Mulder v Laura Holdings Pty Ltd (No 2)

[2023] NSWSC 977

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Mulder v Laura Holdings Pty Ltd (No 2) [2023] NSWSC 977

Hearing dates:

On the papers

Decision date:

17 August 2023

Jurisdiction:

Equity - Real Property List

Before:

Peden J

Decision:

Orders made for imposition of an easement under s 88K and costs: see [27].

Catchwords:

COSTS — Party/Party — Where plaintiffs seek different costs order to s 88K(5) Conveyancing Act 1919 (NSW) — Where plaintiffs seek an order that they pay the defendant’s costs as if a litigant in person — Whether defendant behaved unreasonably in litigation — Where plaintiffs ordered to pay the defendant’s costs save for costs relating to some evidence

LAND LAW — Easements — Creation of easements — Creation by order of court

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 98(4)(c), 98(4)(d)

Conveyancing Act 1919 (NSW) ss 88K, 88K(5)

Cases Cited:

Cuzeno Pty Ltd v Owners Strata Plan 65870 [2013] NSWSC 1385

Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15795

Gordon v Lever [2019] NSWSC 571

McGrath v Mestousis (No 2) [2018] NSWSC 32

Owners Strata Plan 13636 v Ryan [2006] NSWSC 342

Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2

Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003

Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293

Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76

Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99

Category:

Consequential orders

Parties:

Jacobus Mulder (First Plaintiff)
Emma Wilhelmina Mulder (Second Plaintiff)
Laura Holdings Pty Ltd (Defendant)

Representation:

Counsel:
G Carolan (Plaintiffs)
B Le Plastrier (Defendant)

Solicitors:
Benetatos White (Plaintiffs)
HWL Ebsworth (Defendant)

File Number(s):

2021/275440

Publication restriction:

Nil

Judgment

1. The plaintiffs sought an easement pursuant to s 88K Conveyancing Act 1919 (NSW). A substantive judgment was given in favour of granting that easement: Mulder v Laura Holdings Pty Ltd [2023] NSWSC 812.

2. The substantive judgment ordered that, unless the plaintiffs sought a different costs order, they would be ordered to pay the defendant’s costs in accordance with the usual order under s 88K(5).

3. The plaintiffs seek a different costs order, and the defendant resists any departure from the usual order. This judgment resolves that dispute.

4. In addition, the parties were ordered to confer with a view to agreeing final orders. While the parties proffered slightly different final orders other than as to costs, there was no significant difference and I have determined the appropriate form below.

Costs

5. The plaintiffs seek an order that they pay the defendant’s costs as if a litigant in person. An order in that form was made in Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293 at [98] (Basten JA, Barrett and Ward JJA agreeing) (Shi v ABI-K).

6. The relevant principles concerning the operation of s 88K(5) are not in dispute. For example, in Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2 at [181]–[183] Preston CJ at LEC stated (citations omitted):

181 Section 88K(5) of the Conveyancing Act provides that the costs of the proceedings are payable by the applicant for the order unless the Court orders to the contrary. This creates an entitlement in the person affected by imposition of the easement “to have the costs of having it determined by the Court whether the circumstances appropriate for the grant of an easement are established, and the costs of assessing appropriate compensation”...

182 This entitlement will only be lost if and in so far as the person affected has engaged in unreasonable conduct, such as making the proceedings more expensive…

183 The basis on which costs should be paid is the ordinary basis and not an indemnity basis, unless the conduct of the applicant for the order has been such as to justify an order for indemnity costs…

7. Darke J further elaborated in McGrath v Mestousis (No 2) [2018] NSWSC 32 (McGrath v Metousis) at [7]-[8] (citations omitted):

[7] It is well established that an order to the contrary as envisaged by s 88K(5) may be made where the defendant has engaged in unreasonable conduct, including conduct that has made the proceedings more expensive …

[8] In considering the reasonableness of the defendant’s conduct, it is necessary to bear in mind that the conduct occurred in response to an application which, if successful, would result in the creation of an interest in the defendant’s property. It has been held that s 88K bears a confiscatory nature …

8. In Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76 at [188], Basten JA (with whom Bell P, as his Honour then was, and Gleeson JA agreeing) stated:

