Rigging West Pty Ltd v Stanick Pty Ltd - [2013] WASC 185

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: RIGGING WEST PTY LTD -v- STANICK PTY LTD [2013] WASC 185

CORAM: KENNETH MARTIN J

HEARD: 1 MARCH 2013

DELIVERED : 22 MAY 2013

FILE NO/S: CIV 1666 of 2010

BETWEEN: RIGGING WEST PTY LTD
Plaintiff
AND
STANICK PTY LTD
Defendant
HUTGOOD PTY LTD
Third Party

Catchwords:

Costs - Indemnity Orders - Plaintiff seeking to force acquisition of small portion of its encroached land - Adjacent lots - Small spill over and footing encroachment from one lot to other - Subsequent excisement and removal of all intruding portions of footings - Compulsory purchase of plaintiff's property not proceeded with - Partial resolution only - Application for costs - Indemnity costs

Legislation:

Property Law Act 1969 (WA), s 122, s 123
Rules of the Supreme Court 1971 (WA), O 23

Result:

Costs orders favouring the defendant

Category: B

Representation:

Counsel:

Plaintiff:     Ms C H Thompson
Defendant:     Mr M J McPhee
Third Party                   :     No appearance

Solicitors:

Plaintiff:     Benz Legal
Defendant:     M J McPhee Barrister and Solicitor
Third Party                   :     Young & Young

Case(s) referred to in judgment(s):

Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115
Garwolin Nominees Pty Ltd v Statewide Building Society (1984) VR 469
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S)
Walter v Buckridge [No 4] [2011] WASC 313

KENNETH MARTIN J:

This application concerns only the legal costs of the action. The plaintiff and the defendant both asked for indemnity costs against the other. If needed, the defendant would seek to be indemnified against any ultimate costs exposure to the plaintiff by flow‑through costs orders against the third party.
In his oral submissions counsel for the defendant said:
I haven't put any schedule of costs in for my client. I've taken it to be that that's a matter for the taxing master but they're not on the Supreme Court scale, and they'd be substantial.
In those circumstances, it has not been established that an award of taxed costs, to the defendant on the scale, would provide inadequate compensation, if the defendant established an entitlement to costs: see Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S) [3].
The parties are agreed the plaintiff's action should be dismissed. Everyone is also agreed that the defendant's action against the third party, ought be dismissed. But the rival positions over costs issues are live and hotly contested.
The third party did not participate in costs arguments, which (regrettably) spanned almost all of Friday 1 March 2013 (about 50% of the time allocated for the whole trial, had it run).

