Vaughan v Byron Shire Council
[2012] NSWSC 75
•17 February 2012
Supreme Court
New South Wales
Medium Neutral Citation: Vaughan v Byron Shire Council [2012] NSWSC 75 Hearing dates: 28/09/2011 Decision date: 17 February 2012 Jurisdiction: Common Law Before: Fullerton J Decision: 1. The costs order made on 9 August 2011 be set aside and the plaintiffs ordered to pay the defendant's costs limited to the hearing of the motion before Harrison AsJ. The appeal is otherwise dismissed.
2. The amended defence filed on 19 August 2011 be further amended in accordance with [4] herein.
3. The plaintiffs are to pay the defendant's costs of the appeal.
Catchwords: Appeal from decision granting leave to file amended defence - withdrawal of admissions - appeal from order to pay costs - error in exercise of judicial discretion - denial of procedural fairness Legislation Cited: Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005Cases Cited: Byron Shire Council v Vaughan, Vaughan v Byron Shire Council [2009] NSWLEC 88
Drabsch v Switzerland General Insurance Co Ltd (NSWSC, Santow J, 16 October 1996)
House v R [1936] HCA 40; 55 CLR 499
Rigato Farms Pty Ltd v Ridolfi [2000] QCA 292
SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816
Vaughan v Byron Shire Council [2011] NSWSC 824Category: Interlocutory applications Parties: John Vaughan (First plaintiff)
Anne Vaughan (Second plaintiff)
Byron Shire Council (Defendant)Representation: M Henry (Plaintiffs)
S Glascott (Defendant)
Mallesons Stephen Jaques (Plaintiffs)
DLA Piper Australia (Defendant)
File Number(s): 2010/363913
Judgment
HER HONOUR : By notice of motion dated 5 September 2011 the plaintiffs appeal from the decision of Harrison AsJ granting leave to the defendant to file an amended defence (Vaughan v Byron Shire Council [2011] NSWSC 824). They also appeal from her Honour's order that they pay the defendant's costs of the motion it being submitted that her Honour did not afford them an opportunity to be heard and for that reason the costs order should be set aside and on reconsideration the issue of costs determined in their favour.
The appeal is brought pursuant to r 49.4 of the Uniform Civil Procedure Rules (UCPR). In the circumstances of this case it is necessary for the plaintiffs to demonstrate error in the exercise of her Honour's discretion. Counsel's written submissions, which were directed to the identification of error of this kind, were supplemented with the additional argument that her Honour's order that an amended defence be filed and served in the form proposed by the defendant was productive of error of a different kind. He submitted that paragraph 11, arguably the most significant of the three contentious paragraphs in the amended defence, included a clause which states a proposition contrary to law and the appeal should be allowed for that reason. That paragraph reads as follows:
11. In answer to paragraph 46, the Defendant admits the consent operated in rem in respect of the Vaughan property by reason of the declaration made by the Land and Environment Court on 1 February 2010 but otherwise does not admit the paragraph.
(emphasis added)
The consent to which the paragraph refers is a development consent granted by the defendant in 2001 in respect of land owned by the plaintiffs authorising the construction of coastal protection works. The plaintiffs submitted that the consent operated in rem not because (or by reason of) the declaration in the Land and Environment Court of February 2010 but by reason of the terms of the consent as at the date of its issue and that paragraph 11 is defective for that reason.
Even if this is an error properly comprehended by an appeal under r 49.4, I made clear my view during the hearing that a simple edit of the paragraph would remove the offending clause and, assuming the exercise of her Honour's discretion survived challenge on other grounds, the amended defence would be unassailable since it otherwise appeared to me to identify and clarify the matters in dispute. The defendant's counsel consented to a further amendment of paragraph 11 in the way I proposed. The plaintiffs' counsel opposed the amendment. He submitted that were I satisfied that paragraph 11 was defective the appeal should be upheld and the defendant required to make fresh application to amend by the filing of a notice of motion in the ordinary way. While the plaintiffs are entitled to pursue their claim against the defendant with determination, they are not entitled to take a tendentious or combative approach to the litigation. Since I have resolved the appeal adverse to the plaintiffs for other reasons, it is not necessary that I say more about counsel's instructed position on the issue of the amendment of paragraph 11. I propose to permit paragraph 11 to be edited. Both parties would, however, be well advised to reflect upon their obligations under s 56(3) of the Civil Procedure Act 2005 in the further conduct of the litigation.
