McWilliam & Ors v Integral Energy

HIS HONOUR: Nature of Proceedings The defendant moves by way of notice of motion for the following orders: 1. That the plaintiffs pay the defendant’s costs thrown away as a consequence of the amendment of the schedules of items claimed and particulars of items claimed on the following dates: (a) 11 August 2006 (68 schedules to amended statement of claim varying the schedules of items and description of items). (b) 8 December 2006 (seven lever arch folders exhibited to the plaintiffs’ lay evidence varying the schedules of items and description of items). (c) 19 April 2007 (five lever arch folders varying the schedules of items and description of items). 2. Such further or other order as the nature of the case may require.

The defendant also seeks an order that the plaintiffs pay the costs which it incurred in meeting the plaintiffs’ claim for damages for landscaping. In general terms, the defendant submits that because the plaintiffs abandoned that claim and it incurred costs in meeting it, the plaintiffs should pay those costs.

The plaintiffs oppose the application. They submit that as a result of orders made by the Court on 30 July 2008 and the settlement of various heads of damage by way of acceptance of offers of compromise, this application cannot be maintained. In the alternative, they submit that the application should fail on its merits and that the application should be restricted precisely to its terms, i.e. the defendant should not be allowed to seek orders in respect of earlier schedules. Factual background

These reasons for judgment should be read with those of 30 July 2008, which I have attached. These reasons assume knowledge of the factual background therein set out and the orders made.

In 1981 the first and second plaintiffs purchased a property at Stanwell Tops known as “Mingara”. On 25 December 2001 a fire started by the defendant swept across the property. The defendant admitted liability and the only question before the Court in the proceedings was damages and under what principles they should be calculated.

As a result of the fire, the plaintiffs’ home and almost all of their possessions were destroyed. The plaintiffs maintain that the calculation of the damage suffered was difficult. This was because “Mingara” was not a typical property but had a number of special features associated with it. These features included the completion of improvements to the property, the storage of building materials intended to be used for further improvements and the use of sheds on the property for a spray-painting and panel-beating business. The claim also included approximately 3,600 items of personal property, which needed to be valued. The plaintiffs sought to place a value on those items by reference to photographs, family videos and DVDs and by sifting through the debris left by the fire.

In about June 2004 the plaintiffs instructed Keddies Litigation Lawyers (Keddies) to bring a claim for damages against the defendant in respect of the losses from the fire. The plaintiffs were asked to prepare schedules of the personal property items which had been lost in the fire. The plaintiffs say that it took them almost 12 months to complete this task.

A statement of claim was filed on behalf of the plaintiffs in the District Court on 22 December 2004. This was accompanied by a “Statement of Particulars” which comprised one page. On 1 July 2005 an unsealed Statement of Particulars was served comprising 58 pages with 12 schedules claiming damages to the value of $264,484. On 26 July 2005 an Amended Statement of Particulars was filed comprising 118 pages with 54 schedules claiming damages of $1,400,348. This statement listed most of the 3,600 items of personal property in respect of which claims were being made. The statement was in column form. It identified the item and set out a replacement cost.

On 6 October 2005 a further statement of loss was served comprising 14 schedules and claiming damages of $547,243. On 3 November 2005 Keddies served another statement of loss comprising 282 pages with 71 schedules claiming damages of $1,928,801. This statement of loss was in the form of Excel spreadsheets setting out the plaintiffs’ loss, together with photocopies of photographs of destroyed items and a catalogue of items. For ease of reference, the above schedules will be referred to as the “Keddies Schedules”.

In December 2005 the plaintiffs’ present solicitors, Judd Commercial Lawyers (Judd Lawyers), commenced acting for the plaintiffs in place of Keddies. An application was made to transfer the matter from the District Court to the Supreme Court. This transfer took place on 28 February 2006 with the defendant neither consenting nor opposing the transfer.

On 11 August 2006 the plaintiffs were granted leave to file an amended statement of claim. Attached to the amended statement of claim was a further statement of damages. This comprised 69 schedules relating to the 3,600 items of personal property. These schedules were a reworking of the Keddies Schedules, with some changes in the description of the items, but with no statement as to their value.

