Sahab Holdings Pty Ltd v Registrar-General (No 3)

[2010] NSWSC 403

CITATION:	Sahab Holdings Pty Limited v Registrar-General & Anor [No 3] [2010] NSWSC 403
HEARING DATE(S):	31 March 2010
JUDGMENT DATE :	5 May 2010
JURISDICTION:	Equity
JUDGMENT OF:	Slattery J at 1
DECISION:	ORDERS: 1. The first defendant will pay the plaintiff’s costs of the motion of 29 May 2009. 2. The plaintiff will pay the first defendant’s costs of the proceedings other than on the motion of 29 May 2009. 3. There will be no order as to costs as between the plaintiff and the second defendant or between the first and second defendants. 4. Summons dismissed.
CATCHWORDS:	EQUITY - equitable remedies - declarations - plaintiff seeks declaration that right of way was wrongfully extinguished - declaration proposed not in conformity with Court's reasons for decision - no utility in making alternative forms of declaration proposed - PROCEDURE - costs - costs to follow the event - plaintiff successful on motion of 29 May 2009 - first defendant otherwise successful - plaintiff pays the first defendant’s costs on the ordinary basis in respect of the proceedings other than on the motion of 29 May 2009 - misconduct of second defendant in transaction the subject of the proceedings - no order for costs between the plaintiff and the second defendant - no order for costs between the first and second defendants
LEGISLATION CITED:	Conveyancing Act 1919 (NSW), Part 14, s 88K Real Property Act 1900 (NSW), ss 12, 12A, 122, 136, 138 Supreme Court Act 1970 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Pt 42 r 1, 6.9
CATEGORY:	Consequential orders
CASES CITED:	Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Donald Campbell & Co Ltd v Pollak (1927) AC 732 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-478 Jelbarts Pty Limited v Mc Donald (1919) VLR 478 Laguillo v Haden Engineering Pty Ltd (1978) 1 NSWLR 306 MacDougall v Curlevski (1996) 40 NSWLR 430 Ohn v Walton (1995) 36 NWLR 77 Ottway v Jones (1955) 1 WLR 706 Ritter v Godfrey (1920) 2 KB 47 Sahab Holdings Pty Limited v Registrar-General & Anor [2009] NSWSC 1143 Sahab Holdings Pty Limited v Registrar-General & Anor [No 2] [2010] NSWSC 162 Scallan v Registrar-General (1988) 12 NSWLR 514 Sunday Times Newspaper Co Ltd v McIntosh (1933) SR(NSW) 371 Waters v PC Henderson (Aust) Pty Limited (1994) 254 ALR 328 Williams v Stanley Jones & Co Ltd [1926] 2 KB 37 Windsurfing International Inc v Petit (1987) AIPC 90-441
PARTIES:	Plaintiff: Sahab Holdings Pty Limited (ACN 002 728 216) First Defendant: Registrar-General Second Defendant: Castle Constructions Pty Limited (ACN 001 602 188)
FILE NUMBER(S):	SC 5563/08
COUNSEL:	Plaintiff: Mr G K Burton SC First Defendant: Mr P B Walsh Second Defendant: Mr D L Warren
SOLICITORS:	Plaintiff: Kanjian & Company First Defendant: Department of Land Legal Services Second Defendant: Domain Legal

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SLATTERY J

TUESDAY 05 MAY 2010

5563/08 SAHAB HOLDINGS PTY LIMITED (ACN 002 728 216) v REGISTRAR-GENERAL & CASTLE CONSTRUCTIONS PTY LIMITED (ACN 001 602 188) [NO 3]

JUDGMENT

1 HIS HONOUR: This third judgment in these proceedings deals with issues of the formulation of orders for final relief and costs. The Court gave its first judgment on 26 October 2009: Sahab Holdings Pty Limited v Registrar-General & Anor [2009] NSWSC 1143. The Court decided in the first judgment that the Registrar-General had a duty to give reasons for the decisions challenged in the proceedings. The Court gave its second judgment on 8 March 2010: Sahab Holdings Pty Limited v Registrar-General & Anor [No 2] [2010] NSWSC 162. The Court decided in the second judgment that there was no basis for the relief sought by the plaintiff in the amended summons and that it should be dismissed. Argument in the proceedings in relation to costs and the form of final relief took place on 31 March 2010. The parties were represented on the costs argument as they were in the course of the early hearings in the proceedings.

2 The first issue for determination in this judgment is whether the declaration sought to be included by the plaintiff in the final orders for relief should be made. The second issue for determination is what is the appropriate order for costs at the end of the proceedings.

