The Uniting Church in Australia Property Trust (NSW) v Crowe (No 2)

[2024] NSWSC 1560

Supreme Court

New South Wales

Medium Neutral Citation:

The Uniting Church in Australia Property Trust (NSW) v Crowe (No 2) [2024] NSWSC 1560

Hearing dates:

22 November 2024

Date of orders:

22 November 2024

Decision date:

04 December 2024

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

See [59]

Catchwords:

COSTS — party/party — multiple claims in which plaintiff was primarily, but not totally, successful — costs follow the event on a claim-by-claim basis — apportionment based on costs solely referable to each claim — informal offers of compromise made by both parties — refusal of offers not unreasonable in the context of the claims being pursued at the time — respective applications for special and indemnity costs orders failed — plaintiff entitled to ordinary costs of proceedings apart from costs solely referable to unsuccessful or abandoned claims

Legislation Cited:

Uniform Civil Procedure Rules

Cases Cited:

Akierman Holdings Pty Limited v Akerman (No 3); In the matter of Akierman Holdings Pty Limited (No 2) [2021] NSWSC 869

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 3) [2024] NSWSC 1483

The Uniting Church in Australia Property Trust (NSW) v Crowe [2024] NSWSC 1387

Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338

Texts Cited:

Nil

Category:

Costs

Parties:

Statement of Claim filed 31 October 2022
The Uniting Church in Australia Property Trust (NSW) (Plaintiff)
Stephen Desmond Crowe (Defendant)

Cross-Claim filed 19 December 2022
Stephen Desmond Crowe (Cross-Claimant)
The Uniting Church in Australia Property Trust (NSW) (Cross-Defendant)

Representation:

Counsel:
Statement of Claim filed 31 October 2022
G A Sirtes SC/ D Robertson (Plaintiff)
M Castle (Defendant)

Cross-Claim filed 19 December 2022
M Castle (Cross-claimant)
G A Sirtes SC/ D Robertson (Cross-Defendant)

Solicitors:
Statement of Claim filed 31 October 2022
Maddocks Lawyers (Plaintiff)
Keighran Legal (Defendant)

Cross-Claim filed 19 December 2022
Keighran Legal (Cross-Claimant)
Maddocks Lawyers (Cross-Defendant)

File Number(s):

2022/324943

Publication restriction:

Nil

JUDGMENT

1. On 31 October, I published my conclusions on the claims made by the parties in these proceedings, and the reasons for those conclusions: The Uniting Church in Australia Property Trust (NSW) v Crowe [2024] NSWSC 1387 (“J1”). I adjourned the proceedings for a further hearing, if necessary, on any dispute concerning the form of orders to give effect to my conclusions or as to costs. That hearing took place on 22 November, following which I made orders disposing of the proceedings. This judgment sets out the reasons for those orders. The reasons are based on brief oral reasons which I gave at the hearing.

2. This judgment assumes familiarity with my October judgment. Terms defined in that judgment have the same meaning in this judgment.

3. The conclusions I reached in my October judgment were that (J1 [498]):

1. Mr Crowe’s claim to be entitled to occupy the side yard indefinitely into the future, by means of estoppel or implied agreement, failed;

2. so too did Mr Crowe’s application for a transfer of parts of the side yard and its airspace, or a compulsory easement, under EBA s 3, and his application for a compulsory easement under CA s 88K;

3. the Church Trust ’s claim in trespass succeeded with respect to the roof overhang, the balcony and the deck in the side yard (as reconstructed in 2019), and the Trust was entitled to a mandatory injunction requiring the removal of those structures (or, in the case of the deck, to damages representing the cost of removal).

4. The Church Trust was only partially successful in the claims for relief which it made against Mr Crowe in its statement of claim. The trespass claim with respect to the upper stair (see J1 [83]) was abandoned by counsel for the Church Trust at the trial. The claim with respect to the concrete slab laid on the Trust’s land underneath the balcony (see J1 [94]) failed on limitation grounds. All of the claims advanced by Mr Crowe in his cross-claim failed.

5. At the hearing the parties agreed on the form of orders to be made to reflect the conclusions I reached in my October judgment. The agreed orders provided for the grant of a mandatory injunction requiring Mr Crowe to remove the roof overhang, the balcony and the deck (as reconstructed in 2019), and for Mr Crowe’s cross-claim to be dismissed.