On 8 December 2006 Judd Lawyers served the defendant with what was described as the “plaintiffs’ lay evidence”. This comprised affidavits by each of the plaintiffs which had as exhibits 7 lever arch folders which contained schedules of items lost and their description. The content and format of the schedules in these folders was significantly different to those which had preceded them. The Keddies Schedules and that of August 2006 had described items by reference to their site location, rather than by the type of item.

Judd Lawyers concluded that having schedules in such a haphazard form would make the task of experts and others, who would ultimately have to use them, needlessly difficult. They decided to reduce the 69 Keddies Schedules to 7 schedules, grouped by item type rather than on the basis of where the item was found on the property. The 7 new schedules grouped the items of property under the following schedule headings. A Antiques, china, glassware, silver ware, old wares B Household items and furniture C Montague furniture D Landscaping to restore “Mingara” E Tools and related equipment F Plant, machinery, equipment and motor vehicles G Work maintenance and farm supplies

The defendant requested that the December 2006 schedules include an additional column referencing the items to photographs. In this regard it should be noted that as part of the October and November 2006 discovery by the plaintiffs, colour photographs as distinct from black and white photographs and photocopies, were produced for the first time which enabled items on the schedules to be more clearly identified.

On 19 April 2007 a further statement of items in respect of which damages were claimed was served. This comprised 5 lever arch folders. The schedules in this statement were largely based on the reformatted schedules which had been served on 8 December 2006. They contained references to photographs. Allowing for some small variations from time to time, these schedules provided the basis on which the plaintiffs’ claim for personal items thereafter proceeded. Experts who expressed opinions did so by reference to the 19 April 2007 schedules.

By motion filed 8 May 2008 the defendant sought orders that the plaintiffs pay its costs reserved on various dates in 2007 and 2008. The defendant also sought the orders set out in paragraph [1] hereof. The matter proceeded before me as a contest and I handed down reasons for judgment on 30 July 2008. The effect of that judgment was to make various costs orders in favour of the defendant. In relation to the costs which the defendant sought in respect of the specified schedules, I said: “54 In relation to the schedules in their present form I consider that they are an improvement on the “Keddies schedules”. That being so there seems to be considerable force in the proposition that much of the work which was done before the substantial reformatting of the loss schedules in April 2007 may not have been particularly useful. 55 As I indicated to counsel for the defendant in the course of submissions, a more appropriate way of looking at the costs question in relation to the preparation of the loss schedules might be to look at the work done in the past rather than the work done from April 2007 onwards when assessing whether costs should be properly recoverable for all that work. 56 The difficulty I have is that I am not the trial judge. It will not be known until this matter is concluded to what extent the various schedules which have been prepared over time, have assisted in its conduct. It may turn out in the course of cross-examination that much of the earlier work was necessary and that the later schedules could not have been produced without it. Alternatively, it may be that much of the material in the schedules is not referred to or is of little assistance because of the way in which the trial is ultimately conducted. 57 It seems to me that the only person who will be in a position to make a proper assessment of the second order sought in the Notice of Motion is the trial judge. I simply do not have sufficient material available to me at this stage to reach an informed or fair decision.”

As a result of that approach, in paragraph [64] of the reasons for judgment I dismissed the balance of the defendant’s notice of motion of 8 May 2008 being that part which dealt with the costs thrown away as a result of amendments to the schedules.

On 15 October 2008 the plaintiffs served on the defendant 22 offers of compromise, pursuant to Pt 20 r 26 of the Uniform Civil Procedure Rules 2005 (UCPR). After extensions of time were granted, most of those offers of compromise were accepted by the defendant on 12 December 2008. They were accepted on an inclusive of interest basis, but exclusive of costs.

The items in respect of which offers of compromise were accepted by the defendant on that date were: (a) The items listed in schedules A and B, i.e. antiques, china etc and household items and furniture. (b) The items listed in schedule C – Montague furniture. (c) The items listed in schedule E – tools and related equipment. (d) Items 108 – 244 listed in schedule G – work maintenance and farm supplies. (e) An amount relating to compensation for tree regeneration.