The Declaration

3 The plaintiff submits that the Court should make two declarations in its final orders. Both defendants oppose this course. The plaintiff seeks in its final relief the declaration sought in claim 1 in the amended summons filed on 16 February 2009:

“A declaration that the right of way created by transfer A752953 (“right of way”) over part of the freehold property comprised in certificate of title folio identifier A/404929 known as 134 Sailors Bay Road, Northbridge (“dominant tenement”) was wrongly extinguished on or about 22 November 2001 when the first defendant acceded to request 7924023 lodged by the second defendant.”

4 In the alternative, the plaintiff seeks two declarations set out in its submissions on orders and costs of 23 March 2010:

“1. Declare that the right of way created by transfer A752953 created a permanent right of way (subject to the covenant relating to that right of way in the same instrument) over the land comprised in folio identifier A/404929 known as 134 Sailors Bay Road Northbridge NSW (“servient tenement”) in favour of the land comprised in folio identifier 1/726736 known as 69 Strathallen Avenue Northbridge NSW (“dominant tenement”)

2. Declare that the plaintiff is not entitled to relief pursuant to sections 12(1)(d), 122(4)(b), 136(1) or 138(3) of the Real Property Act 1900 (NSW) or section 65 of the Supreme Court Act 1970 (NSW) in relation to the first defendant’s decisions in November 2001 and October 2008 concerning the right of way and covenants created by transfer A752953.”

5 Contentions are made on all sides about the appropriateness or otherwise of making these declarations.

Registrar-General’s Submissions

6 The Registrar-General, the first defendant, opposes the making of the declarations Sahab seeks. The Registrar-General submits that they are not necessary for the disposal of the controversy before the Court; that the judgment of the Court makes the findings that it makes; that these reasons give rise to various issue estoppels; and that therefore there is no need to make the declarations sought.

7 Further, Sahab foreshadows other proceedings, presumably under Part 14 of the Real Property Act 1900 (NSW). Sahab submits that such proceedings are presently hypothetical and irrelevant and do not justify the making of the declarations sought: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582 per Mason CJ, Dawson, Toohey and Gaudron JJ.

Castle’s Submissions on the Declaration

8 Castle also opposes making the declarations. Like the Registrar-General, Castle submits there is no utility in making the declarations and further submits that they will only lead to confusion as to the effects of the Court’s reasons.

9 Castle further submits that the declarations as sought do not actually represent the effect the Court’s decision. Castle says the right of way was validly extinguished by the Registrar-General and; it is now irrelevant that the Registrar-General misconstrued the terms of the grant; it is not to the point that the Registrar-General did not act in the manner that it did resulting in the right of way still being on title.

10 The further point is made that the declaration now sought is totally different from that sought in paragraph 1 of the amended summons so that the logical course is that the amended summons ought now be dismissed because the proceedings are at an end.

11 Castle submits that to the extent that there are differences between the Court’s reasons for judgment and the form of declaration, confusion will arise in the future.

12 Finally, Castle contends that the plaintiff is really seeking these declarations for the purposes of being able to say in the costs argument that it was partially successful and should not have to bear a full costs order.

Sahab’s Submissions on the Declaration

13 Sahab puts several submissions in response to those advanced by the Registrar-General and Castle.

14 The plaintiff submits that the declarations should be made and that they are necessary. The plaintiff candidly indicates that they will be useful in future proceedings but says that they are in conformity with reasons for decision.

Decision

15 The Court will not make the declaration sought in paragraph 1 of the amended summons. The principal difficulty with the declaration in the summons is that it declares that the right of way was “wrongly extinguished” when the Registrar General acceded to Castle’s request.

16 First, there is a problem about the utility of a declaration that uses the word “wrongly" as a description of the extinguishment of the easement in this case. The word is not found in any of the legislative provisions of the Real Property Act that Sahab either attempted to rely upon in these proceedings or anticipates relying upon in any future proceeding. It does not appear in sections 138(3), 136(1), 12, 12A, or 122 of the Real Property Act. The closest statutory formulation in the Real Property Act to what is sought in the amended summons is section 136(1)(c), which refers to circumstances in which "a certificate of title or recording in the register has been fraudulently or wrongfully obtained" (emphasis added). This is a different concept from the declaration sought in the amended summons. Sahab also foreshadowed the possibility of bringing proceedings under Part 14 of the Real Property Act for compensation for the removal of the right of way. The circumstances in which compensation is payable under s 129 Real Property Act do not include as an element of the claim that the event complained of occurred either “wrongly” or “wrongfully”.

