PMCDG Investments Pty Ltd v Monash Gate Project Pty Ltd
[2011] VSC 687
•25 February 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
No. 233 of 2010
| PMCDG INVESTMENTS PTY LTD (ACN 130 678 483 | Plaintiff |
| v | |
| MONASH GATE PROJECT PTY LTD (ACN 127 642 899) | Defendant |
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JUDGE: | Daly, AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 November 2010 | |
DATE OF JUDGMENT: | 25 February 2011 | |
CASE MAY BE CITED AS: | PMCDG Investments Pty Ltd v Monash Gate Project Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 687 | |
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COSTS ― plaintiff successful in obtaining relief ― claim that proceeding precipitous ― costs where no letter of demand or request for undertakings made prior to issue of proceeding
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Mattin | Romeo & Associates |
| For the Defendant | Mr MJ Kenny | Kalus Kenny |
HER HONOUR:
Introduction
PMCDG Investments Pty Ltd (“PMCDG”) and Monash Gate Project Pty Ltd (“Monash Gate”) are owners of neighbouring properties in Dandenong Road, Malvern East. Both properties are substantial parcels of land, which were purchased in about 2008 by each of the defendants for the purposes of developing apartments for student accommodation. Monash Gate obtained the relevant permits for its site, 949 Dandenong Road, and commenced preparatory works for construction of accommodation units in or about December 2009. The development plans of PMCDG have been delayed by the City of Stonnington’s designation of its site, 945-947 Dandenong Road, the site of a former Masonic lodge (“Temple”), as being subject to a heritage overlay.
The two properties were separated by a fence which, as it turned out, did not run along the boundary of the two properties, but in fact was located on Monash Gate’s property. Accordingly, a small strip of Monash Gate’s land (between 14 cm and 42 cm wide) running the depth of the property was enclosed by the fence (“disputed land”), such that the disputed land appeared to form part of PMCDG’s land. Part of the façade of the Temple and an attached brick landing protruded on to the disputed land.
Monash Gate was aware of the true title boundaries, and its development plans provided for the apartment complex to be constructed over the disputed land. PMCDG did not object to Monash Gate’s development plans during the planning approval process.
The sole director of PMCDG, Mr Chris Dimitriou, was also aware of the true title boundaries, possibly as early as 2008.
The disconformity between the title boundary and the fence between the two properties did not become an issue until Monash Gate commenced preparatory works for the development in or around December 2009. Attempts by the builder engaged by Monash Gate, Madden Nomis (“builder”), to remove the fence and commence works on the disputed land were vigorously resisted by Mr Dimitriou. The ensuing dispute culminated in PMCDG issuing this proceeding on 19 January 2010. The substantive issues in the proceeding were resolved by consent orders made by Robson J on 15 February 2010. The question of the costs of the proceeding, is the subject of the application currently before the Court.
The orders of 15 February 2010 provided (among other things) as follows:
“The [Court] declares that:
1.The Plaintiff is the owner by adverse possession of all that parcel of land coloured pink as delineated on the survey plan annexed hereto and marked ‘A’.
2.The Plaintiff is entitled to be registered as the Proprietor of all that parcel of land coloured pink as delineated on the survey plan annexed hereto and marked ‘A’.
3.The Defendant’s title to all that piece of land coloured pink as delineated in the survey plan annexed hereto and marked ‘A’ is extinguished pursuant to section 18 of the Limitation of Actions Act 1958.”
The declarations are substantially similar to the relief sought by PMCDG in its statement of claim filed on 19 January 2010. The boundaries of the strip of land referred to in the orders were based upon a survey conducted by a surveyor engaged by both parties in accordance with an “in principle” agreement reached on 10 February 2010.
Key Events
The events leading up to the issue of the proceeding and the steps leading up to the resolution of the proceeding are set out in some detail in the chronology annexed to this judgment. A summary of the key events follows.[1]
[1]The chronology and the summary are based upon the affidavits filed on behalf of the parties in the proceeding in relation to both the substantive issues and the question of costs. The absence of cross-examination of any of the deponents meant that some relevant factual disputes remain unresolved.
On 9 December 2009, Mr Dimitriou received a fax from a demolition company engaged by the builder enclosing a protection work response notice. The notice refers to the works as including:
“demolition of garage on boundary, boundary walls to be demolished by hand, temporary fencing to be placed on boundary to secure site.”
Mr Dimitriou signed and returned the notice with the handwritten endorsement:
“This consent does not extend to the removal of the boundary fence, or any proposed works.”
On 15 December 2009, Mr Dimitriou signed a further protection work response notice which referred to a temporary fence being constructed along the entire length of the Monash Gate property.
In his affidavit sworn 26 March 2010, Mr Dimitriou deposed that at the time he signed the first and second protection work order notices he was not aware that the construction of the apartment complex would involve the removal of the boundary fence or that the building would encroach on to the disputed land.