It is not possible to prescribe the circumstances in which an owner of land will be deprived of his or her costs in resisting an application under s 88K of the Conveyancing Act. Further, departure from the general rule does not entail a particular result. For example, if the court were satisfied that the land owner had acted so unreasonably so as to warrant a departure from s 88K(5), there would be a number of options open. The court could (i) deprive the applicant of some part of his or her costs; (ii) deprive the applicant of all of his or her costs so that neither party would pay costs; (iii) order that the owner pay some part of the applicant’s costs; (iv) order that the owner pay all of the applicant’s costs to be assessed on the ordinary basis, or (v) order that the owner pay some or all of the applicant’s costs to be assessed on an indemnity basis. These options are in ascending order of departure from the statutory position and require increasing degrees of unreasonableness on the part of the owner.

9. Here, the issue is whether the defendant has relevantly behaved “unreasonably” in the litigation, such as to disentitle it to the usual costs order under s 88K(5), and if so, the appropriate order.

10. The plaintiffs rely on the following conduct to demonstrate the defendant’s unreasonableness.

11. First, on 22 March 2022 the plaintiffs made an offer to pay $6,000 compensation for the grant of the easement, and that was refused. That sum is said to have been so close to the ordered compensation of $7,000, that it demonstrated the reasonableness of the offer, and the unreasonableness of the defendant not accepting it.

12. Secondly, the quantum of the defendant’s costs is said to be unreasonable. By 19 May 2023, the defendant expected its costs of the litigation to be $190,000 plus GST, and the plaintiffs submit that such costs are contrary to the overriding purpose of the Civil Procedure Act2005 (NSW) and not a burden they ought to bear, relying on Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [36] (Basten, Gleeson and Leeming JJA).

13. Further reliance is placed upon Rein AJ’s comment in Owners Strata Plan 13636 v Ryan [2006] NSWSC 342 at [31] (Ryan):

…it would be most undesirable if parties over whose land an easement is sought were to approach the matter on the basis that there was nothing that they and their legal advisers could do in resisting the easement that would deprive them of their costs.

14. Below I consider each of those matters.

Refusal to accept offer

15. While the Court may take into account an offer made in s 88K proceedings, in Shi v ABI-K at [98] Basten JA stated:

… The statutory scheme is not consistent with the proposition that an applicant can obtain a right to costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement. The property owner is entitled to refuse to consent to the easement, thereby requiring the applicant to satisfy a court as to the various preconditions, including questions of the public interest, and that the grant of the easement is reasonably necessary in the sense provided by the section. Unless it has done more than reject reasonable offers of compensation, the property owner should not be put at risk of an adverse costs order in those circumstances.

16. Here, I do not think the plaintiffs’ unaccepted offer assists them, because it was less than the total sum awarded by the Court. In Ryan, a case determined before Shi v ABI-K, the offer taken into account was for $1,000 more than the compensation awarded by the Court. The offer made the plaintiffs in this case was $1,000 less than the compensation awarded. Further, the easement ordered is subject to conditions that were not part of the offer made.

17. The defendant resisted the easement on the bases that the easement was not “reasonably necessary”, the loss of amenity could not be adequately compensated and the plaintiffs had not taken all reasonable steps to obtain an alternative easement. None of those arguments were successful. However, the defendant was not obliged to accept the offer proffered, nor risk any type of adverse costs order for that reason alone.

18. Other additional unreasonable conduct would need to be demonstrated to warrant the outcome the plaintiffs seek.

Exorbitant costs

19. It is alarming that the defendant’s costs are approximately $200,000 for a 2-day hearing concerning an access way to the plaintiffs’ remote rural landlocked land, when neither the plaintiffs nor the defendants permanently reside on their properties.

20. By reason of the legislative drafting, the issue is whether those costs ought to be disallowed or reduced by reason of the defendant’s unreasonable conduct in the litigation.