Factual background

Lying at the heart of the proceedings is a boundary traversal infringement dispute, between two neighbours over the footings for a building. The plaintiff is the owner of Lot 219 on Halifax Drive, in an area that appears to be an industrial or light industrial part of outer Bunbury. The defendant owns adjoining Lot 218, positioned on somewhat higher ground than the plaintiff's land.
The defendant's industrial‑type building was completed on Lot 218 a short time before the completion of a warehouse style neighbouring building on the plaintiff's Lot 219.
As the building on Lot 218 was almost completed, it was discovered that Lot 218's cement footings had intruded at subterranean levels into Lot 219 at some points along the two lots' unmarked common boundary, to a maximum incursion in places of about 200 millimetres. There was also some observable ground surface level concrete spill over to Lot 219.
The incursion to Lot 219 arose as a consequence of the defendant's builder (the third party) having failed to lay down proper formwork to contain the poured footings of the building for Lot 218 in the construction phase. Hence, the poured concrete footings of the building did not set precisely inside the surveyed area of Lot 218. The footings strayed (at points) over the surveyed boundary into Lot 219, to an extent of millimetres.
There is no suggestion that surface concrete spills or the millimetres of subterranean footing incursions at the Lot 218/219 boundary (a) happened deliberately; or (b) rendered any physical harm to the plaintiff's Lot 219, or to the building that was later constructed on the plaintiff's lot. The plaintiff says however that the subterranean footing incursions would need to be notified to any purchaser and that the incursion diminished the value of Lot 219.
What can only be described as a bitter and fractious dispute then erupted, culminating in the plaintiff's issue of these proceedings by writ against the defendant on 11 May 2010.
An apparent personal animosity as between the protagonists looks to have generated an unusual failure to recognise what is clearly an uncommercial dispute. This is especially where the magnitude of the litigation is measured against the underlying problems caused by slight physical footing incursions of Lot 218 into Lot 219.
The affidavit of Desmond Charles Horner, sworn on behalf of the defendant on 27 December 2012 gives insight into the personal animosity. To this affidavit Mr Horner attached the statement of evidence he proposed to give on behalf of the defendant at the trial of this action listed for two days in November 2011, but which, ultimately, did not proceed.
Objection was raised to this evidence. But in my assessment Mr Horner's evidence is relevant, particularly given a broad discretion I now exercise in deciding the costs outcome for this litigation.
Mr Horner's statement recounted his being present at a physical confrontation at the Bunbury lots in 2009 involving the director and key decision‑maker of the plaintiff, Mr Nicola De Marte. At that time Mr Horner had initially been at Lot 218 and was concerned about damage to some tiles on Lot 218 from the building works on the adjacent Lot 219. His concern was that damage to the tiles had been caused as a result of the plaintiff's works.
Mr Horner is a director of a related company of the defendant (Purple Pig (Australia) Pty Ltd). His statement relates how, that day, he and a representative of the defendant's builder, Mr Mark Jenkins, walked from Lot 218 to Lot 219. He relates an examination of a narrow space at the boundary between Lots 218 and 219 at that time. There ensued a physical confrontation between Mr Jenkins and Mr De Marte, shortly followed by a second physical confrontation between Mr De Marte and Mr Horner. The significance in this is not so much what happened or the rights and wrongs but rather, the poisonous and unworkable atmosphere created from that time. This has set the scene for the ensuing escalation to epic proportions of what is at base a neighbourhood problem that should have been mediated without litigation.
Mr Horner related how he was subsequently served with a provisional Violence Restraining Order (VRO) at the behest Mr De Marte as a result of that confrontation. VROs were also issued and obtained as between Mr De Marte and Mr Jenkins. This is all very unfortunate and unnecessary. Common sense seems to have gone out the window from this point.