On 5 January 2010, Mr Dimitriou attended at the property to find workmen removing the palings of the fence. The posts remained in place. Mr Dimitriou protested to the workmen and the representatives of builder. Work ceased, but on 13 January 2010 a representative of the builder contacted Mr Dimitriou and, according to Mr Dimitriou, told him that the builder would proceed to remove the fence and make a clean cut to shear off those parts of the building which protruded over the disputed land. This version of events is disputed by the builder. On 14 January 2010, Mr Dimitriou attended at the site and physically interposed himself between the workmen and the remaining fence posts. Again, work ceased.
On 15 and 16 January 2010, meetings were held between Mr Dimitriou and representatives of the builder and Monash Gate. As the discussions were “without prejudice” their contents were not disclosed to the Court. On 15 January 2010, Mr Dimitriou sent a letter to the builder which stated as follows:
“I confirm the agreement reached between the owners’ representatives of 949 Dandenong Road, your firm and I as representative of the owners of 945 -947 Dandenong Road, Malvern East, on Thursday, 14th January, 2010 5.00 pm, that you or any persons associated with the proposed works will not enter upon the disputed land as delineated in the attached drawing or commence or carry out any building, demolition or associated works on that disputed land until midnight, Tuesday, 19th January, 2010. Same will apply for the land contained within Certificate of Title Volume 4628 Folio 452 (being Lot 1 and 2) on Title Plan No. 594350R.”
On 19 January 2010, Kalus Kenny sent a letter to Mr Dimitriou on Monash Gate’s behalf, which stated as follows:
“This firm acts for Monash Gate Project Pty. Ltd.
I have been provided with a copy of your letter to Simon Madden dated 15 January, 2010.
In that letter you claimed that an agreement had been reached that my client would not enter upon the ‘disputed land’ or undertake any works thereon, until midnight tonight.
I am instructed that upon receipt of the letter Andrew Fraser of Simon Madden’s office, attended at your office and told you that no such agreement had been entered into.
In the event, no works have been effected since then.
My client denies that the land is ‘disputed’. The land clearly forms part of my client’s land, as made clear by the title and the survey.
I am instructed that Mr Fraser has given to you a set of my client’s plans and yesterday he suggested, as a commercial compromise, that my client amend its plans and proceed with the works on the basis that the works not proceed to build on or over, those parts of the erections on your company’s land, that encroach onto my client’s land.
I am instructed that Mr Fraser told you that his suggestion was not to be taken as any admission that your company’s claim has merit, and that my client was reserving its rights.
Whilst my client denies that it has any liability to do so, my client intends to now proceed with works on that basis.
My client reserves its rights.
I note for the record, that:
-your company did not object to my client’s application for a planning permit or building permit,
-you have been aware of my client’s plans for some considerable time,
-you signed and approved protection works forms,
-you have never raised any issue over the land you now describe as disputed, until last week, and
-you have been well acquainted with my client’s land, having attempted to buy it 2 years ago, and being a director of the owner of the neighboring land since 2008.”
In his affidavit sworn 9 April 2010, Mr Simon Madden, a director of the builder, denied that he reached an agreement in accordance with Mr Dimitriou’s letter of 15 January 2010. Further, in his affidavit sworn 9 April 2010, Mr Andrew Fraser, an employee of the builder, deposed that he met with Mr Dimitriou on 15 and 16 January 2010, and put to him a proposal on a “without prejudice” basis. He deposed that he had formed the view that Mr Dimitriou would respond to the proposal on Monday, 19 January 2010. Mr Fraser deposed that when he attended Mr Dimitriou’s office on the afternoon on Monday, 19 January 2010, Mr Dimitriou told him he was not in a position to respond to the proposal.
The writ and statement of claim were filed on 19 January 2010, along with a summons seeking urgent interlocutory relief (returnable in the Practice Court on 22 January 2010). The statement of claim sought the following relief:
(a)a declaration that Monash Gate is barred from bringing an action to recover the land;
(b)a declaration that PMCDG was entitled to possession of the disputed land, and to be registered as the proprietor of the disputed land;
(c)an order vesting the disputed land in PMCDG;
(d)damages;
(e)interlocutory relief restraining Monash Gate from entering onto the disputed land, and carrying out any works on the disputed land, including demolishing the fence; and
(f)costs.