The plaintiffs bring proceedings in negligence claiming loss and damage consequent upon what they contend to be either the defendant's failure to grant a development consent for the construction and maintenance of certain coastal protection works, namely a geobag revetment (a wall of sandbags) on or near their property at Belongil Beach, Byron Bay, or because it unreasonably took steps to enjoin them from undertaking that work, thereby exposing the property to storm damage.
The statement of claim is a comprehensive pleading consisting of 168 paragraphs. It details a lengthy history of the attention the defendant Council has given (or, as the plaintiffs would contend, failed to give) to the impact of coastal erosion by tides and storms, including the advice it has received from government agencies from time to time and the expert reports it has commissioned with a view to effecting a long term Coastal Management Plan for Belongil Beach and surrounding areas. A very significant number of admissions are made and maintained in the amended defence which extends to 68 paragraphs. Only three paragraphs were the subject of contention in the proceedings before her Honour. Other amendments were made by consent.
The amendments which were opposed are conveniently set out in her Honour's judgment at [15] - [23] each of which has the effect of withdrawing an admission made in the defendant's filed defence:
( i) Paragraph 46 of the statement of claim and paragraph 11 of the amended defence
[15] Paragraph 46 of the statement of claim pleads:
"46. The Consent operated in rem in relation to the Vaughan property and had the effect that the plaintiffs were entitled to do the things permitted by the Consent on their own land."
[16] Paragraph 11 of the flied defence pleads the defendant:
"11.1 admits the matter pleads but will refer to the pleaded and associated documents for their full meaning and effect;
11.2 does not admit that the Consent operated to obviate the requirement for other licences, permits, permissions or approvals."
[17] Paragraph 11 of the proposed amended defence reads:
"11. In answer to paragraph 46, the Defendant admits the consent operated in rem in respect of the Vaughan property (by reason of the declaration made by the Land and Environment Court on 1 February 2010) but otherwise does not admit the paragraph."
(ii) Paragraph 84 of the statement of claim and paragraph 33 of the amended defence
[18] Paragraph 84 of the statement of claim pleads:
"84. At all material times, including on and from 20 May 2009, the Council knew or ought or have know that the plaintiffs were entitled to do works authorised by the Consent on their own property.
Particulars
(i) Council knew or ought to have know that the Consent operated in rem ."
[19] Paragraph 33 of the flied defence pleaded:
"The Defendant admits paragraph 84 of the Statement of Claim."
[20] Now paragraph 33 of the proposed amended defence the Council denies paragraph 84 of the statement of claim.
(iii) Paragraph 144 of the statement of claim and paragraph 57 of the amended defence
[21] Paragraph 144 of the statement of claim reads:
"144 At all material times, by reason of the Consent and the development undertaken by the Council in purported compliance with the Consent, the Council was obliged to carry out development and works at the Manfred Street Site strictly in accordance with the GHD Report and the plaintiffs were able but not obliged to carry out such things on the Vaughan property."
[22] Paragraph 57.1 of the flied defence pleaded the defendant:
"57.1 denies any obligation to undertake works 'strictly' in accordance with the GHD Report;
57.2 repeats the matters pleaded in answer to paragraph 46 above;
57.3 otherwise admits paragraph 144."
[23] Paragraph 57 of the amended defence reads:
"57 In answer to paragraph 144 the Defendant:
57.1 ...
57.2 does not admit that compliance with Condition 1 of the Consent required the Council Wall to be constructed in exact and complete conformity with figure 4.20 being Annexure A t the GHD Report or with Section 3.5 of the GHD report entitled, Design and Construction Elements;
57.3 repeats the matters pleaded in answer to paragraph 46 above;
57.4 otherwise denies paragraph 144."