History of the proceedings

The plaintiff's writ was filed on 11 May 2010. The plaintiff's solicitor was initially Kroon & Co (a Bunbury firm). The solicitor concerned was a Ms Harriette Benz. Subsequently she left that firm to form her own Bunbury practice, Benz Legal. Ms Benz has continued to represent the plaintiff throughout.
The endorsement to the plaintiff's writ shows the plaintiff from the outset, sought compulsory acquisition relief, pursuant to s 122 or s 123 of the Property Law Act 1969 (WA). According to the endorsement, the plaintiff sought to vest a portion of the plaintiff's land (Lot 219) in the defendant 'by reason of the footings of a building constructed on the defendant's adjoining land, being Lot 218 … encroaching on Lot 219'.
The endorsement also pursued damages, including exemplary and punitive damages for trespass to Lot 219 'by reason of the encroachment'.
The endorsement claimed as well, statutory compensation for the plaintiff pursuant to s 123(2)(c) of the Property Law Act and 'costs on an indemnity basis'.
A statement of claim was filed on 31 May 2010. Beyond relief for trespass, it also raised common law negligence as a further cause of action against the defendant (see pars 6 and 9 of the statement of claim).
The May 2010 statement of claim contended that the encroachments emanating from Lot 218 into Lot 219 had caused the plaintiff to amend its building plans. It was pleaded that this caused the plaintiff's building to be 50 sq m smaller than originally proposed (pars 10 ‑ 13 of the statement of claim). The plaintiff contended for damages by reason of it:
(a)having incurred costs in amending its plans for the building on Lot 219;
(b)losing rental income in respect of Lot 219;
(c)suffering a diminution in the value of Lot 219; and
(d)incurring the costs of remedial works required by the City of Bunbury.
The statement of claim also contended there had been a failure or refusal by the defendant to remedy the encroachment in a manner 'satisfactory to the plaintiff'. This was pleaded to constitute a 'contumelious disregard for the plaintiff's rights' (par 16) and was (presumably) the basis on which exemplary damages for trespass were sought (par 2 of the prayer for relief).
The key relief then sought was 'the order pursuant to s 122 or s 123 of the Property Law Act 1969 (WA), vesting a proportion of Lot 219 subject to the encroachment in the defendant', and 'compensation pursuant to s 123(2)(c) of the Property Law Act 1969 (WA)'.
Following a status conference before a Registrar of this court, the action came to be case‑managed in my CMC List on 14 March 2011. I subsequently observed its progression at various directions hearings and strategic conferences. I necessarily bring some insights from that role to bear on this costs argument.
In May 2011 the plaintiff filed an amended statement of claim. The former common law negligence pleas at pars 6 and 9 were excised. Particulars to par 12 concerning the encroachment issue said:
The encroachment is over a range of zero to 200 millimetres along approximately 75% of the east‑west boundary dividing Lot 218 and 219, and is underground.
Paragraph 14 of the amended pleading excised the prior plea concerning remedial works, required by the City of Bunbury. It was now pleaded (for the first time) the plaintiff had lost use of four soak wells it had installed on Lot 219. It was said the plaintiff needed to move them to alternative locations.
The plaintiff augmented its earlier pleas concerning loss and damage. It now sought (par 15):
(a)$9,000.75 plus GST, as costs incurred in amending its plans to Lot 219;
(b)$8,914 plus GST, per annum, for loss of rental income on Lot 219;
(c)$3,520 plus GST, as the value of the portion of Lot 219 to be lost to the plaintiff; and
(d)$6,000 plus GST costs associated with relocating four soak wells.
However, the plaintiff still did not seek to pursue any relief such as to compel the defendant to remove, cut, or shave off any intruding portions of the surface spill or subterranean footings which traversed over the boundary from Lot 218 into Lot 219.
Significantly to my end assessment on legal costs, the defendant, through its solicitors, did offer a remedial physical solution to the plaintiff by a 'Calderbank' letter (without prejudice save as to costs) of 26 May 2010 to the plaintiff's solicitor. This letter read (in part):
My clients do not consider that Mr De Marte's (of your client) personal dispute with Mr Jenkins, whatever it may be, is sufficient grounds to refuse access to Hutgood Pty Ltd (the Builder) to inspect and remove any alleged encroachment.
If your client wishes to obtain an expert report, presumably on the basis that there is some matter of concern not taken into account by the council [referring to the Bunbury City Council], then I would respectively suggest our client does so … My instructions are that any overspill and any portion of the one 'footing' which may constitute an encroachment are able to be easily removed by the Builder, without risk or damage, provided access is granted … My client regards your client's ongoing refusal to permit entry to your client's property and inspection (and possible remedial works if required) by the Builder of the alleged encroachment is unreasonable and reserves its position entirely.
In terms of your proposal, my client respectively disagrees, and is of the view the most cost effective manner of remedying the dispute is for your client to permit access to the Building (without Mr Jenkins if that is insisted upon) to inspect and remedy any issue, with appropriate consultation with your client.
My client invites your client to reconsider its objection to the Builder having access to inspect.
As mentioned in previous correspondence, my client denies that your client has suffered any loss at all, from any alleged encroachment. (emphasis added)
This letter was sent in apparent response to an earlier open letter from Kroon & Co on behalf of the plaintiff of 24 May 2010. Its penultimate paragraph had read:
Our client maintains that the most cost effective manner to resolve matters between the parties once and for all is for your client to purchase that portion of our client's land upon which the footings encroach, together with payment of damages representing our client's past losses.
There was an earlier 'Calderbank' communication from the defendant's Perth solicitors of 17 May 2010 which read (in part):
While my client denies your client has suffered any loss, my clients remain ready willing and able to investigate and remove any encroachment which may be in place. (emphasis added)
So as of May 2010, the plaintiff was seeking to have the portion of its land (referred to as a 'sliver' of its Lot 219, into which there had been the encroachments to the extent of millimetres) compulsorily acquired by the defendant under s 122 and s 123 of the Property Law Act and for the defendant to pay compensation and variously formulated damages (including exemplary damages).