Costs

6. The parties were unable to agree on costs. Three main issues were debated.

7. The first was the extent of the costs to be awarded in the Church Trust’s favour, given that it did not completely succeed on its claims. The second was an application on behalf of Mr Crowe for a costs order in his favour covering the period after November last year, on account of an informal offer of compromise which was rejected by the Church Trust. The third was an application on behalf of the Church Trust that costs awarded to it should be awarded on an indemnity basis, based on informal offers of compromise made by the Church Trust.

8. Following the argument, I concluded that:

1. the Church Trust was prima facie entitled to an order in its favour for the costs of the proceedings, apart from paying the costs solely referable to its trespass claims with respect to the concrete slab and the upper stair;

2. Mr Crowe’s application for a special costs order based on his offer of compromise of November last year failed;

3. so too did the Church Trust’s application for an indemnity costs order based on its own offers of compromise.

9. After I announced these conclusions, the parties conferred and agreed a form of order to give effect to them. Set out below are my reasons, based on the argument and further consideration, for the conclusions.

10. I was told by the parties that, prior to the hearing, a question was raised by Mr Crowe’s solicitors about senior counsel for the Church Trust potentially being conflicted as a result of having previously given advice to Mr Crowe on matters which “intersected with issues” in the present proceedings. This question was dealt with between the parties and did not delay the trial. I was told that the parties had agreed that any costs the Church Trust might have incurred as a result of the potential conflict question would not be recoverable from Mr Crowe. In the end, no order was sought about this; I simply note the parties’ agreement and pass on.

Extent of costs award in favour of the Church Trust

11. In Akierman Holdings Pty Limited v Akerman (No 3); In the matter of Akierman Holdings Pty Limited (No 2) [2021] NSWSC 869, and in later cases, I have adopted a general approach to the incidence of costs in cases where there is a degree of success on both sides. That general approach has been:

1. the rule that costs generally follow the event (Uniform Civil Procedure Rules, r 42.1) should be applied distributively between claims for relief which are distinct (for example, claims for damages on account of separate losses);

2. but failure on an issue arising in a claim on which a party has succeeded should not result in an adverse costs order with respect to that issue unless the issue is “clearly dominant or separable” (Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; see Akierman at [67], [85]);

3. where a plaintiff has succeeded on one claim but failed on another, if the claim on which the plaintiff succeeded was sufficiently substantial to justify the bringing of proceedings, the general costs of the proceedings should follow that claim, so that the successful plaintiff is deprived of his costs, and is required to pay the defendant’s costs, solely referable to the unsuccessful claim, and the defendant is otherwise required to pay the costs of the proceedings (for a recent example, see Martinus Rail Pty Ltd v Qube RE Services (No 2) Pty Ltd (No 3) [2024] NSWSC 1483).

12. I advised the parties that, subject to any submissions that they might wish to make, I would take this approach as my starting point in the present case. Neither party submitted that I should follow a different approach.

13. Counsel for the Church Trust submitted that, although the Church Trust did not obtain injunctions for the removal of the concrete slab or the upper stairs, this was of no consequence in the scheme of things. Counsel submitted that in substance the Church Trust had been wholly successful and should receive an order in its favour for the whole of the proceedings.

14. Counsel noted that Mr Crowe had made a claim for an order under EPA s 3 with respect to the concrete slab, and under CA s 88K for the upper stair, both of which had failed. The Church Trust was therefore entitled to remove the structures if it wished. Counsel also noted that Mr Crowe’s (limited) success was based on the limitation defence which was raised at a late stage of the proceedings.

15. Counsel for Mr Crowe (who did not appear at the trial) submitted that the trespass claims with respect to both the concrete slab and the upper stair where sufficiently substantial to qualify as “events” for the purposes of UCPR r 42.1. Counsel submitted that both the concrete slab and (especially) the upper stair had played a significant evidentiary role in the case. Counsel referred to evidence given by two of Mr Crowe’s lay witnesses, and survey evidence, about the upper stair. Indeed, counsel submitted that the expert evidence from Mr Lonergan (see J1 [37]-[38]) was entirely concerned with it.

16. Counsel submitted that the Court could deal with Mr Crowe’s success on these claims in one of two ways. One would be to make an order in favour of Mr Crowe for his costs solely referable to the claims, and otherwise order him to pay the Church Trust’s costs of the proceedings. The other would be to make an order in favour of the Church Trust for the costs of the whole proceedings but discount it by a percentage. Counsel’s preference was for the latter approach. She submitted that it would simplify the quantification exercise. She did not, however, suggest a particular figure for the percentage reduction to be applied.

