appellants to pay the costs of the motion. The appellants challenge the order as one made without evidence and otherwise vitiated for error in the exercise of the Judge's discretion.
26 The history of the matter, so far as appears from the Court's records, is that on 4 April 2008 the respondent filed a notice of motion and statement of charge seeking orders that the appellants be found guilty of contempt for failing to comply with Orders (1) and (2) made by White J. The respondent alleged that water had been allowed to discharge from the pipes on to the respondent’s property on 5, 6, 28 and 29 February and 10 and 12 March 2008 and the respondent had failed to do all things necessary to prevent such discharges.
27 An amended notice of motion and statement of charge were served on 10 September, the day before the contempt proceedings came on for hearing before the Debelle AJ. These alleged that further discharges of stormwater had occurred on 26 March, 21 April, and 5 September. The amended particulars also alleged that the appellants’ proposal for preventing the discharge of stormwater required the consent of other neighbours, or an order under s 88K of the Conveyancing Act for the grant of an easement, but proceedings had not been commenced.
28 Before counsel for the respondent opened its case counsel for the appellants handed up to the Judge a tender bundle prepared by his instructing solicitors which included photographs of the site (T2). Counsel for the respondent showed the Judge a plan of the site (T3), and then a photograph which showed the pipes.
29 The Judge was then taken to photographs from the respondent's evidence showing the proximity of the pipes to the boundary (T6). Reference was made to a proposal by the respondent for the stormwater to be piped at the appellants’ expense across the respondent's land to a public street (T8). The appellants had not agreed to this and had explored alternatives.
30 Counsel told the Judge that after the orders were made on the 11 December and prior to the 22nd the appellants had installed concrete lined pits close to the boundary and handed up "a pit diagram" from the appellants’ exhibits (T11). The Judge was shown a photograph taken on 28 February (T11) showing these works, and was told that they discharged stormwater from the pipes on to neighbouring Lot 27 owned by a third party, who became "irate" (T12-13).
31 The appellants then undertook further work which prevented stormwater flowing onto Lot 27. On 4 February, as respondent’s counsel said, "according to the defendants’ own evidence" water overflowed from the pits onto the respondent's property (T13). Counsel pointed to the flow of water shown on a photograph (T13). He continued:
- "The defendants don't seem to dispute that at least on a number of occasions there has been a breach of the orders and there has been an outflow of water. Mr Bachmid, the defendants’ witness, admits the outflows on 4 and 5 February 2008, and Mr Chong admits the outflow on 5 February … [a]nd … admits in his affidavit that ‘on a very limited number of instances there may have been leakage from the pits onto the Goodman property’” (T14).
32 Counsel said that Court orders had been in place for 10 months but "last Friday [ 5 September] water is still flowing from these pipes up the top of the pit onto our land" (T15), and the defendants accept that the construction of the pit works was "temporary".
33 The appellants’ permanent solution was to pipe the stormwater from pit 6 to Cabramatta Creek through either Lot 27 or Lot 1 but counsel said "on [their] own evidence they knew by 9 January … that the owner of Lot 27 would not agree … [and] by 14 May that the owner of Lot 1 would not grant them an easement” but there was no evidence that an s 88K application had been lodged [t15].
34 The transcript records (T33-6) what followed after agreement had been reached on the undertakings to be given by the appellants. Counsel for the respondent relied on the appellants’ "evidence" that the pit works were always intended to be temporary, and that a permanent solution required an easement over Lot 27 or Lot 1, and "on their own evidence" they had known since 14 May that they would have to go to court but no application under s 88K had been made. As a result the respondent "had no option but to commence proceedings to try and force the [appellants] to do the very thing that they’ve undertaken to do now" (T33).
35 Counsel for the appellants submitted that the Judge could not order his clients to pay the costs without making "a value judgment" as to the likely outcome of the motion which the Judge "was deprived of making" by the way the matter had been resolved. The appellants’ affidavits had not been read and the undertakings were given without admissions (T34). He continued (T35):
- "In order for your Honour to form a view about that question your Honour would need to read the affidavit evidence and actually for the purposes of the costs argument invade yourself into the evidence and hear a deal of evidence before your Honour can come - "
36 The Judge intervened (T35):
- "Is that right? Isn’t the position simply this, you were ordered to take certain steps, there was a temporary measure put in place, reasonably so. You did contemplate a s 88K application. It's taken a long, long time for that even allowing for delays on the part of those over whose land you sought the easement, we are still a long way further on from that. These proceedings were issued in April. You could have taken the attitude, well, we deny the contempt but can we tell you this: We are going to prosecute a s 88K application and do it as quickly as we possibly can. As I perceive it none of that has really been done and it's taken until we get to that stage for that to be done when the Judge sort of points to what is really the obvious application; you've got water on your property, you've got to discharge it in a way that does not disadvantage your neighbours and that we've had to get to this stage to do that. Now on that footing I ask that may well be a suitable basis to order costs."