17 Second, to the extent that the issue of the wrongfulness of the cancellation has been examined in these proceedings the Court has not found that the recording of the removal of the right of way in the register was “wrongfully obtained”: see the second judgment Sahab Holdings Pty Limited v Registrar-General & Anor [No 2] [2010] NSWSC 162 at [86]. I decline to make the declaration sought in paragraph 1 of the amended summons that the extinguishment occurred “wrongly”, in circumstances where I have found that there was some evidence upon which the Registrar General appears to have acted when making the recording in the register.

18 The alternative formulation of the declarations in Sahab’s submissions does not declare as against the Registrar-General and Castle that the cancellation of the right of way occurred “wrongly”. However the alternative formulation of the declaration has other difficulties. It may create an inapt impression of my reasons for decision to make a declaration as to the creation of a “permanent right of way” by Transfer 752953 and then merely to declare that there was no relief available under the Real Property Act or the Supreme Court Act 1970 (NSW) in respect of the Registrar General’s 2001 and 2008 decisions. As Mr Warren submits the Court’s reasons for decision set out what happened and create issue estoppels among the parties. Attempting to summarise those reasons in the form of the declarations sought is likely to lead to disputes in future Part 14 or 88K Conveyancing Act 1919 (NSW) proceedings. Such disputes should be avoided and I decline to make the alternative form of declarations sought.

Costs

19 All the parties put quite different positions and submissions in support in relation to costs. Those submissions in summary are the following.

Sahab’s Submissions on Costs

20 The plaintiff has propounded a series of costs orders in descending order of preference which are dealt with in its submissions as follows.

21 Sahab submits that the kind of situation encountered in these proceedings justifies departure from the usual rule that costs follow the event: see for example Scallan v Registrar-General (1988) 12 NSWLR 514 at 520-521.

22 Sahab points out that it has established that its interpretation of Transfer A752953 creating the rights of way in the covenant and covenants was correct. Sahab concedes that it did not establish a path to relief through the legislation to reopen and correctly make the 2001 and 2008 decisions. It points out that it was not Sahab’s fault that there was no such path to relief. Sahab was in the position of trying to correct a wrong decision which affected its interests and which was attributable to the activities of Castle.

23 The plaintiff says this case is like Scallan’s Case and points to the reasons in the principal judgment [26], [37], [76]-[78] and [86] and that the Court has now found that Castle’s interpretation was wrong and that its statutory declaration was incorrect and misleading. This has allowed Castle to benefit from those matters and has materially contributed to the incorrect removal of the right of way from which it has also benefited.

24 Looking at the position of the Registrar-General, Sahab says that the Registrar-General wrongly acceded to the 2001 request and only gave, as the Court found, very “spare” reasons which did not assist the Court in drawing an inference about the Registrar-General’s reasoning processes. This meant that Sahab suffered from the spareness of the available material despite the fact that the Registrar-General had a statutory duty to provide reasons. Furthermore the adversarial role taken by the Registrar-General was likely to have increased the costs of the parties.

25 Sahab also relies upon the Registrar-General’s declining to provide reasons in the 2007 correspondence requiring the plaintiff to bring a notice of motion, a stance which was supported by Castle.

26 The plaintiff submits that the result should be that the Court should:

a) Order the defendants and primarily the Registrar-General to pay Sahab’s costs of the motion of 28 May 2009;

b) That Sahab should have its costs of the balance of the proceedings in relation to the interpretation question from either or both of the Registrar-General and Sahab with the proportion to be borne between those defendants and;

c) The plaintiff should not have to pay costs to any other party

The Registrar-General’s Submissions on Costs

27 The Registrar-General says there is no basis for making an order that the Registrar-General pays Sahab’s costs because: the Registrar-General filed a submitting appearance; the Registrar-General did not take an active part in the proceedings apart from the 28 May 2009 motion; the Registrar-General took no part in the controversy surrounding the proper construction of the right of way; it was Castle that misled the Registrar-General as to the wrong construction of the right of way; the Registrar-General made no submissions about whether the Court could reinstate the right of way which was contested between Sahab and Castle; in 2001 the Registrar-General properly acted on evidence of abandonment of the right of way; there is no basis to interfere with either the Registrar-General’s 2001 or 2008 decisions.

28 The Registrar-General submits that costs should follow the event. It also submits that this is not one of those exceptional cases in which a successful defendant will be ordered to pay the costs of an unsuccessful plaintiff. For these reasons the Registrar-General submits that the Registrar-General should have an order for costs against Sahab.