On the other hand, the defendant was contending any footing incursions could, and should be, physically addressed by its builder (the third party).
The defendant was also expressing its concern about its builder being denied the opportunity of inspection access by the plaintiff to the boundary encroachment areas. Denial of access sprang from the tensions that subsisted as between Mr De Marte and Mr Jenkins which had given rise to the VROs issued in 2009.
An apparent philosophical impasse as to the appropriate relief (compulsory acquisition or physical redress) could not be broken.
Third party proceedings came to be issued by the defendant against its builder, Hutgood Pty Ltd. There followed a defence pleading filed on 16 May 2011 by the third party. The third party said:
6.3Encroachment (no Encroachment being admitted) resulted from innocent mistake, error or oversight of the Third Party or its contractors;
6.4If any Encroachment is established (which is not admitted) the Encroached Footings can be removed by being cut off or broken off from the remainder of the Footings without causing damage to any property of the Plaintiff or compromising the structural integrity of the building of which the Footings forms part;
6.6The Third Party has, at all material times, since becoming aware that the Plaintiff alleged the existence of the Encroachment, offered to remove the alleged Encroachment (no Encroachment being admitted) ('the Offer');
6.7Notwithstanding the Offer, the Plaintiff has refused to permit the Third Party and its workers to enter upon 49 Halifax Drive [Lot 219] for the purpose of removing the alleged Encroachment;
6.8the Plaintiff has failed to mitigate its loss arising out of any encroachment (no encroachment being admitted). (emphasis added)
On 21 July 2011, the plaintiff filed a further amended statement of claim maintaining earlier pleas, particularly seeking damages for the amounts as particularised under par 15, along with its prayer seeking exemplary damages (prayer 2).
An amendment added a new prayer 1A. Now, for the first time the plaintiff sought this (alternative) relief:
1AIn the alternative to 1, an order requiring the defendant to do all things necessary to remove the Encroachment from Lot 219 and to remediate Lot 219 to the plaintiff's reasonable satisfaction.
At 21 July 2011 with the trial then looming the option of physically removing any protruding footings into Lot 219 now emerged as a part of the relief sought by the plaintiff. A tactical shift occurred after the action had been extant for over 14 months (from 11 May 2010), although the plaintiff and the defendant via their respective solicitors had been exchanging strongly worded correspondence over the encroachment issue since March 2009 (the defendant's former Victorian solicitors, Frankel Partners, writing at that time to Mr De Marte seeking details of the encroachment).
During the course of oral submissions to me from counsel it was put on behalf of the plaintiff, in explanation of what had occurred regarding an apparent change to seek the remedial relief, that:
(a)the plaintiff had not known earlier whether a remedial option was feasible. It was put that it was not until 2011, after expert reports on all sides were obtained and exchanged, that remedial work was confirmed to be a viable option. Prior to then there had been legitimate concerns from the plaintiff about such excision work to the footings possibly damaging the fundamental base of the defendant's Lot 218 building;
(b)the parties had earlier been somewhat at cross purposes in their solicitor exchanges. The plaintiff complained not only about surface spill to Lot 219, but also of the subterranean incursions by the intruding footings. It was said the defendant had not appreciated, responded to, or at least not sufficiently appreciated or taken seriously, the footings incursion problem;
(c)given unfortunate physical confrontations of 2009, subsequent VROs, and ensuing mutual undertakings as between Mr De Marte and Mr Jenkins, it was wholly appropriate the plaintiff, through solicitors, insist that Mr Jenkins not be a participant in any site visits on behalf of the third party builder, or in an on site assessment of boundary incursion issues.
I must reject these arguments. In my assessment:
(a)investigating a physical solution to the footings incursion issue, with a view to ascertaining early on whether it could be physically addressed by cutting off the millimetres of footings incursion was the obvious practical solution and should have been explored by the plaintiff a lot earlier than it did. The plaintiff should have investigated this option more thoroughly before it pursued a more expensive and elaborate option of bringing Supreme Court proceedings seeking the compulsory acquisition of a 'sliver' of its land via s 122 and s 123 of the Property Law Act;
(b)there was too much passing solicitor correspondence put before me by the parties in their respective costs argument affidavits. On my assessment that correspondence does not indicate the defendant was unappreciative of a distinction as between the surface spill as contrasted to a subterranean encroachment issue with the footings of Lot 218 traversing into Lot 219, or that the defendant was unwilling to have its builder attend to physically fixing any incursion issues that presented;
(c)on my assessment, it was not unreasonable for this defendant to have its builder (who was responsible in the first place for the pouring of the cement footings and who, by its third party pleading, had accepted responsibility to fix any encroachments) physically fix the footings problem, at the builder's expense. In the end that is what ultimately occurred by agreement. That resolution of sorts was reached, as between the plaintiff and the third party, with the defendant's acquiescence, just before commencement of the two‑day trial fixed before me on 7 and 8 November 2011;
(d)my review of the correspondence emanating from the plaintiff's solicitor exposes what I very regrettably assess as an obstructive attitude emanating from this plaintiff, rejecting or being difficult about proposed offers to physically fix the incursion problem, until just before the two‑day trial was due to start. Without needing to allocate blame or go too far into the physical confrontation incidents that occurred as between Mr De Marte and Mr Jenkins, and for that matter with Mr Horner, I detect no convincing reason why later on Mr De Marte could not have temporarily absented himself from Lot 219, or appointed someone else to represent him at site if necessary, whilst inspections or rehabilitation works were being performed. This is also what ultimately happened.