37 Counsel for the appellants repeated his earlier submission that the Judge could not form a view that it was reasonable for the respondent to bring a claim for contempt, that the respondent may have lost the motion, and the Judge could not "second-guess that", and there was "no evidence" and "no basis" on which the Judge could act (T36).
38 The Judge then gave short reasons and made the order complained of. He referred to the basis for making an order for costs he had put to the appellants’ counsel (para [17]):
- "I made some observations as to the grounds upon which I thought it might be possible to make an order as to costs. In my view those reasons are reasons why an order for costs should be made in this matter. The defendants were under a clear obligation to take steps to remedy a situation which had given rise to the orders and injunctions made on 12 December 2007. 2. The defendants’ conduct has been of a kind which in my view in this matter attracts a liability as to costs, notwithstanding that I have not heard the matter or made any determination of the merits."
39 The relevant principles were summarised by McHugh J in Re Minister for Immigration and Ethnic Affairs ex parte Lai Qin (1997) 186 CLR 622 at 624:
- "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties … In some cases, however, the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action."
40 McHugh J referred to and relied on the reasons of the Refugee Review Tribunal and the affidavit in support of the application for an order nisi (626), and later referred to “the material before the Court" (627).
41 It is not clear from the report whether that material was formally read on the application for costs, but it seems that it was simply treated as available for that purpose because it was on the file.
42 In my judgment Debelle AJ had power to make an order for costs although there had been no hearing on the merits provided he could find that the appellants had acted unreasonably. The chronology of events, and the long delays after the neighbours had refused to grant the necessary easement, as the Judge held, established a proper basis for making the order.
43 During his opening, and in his submissions on costs, counsel for the respondent relied on admissions in the appellants’ affidavits and on various photographs and plans in their tender bundle, and in other affidavits on the file. Counsel for the appellants did not suggest that the material referred to had been taken out of context or that its description by counsel for the respondent was unfair or inaccurate. Sworn copies of these affidavits had been filed and served and the relevant paragraphs could have been tendered against the appellants as admissions.
44 The principal submission by counsel for the appellants was that the Judge had no power to make the order unless he could find that the respondent would have succeeded on the motion but that is contrary to the decision of McHugh J. He did not challenge the chronology.
45 The appellants were not denied procedural fairness and the Judge's reasons incorporated by reference the matters he had put to the appellants’ counsel (para [17]). The question for this Court is whether the Judge was "able to conclude" that the appellants had acted so unreasonably that the respondent should have its costs. In my judgment this conclusion was available to the Judge and the appeal should be dismissed with costs.
46 Since preparing the above I have read and considered the draft reasons of Young JA and Sackville AJA and agree with the supplementary reasons of Young JA.
47 SACKVILLE AJA: The course of events that led to the primary Judge ordering the appellants to pay the respondent’s costs have been recounted by Handley AJA. I am grateful to his Honour for the account and I do not repeat it.
48 The cost shifting rules applicable in all Australian superior courts provide a fertile source of disputation. Even when the parties to litigation are able to resolve the substantive dispute by agreement, they sometimes cannot reach agreement as to the appropriate costs order. The present is such a case. Moreover, disputes about costs may involve substantial sums of money. The Court hearing the application for leave to appeal in the present case was informed that the respondent has claimed approximately $100,000 pursuant to the costs orders made by the primary Judge against the appellants.
49 Section 98 of the Civil Procedure Act 2005 (NSW) (“Civil Procedure Act”) provides that, subject to any rules of court or other legislation, costs are at the discretion of the court and the court has full power to determine by whom, to whom and to what extent costs are to be paid. Part 42 of the Uniform Civil Procedure Rules 2005 relates to costs, but none of the provisions of Part 42 modifies the discretion conferred by s 98 in the circumstances of the present case.
50 Where litigation has been resolved without a hearing on the merits and the only issue remaining is that of costs, the principles stated by McHugh J in Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, at 624 (reproduced in the judgment of Handley AJA at [21]) are frequently invoked. It is important to remember, however, the context in which McHugh J made these observations.