29 And finally, the Registrar-General says of the possibility of there being criticism made of the 2001 decision, potentially leading to adverse costs consequences, that the Registrar-General’s 2001 decision was based in large part on Castle’s incorrect and misleading statutory declarations.

Castle’s Submissions on Costs

30 Castle makes no submissions about the appropriate costs orders between Sahab and the Registrar-General.

31 Castle says that it was entirely successful in defending the claim for relief which Sahab advanced against it and it should have its costs.

32 Castle points to the curious history of these proceedings in which Sahab opposed Castle’s joinder to the proceedings and says that Castle should have been joined right from the outset.

33 Castle’s principal argument is that Sahab sought to convince the Court that there was a statutory path to relief through the Real Property Act 1900 (NSW) to enable the Court to reinstate the right of way. Castle says that statutory argument occupied the bulk of the hearing. In respect of that substantial argument, Sahab took the position on which it was not successful and should therefore pay the costs of the proceedings. It is not to the point that it won on only one part of the proceedings, the construction argument. In those circumstances Castle says there is no reason to depart from the usual order that costs follow the event.

34 Castle separately says that in relation to the costs of Sahab’s motion filed on 29 May 2009, Castle says it was a minor player on that motion which was opposed by the Registrar-General. Castle says that if there is to be a specific order for costs in relation to that motion that as between Sahab and Castle, each party should bear its own costs of the motion and the Registrar-General should pay the costs of the plaintiff. Castle says that there is no reason why it should be joined in to bear any order for costs on that motion.

Decision

Applicable Principles

35 The parties’ submissions raise several uncontroversial principles relating to the exercise of the costs discretion. Costs normally follow the event unless it appears that “some other order should be made”: Uniform Civil Procedure Rules 2005 (NSW) (UCPR) Pt 42 r 1. The exercise of this costs discretion is compensatory rather than punitive: Ohn v Walton (1995) 36 NWLR 77 at 79 per Gleeson CJ.

36 It is generally accepted that the “event” refers to the practical result of a particular claim: Windsurfing International Inc v Petit (1987) AIPC 90-441. But the expression is not limited to the determination of either the proceedings as a whole or of particular causes of action: Williams v Stanley Jones & Co Ltd [1926] 2 KB 37 and Jelbarts Pty Limited v Mc Donald (1919) VLR 478. It extends to any disputed questions of fact or law and is not limited to “issues” in the technical pleading sense: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-478 per Toohey J.

37 Normally the costs of the proceedings will be awarded to the successful party without differentiation as to success or failure on particular issues unless the issues on which the party failed were clearly the dominant issues or clearly separable from the issues on which the party succeeded; Waters v PC Henderson (Aust) Pty Limited (1994) 254 ALR 328. But the Court may deprive an otherwise successful party of costs in relation to particular matters: Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20.

38 The Court has a discretion to refuse costs to a successful party or order costs against a successful party: Donald Campbell & Co Ltd v Pollak (1927) AC 732 and Laguillo v Haden Engineering Pty Ltd (1978) 1 NSWLR 306. This may occur where the successful party has either encouraged the unsuccessful party to contest the proceedings or otherwise misconducted itself either in relation to the transaction the subject of the proceedings or in relation to the conduct of the proceedings: Ritter v Godfrey (1920) 2 KB 47 and Sunday Times Newspaper Co Ltd v McIntosh (1933) SR(NSW) 371 at 377.

39 An order that a successful party pay the costs of an unsuccessful party is generally regarded as requiring particular justification: Ottway v Jones (1955) 1 WLR 706 at 708. It is rare for such an order to be made unless the successful party’s conduct lengthened the proceedings unnecessarily, caused unnecessary issues to be canvassed or otherwise increased the costs of the litigation: MacDougall v Curlevski (1996) 40 NSWLR 430.

40 Costs issues may be divided for convenient analysis into issues relating to the Sahab motion of 29 May 2009 and costs issues relating to the balance of the proceedings. The costs of the motion are sufficiently separable from the costs of the balance of the proceedings that they would be capable of discrete assessment. It is useful to examine each of them separately.

Costs of the Sahab Motion of 29 May 2009

41 Sahab succeeded on its motion of 29 May 2009. It is appropriate to make a separate costs order in respect of the motion. It was argued in a discrete part of the proceedings. It resulted in its own separate judgment on 26 October 2009. It should not be difficult to isolate the costs conduct of the motion from other costs incurred by the parties in the proceedings. The costs of the motion should follow the event unless it appears that some other order should made.