21. Mere quantum of costs is not an accepted reason not to award a defendant its legal costs in defending a s 88K application. For example, in McGrath v Metousis at [15] Darke J stated:

That the defendant has apparently incurred costs in the order of $350,000 in relation to this case gives rise to considerable disquiet. As I noted in the principal judgment (at [81]), the defendant appeared implacably opposed to the easement. He has clearly defended the case strenuously, and in so doing has made extensive use of the services of Mr Baxendale. This has no doubt contributed in large measure to the total amount of costs incurred. However, I am unable to conclude that the large quantum of costs itself demonstrates unreasonable conduct on the part of the defendant, or is so disproportionate to the matters at issue that it establishes that the defendant has conducted his defence in a manner contrary to the overriding purpose referred to in s 56 of the Civil Procedure Act. In assessing the reasonableness of the defendant’s conduct, it is necessary to focus more particularly upon what the defendant actually did in the conduct of his defence.

22. It is clear that costs in relation to particular evidence may be carved out as being unreasonably incurred and inappropriate to be borne by an applicant. Windeyer J took this course in relation to the costs of valuation in evidence in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15795. Darke J took a similar approach in McGrath v Metousis and did not allow the defendant’s costs of preparing evidence that he considered “tenuous at best” (at [23]). He summarised it at [23]:

This aspect of the case for compensation was in my view so untenable that it was unreasonable of the defendant to pursue it.

23. Further, Sackar J in Gordon v Lever [2019] NSWSC 571 at [23] acknowledged:

A Court will always be able to exercise a discretion on costs if there are unnecessary costs incurred in relation to expert evidence. Clearly where expertise is duplicated and what is being done is simply adding an additional but identical voice to the litigation very few Courts would contemplate allowing the costs of the second expert.

24. I consider that the defendant ought not have its costs related to the claim for loss of amenity, including the expert evidence concerning that issue (see substantive judgment at [112]).

25. Further, I do not consider the defendant ought to have its costs of the expert evidence of Mr Haskew, in circumstances where the only parts of this report relied upon by the defendant was “navigate-ability in terms of erosion risk and other sort of impact from other weather events”. The issues of maintenance and management of the proposed easement and the connected Crown roads were abandoned and no submission was made as to why erosion risk and impact from weather events would not fall within the concept of maintenance and management. In my view, the evidence of this expert did extend the length of the hearing: see eg Cuzeno Pty Ltd v Owners Strata Plan 65870 [2013] NSWSC 1385 at [151] (Darke J).

26. Otherwise, the plaintiffs have not suggested that the Court is in a position to make a properly informed decision about whether the defendant’s costs are grossly excessive (see eg Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 at [42] (Palmer J)). It is therefore not possible to cap the defendant’s costs, for example, as envisaged by ss 98(4)(c) and 98(4)(d) of the Civil Procedure Act.

Orders

27. For the above reasons and the reasons in the substantive judgment it is appropriate to make the following final orders:

1. Pursuant to s 88K Conveyancing Act 1919 (NSW), order that a right of carriageway 20 metres wide be imposed on the defendant’s land in Lots 57 and 68 in Deposited Plan 753018 for the benefit of the plaintiffs’ land comprised in Lot 90 in Deposited Plan 753018 on the same terms as are contained in Deposited Plan 649935 (right of carriageway), save that:

1. It is a condition that the right of carriageway is subject to the plaintiffs’ obligation to close and re-lock any gates on the defendant’s land which they are required to open in order to obtain access to the right of carriageway, and, that the defendant together with successors in title to provide the plaintiffs with 2 keys to any locked gates.

2. Direct the plaintiffs to prepare all necessary documents and forms in relation to the registration of the right of carriageway by the Registrar-General.

3. The right of carriageway is not to be registered with the Land Registry Service, until the plaintiffs have procured a registered right of way over Lots 101 and 102 in Deposited Plan 1190056, being the land currently owned by Agriwealth Capital Limited.

4. The plaintiffs pay the defendant's costs of the proceedings on the ordinary basis as agreed or assessed, save for the following costs:

1. Expert evidence of Mr Haskew; and

2. Preparation of evidence concerning loss of amenity, including Mr Johnstone’s expert valuation evidence on that issue.

**********

Amendments

29 August 2023 - Paragraphs [25] and [27(4)] amended to remove the costs of plaintiffs' expert pursuant to rule 36.17 Uniform Civil Procedure Rules 2005 (NSW).

Decision last updated: 29 August 2023