51 In Ex parte Lai Qin, the prosecutrix sought an order that the Minister pay the costs of proceedings in which the prosecutrix sought judicial review of a decision by the Refugee Review Tribunal (“the RRT”), which had affirmed the Minister’s decision to deny her a protection visa. The proceedings were instituted in the original jurisdiction of the High Court on 15 January 1996. On 22 January 1996, the Minister exercised his discretion in favour of the prosecutrix and granted her a protection visa. That Ministerial decision rendered the proceedings in the High Court redundant and the prosecutrix did not pursue them. However, she sought a costs order pursuant to O 71 r 39 of the High Court Rules which at the time empowered the Court, when the further prosecution of a proceeding became unnecessary except for the purpose of determining costs, to make such order as to costs as was just.
52 When McHugh J said that in an appropriate case a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed, he had in mind a case where the party seeking costs, in effect, has succeeded in obtaining the relief sought in the proceedings. This is made clear by his Honour’s observations (at 624) that he was citing principles which
- “govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means.” (Emphasis added)
His Honour illustrated the point by reference to R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13, a case in which the prosecutor in the proceedings was awarded costs up to the date the respondent (a council) notified the prosecutor that it would agree to the orders that had been sought.
53 McHugh J later observed in Ex parte Lai Qin (at 625) that:
- “If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.”
54 McHugh J identified the critical question in the case before him as whether or not the prosecutrix had acted reasonably in bringing the proceedings and whether the Minister had acted unreasonably in not promptly informing her that he was considering granting her a visa. His Honour pointed out that the Minister granted the visa because of the changed circumstances of the prosecutrix since her arrival in Australia, in particular her marriage to an Australian citizen and the fact that she had given birth to a child. McHugh J, having read the RRT’s decision and the affidavit filed in support of the application, considered that, although the prosecutrix had an arguable case, she did not have strong prospects of success. Since the Minister had been considering the prosecutrix’s case for only a few days prior to the proceedings being commenced in the High Court, there was nothing unreasonable in the Minister’s failure to inform her prior to the institution of proceedings that a decision in her favour might be made. Accordingly, his Honour declined to accede the prosecutrix’s application for a costs order.
55 In ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, Burchett J expressed the view that (at 553 [6]):
- “…it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. …”
This passage was cited with approval by the Full Federal Court in Chapman v Luminis Pty Ltd [2003] FCAFC 162, at [7]. Both cases were decided after Ex parte Lai Qin and both referred to the judgment of McHugh J.
56 The primary Judge gave extremely brief reasons in the present case for awarding costs against the appellants, although he cross-referred in the reasons to observations he made in the course of the argument on costs. The relevant passages are reproduced in the judgment of Handley AJA (at [18], [20]).
57 The primary Judge appears to have accepted the argument put on behalf of the appellants that he was not in a position to determine whether the respondent’s contempt motion would have succeeded. His Honour made no finding that the appellants had acted unreasonably in resisting the contempt proceedings brought against them. In any event, no such finding could have been made without examination of the evidence that would have been adduced in the proceedings. Nor did his Honour suggest that it was appropriate to make a costs order in the respondent’s favour on the ground that it had substantially succeeded in the litigation. The absence of any such suggestion is hardly surprising since the motion filed by the respondent sought orders that the appellants be found guilty of contempt for failing to comply with the orders made on 12 December 2007. It is true that the motion also claimed such further relief as the Court deemed fit, but until the primary Judge suggested a compromise the respondent did not indicate that it would be satisfied with any relief short of the imposition of contempt sanctions.
58 The primary Judge characterised the appellants’ conduct as
- “of a kind which … attracts a liability as to costs, notwithstanding that I have not heard the matter or made any determination on the merits”.
It is not entirely clear why his Honour took this view, but he apparently took into account that the appellants were
- “under a clear obligation to take steps to remedy a situation which had given rise to the orders and injunctions made on 12 December 2007”.
59 The only obligation the appellants incurred in consequence of the orders made on 12 December 2007 was the obligation to comply with the orders themselves. Order 2 required certain steps to be taken by 22 December 2007, a period of only ten days. His Honour acknowledged in the course of the costs argument that the appellants had implemented temporary measures within that time frame and “reasonably so”.