There was a poisonous environment subsisting as between the plaintiff and the builder, arising out of the 2009 confrontations. Regrettably, antipathy has flowed across to this civil litigation. This action was always less than commercial to pursue in the scheme of things. There was, as I assess it, a rather unfortunate 'get even' approach, emanating from this plaintiff. This manifested in the plaintiff being difficult to deal with and overreaching in the relief sought from the litigation.
On my assessment, the defendant largely played a 'straight bat' when responding to the plaintiff's rather juvenile attitude. The defendant simply reiterated a reasonable position that physically excising any encroachment footing areas was the obvious and best solution and should be carried out by the builder at no cost to the defendant. The defendant also rejected, as wholly unjustified, the plaintiff's other claims for monetary damages compensation and exemplary damages.
An end position, as was ultimately accepted by the plaintiff, was largely to accord with the defendant's communicated stance to the plaintiff over time.
I am wholly unmoved by the plaintiff's argument it was only in late 2011 it could be confirmed that an option of remedial work to the footings was open and viable. By then each side had now spent far too much money engaging engineering experts, who ultimately were in agreement as to the viability of the physical remedial option, always advocated by the defendant.
In my view, it was for this plaintiff to itself investigate the viability of that physical option a lot earlier than it did. The plaintiff's commencing position in this litigation of seeking to require the defendant to acquire the encroached upon portions of its Lot 219 would have been far more reasonable, had the plaintiff's expert advice been that excising the subterranean encroaching footings was not viable. It was not. But my assessment is that this plaintiff was complaining noisily and expected the defendant to bow to its demands, including the demand the defendant engage, at its cost, any subterranean experts.
Returning to the history of the action, there was a further amendment (fourth iteration) of the plaintiff's statement of claim, filed on 23 August 2011. Significantly, the plaintiff now dropped most of its claims for loss and damage, as previously seen under par 15. The fourth statement of claim only sought 'the value of the portion of Lot 219 lost to the plaintiff (including GST) in the amount of $3,520'.
A chronology that is attachment HEB1 to Ms Benz's affidavit, filed 24 December 2012 explains the events of 25 October 2011 and 27 October 2011. For these days her chronology reads:
25 October 2011
Informal settlement conference held at Francis Burt Chambers … Settlement agreed on basis that work proceed in accordance with Wood & Grieve Report subject to 2 minor points. Costs to be the subject of mediation or a special appointment. Plaintiff confirmed it did not object to the outstanding work from Bruhn letter 15 June 2009 being done at the same time.
27 October 2011
Directions hearing before Kenneth Martin J. Trial vacated, costs reserved, residual issues to go to mediation not before 7 February 2012, adjourned to 2 February 2012 for further directions.
So, after almost 18 months of litigation with no outcome, the offending encroachments were agreed to be excised by works to be carried out at the instigation of the third party. The third party would engage an engineering firm Sivcon, to be supervised by Mr Sidwell of Wood & Grieve Engineers for the plaintiff.
Ms Benz's chronology shows that ultimately the remedial work was carried out, although the work took some time.
In 2012, the parties agreed that their unresolved costs dispute should be referred to a mediation conference convened before a Registrar of this court. That occurred on 1 November 2012 before Registrar S Boyle. The parties in mediation (including the third party) were unable to reach any consensus as to who would bear the costs of their litigation.
Early in the proceedings an undertaking was given by the plaintiff to the defendant in lieu of orders for security for costs. Pursuant to a written undertaking filed 15 July 2010, Mr De Marte undertook 'to personally indemnify the defendant against any costs that the plaintiff may be ordered to pay the defendant' in this action.
The defendant, if it obtains a costs order against the plaintiff, seeks to enforce the personal undertaking of Mr De Marte.