On 12 December 2008 the defendant served offers of compromise on the plaintiffs in respect of other parts of the plaintiffs’ claim not settled as of that date. The defendant’s offer in respect of items in schedule F – plant, machinery, equipment and motor vehicles – was accepted by the plaintiff by letter dated 15 December 2008.

On 19 December 2008 judgment was entered in favour of the plaintiffs to give effect to those offers of compromise which had been accepted. Despite those settlements, there remained important issues as to damages still outstanding between the parties. These included the claims for landscaping, the house, building materials and rent. In particular the items in Schedule D remained unsettled.

When the matter came before the court on 15 December 2008 the following exchange took place between counsel and the Court. “MONTGOMERY: We had a notice of motion, you will recollect it was about costs, it was dated 8 May. Your Honour delivered a judgment on it on 30 July. With respect my understanding of the reasons your Honour gave in relation to that motion on the second order, the second order was about the changes of schedules, was that it was best left to the trial judge. On that basis you were prepared to make no order because you might not have been the trial judge. In the event that this case is resolved in its entirety, we would want that second order dealt with. We would hope the Court would be happy to deal with it, it would be a matter of discretion in the circumstances of course. So we can either on Friday file a fresh notice of motion which would only restate that order 2, or we could ask your Honour this morning, and I do. HIS HONOUR: If you resolve everything except for that, then I will grasp the nettle. It may be the matter defies resolution, I’m not sure. I remember you had great difficulty sorting out what happened, that is why I was reluctant to buy into it. Mainly because at the end of the day the best person to address the change in schedules was going to be the trial judge. But if everything was resolved and the only outstanding issue is the question of costs on that you can work on the basis you can rely on the old notice of motion but I would probably require some further submissions on that discrete point. … MILLER: There are consequences from acceptance of the offer of compromise which may impact on costs. There also may be, and ultimately that won’t be determined until the whole matter is finalised, the question of we seeking special orders for costs. All of that I have not raised at this stage, I simply flag it. The quicker we can get through this case the better.”

It should be noted that when the various offers of compromise were accepted, there was no express reservation of any costs or special costs orders sought. The offers were accepted on a plus costs basis without qualification.

On 19 December 2008 I entered judgment in accordance with consent orders which were placed before the Court. Those consent orders reflected the settlements which had been achieved by acceptance of the offers of compromise. Order 9 of the consent orders provided: “In relation to the judgment and orders 1 – 8 hereof, the Defendant to pay the First and Second Plaintiffs’ costs as assessed or as agreed in accordance with UCPR 42.13A save that the parties have the benefit of orders relating to costs made in the proceedings to date.”

Before those orders were entered, counsel for the defendant said: “MONTGOMERY: There is a notation there preserving the parties entitlement to costs orders made to date but that it is not to consume the matter I flagged on Monday. We see that as still alive in the proceedings. HIS HONOUR: I appreciate that Mr Montgomery. And I am sure Mr Thompson does.” After I had made those consent orders, the following exchange took place: “THOMPSON: Last Monday, 15 December, Mr Montgomery raised the issue of the costs thrown away by the amendment of the schedules and the reference to that in your Honour’s judgment of 30 July. We would like to place on the record that we disagree with the defendant’s position on that and it is now no longer open for them to argue the position on the basis of the offer of compromise. HIS HONOUR: Mr Montgomery made it clear he would reserve his client’s position in relation to that. If there is an argument that in some way that issue has been absorbed in the consent judgment, then obviously you would be entitled to argue that. As I understand, what Mr Montgomery said to me on Monday of this week was that was a matter he fairly and squarely left outstanding and that was my understanding of what he said. THOMPSON: All we would say we accepted offers of compromise. That is the end of it. The rules are explicit in our submission. We wanted to note that for the record. ….”

Between 19 December 2008 and 16 February 2009 further outstanding matters between the parties were settled. These included damages for the destruction of the family home and the loss of building materials. There still remained outstanding issues, in particular an issue under Schedule D relating to landscaping and an expert report served by the plaintiff from a Mr Sidebottom. Other outstanding matters were the cost of replacing outbuildings on the property and a claim for inconvenience costs, rent and removal costs.