One of the discrete questions raised on the appeal is whether her Honour erred in applying the principled approach articulated in SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 where application is made by a party for leave to withdraw an admission. The plaintiffs contend that although her Honour cited the relevant authority she either failed to apply the appropriate test by failing to take into account material considerations or she acted upon a wrong principle.
Each of the three contentious paragraphs in the amended defence either directly or indirectly concern the effect and scope of the development consent granted by the Council on 8 November 2001. The plaintiffs submitted that her Honour misunderstood or misapplied the principle that a development consent operates in rem by attaching to the land to which it relates for the benefit of the owners and occupiers of the land. They submitted that by allowing the amendments her Honour must be taken to have regarded the development consent as personal, that is not attaching to the land but entitling only the recipient of the consent to act upon it. They maintained this submission despite her Honour's acknowledgment of the binding effect of the authorities to the contrary cited at [12] and [13] of her judgment.
The plaintiffs submitted that her Honour's erroneous appreciation of the legal effect of a development consent infected the exercise of her discretion and that a fresh determination of the application to amend would necessarily result in leave being refused. In order to deal with that submission it is necessary to refer to the history of dealings between the Council and the plaintiffs.
The development consent was granted by the defendant in November 2001 in its capacity as the consent authority, to itself, as proponent of the development to which the consent related. It was common ground that an interim sandbag wall constructed by the Council pursuant to the consent failed in front of the plaintiffs' property due to unprecedented weather events in May 2009 and that their property (and other properties) were unprotected from damaging wave action as a result. Thereafter the plaintiffs sought to undertake works of various kinds on their land to prevent further erosion but (so it was argued by the Council) did so in such a way that other properties on Belongil Beach were likely to be adversely effected, including property owned by the Council.
Proceedings were brought in the Land and Environment Court in 2009 concerning the development consent, including whether it applied to the plaintiffs' property and, if so, whether it operated in rem entitling the plaintiffs to legally carry out the works they proposed ( Byron Shire Council v Vaughan, Vaughan v Byron Shire Council [2009] NSWLEC 88). In September 2009 the Council successfully restrained the plaintiffs from undertaking any erosion protection works that might have been provided for in the development consent until further order having persuaded the Court that were they to undertake any remedial work on their property in isolation it would be potentially productive of adverse impacts on neighbouring properties.
In February 2010 those proceedings were settled with consent orders being made without admission. The proceedings in this Court were commenced in November 2010. The plaintiffs' case in this Court relies upon the orders made in the Land and Environment Court, it being contended by them that the erosion protection work they wished to undertake was comprehended by the development consent and that the defendant acted unreasonably in preventing them from undertaking that work.
Harrison AsJ extracted the orders made in the Land and Environment Court in full in her judgment at [8]. For present purposes it is sufficient to cite them in part only:
"By consent and without any admission by the parties, the COURT:
In proceedings 40342 of 2009
1. Declares that the consent granted on 8 November 2001 by telephone by the respondent (The Council) in response to development application no 10.2001.403.1 (the Development Consent);
(a) constitutes a valid and subsisting development consent in accordance with its terms;
(b) constitutes such a development consent in respect of the land which includes Lots 1 and s DP 21030 and Manfred Street and The Esplanade (the Council Land) and Lots 11, 12, 13 and 14 Section 3 DP 1623 (the Vaughan Land) (all the properties referred to in this sub-paragraph (b) together being the Manfred Street Site); and
(c) provides for interim beach stabilisation works,
...
4. Declares that the Vaughans are entitled to but not obliged to maintain and repair the existing geobag revetment and sand nourishment behind it, including in particular to the same height and shape as prior to the May 2009 storm event, insofar as it is on the Vaughan Land, either in accordance with the Development Consent or in accordance with the present configuration of the existing geobag revetment on the Council Land, provided that ...