On the first return date (22 January 2010) orders were made by Hargrave J adjourning the hearing of the application for interlocutory relief to 29 January 2010. On 28 January 2010, the following documents were filed and served by the parties:
(a)on behalf of PMCDG, an affidavit sworn by Mr Ronald Forbes. This affidavit provided a solid evidentiary basis for PMCDG’s contention that it was entitled to adverse possession of the disputed land. Mr Forbes deposed that in 1943 he joined the Waverley Lodge of the Freemasons, which met at the Temple, and from 1969 became a member of the group of trustees responsible for the administration of the Temple. He deposed that for the entire period of his involvement in the affairs of the Temple there had been a fence constructed between the Temple and 949 Dandenong Road, substantially in the same position as it stands today. He exhibited certain documents held by him in relation to the Temple which verified the matters deposed to in his affidavit;
(b)a further affidavit sworn by Mr Dimitriou on behalf of PMCDG making observations regarding the position of buildings along the boundary between the properties;
(c)an affidavit sworn by Simon Feingold on behalf of Monash Gate, which deposed as to the progress of the development application and approval process, the potential losses which might be caused by any delay in the development, and certain matters which disputed the contentions advanced by Mr Dimitriou in his affidavits regarding the length of time the respective properties had been divided by the fence or any previously erected fence;
(d)a defence and counterclaim on behalf of Monash Gate, which denied PMCDG’s allegations in relation to its claim for adverse possession of the disputed land or, in the alternative, resisted the claim on the basis of waiver, abandonment, or estoppel. In its counterclaim, Monash Gate sought declarations with respect to the ownership of the disputed land, and sought equitable compensation in respect of losses suffered by it or likely to have been suffered by it in respect of PMCDG’s claim for adverse possession; and
(e)a request by Monash Gate for further and better particulars of PMCDG’s statement of claim, seeking, relevantly, the following:
“[2]particulars of the ‘strip of land’ referred to therein including (preferably by a surveyor’s plan) the exact dimensions and location of the ‘strip of land”; and
“[6]particulars and the usual details of:
(a)the ‘continuous possession of the strip of land’ by:
(i)the Plaintiff;
(ii)the Plaintiff’s predecessors in title;
(b)the act of exclusion of the Defendant and its predecessors in title.”
On 29 January 2010, orders were made by Hargrave J (by consent) providing for directions to be made for a speedy trial which was fixed to be heard on 15 February 2010) with certain undertakings given by both PMCDG (as to damages) and Monash Gate (with respect to entry onto the disputed land). However, by this time, settlement discussions were underway.
At 5.50 pm on 27 January 2010, Kalus Kenny sent a letter to Romeo & Associates (the solicitors for PMCDG) headed “without prejudice save as to costs” stating that Monash Gate would consent to an order being made that PMCDG had acquired the disputed land. No reference was made as to costs. The other was stated as being open for acceptance by “2 pm tomorrow morning (sic).” The letter annexed a plan, which shows the disputed land as having boundaries slightly different to those of the land marked “A” annexed to the orders made on 15 February 2010. The offer was said to be made in accordance with the principles in Calderbank v Calderbank[2] and Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority.[3] There was no evidence as to any response in this letter. However, as Monash Gate filed and served its defence and counterclaim on the following day, and pre-trial directions were made on 29 January 2010, there appears to have been no response.
[2]Calderbank [1975] All ER 333.
[3]Hazeldene [2005] VSCA 185.
On 9 February 2010, Kalus Kenny sent a further letter of offer to Romeo & Associates. It stated as follows:
“I am instructed that my client cannot accept the offer that your client made yesterday.
I am instructed that my client offers the following to settle the litigation:
A. My client will agree to the following new boundary:
1.From Dandenong Road footpath title corner (0mm) to a 60mm offset (not 125mm as proposed) at a point being adjacent to midway along the face of the brickwork of the gate wall.
2.From gate wall point (as above) to a point being 125mm offset (as submitted by Dimitriou) adjacent to midway along the face of the brickwork of the landing.
3.From the landing point (as above) in a line directly to a point being at the middle of the fence post at the rear laneway.
B. Each party is to pay its own costs.
Please let me know your client’s attitude by 1 pm tomorrow.”
Less than an hour later Romeo & Associates replied:
“We acknowledge receipt of your letter of even date received by facsimile at 3.51 pm.
Our client has instructed us to reject same.”
On 10 February 2010, Kalus Kenny sent a further (open) letter to Romeo & Associates complaining about PMCDG’s failure to provide further and better particulars in accordance with the orders made on 29 January 2010. The letter states as follows:
“This morning I called you to ask for your client’s further and better particulars.
Since then, you have informed my secretary that your client’s counsel has not completed the further particulars, and is waiting on a survey plan, that is apparently being prepared today.
As you know, my client does not know the exact dimensions of the land your client claims.
The plan which is exhibits ‘CD 20’ to the affidavit of Chris Dimitriou sworn on 28.1.10 does not assist because the measurement and dimensions are not stated.
The purpose of the Request for particulars was to adduce the exact dimension so of the claim.
His Honour Justice Hargrave made an order ( by consent ) that your client provide the particulars by 2 February.
This is completely unsatisfactory.
Please serve the further particulars immediately.”
However, it appears that on the same day, substantial progress was made to resolve the dispute. At 1.42 pm that day, Romeo & Associates faxed to Kalus Kenny a letter in the following terms:
“We refer to our telephone conversation of even date and acknowledge your client’s new offer of settlement viz that your client is prepared to concede our client’s claim for adverse possession of the land as it was fenced prior to its demolition by your client’s agents. Our client accepts this offer.