17. In my opinion, the Church Trust’s claims with respect to the concrete slab and the upper stair are properly regarded as separate claims, and therefore as separate “events”. The Trust was seeking mandatory injunctions for their removal by Mr Crowe, or damages. Had those claims succeeded, there would have been an appreciable additional expense to Mr Crowe in having to remove them, above and beyond the expense of having to remove the roof overhang, the balcony and the deck.

18. It is true that Mr Crowe unsuccessfully cross-claimed for easements over the concrete slab and the upper stair. But that should not obscure the fact that the Trust, as plaintiff, made its own trespass claims with respect to those structures, and failed, although it may affect the quantum of costs attributable to that failure.

19. Nor do I think it matters that Mr Crowe succeeded, so far as the concrete slab was concerned, on limitation grounds, or that the defence was raised late. It was always incumbent upon the Church Trust to justify its claim. It was not suggested that the delay in pleading limitation resulted in any increase in the Trusts’ costs. The important point is that Mr Crowe did succeed in defeating the claims in question, and, in doing so, averted an outcome which would have been appreciably worse from his point of view.

20. In principle, therefore, I think that Mr Crowe should have an order in his favour for the costs solely referable to the Church Trust’s two unsuccessful claims. But I emphasise that any costs under this order must be costs solely referable to the Church Trust’s claims for relief. Costs of evidence forming part of the general background, or of evidence relevant for the purposes of the unsuccessful easement claims, would not be costs “solely referable” to the Church Trust’s trespass claims.

21. Subject to Mr Crowe’s application for a costs order in his favour from November last year onwards, I will therefore order that the Church Trust pay Mr Crowe's costs solely referable to the claims by the Church Trust concerning the presence on the land of the concrete slab and the upper stair, and that Mr Crowe otherwise pay the Church Trust’s costs of the proceedings, including the cross-claim.

22. Effectively this will involve determining the extent to which both parties’ costs were increased by the inclusion of those claims. If the parties cannot agree on that, then it can be dealt with by way of assessment. For the reasons given in Akierman at [121]-[123], I do not favour the making of the making of some sort of percentage deduction order.

23. I should add that I am not sure that there was as much evidence solely concerned with the Trust’s unsuccessful trespass claims as counsel for Mr Crowe suggested. In particular, my perception was that what Mr Lonergan said about the upper stair was relevant to Mr Crowe’s s 88K claim as well, and that Mr Lonergan’s report also canvassed the history of the site in a way which was useful in understanding the general factual background. In the end, however, this will be a matter for a costs assessor if the parties cannot agree on it.

Informal offer by Mr Crowe

24. The informal offer on which counsel for Mr Crowe relied for a special costs order was contained in a letter dated 16 November last year. The letter followed an unsuccessful mediation. It was headed “without prejudice save as to costs” and relevantly stated:

3. We confirm that for fire safety and storm water run-off reasons it is now apparent to Mr Crowe that he is required to consult with external consultants in respect to a requirement for a s 88K easement over part of the Side Yard to enable fire safety egress and storm water drainage, given that on a commonsense and reasonable approach:

(a) the 'old timber' Stairs appear to him to be the only practical means of accessing the open space at the southern end of 33 Edward Street;

(b) the Stairs provide an essential method of escape from the rear bedrooms in the event of a fire, which is more pertinent given that there are three young children that reside at the premises; and

(c) the Side Yard provides the only practical pathway for stormwater drainage (and is the current pathway).

4. Addressing the apparent above necessity within the confines of the current proceedings would not be the most practical approach or one that satisfies the overarching dictates of s.56 of the Civil Procedure Act 2005. The intention is that the parties have the time necessary to privately resolve these fire safety and storm water run-off aspects that affect both parties and without the need for costly litigation.

5. As we understand it, UCAPT [the Church Trust] is not prepared to resolve these proceedings on any basis other than that encroachments are removed from 35 Edward Street and Mr Crowe's applications under s 88K of the Conveyancing Act 1919 and s 3 of the Encroachment of Buildings Act 1922 are dismissed.