Materials filed on legal costs arguments

For the plaintiff, two affidavits of Ms Benz, the plaintiff's solicitor, were read. Her first affidavit sworn 20 December 2012 spans four bound volumes, with 65 attachments, comprising 297 pages of material. Ms Benz filed a further supplementary affidavit of 31 January 2013 encompassing a further 44 pages of material, including eight pages of objections to the defendant's affidavit materials (see pages 37 to 44).
The defendant relied on two affidavits. The first is the affidavit of Mr Horner of 27 December 2012 (filed 18 February 2013), to which I have referred. Second, it read a 128‑page affidavit from the defendant's director Mr Nicholas Preston, containing 44 attachments.
The parties objected to a number of passages in each others affidavit materials. It is not necessary for me to resolve the majority of these objections. Their magnitude, however, is illustrative of a bloody and unbending battle, wholly uneconomic to pursue from inception, fought out between two Bunbury neighbours over an unintentional subterranean footings incursion of a matter of millimetres. Such a dispute ought to have been resolved by a neighbourhood mediation or simple common sense years earlier without need for Supreme Court litigation.
A diagrammatic view of the subterranean footing incursions into Lot 219, measured at different points (see drawings prepared by consulting engineers WML Consultants) is found at vol 3 of Ms Benz's affidavit (see pages 184 ‑ 186). The largest degree of footing incursion to Lot 219 was approximately 150 mm (diagram T, page 186), and 130 mm (diagram C, page 184 and diagram H, page 185).
The plaintiff and defendant have also both filed lengthy written submissions in support of the rival legal costs positions. Each asserts a substantive victory in the litigation and a consequent entitlement to indemnity costs orders against the other. The exception was the third party who, more wisely, agreed to abide the court's orders and did not otherwise participate.

Disposition

It is appropriate the plaintiff's action be dismissed. So also, should the defendant's action against the third party. There is no controversy over making such orders.
It is significant to any ultimate resolution of the controversy over legal costs between the plaintiff and the defendant, that:
(a)the plaintiff's action did not ever get to a trial to be finally adjudicated;
(b)the plaintiff's action was only partially resolved by an end point settlement, pursuant to which remedial works removing all footing encroachments into Lot 219 from Lot 218 were carried out at the third party builder's instigation. The remedial work was commissioned and paid for by the third party. The defendant would not pay for the remedial work but the defendant did not object to such work proceeding to the extent that it was carried out upon Lot 219 from its Lot 218;
(c)the remedial work was carried out in line with the third party's unqualified and openly pleaded acceptance of responsibility (as the defendant's builder) for the encroachments into Lot 219 and at no financial cost to the defendant;
(d)aside from pressing for its legal costs against the defendant on an indemnity basis, in the end the plaintiff now seeks no other relief against the defendant. In particular, its initial objective to have a 'sliver' of its land that had been encroached upon, be compulsorily acquired by the defendant pursuant to the Property Law Act is moot. Plainly that relief became inappropriate to pursue, in light of a consensual completion of remedial works to remove all encroaching footings; and
(e)the plaintiff has not received any of the damages it once pursued against the defendant. Nothing was obtained in respect of lost rent, lost capital value of its property, or, of course, as exemplary damages.