For this purpose we are prepared to rely on your client’s Plan of Survey prepared by Owen Michael Dabelstein of Neil Webster & Associates on 17/01/2008 which was exhibited to our client’s Affidavit as Exhibit CD 15.
Please confirm by return facsimile that the issue of our client’s possessory rights as defined by the fence line has been conceded by your client and that matter has settled and there now remains only the question of costs.
As agreed with you during the course of our conversation this morning unless this question can also be resolved in the intervening time, this aspect of the matter will be argued before his Honour on Monday.
Unless we have confirmation of the above by 2.30pm we will proceed to complete all outstanding interlocutory matters with a view to the matter proceeding as a full hearing on Monday.
If the matter has settled save costs, please forward as a matter of urgency Terms of Settlement and the proposed Orders for Monday’s hearing.”
At 6.25 pm on 10 February 2010, Kalus Kenny sent a further letter, as follows:
“I refer to your letter faxed at 1.42 pm today, and to our conversation at about 3.45 pm this afternoon.
In your letter you state that your client relies on the survey plan dated 17.1.08 that is part of exhibit “CD 15”.
My client agrees to resolve your client’s claim for adverse possession by consenting to an order that your client have title to that land, being the land inside the former fence line, that is the line created by the fence that was demolished on about 5 January, 2010.
We also agree that the question of costs be determined by the Court.
However, as discussed, there is some uncertainty as to the exact line for the new boundary to be effected pursuant to this agreement.
The plan that you faxed to me today, does not contain enough detailed measurements for certainty for a new boundary.
I therefore propose the following:
1.The new boundary be drawn, in accordance with the Survey plan that you faxed to me today, with detailed measurements inserted by Neil A Webster & Associates. You have expressed the desire to contact that firm of surveyors to ascertain if they have their original notes. My client has no objection to you doing so.
Please also ask the surveyors when they can have the plan completed.
The surveyors will be asked to prepare that plan as soon as possible.
Assuming that they cannot do so before Monday morning , then:
2.The parties inform the Judge on Monday morning that
a.they have agreed to resolve the matter by a consent order (which you should draft in due course for our consideration) that will create a new boundary and give your client title to the land your client claims to have acquired by adverse possession, and
b.the question of costs has not been agreed and the parties wish that question to be determined by the Court.
c.That the matter be adjourned for a short time to allow for the survey plan to be prepared.
d.The hearing on the question of costs be adjourned to a date to be fixed by the Court, with directions for written submissions and any affidavit to be relied on by the parties to be served.
3.I note your comments that the Judge will not adjourn the case because it is a special fixture. That is not correct. The Court will accommodate the parties under the circumstances.
4.The costs of the appearance on Monday should be reserved and be part of the costs argument to be agitated in due course.
I note that you intend to contact the Surveyor tomorrow and you have indicated that you will then contact me.
Finally, you asked me this afternoon if my client will reinstate the fence at the conclusion of the works.
I am instructed that part of the proposed structure to be built on my client’s land, will be masonry walls built up to the new boundary at 2 points. My client will build a new paling fence at the conclusion of the works, on that portion of the boundary on which there is no structure.
If access to your client’s land is required for any works on the boundary line, please confirm that your client will grant access and co-operate.”
Finally, at 1.31 pm on 12 February 2010 (the last business day before the date the trial was due to commence), Romeo & Associates sent the following fax to Kalus Kenny confirming the terms of the agreement:
“We refer to your email correspondence of even date.
Following your offer of 10th February 2010 Mr Frank Romeo of this office had a discussion with Mr Jonathan Kenny of your office and confirmed:
1.That our client agreed to settle his claim for adverse possession on the terms contained in paragraph 3 of your letter sent by facsimile on 10 February 2010 and received by us at 6.24 pm.
2.That on the question of costs our client agreed to an adjournment to a date to be fixed by the court but that counsel had advised us that he did not believe an adjournment would be granted and accordingly, we intended to have submissions ready to submit in the event that the adjournment was not granted.
3.That in relation to the survey plan Mr Romeo had spoken to the surveyor Mr Neil Webster who had advised him that he would redraw the survey plan with detailed measurements every 3 metres as required by Mr Kenny and the amended plan would be available on Friday 12th February 2010. We have been advised it should be available by 3pm today.
In the event that his Honour does agree to adjourn the matter on the question of costs, our client agrees that the costs of the appearance on Monday be reserved and argued at the same time as the costs of the proceeding.
Counsel has advised that Minutes of Consent will be available after 2pm today. On receipt of both the Minutes of Consent from Counsel and the detailed survey plan we will provide you with same.
We propose advising his Honour’s Associate that the substantive issue of this matter has been settled and there will be a request for an adjournment on the question of costs.”
The following conclusions can be drawn from this correspondence:
(a)Monash Gate was prepared to accept that adverse possession be granted to PMCDG in respect of at least a portion of the disputed land by 27 January 2010 (that is, even prior to the service of Mr Forbes’ affidavit);
(b)between 22 January 2010 and 27 January 2010, Monash Gate had agreed to suspend works on the disputed land; and
(c)while settlement discussions were underway, Monash Gate was also preparing to vigorously defend PMCDG’s claims.