6. Bearing the above in mind, Mr Crowe offers to settle the current proceedings on the basis that:

(a) he will agree to remove the [Encroaching Structures] at his own cost within a period of 12 months from the date of this letter, subject of course to any required council consents and approvals and force majeure;

…

(d) the current proceedings are dismissed with no order as to costs, with the purpose being that each party bear their own costs of the proceedings; and

(e) UCAPT agrees that if Mr Crowe commences future proceedings seeking an easement over 35 Edward Street for the purpose of facilitating fire safety egress and/or storm water run-off, UCAPT will not contend that such proceedings are an abuse of process or that Mr Crowe is estopped from doing so,

(offer).

7. The offer remains open for a period of 28 days and expires at 5pm on 14 December 2023.

25. The letter was sent by email on the morning of 16 November. It was rejected by email sent within a few hours on the same day, in which the Church Trust’s solicitors stated that the Trust had “no interest in engaging with your offer”.

26. Counsel for Mr Crowe submitted that the offer had been a highly reasonable one. On the Church Trust’s claim, it gave the Trust everything which it asked for, and more than it ultimately received, in that the offer included removal of the concrete slab and the upper stair at Mr Crowe’s own expense. The offer also included the dismissal of Mr Crowe’s cross-claim.

27. Counsel submitted that the dismissive way in which the offer had been refused showed that the Church Trust was not interested in resolving the proceedings except on the basis of a total capitulation by Mr Crowe. Counsel submitted that Mr Crowe has “a real and justified sense of grievance” that after rejection of his offer the Church Trust was now seeking to recover all of its costs of the proceedings and making a claim for indemnity costs on top of that.

28. In response, counsel for the Church Trust pointed out that acceptance of the offer would have left open the potential for a later s 88K application, albeit it on a narrower basis than that which had been propounded by Mr Crowe in his cross-claim. Counsel submitted that it was not proper to require the Trust, at the peril of exposure to an indemnity costs order, to give up the Anshun argument which would otherwise have resulted from the dismissal of the cross-claim. The attraction of compromise was its finality, and the Court should not encourage offers which did not provide for it and left the parties exposed to the costs and delay associated with further litigation down the track. Counsel also pointed out that the offer did not contain any provision for the Church Trust’s costs of the proceedings to date, which no doubt would have been substantial.

29. I have concluded that this offer should not displace the prima facie incidence of costs which I have determined above. That is because the offer required the Church Trust to bear its own costs of the proceedings, when, on the conclusions I have ultimately reached, the Trust was entitled to a costs order in its favour for most, if not all, of its costs of the proceedings to that point. For that reason alone, it cannot have been unreasonable for the Trust to refuse the offer. It is unnecessary to consider the reservation in the offer of the possibility of Mr Crowe bringing a further compulsory easement claim.

30. Even if I had reached a contrary conclusion, it would still have been necessary to consider the fact that, at the time the offer was made, Mr Crowe had not propounded his estoppel claim. My impression was that a significant part, if not the majority, of the hearing time was taken up with evidence (particularly the cross-examination of Mr Crowe) and submissions on that claim, which was entirely unsuccessful.

31. I find it difficult to see how an order requiring the Church Trust to pay the costs of this claim, let alone to pay them on an indemnity basis, could be justified when the claim had not been propounded at the time of the offer. Unreasonable refusal of an offer of compromise should not be seen as a blank cheque for the incurring of costs by the offeror thereafter. Any sense of grievance which Mr Crowe may feel about the level of costs he has incurred, and will have to pay, should be tempered by a realisation that, to a large degree, those costs have been self-inflicted.

32. For these reasons, had I decided that the refusal of the offer was unreasonable, it would have been necessary to limit any costs consequence to the claims in suit at the date of the offer, or, perhaps, by depriving the Trust of its costs but not awarding costs in favour of Mr Crowe. Nor would it necessarily have followed that any order in favour of Mr Crowe should have been on an indemnity basis. In view of the conclusion I have reached, it is unnecessary to go into these questions any further.

Informal offers by Church Trust

33. The first informal offer upon which counsel for the Church Trust relied for their indemnity costs application was contained in a letter from the Church Trust’s solicitors dated 22 September 2022, shortly before the proceedings were commenced. The letter followed earlier correspondence between solicitors for the Church Trust and Mr Crowe described at J1 [147]-[149] and [156]-[163].