Her Honour noted at [9] that the orders give rise to issue estoppels and res judicata . She also cited the authorities relating to the legal effect of a development consent in uncontroversial terms including, in particular, that a development consent operates in rem . In submissions before me the correctness of that statement of general principle was not doubted. What the defendant wishes to agitate in its defence is the operation of that principle when the terms of the development consent in this case permit development over different parcels of land owned by different persons. The defendant's counsel also submitted (correctly in my view) that the statement of general principle that a development consent operates in rem must, in an appropriate case, leave open the question whether nominated works are within the terms of a particular development consent such that those works may be lawfully carried out.
The defendant's counsel submitted that the terms of the consent were arguably much narrower than what was pleaded by the plaintiffs in paragraphs 48, 84 and 144 of the statement of claim . He submitted that it does not entitle the plaintiffs to do works upon their land when that would involve construction of only part of a larger approved development (namely, a revetment wall which extended beyond and straddled other properties not owned by the plaintiffs - including land owned by the Council itself) leaving the adjacent properties exposed to damage from partial construction of the wall. This, it was submitted, has always been the defendant's position, consistent with the position it adopted in the litigation in the Land and Environment Court. Counsel did concede that until the defence was amended that position was expressed in somewhat opaque terms in the proceedings in this Court.
Ultimately at [29] her Honour accepted the defendant's submission that the terms of the development consent, and the final orders in the Land and Environment Court which refer to it, gave rise to a question of construction as to the plaintiffs' entitlement to do the particular erosion prevention works they claim they were prevented from undertaking to their detriment. As the defendant's counsel sought to emphasise, this finding does no damage to the unchallenged proposition that the development consent operates in law to entitle the plaintiffs to perform authorised works on their land. Rather it serves to highlight that there is an issue between the parties as the extent to which the proposed works are or were authorised, a position either not articulated or not clearly articulated in the unamended defence. I am not persuaded that her Honour misunderstood or wrongly applied the law concerning the effect of a development consent in the way contended for by the plaintiffs. This ground of appeal must fail.
One of the grounds upon which the amendments were opposed in the proceedings below was that they would put in issue a matter that was res judicata . Her Honour held that the nature and extent of the estoppels arising from the proceedings in the Land and Environment Court, and whether res judicata operates to prevent the Council from advancing this aspect of its defence in this Court were legal questions and that the plaintiffs were not prejudiced from leave being granted to amend the defence to allow those questions to be tested at trial. The plaintiffs challenged her Honour's characterisation of the issues in this way. They submitted that in giving primary weight to the issue of prejudice she acted upon a wrong principle and that for this reason her discretion miscarried.
The authorities dealing with the circumstances in which leave will be granted under r 12.6 of the UCPR to withdraw an admission were collected by White J in SLE Worldwide at [54] to [58]. At [27] and [28] her Honour set out the principles referred to by White J in full including, at [58] of his Honour's judgment, that a party opposing the withdrawal need not necessarily adduce evidence of particular prejudice if leave is to be granted. That is not to say, however, that the issue of prejudice is irrelevant to the exercise of discretion or that the absence of prejudice is unimportant, simply that it is not predominant. Her Honour was entitled to consider the issue of prejudice (or the lack thereof given that the proceedings are in their infancy in this Court and there was no suggestion that additional costs would be incurred or had been thrown away by reason of the amendment) and to afford it weight in the exercise of discretion. The submission that she afforded it undue weight is not made out.
The statement of principle in SLE Worldwide also includes the following:
(i) a party who has made an admission in a pleading should not be entitled to withdraw that admission without good cause; and
(ii) where a court is satisfied that admissions have been made after consideration and advice, and after a full opportunity for the relevant party to consider its case and whether the admissions should be made, admissions so made with deliberateness and formality will ordinarily not be permitted to be withdrawn.
(iii) a court will not lend its approval to the withdrawal of admissions where it is shown that the admission is contrary to the actual fact;
(iv) it will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts;
(v) leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters;
(vi) it is legitimate, and it may be necessary, to consider, among other things, whether the party making the admission is so deliberately or in error and whether new evidence has come to light; and
(vii) a party opposing the withdrawal of the admissions need not necessarily adduce evidence of particular prejudice if leave to withdraw the admission is granted.