On 6 March 2009 the plaintiffs abandoned their claim for landscaping and the restoration of a vegetable garden. These were the outstanding items in Schedule D. This was the item to which the report of Mr Sidebottom was directed. The order made by the Court was as follows: “3 The plaintiffs abandon the balance of that part of their claim that relates to compensation for landscaping to “Mingara” including the claims set out in schedule D of exhibit “WJM6” as amended to the affidavit of William James McWilliam sworn 19 April 2007.” Since the parties were at issue as to the costs consequences of that abandonment, I stood over the hearing of that costs argument to a later date. That is the second costs argument with which this judgment is concerned.

When the matter was mentioned on 1 March 2010, the Court was advised that all outstanding matters between the plaintiffs and the defendant had been resolved except for the two costs issues the subject of this judgment. Argument in respect of those matters took place on 17 March. Defendant’s claim for costs arising from amendments to the plaintiffs’ schedules

The plaintiffs submitted that the defendant was not entitled to make a claim for these costs. They submitted that this claim had been dismissed in the judgment of 30 July 2008 and that there had been no attempt to raise that issue until the exchange between counsel and the bench which occurred on 15 December 2008.

The plaintiffs submitted that the effect of the dismissal of this part of the notice of motion, coupled with the acceptance of the offers of compromise on a plus costs basis, meant that the defendant’s claim for costs in respect of this issue had merged with the settlement achieved by the offers of compromise and was no longer available.

In the alternative, the plaintiffs submitted that since I had declined to make the orders sought by the defendant on 30 July 2008 because I thought there was insufficient information available at that time, I should decline to do so now since no additional information had become available.

The plaintiffs submitted that in dismissing the defendant’s motion on 30 July 2008 I had not reserved the question for further consideration and the defendant had not sought to re-argue or raise that costs issue until 15 December 2008 when the offers of compromise had already been accepted. When those offers of compromise had been accepted, there was no express reservation of costs in respect of the schedules.

The plaintiffs submitted that when judgment was entered in favour of the plaintiffs on 19 December 2008, there had been no express reservation of any outstanding costs. On the contrary, paragraph 9 of the consent judgment in its terms excluded any such reservation.

The plaintiffs have misunderstood the effect of the orders which I made on 30 July 2008. While I dismissed the balance of the defendant’s motion, I did so on the basis that the particular question should be dealt with on a later occasion by someone better able to deal with it. I did not decide the question on its merits. In particular, I did not preclude the defendant from raising the matter again. The reasons for judgment made it clear that the issue as to the costs of the schedules remained unresolved and was to be decided at a later point in time. Leaving aside the acceptance of the offers of compromise, there was no conduct on the part of the defendant which would have indicated to the plaintiffs that it did not intend to re-agitate that question at some time in the future.

It is true that the acceptance of the offers of compromise, both those made by the plaintiffs and the defendant’s offer in respect of schedule F, resolved most of the matters covered by the reformatted schedules. The only unresolved matters were in schedule D. Each offer of compromise was accepted on a plus costs basis.

The difficulty with the plaintiffs’ submission is that the question as to the defendant’s costs thrown away by what it asserted were unnecessary schedules was a costs issue which related to all of the schedules, rather than to an individual schedule. It is difficult to see how that question could have been dealt with when the offers of compromise were made in respect of individual schedules. The defendant could have accepted the offers of compromise on 12 September with an express reservation of that issue. Alternatively, the plaintiffs could have made it clear when making the offers of compromise that they were intended to cover this costs issue which at that stage remained unresolved. In any event the defendant made its position clear on 15 December 2008 when it specifically raised the issue in court.

On 15 December 2008 the defendant through its counsel made it clear that it still wished to argue the costs question relating to the multiplicity of schedules. That reservation was made in open court before judgment on the schedules had been entered. Counsel for the defendant confirmed its position on the day when judgment was entered but before entry of judgment took place. The plaintiffs clearly understood that the defendant wished to reserve this costs question.