Submissions
Both parties relied upon numerous affidavits sworn in the proceeding, including affidavits of Mr Dimitriou sworn 19 January 2010, 21 January 2010, 28 January 2010 and 26 March 2010. PMCDG also relied upon the affidavit of Ronald Spencer Forbes, dated 28 January 2010.
Monash Gate relied upon the affidavits of Michael Jonathan Kenny, sworn 21 January 2010, 5 March 2010 and 28 October 2010, along with the affidavits of Simon Feingold, sworn 28 January 2010 and 5 March 2010, along with affidavits sworn by Andrew Fraser and Simon Madden on 9 April 2010 and Eduard Kucherenko, sworn 9 April 2010.
In accordance with the terms agreed by the parties, on 15 February 2010 Robson J referred the question of costs to an associate judge for hearing and determination on a date to be fixed, and gave directions for the filing and service of affidavits by the parties with respect to the question of costs.
The solicitors for Monash Gate accepted that, in the ordinary course of events, that Monash Gate should pay PMCDG’s costs of the proceeding as PMCDG had been substantially successful in obtaining the relief it sought in the proceeding. However, Monash Gate submitted that I should make no orders as to costs because of the conduct of PMCDG prior to the commencement of the litigation. The relevant conduct complained of was that, first, PMCDG issued the proceeding on 19 January 2010 without first making any demand upon Monash Gate, or communicating to Monash Gate that it claimed the disputed land by way of adverse possession. No undertaking was sought by PMCDG from Monash Gate that it would not enter on to the disputed land pending the resolution of the dispute regarding its claim for adverse possession. Furthermore, Monash Gate contends that Mr Dimitriou was aware that PMCDG potentially had a claim for adverse possession over the disputed land for perhaps a year before the proceeding was commenced but had waited until after Monash Gate had sold all 66 apartments in the accommodation complex and had started building works before making a claim for adverse possession. It was submitted that I should draw an inference that PMCDG was waiting until Monash Gate was in an economically vulnerable position before taking action.
The nub of Monash Gate’s submission was that as the evidence discloses that Monash Gate was willing to negotiate with PMCDG once Monash Gate had learned of its adverse possession claim, I should draw an inference that if PMCDG had told Monash Gate of its adverse possession claim at any time prior to instituting the proceedings, Monash Gate would have entered into negotiations with PMCDG to settle the dispute without recourse to the Court. In those circumstances, PMCDG should not have brought the proceeding without first communicating with Monash Gate regarding its claim and making a formal demand. Further, there was no explanation from PMCDG as to why it did not make the application for a declaration that the disputed land was subject to adverse possession prior to the works commencing, given that Mr Dimitriou knew of the true title boundaries as early as July 2008, on one view of the evidence, and, at the very latest, early in 2009.
Finally, another relevant matter is that the written statement of claim served upon Monash Gate on 20 January 2010 did not make entirely clear the dimensions of the disputed land for which an order for adverse possession was sought.
Counsel for PMCDG submitted that Monash Gate had not discharged the burden of showing that the Court should make anything other than the usual costs order in its favour.
Counsel for PMCDG submitted that as at about 19 January 2010, PMCDG, through Mr Dimitriou, had reasonably formed a view, based upon the events of the previous fortnight that, unless it took immediate legal action, Monash Gate would continue to remove the fence and that part of the Temple building protruding on to the disputed land.
Counsel submitted that if the builder had proceeded to remove the fence in its entirety, evidence in support of any claim for adverse possession would be lost. Importantly, the only concession that Monash Gate was prepared to make prior to the issue of the proceeding was to temporarily cease building works upon the disputed land. The letter of Kalus Kenny dated 19 January 2010 made it clear that Monash Gate vigorously disputed any claim by PMCDG to the disputed land.
Findings
In my view, while in hindsight the actions of PMCDG in issuing the proceeding and seeking urgent injunctive relief might appear to be somewhat precipitous, its conduct does not reflect so adversely upon it as to warrant an order for costs other than the usual order. The evidence does not make clear the nature of the agreement that had been reached between PMCDG and Monash Gate at the meetings between Mr Dimitriou and the builder in the week prior to 19 January 2010. In fact, the affidavits of Andrew Fraser and Simon Madden deny that they told Mr Dimitriou that the builder would wait until 19 January before recommencing works to remove the remainder of the fence. This reflects the position adopted by Kalus Kenny in their letter of 19 January 2010 to PMCDG. In circumstances where building works were underway and the relevant fence had already been partly demolished over the protests of Mr Dimitriou, it was not unreasonable for PMCDG to commence the proceeding. It may be that in the negotiations which took place prior to 19 January 2010, Monash Gate was prepared to go further than what was proposed in Kalus Kenny’s letter of 19 January 2010 in order to placate Mr Dimitriou, but there is no evidence of that before the Court
I also note that despite Monash Gate’s professed willingness to negotiate with PMCDG, on 28 January 2010 it filed and served an extensive defence and counterclaim denying that the PMCDG was entitled to a declaration that it owned the disputed land on the basis that it had waived or abandoned any right, title or interest in the disputed land, was estopped from claiming any title, and claiming damages for any delay caused by the claim for adverse possession.