At [29] her Honour said:
As previously stated, the reasons for the changes to the Council's defence in paragraphs 11 and 33 are due to Counsel's advice. These proposed changes to the defence come about because the Council wishes to put in issue whether the Vaughans were entitled to carry out certain works under the consent on their land (other than those works referred to in paragraph 4 of the order of the Land and Environment Court). The Council's position in the original defence (at [11]) was that they admitted that the Vaughans were entitled to do things permitted by consent on their own land but it would refer to the pleaded and associated documents for their full meaning. The Council did not admit that the consent operated to obviate the requirement for the other licences, permits, permissions or approvals. It was never a carte blanche admission.
After noting the basis for the grant of the interim injunction in the Land and Environment Court (referred to in [12] above) her Honour said at [32]:
Each case depends on its facts. On 17 March 2011, the defence was filed. On 10 June 2011 this motion was filed seeking to amend its defence. There has been little delay in seeking these amendments. It is arguable that the Land and Environment Court orders do not determine the Vaughans right to carry out work set out in the DA on their own property (other than that stipulated in order 4). The issue as to what issue estoppels arise and whether the matters raised in the defence are subject to res judicata as a result of the judgment in the Land and Environment Court are essentially legal arguments and do not create prejudice for the Vaughans. It is my view that the issues raised by these amendments to the defence should be permitted to go to trial.
The plaintiffs submitted that her Honour failed to take into account the following material considerations in granting leave to withdraw the admissions:
(i) the Council adduced no evidence of the circumstances in which the admissions were made;
(ii) there was no evidence that the admissions were made inadvertently or in error;
(iii) there was no evidence that new evidence had to come to light which justified the withdrawal of the admissions;
(iv) the only explanation proffered for the withdrawal of the admissions was inadequate since it relied upon the undisclosed advice of counsel;
(v) the defence was filed approximately 4½ months after the filing of the statement of claim; and
(vi) the filed defence is verified and bears a certificate under s 347 of the Legal Profession Act 2004 signed by the defendant's solicitor that states, among other things, that the defence has reasonable prospects of success.
The plaintiffs further submitted that her Honour did not proceed on the premise that a deliberate and formal admission should not ordinarily be permitted to be withdrawn, and that she failed altogether to make an evaluative assessment as to whether the defendant had demonstrated there was "good cause" for the admissions (or any of them) to be withdrawn.
The defendant's counsel drew attention to White J's reference at [55] of SLE Worldwide to what his Honour there described as the "correct statement of the relevant principles " being those stated by Santow J in Drabsch v Switzerland General Insurance Co Ltd (NSWSC, Santow J, 16 October 1996) . In addition to the specific matters set out in [20] above, Santow J said:
...It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters...
Counsel submitted that the circumstances justifying the grant of leave in this case were adequately explained in the evidence tendered in support of the application before her Honour and in submissions. In particular, he submitted that it was permissible to rely upon the advice he rendered as the basis for the withdrawal of an admission without disclosing the substance of the advice. He informed her Honour that following a request for production of documents by the plaintiffs, and after he was asked to review the filed defence against the terms of the declaration in the Land and Environment Court and the development consent, he took the view the principle of estoppel, and acceptance of the proposition that the development consent operates in rem , was no obstacle to the amendments that he advised should be made. For those reasons, and in order to better clarify the defendant's position, he advised that the plaintiffs' consent to the amendments should be sought and, if consent was not forthcoming, leave should be sought to amend the defence. He submitted that this approach was in accordance with his obligations under s 56(4) of the Civil Procedure Act .
The plaintiffs' reliance on paragraph [64] in SLE Worldwide for the proposition that the defendant's failure to adduce evidence of the circumstances in which the admissions were made is demonstrative of error because her Honour failed to refer to it in her judgment is difficult to maintain in light of counsel's disclosure of the advice he rendered in the course of submissions and the evidence of his instructing solicitor in which she deposed to the fact that the amendments were made on counsel's advice.