Further costs considerations

The parties failed to resolve their legal costs dispute at mediation. They now press the court to resolve their costs dispute. But neither the plaintiff nor the defendant ask me to conduct a de facto trial of the merits of the litigation, had it proceeded concerning the relief once sought by the plaintiff, or the counter‑relief sought by the defendant against the third party. Such a wasteful course would be unthinkable. Hence, I am asked to estimate costs on the materials submitted, as a matter of overall impression.
The costs of an action lie at the discretion of the court. Nevertheless, the discretion is to be exercised judicially, in accord with well recognised principles. A court needs to make a fact specific judgment by reference to the unique presenting circumstances before the court concerning an award of costs. Indemnity costs orders may, on occasion, mark the disapproval of the court, where it detects unreasonable, inappropriate or unacceptable conduct by a party or its solicitors. Observations by the Court of Appeal in Swansdale Pty Ltd v Whitcrest Pty Ltd [10] and Ford Motor Co of Australia Ltd v Lo Presti [2009] WASCA 115 [16] ‑ [32] explain principles underlying a potential award of indemnity costs.
In contested litigation, prima facie, it is the loser who bears the taxed legal costs in a determined action.
The core difficulty in the present case is that there has been no final determination of this dispute, either in favour of the plaintiff, against the defendant, or concerning the third party (see Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 624 ‑ 625 (McHugh J)).
The present costs applications therefore presents a unique situation in which, there being no 'result', both the plaintiff and the defendant effectively self‑proclaim themselves as the 'victors' and seek costs orders, against the other.