60 Order 1 restrained the appellants from allowing water to discharge from three identified pipes onto the respondent’s land. The information provided to the primary Judge by the respondent’s counsel, Mr Stack, indicated that the pipes had been blocked and water diverted into temporary collection pits. The respondent alleged in the Statement of Charge filed on 4 April 2008 that water had been discharged from the pipes on to the respondent’s property on six occasions in February and March 2008, apparently as the result of heavy rain.
61 In an amended Statement of Charge filed in court at the commencement of the hearing before the primary Judge, the respondent alleged that water had escaped on three further occasions, in March, April and September 2008. The amended Statement of Charge also alleged that the only proposals put forward by the appellants to resolve the problem required the consent of third parties (the owners of neighbouring properties) and that the appellants had neither obtained their consent nor instituted proceedings, pursuant to s 88K of the Conveyancing Act 1919 (NSW), seeking orders for the creation of easements over the neighbouring properties.
62 The exchanges between counsel and his Honour indicate that, although the appellants apparently did not contest that water had flowed from their land onto the respondent’s land on a number of occasions, they intended to rely upon a number of matters as defences to the contempt charges. Mr Stack recorded (Transcript 15) contentions by the appellants that an earth mound had caused water to flow across the respondent’s land and that a “spoon drain”, constructed on the appellants’ land, had turned out to be unsatisfactory. Mr Stack maintained that these matters were irrelevant to the contempt proceedings. Nonetheless, the primary Judge plainly would have had to address the matters raised by the appellants, had the contempt charges proceeded to a hearing.
63 Mr Sirtes, who appeared on behalf of the appellants before the primary Judge, informed his Honour (Transcript 17) that, as a result of the orders made on 12 December 2007, the drainage system on the appellants’ property had been “decommissioned” and a “series of baffles [had] been inserted”. In consequence, both the pipes and pits had been blocked off, presumably with the result that the flow of water into and from the pipes was affected, albeit in a manner not revealed in the transcript of argument.
64 Mr Sirtes also informed his Honour that the appellant had retained the services of a hydraulic engineer. The engineer had advised that a solution proposed by the respondent, which apparently involved the creation of an easement over the respondent’s land, was not workable in the absence of additional information. Despite the appellants’ efforts (so Mr Sirtes said), the necessary information had not been provided or obtained. Mr Sirtes further indicated that the consent of Parramatta City Council was required for any solution and he implied that its consent had not been forthcoming.
65 Mr Sirtes told his Honour that, when it became apparent that the solution proposed by the respondent was not workable, the appellants had determined that they would have to make an application under s 88K of the Conveyancing Act. Although no such application had been filed, the appellants were “on the cusp of issuing proceedings” (Transcript 18).
66 In these circumstances, it is difficult to see how his Honour could have concluded that, notwithstanding that the respondent’s contempt motion was not to proceed to a hearing, the appellants’ conduct had been so unreasonable as to warrant an adverse costs order. His Honour made no specific factual findings demonstrating that the appellants’ conduct had been unreasonable or, for that matter, that the respondent had no choice but to institute the contempt proceedings. Indeed, in the absence of evidence or specific admissions made by or on behalf of the appellants, his Honour could not properly have made any such findings.
67 The mere fact that water had escaped from the appellants’ land on a number of occasions and had flowed on to the respondent’s land could not establish that the appellants had acted unreasonably, much less that they had contravened the orders made on 12 December 2007. To determine that the appellants had acted unreasonably, or that the respondent had no choice but to institute contempt proceedings, the primary Judge, at the very least, would have had to make findings as to what had occurred. In particular, he would have had to consider whether, on the evidence, the appellants had attempted to comply in good faith with the orders made on 12 December 2007 and whether the delay in resolving the problem of water flow was attributable to defaults on their part or to other factors. The appellants did not make any admissions, whether through their counsel or otherwise, that the escape of water on the appellant’s land was avoidable and neither party adduced evidence on the costs application.
68 In my opinion, the failure of the primary Judge to make any factual findings supporting his view that the appellants had acted unreasonably, or that the respondent had no choice but to institute contempt proceedings, vitiates the exercise of his discretion under s 98 of the Civil Procedure Act. There is no basis, on the material before the primary judge, to make such findings and indeed Mr Stack did not invite this Court to do so.
69 I would therefore allow the appeal, set aside the costs orders made by the primary Judge and order that the appellants and the respondent bear their or its costs of the proceedings before his Honour. The respondent should pay the appellants’ costs of the appeal.
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