While it was reasonable for Monash Gate to test PMCDG’s claims and to defend the proceeding, its public position as evidenced by the documents filed with the court does not sit well with a conclusion that PMCDG would be able to obtain the relief it sought without recourse to litigation.
Furthermore, the correspondence demonstrates that even once Monash Gate conceded that PMCDG should have adverse possession of the disputed land, the parties were negotiating over the exact dimensions of the disputed land right up until the last business day prior to the scheduled trial date.
Finally, while it is the case that Monash Gate made an offer to concede ownership of at least part of the disputed land on 27 January 2010 (that is, before the affidavit of Mr Forbes was sworn, filed and served), it is noteworthy that in his affidavit sworn on 21 January 2010 (the day prior to the first return date of the application for interlocutory relief), Mr Dimitriou swore:
(a)on 20 January 2010 he spoke with Mr Forbes, who informed him that he held all records of the Temple since 1922;
(b)Mr Forbes informed him that the extensions to the Temple constructed in 1955 were constructed to abut the existing fence line, and that during the period he had been associated with the Temple there had always been a fence on the fence line; and
(c)Mr Forbes was willing to give evidence regarding these matters and produce any relevant documents to the Court.
Accordingly, from 21 January 2010, Monash Gate was aware that PMCDG’s claim for adverse possession was likely to have a solid evidentiary basis. This knowledge (along with the substantial pressure it was under to complete the development in a timely fashion) may well have contributed to Monash Gate making an offer on 27 January 2010. However, prior to that time, the only concession that Monash Gate was prepared to make was in relation to the building works to be carried out on the disputed land (see Kalus Kenny’s letter of 19 January 2010), not with respect to the ownership of the disputed land.
The submissions made on behalf of Monash Gate (similar contentions were made by Mr Feingold in his affidavit sworn 5 March 2010) that it was not until the writ and statement of claim were served on 20 January 2010 that Monash Gate was aware of a claim for adverse possession of the disputed land were somewhat disingenuous. First, Mr Dimitriou’s letter of 15 January 2010 referred to “disputed land”. The only possible relevant dispute could be about its ownership. Indeed, in its response of 19 January 2010, Kalus Kenny stated:
“My client denies the land is ‘disputed’. The land clearly forms part of my client’s land, as made clear by the title and the survey.”
Further, the letter states:
“I am instructed that Mr Fraser told you that his suggestion was not to be taken as any admission that your company’s claim has merit, and that my client was reserving its rights.”
Therefore, notwithstanding the fact that Mr Dimitrou’s letter of 15 January 2010 did not expressly refer to an adverse possession claim over the disputed land, neither Monash Gate’s solicitors and builder appeared to be in any doubt as to the nature of PMCDG’s claim.
Similarly, the claims made by or on behalf of Monash Gate in correspondence and in affidavits filed on its behalf that Monash Gate did not know the precise dimensions of the land claimed were somewhat disingenuous. It is apparent, and would have been apparent from the time of the commencement of the dispute on 5 January 2010 that Mr Dimitriou was protesting about the removal of the fence, and laid claim to the portion of land enclosed by the fence.
Monash Gate submitted that PMCDG should not have its costs of the proceeding because if it had asked properly and made its claim for adverse possession through the “usual” channels, it would have incurred costs and there would be a delay of some months. That may well be the case (although presumably the extent of delay and costs would depend upon Monash Gate’s attitude to any such application). However, this matter is of limited relevance in the circumstances of this case, where builders were on site, apparently threatening to intrude upon the disputed land and carry out construction works upon the land.
Counsel for Monash Gate relied upon a number of authorities to support its contention that the circumstances in the current case justified denying PMCDG its costs of the proceeding, as follows: Wilson Parking Australia 1992 Pty Ltd v Rush (No 2) [2008] FCA 1619 (“Wilson Parking”), Melbourne University Publishing Ltd v Williamson [2005] FCA 1910, Lollis v Loulatzis (No 2) [2008] VSC 35, and Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 (“Verna Trading”). A review of these authorities leads one to observe that it is difficult to distil any firm principles, apart from the principle that courts have a broad discretion with respect to costs, and that discretion must be exercised judicially, such that any departure from the “usual” rules and practices with respect to costs should be based upon identifiable grounds.
In Wilson Parking Australia v Rush, Jessup J made adverse orders against an applicant for interlocutory relief, in part because there was no express request for relief prior to the issue of a notice of motion seeking orders, some of which were successfully resisted, and some of which were made by consent. The difficulty in comparing this case with the current case is that the judgment does not descend into detail regarding the factual background to the dispute between the parties and the application. Further, the application was partially unsuccessful and there were a number of different respondents.