At paragraph [64] White J referred with approval to the approach taken by McPherson JA in Rigato Farms Pty Ltd v Ridolfi [2000] QCA 292:
[64] McPherson JA emphasised that before permitting an admission to be withdrawn the Court should be satisfied that there was a genuine dispute, and that would ordinarily require an explanation of how the admission came to be made and why it should be withdrawn. His Honour said (at 459-460, [27]):
Before permitting the admission to be withdrawn, the first step to be determined here was whether there was a genuine dispute about the defendant's liability in this action ... it is not enough for that purpose simply to assert that a dispute exists: ... Some proper basis must be laid for that assertion, which would ordinarily include an explanation of how the earlier admission came to be made and why it should now be permitted to be withdrawn. That is not shown by a (sic) saying simply that there has been a change of solicitors, or that it is possible to see that, before the admission was made, the issue of liability was an open question. Here the defendant has not condescended to swear to the circumstances in which the admission came to be made, or to show that it occurred by inadvertence, mistake or in some other way that might now justify its withdrawal.
[65] To show that the amendment is necessary for the "real issues" to be determined, it is not enough to show that SLE's liability to indemnify Gerling is reasonably arguable or, as McPherson JA put it, an open question before the admission was made. An explanation on oath was required as to why the admissions were made, and why it is now sought to withdraw them.
In written submissions before her Honour it was said that the defendant was not prepared to disclose the advice. There was no call for production of counsel's advice in the hearing below (or it seems in the correspondence that passed between the lawyers beforehand) despite what must be taken to have been the defendant's waiver of privilege given their reliance on the advice as one of a number of bases supporting the grant of leave. In addition, there was no cross-examination of the plaintiffs' solicitor on her affidavit where the content of counsel's advice might have been explored. The position the plaintiffs took in argument was that the onus was on the defendant to produce evidence that the admissions were made in error or due to inadvertence and in the absence of the detail of counsel's advice there was a lack of any proper or satisfactory explanation for the admissions sought to be withdrawn. The sufficiency of the evidence before her Honour, and the sufficiency of the explanation that counsel proffered in submission, were questions for her Honour in the broad exercise of discretion afforded her under the Rules and are not susceptible to review under the established principles articulated in House v R [1936] HCA 40; 55 CLR 499. The plaintiffs have failed to persuade me that there was no evidence as to the circumstances in which the admissions were made or that her Honour gave weight to wholly irrelevant considerations. I do not regard matters (v) and (vi) in [23] as material matters that, either alone or in combination, warranted the exercise of discretion in the plaintiffs' favour in the context of the issues that were presented to her Honour for consideration.
The defendant also relied upon what were submitted to be the inherent inconsistencies in the filed defence as justifying amendment, including the withdrawal of admissions. As I understand it these inconsistencies were said to have been indicative of inadvertence on the part of the lawyer who drafted the defence, or at least a failure to carefully attend to the need for a pleading of some factual complexity to be clear and consistent, and not the result of a new or changed state of affairs or of a changed position as regards awareness or knowledge on the part of the Council. By way of example counsel pointed out (to me and to her Honour) that paragraph 32 of the filed defence (which was amended without objection) denies the Council knew or ought to have known that it had no reasonable basis for asserting that the consent did not apply to the plaintiffs' land, while in paragraph 11 (which was the subject of the contested application to amend) it admitted that the consent applied to the plaintiffs' land and that the plaintiffs were entitled to do what was permitted by the consent on their land, and by paragraph 33 of the filed defence they admitted that they knew or should have known the plaintiffs were entitled to do works under the consent on their property.