34. The letter began by alleging that certain “Encroaching Structures” had been unlawfully erected on the land by Mr Crowe. These “Encroaching Structures” were the deck; the concrete slab; the upper stair; the balcony; and the roof overhang. The letter made it clear that the Church Trust did not consent to Mr Crowe’s continued occupation and use of its land (and, indeed, had previously demanded removal of the Structures) and stated that, as a result, “Mr Crowe’s conduct constitutes a deliberate and continuing trespass” on the land which was “actionable per se”.

35. The letter continued:

8. Uniting [the Church Trust] requires and demands that Mr Crowe, by no later than 12 October 2022, sign and return to us the enclosed form of Acknowledgement and form of Undertaking, in which he:

8.1 expressly acknowledges that the Encroaching Structures constitute a continuing trespass (Acknowledgement); and

8.2 undertakes that he will carry out all necessary works to (a) remove the Encroaching Structures from the Uniting Land [number 35] and (b) restore the Uniting Land to the condition that it was in immediately prior to the construction of the Encroaching Structures (Undertaking). These works are to be commenced within 6 months of the date of this letter and are to be completed within 12 months of the date of this letter.

9. In the event that Mr Crowe:

9.1 provides the Signed Acknowledgement and Undertaking within the requisite time frame (that is, by 12 October 2022); and

9.2 carries out all necessary works to (a) remove the Encroaching Structures from the Uniting Land and (b) restore the Uniting Land to the condition that it was in immediately prior to the construction of the Encroaching Structures within the requisite timeframes,

Uniting irrevocably agrees that it will not take any further action against Mr Crowe in respect of the Encroachments and/or his trespass onto the Uniting Land, including any action for damages or any other relief.

10. However, if Mr Crowe:

10.1 fails to provide the signed Acknowledgement and Undertaking within the requisite timeframe (that is, by 12 October 2022); and/or

10.2 provides the signed Acknowledgement and Undertaking but fails to carry out all necessary works to (a) remove the Encroaching Structures from the Uniting Land and (b) restore the Uniting Land to the condition that it was in immediately prior to the construction of the Encroaching Structures within the requisite timeframes,

Uniting will commence proceedings against Mr Crowe without further notice, in which it may seek, inter alia, orders requiring Mr Crowe to remove the Encroaching Structures and reinstate the Uniting Land, as well as damages for trespass.

11. Further, in the event that our client is compelled to commence proceedings against Mr Crowe, our client will rely on the terms of this letter to seek its costs of the proceedings against Mr Crowe on an indemnity basis, in accordance with the principles in Calderbank v Calderbank [1976] Fam 93 and related cases.

36. There was no substantive response to this letter before the specified period lapsed.

37. The second informal offer was contained in a letter from the Church Trust’s solicitors dated 17 May this year, shortly before the trial was due to begin. The offer, described as a counter-offer, was set out in [5.3] of the letter:

5.3 If the Defendant:

5.3.1 acknowledges in writing that the [Encroaching Structures] constitute a continuing trespass; and

5.3.2 undertakes to the Court that he will carry out all necessary works to (a) remove the Structures from 35 Edward Street and (b) restore 35 Edward Street to the condition it was in immediately before the construction of the Structures in late 2009;

Uniting will agree to:

5.3.3 give the Defendant 18 months, from the date of an agreement, to carry out all works to remove the Structures and restore 35 Edward Street in accordance with the undertaking; and

5.3.4 in lieu of enforcing any rights in respect of costs against your client, accept an amount of $130,000 in settlement of its costs ….

38. After referring to the substantial costs which the Church Trust had already incurred (said to total $260,000) and the likelihood of future costs, the letter stated that that failure to accept might lead to an application for indemnity costs.

39. The offer was formally rejected in a letter from Mr Crowe’s then solicitors on 31 May. In rejecting the offer, Mr Crowe’s solicitors reiterated their arguments that he would succeed in his claim for the grant of easements over the Encroaching Structures.

40. I do not think that there is any real dispute about these principles to be applied in determining whether to award indemnity costs on the basis of an offer of compromise which is not accepted. The written submissions by counsel for the Church Trust stated the principles in a somewhat different way, but not, to my understanding, in a way which differed in substance, from the way I will express them.

41. As counsel for the Church Trust acknowledged, it is a necessary condition that the offeror should obtain a result in the proceedings more favourable than the terms of the offer. But unlike a formal offer of compromise under the Rules, the satisfaction of this condition does not create any presumption in favour of an award of indemnity costs. The onus remains on the offeror to demonstrate some good reason for making such an award.