42 Looking at the motion of 29 May 2009 I am not persuaded that some other order should be made. Although it is true that the Registrar-General appeared in the proceedings on this issue at the invitation of the Court and that the Registrar-General’s role has been of assistance to the Court, as my first judgment explained, the Registrar-General took a sufficiently adversarial role that the Registrar-General was directed in my first judgment to file a full appearance in the proceedings under UCPR r 6.9. The Registrar-General filed such an appearance. The Registrar-General took a position in relation to the obligation to give reasons for decisions under the Real Property Act which the Court has found to be erroneous and the Registrar-General has now provided reasons in accordance with the Court’s decision of 26 October 2009. The Registrar-General should pay Sahab’s costs of the motion of 29 May 2009 assessed on the ordinary basis.

43 Castle agreed with the Registrar-General’s stance but did not take an active role in relation to the Registrar-General’s obligation to give reasons. Castle’s lack of active involvement in this issue as a co-defendant does not warrant an order for costs against it in respect of the motion of 29 May 2009.

Cost of the Balance of the Proceedings

44 It is convenient to deal with the cost of the balance of the proceedings firstly as between Sahab and the Registrar-General and secondly as between Sahab and Castle.

45 As between Sahab and the Registrar-General, the Registrar-General’s involvement in other issues in the proceedings was minimal. The burden of establishing that Sahab had no statutory remedies to rectify the register following the 2001 decision fell to Castle. I have found that there was on the material available to him at least some evidence upon which the Registrar-General could have acted to take the step that he did to remove the recording of the right of way from the folio of the register for 134 Sailors Bay Rd. It has now become evident that the Registrar-General did not have as complete a picture of the real facts as has emerged in the course of these proceedings. It is therefore difficult to bring home any case against the Registrar-General of responsibility for causing or encouraging the bringing of these proceedings or being involved in misconduct in relation to the transaction the subject of the proceedings. I conclude therefore that as between Sahab and the Registrar-General that Sahab should pay the Registrar-General’s costs on the ordinary basis in respect of all parts of the proceedings other than the costs of the motion of 29 May 2009.

46 Finally, as between Sahab and Castle the situation is somewhat different. For several reasons I have reached the view that the appropriate order between these two parties is that costs should lie where they fall and that no order for costs should be made. I reach this conclusion for several reasons.

47 First, this costs issue cannot really be decided on the basis that Sahab was successful on the issue of the interpretation of the covenant and should be awarded costs for that reason. Mr Warren correctly points out that in order to succeed in claiming relief against Castle, Sahab needed to establish both its interpretation of the covenant and an available path through the legislation to warrant a grant of relief. It may have succeeded on the former but it has failed on the latter and has therefore failed overall. This on its own would not be sufficient to alter the ordinary rule that costs follow the event. Against this (and against the Registrar-General) Mr Burton says that Sahab commenced the proceedings merely to find out what had happened because no information was forthcoming either from the Registrar-General or from Castle. I do not think this is the correct analysis of the proceedings because the focus on obtaining reasons for the Registrar-General’s 2001 decision was not a primary focus of the amended summons or the opening submissions but only emerged in the course of discussion with the Court at the end of submissions in the first round of proceedings.

48 In similar vein, Mr Burton says that Sahab was not responsible for creating the position in which it found itself. This factor alone would not incline me to vary the principle that costs follow the event. However, another factor is significant in this case. I have found that Castle advanced an incorrect and misleading statutory declaration to the Registrar-General which led to the 2001 decision. Whilst I am mindful the costs jurisdiction is compensatory and not punitive it is difficult to escape the conclusion in this case when one analyses the careful correspondence pursued by Sahab against the Registrar-General before commencing proceedings, that Castle’s conduct ultimately occasioned Sahab to take some step such as this to free itself from the problem of it being landlocked which it then faced. The circumstances are in my view analogous to those which confronted Young J in Scallan’s Case at 520-521. Castle’s incorrect and misleading statutory declaration is sufficient misconduct in relation to the transaction the subject of the proceedings to warrant departure from the usual principles. I do not think that a costs order against Castle is warranted. I will make no other order as to costs between Sahab and Castle.

49 I do not think that any costs order as between Castle and the Registrar-General is warranted.

Orders

50 The orders therefore will be as follows:-

1. The first defendant will pay the plaintiff’s costs of the motion of 29 May 2009. 2. The plaintiff will pay the first defendant’s costs of the proceedings other than on the motion of 29 May 2009. 3. There will be no order as to costs as between the plaintiff and the second defendant or between the first and second defendants.
4. Summons dismissed.

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