In Melbourne University Publishing Ltd v Williamson, Heerey J refused to make an order for costs in circumstances where orders for injunctive relief were made by consent, stating:
“It seems to me that it is more than speculation that had a letter of demand been sent the parties would have reached the commonsense resolution that they have. In fact, it is a widespread and salutary practice in all forms of civil litigation for a prospective plaintiff to write a letter of demand, for the very reason that a prospective defendant can take advice and, if there is no defence, save the substantial costs that would be involved even for a brief undefended application like the present one.”
This case is superficially similar to the current case, and the above statement is uncontroversial. However, it is apparent from the reasons that the defendant in this case immediately consulted a solicitor, and quickly agreed to the consent orders. It also seemed to be relevant that the plaintiff was an established publisher and the defendant was a small photocopy shop. In the current case, while negotiations were under foot at an early stage, Monash Gate actively defended PMCDG’s claims, at least in the court documents, and had builders and equipment on site ready to carry out works on the disputed land.
In Lollis v Loulatzis, Kaye J reduced the costs awarded to the successful plaintiff on two primary grounds: the first on the basis that the plaintiff failed in relation to a substantial part of her claim (a claim of damages), and secondly, because the plaintiff was substantially responsible for the excessive time that was required to complete the trial.
The current case is readily distinguishable from the circumstances of the application currently before the court. In the current case, PMCDG was substantially successful in obtaining the relief it sought in its statement of claim. Furthermore, to the credit of both parties, the proceeding was substantially resolved within four weeks of its commencement, and consumed very little court time. This is to be contrasted with the situation facing Kaye J, where a trial with an estimate of hearing time of 6 to 7 days ultimately lasted for 19 days.
Finally, in Verna Trading, the court awarded costs against a successful defendant on the basis that the defendant had not communicated the critical basis of its defence to the plaintiff until the trial had commenced, which put the plaintiff to unnecessary expense. Counsel for Monash Gate submitted that by failing to make a demand, or to communicate its claim for adverse possession, PMCDG had put Monash Gate to unnecessary expense.
However, while no formal letter of demand was sent by PMCDG, I have found Monash Gate were most likely aware that PMCDG had a claim for adverse possession. In any event, the Verna Trading case is again substantially different from the current situation. First, the defendant was the plaintiff’s insurer, which had, in the words of Beach J, over the course of many months, given its insured the “runaround” with respect to the insured’s claim and, once the proceeding had commenced, had refused to admit certain incontrovertible facts, and only communicated the substance of its defence on the first day of trial.
Conclusion
While in hindsight it may appear that the claims by PMCDG for adverse possession over the disputed land were capable of being resolved by negotiation, the position as at 19 January 2010 was much less clear. Certainly, Monash Gate had demonstrated a willingness to negotiate with PMCDG, no doubt motivated by the potential disruption to the construction of the apartment complex occasioned by any dispute with PMCDG. However, it was not until after the proceeding was commenced that Monash Gate put forward any settlement proposal which involved an adjustment of the boundaries on the title. All previous offers (at least those in evidence) centred around the issue of whether building works would encroach upon the disputed land, and no offer was made to reinstate the boundary fence in its previous position or any other position. Finally, it appears that it was not until 10 February 2010 that Monash Gate conceded that the land to be surrendered to PMCDG should be the whole of the land enclosed by the previous fence.
Accordingly, I do not consider there are compelling reasons to depart from the usual order that a party successful in litigation should have its costs paid by the unsuccessful party. I shall hear from counsel on the precise forms of orders to be made, including with respect to the costs of this application.