42. Generally speaking, that requires the offeror to demonstrate that the offeree’s failure to accept the offer was unreasonable, having regard to the circumstances of the case at the time the offer was made. Failing to accept an offer which does not contain any substantial element of compromise could really, if ever, be demonstrably unreasonable.

43. In their submissions in support of the application for indemnity costs, counsel for the Church Trust noted my findings that Mr Crowe was well aware at the time he constructed the Structures that he did not own the land on which they stood (J1 [254]-[256]) and that he decided to go ahead and carry them out for reasons which remain undisclosed (J1 [268], [279]). Counsel also pointed out that, throughout the proceedings, Mr Crowe made no concession that the Church Trust was entitled to any relief at all. To the extent that Mr Crowe succeeded, he succeeded on a limitation ground which was only raised at trial.

44. As already noted, counsel acknowledged that it was necessary to demonstrate, before either offer could have any affect, that acceptance of the offer would have left Mr Crowe in a more favourable position than what he ultimately achieved. Counsel acknowledged that both offers required Mr Crowe to remove the concrete slab and the upper stair, which he will not ultimately be obliged to do under the orders obtained by the Church Trust. But counsel submitted that, even so, Mr Crowe’s failure to accept the offer, had, on balance, clearly left him worse off than if he had accepted it. In particular, by accepting the offer he would have avoided the costs of the proceedings, including the costs liability to the Church Trust. Counsel argued that these costs would have greatly exceeded the expense of removing the slab and the stair.

45. For her part, counsel for Mr Crowe submitted that it would be incorrect to see him as having opposed any and all efforts to settle the proceedings. Counsel pointed out that Mr Crowe had made a number of offers to settle, including, but not limited to, the offer of November last year which is discussed above (although the other offers were not said to have been more favourable from Mr Crowe’s point of view than the ultimate outcome).

46. Nor did counsel for Mr Crowe accept that the Church Trust had obtained a result more favourable than the terms of its offers. Focussing on the grant of relief, this was not so as the Church Trust had failed to obtain orders for the removal of the slab and the upper stair. Counsel also submitted that it had not been unreasonable for Mr Crowe to defend the proceedings, given the factual and legal complexities involved, and that the offers did not involve any element of compromise, but rather demanded complete capitulation.

47. An award of indemnity costs on the grounds of unreasonable failure to accept an offer of compromise must be distinguished from an award of indemnity costs on the ground of pursuit of a hopeless claim or defence. In the latter class of case, an award of indemnity costs may be justified if the defendant, properly advised, should have known that the defence was hopeless, and the Court can thereby infer that the defence was pursued for ulterior purposes (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397). In such a case, it is not necessary for the successful plaintiff to have made an offer which involved a degree of compromise and was bettered at trial, or indeed to have made any offer of compromise at all, although the making and refusal of such an offer may assist the Court to draw the inference that the defence was pursued for some ulterior or improper purpose.

48. In the present case it is true that I found Mr Crowe’s evidence unreliable and I disbelieved some parts of it. But it would be going too far to say that Mr Crowe’s case was an entirely false one, let alone that, properly advised, he must have known that it was bound to fail. The case was indeed a complicated one, factually and legally. The arguments presented by his counsel properly acknowledged the deficiencies in Mr Crowe’s evidence and were presented on the basis that those arguments did not require the Court to accept Mr Crowe’s testimony on disputed matters (see J1 [245]).

49. Most significantly, Mr Crowe’s defence to the trespass claim was successful in part. It does not seem to me to matter that the successful defence was raised only at trial. Just as witnesses may unexpectedly collapse under cross-examination, new legal points may unexpectedly emerge or come into focus in the course of proceedings. That is part of the ordinary process of litigation and it something that both parties are expected to consider in formulating and responding to offers of compromise.

50. There are several difficulties with the application for indemnity costs based on the Church Trust’s September 2022 letter of demand. The first parallels the difficulty I have already mentioned concerning Mr Crowe’s application for indemnity costs based on his offer of November last year.

51. The Church Trust’s letter of demand was sent before the proceedings had even begun. At that point, Mr Crowe had not made any of the claims which later formed the subject of his cross-claim in the proceedings. The demands therefore concerned only the Trust’s trespass claims.