Outcome

I am of the view, as a matter of discretion, the plaintiff should not receive its costs. Further, it must instead bear the defendant's taxed legal costs of this action. I reach that view as:
(a)there was no effective 'result' in this litigation. What unfolded after too much time was an incomplete compromise, effectively between the plaintiff and the third party, just before trial in November 2011. The defendant concurred in this outcome. A partial resolution of the dispute saw the third party accept responsibility of remedial works to excise all surface or subterranean encroachments into Lot 219 from spill or concrete footings from Lot 218;
(b)the plaintiff significantly altered its position over time to no longer seek compulsory acquisition relief. It took that tactical change relatively late in its action against the defendant by its further amended statement of claim of 21 July 2011. In seeking the physical excision of the footings incursion, the plaintiff was ultimately pursuing a more sensible and logical remedial result. This was the remedy it ought to have pursued before commencing, what was always, wholly uneconomic litigation. The plaintiff eventually gave up on more extravagant compulsory acquisition relief pursuant to s 122 and s 123 of the Property Law Act;
(c)the third party had effectively offered to remove any encroachment made. Bearing this in mind, it is doubtful a court in the exercise of a discretion would have granted this plaintiff a permanent mandatory injunction to compel the defendant in terms of par 1A of the plaintiff's further amended statement of claim of 21 July 2011. A court would be unlikely to issue a permanent mandatory injunction against a defendant, if that same result was then being volunteered (at no cost) by a third party. Equitable relief by injunction is discretionary. In the present case it was sought by the plaintiff late, in a context of what was essentially a common law claim over the unintentional trespass to Lot 219. Equity assists the common law in its ancillary jurisdiction. But discretionary considerations arise. With a third party builder offering to physically remove any encroachments to Lot 219 at its expense, it is more than doubtful whether the plaintiff could ever have obtained injunctive relief against the defendant to the same end;
(d)a position as was ultimately accepted by this plaintiff in October 2011, as regards the remedial works to be occasioned by and paid for by the third party, amounted to a very significant 'back down' in the plaintiff's position. The plaintiff had once claimed damages against the defendant for lost rental, diminution in capital value to Lot 219, soak well relocation costs plus exemplary damages. Those claims were not ultimately pursued, let alone vindicated. The defendant had rejected them from the start. Pursuing the extravagant compulsory acquisition relief, in my view, contributed towards a most regrettable inability in the parties to sensibly reach an earlier resolution of a wholly uneconomic dispute;
(e)all proceedings are agreed as being appropriately dismissed between all parties. If a plaintiff seeks leave to withdraw an action against a defendant, a prima facie position arising out of O 23 of the Rules of the Supreme Court 1971 (WA) is that the defendant will enjoy an entitlement to taxed costs of the litigation to that point. That provides some analogy to present circumstances. Although this is a case of consensual dismissal of the action, the plaintiff's action, in effect, has been effectively withdrawn before trial. Consistent with the observations by Le Miere J in Walter v Buckridge [No 4] [2011] WASC 313, where an action commenced is to be consensually dismissed without proceeding to trial, a plaintiff is generally exposed to an adverse costs order, having started the litigation and therefore being responsible for the ensuing expenditures as sought with the defence of the litigation. A subsequent realisation on the part of the plaintiff that litigation it has begun is pointless, coupled with an assertion that it nonetheless conducted itself reasonably throughout the course of proceedings is not sufficient, without more, to shift the cost exposure tied to starting the litigation away from the plaintiff as the party who has 'cast the first stone'. (See also Garwolin Nominees Pty Ltd v Statewide Building Society (1984) VR 469, 472); Re Minister for Immigration and Ethnic Affair; Ex parte Lai Qin (McHugh J)).
(f)my review of the voluminous materials filed on this application has not identified anything to detract from the prima facie exposure of this plaintiff to the taxed legal to costs of the defendant;
(g)I am of the view that from about May 2010, the defendant, by its Calderbank letters, articulated what has now been shown to be a reasonable position as regards offering (via the third party) to rehabilitate the encroachments onto Lot 219;
(h)the defendant's position was vindicated as a result of the remedial works commissioned by the third party, carried out at the third party's expense;
(i)I have not overlooked the surface spill‑over and footing incursions into Lot 219 constituted a wrong and civil trespass to the plaintiff's land. But the plaintiff had options towards seeking reasonable relief. The plaintiff had no licence to demand, without consequence, high tier acquisition relief for a 'sliver' of its land;
(j)I assess the plaintiff's overall conduct of its action to be disproportionate to the underlying subterranean footing incursion problem. The plaintiff was extravagant in its early demands and had to 'back down' in the face of this defendant's vindicated stance over time;
(k)this is not a case analogous to certain discontinuance scenarios by leave, where some unforeseen event intrudes to render a plaintiff's action moot, in a way that it must be said there was no fault on either side. Rather, this is a case more akin to a discontinuance under leave where a plaintiff retreats from an early stance adopted at the commencement of its litigation. In the end, given what has transpired to remedy the encroachment problem to Lot 219, the plaintiff must bear the taxed costs responsibility for the 'tidal wave' it ultimately unleashed.
(l)the defendant should receive its taxed costs, which should be by reference to scale allowances. The defendant has not established that an award of costs taxed to the relevant scale will not substantially provide appropriate redress. Furthermore, I am not persuaded to impose punitive indemnity cost orders (see Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S) [3]).
I reject the plaintiff's claims for costs, let alone the award of indemnity costs, against this defendant. That it would press for indemnity costs in circumstances where it was not vindicated by a trial and was effectively ending its own action as moot, gives some insight to what was a lack of proper perspective on the plaintiff's part.
The defendant, on the other hand, has been substantially vindicated. It should receive its taxed costs from the plaintiff, including taxed costs for the preparation and the hearing of argument spanning one hearing day on 1 March 2013.
Accordingly, I order:
(a)the action and the third party proceedings be dismissed;
(b)the plaintiff pay the defendant's taxed costs, including any reserved costs of this litigation, including the taxed costs of the preparation for, and hearing of, the argument at the special appointment on 1 March 2013;
(c)the third party pay the defendant its taxed costs of the third party proceedings; and
(d)Mr De Marte is also ordered to indemnify the defendant on these orders against the plaintiff. Mr De Marte must to pay the defendant any unmet costs payable (by the plaintiff) to the defendant, if the plaintiff does not render full payment within 14 days of these orders issuing.