In addition, unlike the situation that prevailed in SLE Worldwide where White J expressly refrained from taking ss 56 and 57 of the Civil Procedure Act into account in considering whether to grant leave, her Honour was obliged to give effect to the overriding purpose of the Act and the Rules. It is implicit in her analysis and her reasoning that she was concerned to ensure that the pleadings should reflect the real matters in dispute and to allow a means of resolving them in conformity with the dictates of justice and efficiency. It hardly needs to be said that each case where leave is sought to amend a defence by withdrawing of admissions must be decided on its merits in light of the circumstances particular to the action being mounted and defended in accordance with established principle and with the ultimate objective of ensuring a fair trial. I am not satisfied that her Honour's discretion miscarried or that the plaintiff has made out error of the kind contended for.
The only remaining issue concerns the costs order made against the plaintiffs in the proceedings below. It was not submitted that costs of the appeal should be dealt with otherwise than in accordance with the general rule that costs follow the event .
The plaintiffs submitted that they were denied procedural fairness in not being invited by her Honour to address the question of costs before orders were made against them and, as a consequence, they were denied the opportunity to persuade her that the general rule should be varied and that either no costs order should be made or, if made that it should be limited to the costs of the hearing. This, it was submitted, was a submission based upon her Honour's acceptance of the defendant's argument at [29] that the amendments were directed to making patent what had hitherto been unclear so far as the development consent was concerned, namely that the matter in issue was whether the plaintiffs were entitled to carry out certain works on their land under the consent. It was the plaintiffs' contention that the defendant's position was only clearly articulated in the course of argument before her Honour. The extent of the defendant's vacillation on the final form of the proposed amended defence, and the expense occasioned by the need to engage the Court in resolving what remained in dispute, is said by the plaintiffs to have been borne out by the fact that between June 2011 when the notice of motion and proposed amended defence was served and the hearing in August, the defendant served the plaintiffs with two further and materially different proposed amended defences in respect of each of the three contentious paragraphs. The plaintiffs submitted that in these circumstances they should not have been ordered to pay the defendant's costs of the notice of motion when, were the defendant's position clarified earlier, the amendments may have been the subject of agreement.
The defendant submitted that her Honour was entitled to exercise the discretion to award costs in accordance with the general rule and that the plaintiffs' complaint that they were not heard on the question should not be entertained since they did not seek to either reserve submissions on the issue of costs at the conclusion of the hearing on the grounds now relied upon or to seek to be heard when her Honour published her reasons. I accept that the parties were not afforded the opportunity to digest her Honour's reasons for granting leave before the costs order was made. That said, it is also clear that no application was made at the time her Honour published her judgment for that opportunity. The question that arises is whether her Honour should have invited submissions on the question of costs where the annexure to the plaintiffs' written submissions set out the tortuous evolution of the proposed amended defence prior to the hearing and after service of the notice of motion.
I am satisfied that the plaintiffs have made good their claim that they were denied procedural fairness and that the costs order should be set aside. I am also satisfied that the order in the defendant's favour should be limited to the costs of the hearing and that the costs of and incidental to amendments that were made by consent should await assessment. Clearly enough, it would not have been open to her Honour to apply the 'slip rule' to vacate the costs order even if she were invited to. Moreover, the defendant would have been unlikely to consent to vacating the order given the entrenched and seemingly uncompromising position of the parties reflected in their correspondence in the aftermath of her Honour publishing her reasons. This material was tendered by the plaintiffs on the appeal in support of a claim for indemnity costs were the appeal successful. I refrain from expressing any view as to whether there was any basis for the contention concerning the amended defence the plaintiffs suggested followed from her Honour's judgment. Suffice to say that I am satisfied there was no discernible error in the exercise of her Honour's discretion in granting leave to amend the defence. I am also satisfied that the further refinement of paragraph 11 should further clarify the defendant's case in advance of the hearing.
Accordingly, I make the following orders:
1. The costs order made on 9 August 2011 be set aside and the plaintiffs ordered to pay the defendant's costs limited to the hearing of the motion before Harrison AsJ. The appeal is otherwise dismissed.
2. The amended defence filed on 19 August 2011 be further amended in accordance with [4] herein.
3. The plaintiffs are to pay the defendant's costs of the appeal.
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Decision last updated: 24 February 2012
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