52. The cross-claim was of course unsuccessful. In the usual way, Mr Crowe should pay the costs of it. But it is hard to see what justice there would be in requiring him to pay such costs on an indemnity basis as a consequence of a failure, even if it was an unreasonable failure, to compromise a different claim.

53. The reasonableness of Mr Crowe’s refusal of the Church Trust’s demands must also be considered in the context of the case as it then was, namely a case confined to the Church Trust’s trespass claims. Seen in that way, Mr Crowe’s eventual success on the claims for removal of the concrete slab and the stair is more significant than counsel for the Trust allowed for in their submissions. Mr Crowe was successful on two of the five claims.

54. Nor do I accept that the Court should, in making an assessment as to whether the Church Trust achieved a result more favourable than what it demanded, take account of costs that would have been saved had the demands been complied with. The proper comparison is between entitlements to relief which the Trust then had (to the extent vindicated by the court’s judgment) and the redress which it demanded. Mr Crowe’s costs, are, it seems to me, irrelevant. And, so far as the Trust’s costs are concerned, at the time the offer was made no recoverable costs had yet been incurred. For the same reason, the demands did not involve any element of compromise.

55. The Trust’s September 2022 letter reads, apart from the reference to costs being sought on an indemnity basis, like a “letter before action”. Traditionally, such a letter would be written on behalf of a prospective plaintiff to a prospective defendant before litigation, and would set out a formal demand for specified redress from the defendant, failing which proceedings might be brought.

56. The “letter before action” procedure was, and remains, a useful way of indicating that any preliminary negotiations between the parties have ended and if the defendant persists in denying redress to the plaintiff, costs incurred by the plaintiff beyond that point will be recoverable from the defendant through litigation. But those costs will be recoverable in accordance with the Rules, and that means, on an ordinary basis. The entitlement flowing from a letter before action cannot be upgraded to costs on an indemnity basis by simply marking the letter before action “without prejudice except as to costs” and including a Calderbank warning. Of course, a demand which is pitched at a significant discount to the plaintiff’s claimed entitlements may give rise to different considerations.

57. The position so far as the May offer was concerned is not entirely the same. That offer did involve a compromise, or an alleged compromise, of the Church Trust’s existing costs entitlement, although no evidence was presented before me (or, more to the point, in the letter itself) to demonstrate what the Church Trust’s actual recoverable costs would have been at that time. And if the figure quoted in the letter were correct, then counsel for the Church Trust may be right in asserting that the recoverable costs forgone would have been worth more than the cost of removing the concrete slab and the upper stair, although, again, there was no evidence before me that this was so.

58. In my view, the Court should be slow in an application such as this to be drawn into such calculations, or to expect the recipient of such an offer to have to undertake them. If an offer had been made, as it could have been, under the Rules, and if it could be clearly demonstrated that the offer had been bettered, then that would be one thing. As it is, the Church Trust must go further and demonstrate unreasonableness on Mr Crowe’s part. I am not satisfied that it has done so. The costs order that I make in favour of the Church Trust will therefore be an order for its costs on the ordinary basis.

Orders

59. The orders the Court made on 22 November were:

1. In respect of the relief sought by the plaintiff in its Statement of Claim, within 90 days of the date of these orders, the defendant is to have carried out all work and done all things necessary to demolish and remove from the plaintiff’s land the following structures (as defined in the Judgment):

1. the deck (being the structure on the plaintiff’s land depicted and marked “B” in the survey dated 14 February 2024 prepared by Bradley Glasson of Frankham Engineering Surveys and annexed to these orders (Survey));

2. the roof overhang (being the structure in the airspace above the plaintiff’s land depicted and marked “E” in the Survey); and c. the balcony (being the structure on the plaintiff’s land and in the airspace above the plaintiff’s land depicted and marked “C” in the Survey).

2. The Second Further Amended Statement of Cross-Claim filed on 20 June 2024 is dismissed.

3. The plaintiff is to pay the defendant’s costs solely referable to the claims by the plaintiff concerning the presence on its land of the concrete slab and the upper stair (as defined in the Judgment), on the ordinary basis, as agreed or assessed.

4. The defendant is to otherwise pay the plaintiff’s costs of the proceedings including its costs of the Cross-Claim, on the ordinary basis, as agreed or assessed.

5. The parties have liberty to apply on 3 days’ notice in respect of the defendant’s compliance with Order 1 above.

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Decision last updated: 04 December 2024