Chronology
| Date | Event | Affidavit Reference |
| May 2008 | PMCDG contract of sale for purchase of 945-947 Dandenong Road, Malvern East. | Dimitriou, 19/1/10, para 4 |
| 30 June 2008 | Monash Gate becomes registered proprietor of 949 Dandenong Road, Malvern East | Dimitriou, 19/1/10, Para 6, ex CD-5 |
| 2 January 2009 | PMCDG becomes registered proprietor of 945-947 Dandenong Road | Dimitriou, 19/1/10, ex CD-3 |
| Early 2009 | PMCDG carries out site analysis survey | Dimitriou, 19/1/10, para 13 |
| August 2009 | City of Stonnington places heritage overlay on 945-947 Dandenong Road | Dimitriou, 19/1/10, para 9 |
| November 2009 | Dwelling on 949 Dandenong Road caught fire and was demolished. | Dimitriou, 19/1/10, para 11 |
| 9 December 2009 | Mr Dimitriou receives first Protection Work Response Notice and returns with Endorsement. | Dimitriou, 19/1/10, para 12, ex CD-7 |
| 15 December 2009 | Mr Dimitriou has conversation with Mr Kucherenko of Madden Nomis and signs second protection work notice. | Dimitriou, 19/1/10, para 15, ex CD-9 |
| 22 December 2009 | Mr Madden of Madden Nomis provides copies of plans to Mr Dimitriou. | Dimitriou, 19/1/10, para 21, ex CD-13 |
| 5 January 2010 | Mr Dimitriou attends at site and finds workmen removing rails and paling from fence. Mr Kucherenko speaks to Mr Dimitriou and tells him he will speak to him after a site meeting on 7 January. | Dimitriou, 19/1/10, para 17 |
| 11 January 2010 | Mr Fraser of Madden Nomis called Mr Dimitriou: nothing resolved. | Dimitriou, 19/1/10, para 18 |
| 13 January 2010 | Mr Dimitriou attends site – Mr Fraser is present. Mr Dimitriou says Mr Fraser told him that he wanted to cut back the building and remove the posts. Mr Dimitriou objected. Later that day, Mr Fraser called Mr Dimitriou and told him that they would be going ahead the next day, and that “he would be making a clean cut to shear off the parts of the building which were annexed on the strip of land”. Mr Fraser disputes he said this. | Dimitriou, 19/1/10, para 18 Fraser, para 10 |
| 14 January 2010 | Mr Dimitriou attends site. He saw a workman remove a post. He physically interposed himself between the machinery and the remaining posts. He contacts the building surveyor and the City of Stonnington and obtains plans from the City of Stonnington | Dimitriou, 19/1/10, para 19 |
| 15 January 2010 16 January 2010 | Without prejudice meetings held between Mr Dimitriou and representatives of Monash Gate and Madden Nomis. Dispute not resolved. On 15 January 2010, Mr Dimitriou sends a letter to Madden Nomis purporting to confirm an agreement that “you or any persons associated with the proposed works will not enter upon the disputed land as delineated in the attached drawing or commence or carry out any building, demolition or associated works until midnight, Tuesday, 19th January 2010.” Mr Fraser disputes that such an agreement was reached, but that Madden Norris made a proposal to Mr Dimitriou which Mr Dimitriou said he would consider. PMCDG’s solicitors commence preparing for application for interlocutory injunction on 15 January 2010 (as evident from dates on ASIC and title searches) | Fraser, para 8 Dimitriou, ex CD-12 |
| 19 January 2010 | Kalus Kenny sends a letter to Mr Dimitriou in response to the letter of 15 January 2010. The letter:
| Kenny, 21/1/10, ex MJK-1 |
| 20 January 2010 | Romeo & Associates send a fax to Kalus Kenny informing them that they had issued proceedings “in respect to this dispute” returnable in the Practice Court at 10.30 am, and asking if Kalus Kenny had instructions to accept service. | Kenny, 21/1/10, ex MJK-1 |
| 22 January 2010 | Hearing adjourned to 29 January 2010. | |
| 27 January 2010 | Letter from Kalus Kenny to Romeo & Associates offering to settle dispute (no evidence of any response). | Feingold, 5/3/10, ex SF-C |
| 28 January 2010 | Monash Gate filed Defence and Counterclaim, and affidavit in opposition sworn by Mr Simon Feingold. PMCDG filed and served further affidavit of Mr Dimitriou, and affidavit of Ronald Spencer Forbes (formerly trustee of the Temple) verifying PMCDG’s claim for adverse possession. | |
| 29 January 2010 | Consent orders made by Hargrave J setting down the proceeding for hearing on 15 February 2010, and making various interlocutory orders. Upon PMCDG giving the usual undertaking as to damages, Monash Gate agreed not to carry out any works on the disputed land. | |
| 8 February 2010 | Unspecified offer of settlement made by PMCDG. | Letter from Kalus Kenny to Romeo & Associates dated 9 February 2010. Feingold, 5/3/10, ex SF-D |
| 9 February 2010 | Monash Gate rejects PMCDG’s offer of settlement, puts a counter offer to agree to a new boundary, with each side to bear its own costs. Offer rejected by PMCDG. | Letter from Kalus Kenny to Romeo & Associates dated 9 February 2010 and letter from Romeo & Associates to Kalus Kenny of even date, ex SF-C |
| 10 February 2010 | Kalus Kenny requests PMCDG provide further and better particulars (due 2 February 2010). PMCDG accepts Monash Gate offer that PMCDG have adverse possession of the land as fenced prior to demolition, in accordance with a plan prepared by Monash Gate’s surveyor, with costs to be determined by the Court. Monash Gate proposes that a new survey plan be drawn. | Letter from Kalus Kenny to Romeo & Associates dated 10 February 2010. Letter from Romeo & associates to Kalus Kenny dated 10 February 2010 (Feingold, 5/3/10, ex SF-E, SF-F) |
| 12 February 2010 | PMCDG confirms terms of settlement. | Letter from Kalus Kenny to Monash Gate dated 17 February 2010, Feingold, 5/3/10, ex SF-G |
| 15 February 2010 | Consent orders made by Robson J. |
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