The submission by the plaintiffs would have been stronger if all of the outstanding issues in relation to the schedules had been resolved by the acceptance of the offers of compromise. That had not occurred. There were still outstanding issues in relation to schedule D. That of itself, it seems to me, provided adequate scope for the defendant to reserve this question. The fact that no settlement had been achieved in relation to schedule D highlights the difficulty created when this costs question was an overarching one applying to all of the schedules, whereas the offers of compromise referred to costs in respect of each schedule.

I reject the plaintiffs’ submission that I should not now entertain the defendant’s claim for these costs because I declined to do so on 30 July 2008. As the judgment made clear, my reasons for declining to decide that issue at that time was that I believed the trial judge who would have had to decide the factual issues associated with the schedules, would have been in a better position to assess what value, if any, was to be attributed to the production of the various schedules from time to time. As matters have eventuated (and for which the parties should be congratulated) no such hearing took place. Accordingly, I have no choice but to decide the issue. This Court has often stated that difficulty in decision-making should not be a bar to the Court making a decision ( State of NSW v Moss (2000) 54 NSWLR 536).

If I am wrong in the above conclusions, there is still a discretion to be exercised pursuant to Pt 42 r 42.13A(2)(b) of the UCPR. That rule relevantly provides: “(2) A plaintiff is entitled to an order against the defendant for the plaintiff’s costs in respect of the claim, assessed on the ordinary basis up to the time when the offer was made, unless: (a) The offer states that it is a verdict for the defendant and the parties are to bear their own costs, or (b) The Court otherwise orders.”

That discretion enables me to take into account the conduct of the parties leading up to and at the time of the acceptance of the offers of compromise and the entry of judgment. While it is clear that the plaintiffs are entitled to their costs in respect of the schedules which were settled and in respect of which judgment was entered, it is also open to the Court to reserve from that general entitlement to costs the question of whether and if so to what extent, the defendant should be able to recover its costs in respect of the various schedules which were served on it.

Accordingly I propose to examine the merits of the defendant’s claim for costs in respect of the schedules and the plaintiffs’ response to that claim.

The plaintiffs in the course of argument submitted that if the defendant were to be allowed to argue this question, its submissions should be limited to the schedules specifically referred to in its motion of 8 May 2008, i.e. the defendant should not be allowed to make submissions in respect of the “Keddies Schedules”, only in respect of the “Judd Lawyers” schedules.

I do not agree. As I indicated in the judgment of 30 July 2008 and in the course of argument leading up to that judgment, the only way to adequately rule on the merits of the defendant’s application was to look at all of the schedules and the part they played in the preparation of the case. As I indicated in argument, it is clear that the schedules of December 2006 and April 2007 were a significant improvement on those which preceded them. It would be quite artificial and involve a distortion of what actually occurred to focus only upon those final products without looking at the schedules which went before.

The defendant’s submission can be briefly stated. It submitted that as each statement of damages was served upon it, it was necessary for its lawyers to consider its contents and where necessary request particulars. It submitted that from approximately the middle of July 2005, the plaintiffs’ solicitors were fully instructed as to the damages claim and that there was no good reason why proper schedules (i.e. such as were produced in December 2006 and April 2007) could not have been produced in 2005.

The defendant submitted that the problem with the various schedules is that no two schedules were the same. The values attributed to various items differed from schedule to schedule, as can be seen from the differing totals. More importantly, items were moved from one schedule to another without explanation and without any apparent logical basis. Items were on occasions duplicated in the various schedules and were in many cases differently described from one statement of damages to the next.

In submissions made to the Court in July 2008, the approach followed by the defendant was to take 10 clearly identified items (out of the approximately 3,600 claimed in the schedules) and starting with the first schedule in July 2005, to follow those 10 items through until the April 2007 statement of damages with its seven schedules. Those 10 items forcefully made the argument being put by the defendant. They appeared in different schedules without any apparent logical reason. They were on occasions differently described and on an apparently arbitrary basis different monetary values were given to them in different schedules. I am prepared to accept that a considerable amount of wasted time and effort was expended by the defendant and its lawyers in analysing statements of damages which were then subsequently changed requiring further examination.

I have concluded that the Keddies Schedules were not particularly well prepared. The grouping of items was haphazard and displayed no internal logic. I fully accept the criticism of Mr Judd in his affidavit that experts would have found it almost impossible to use the Keddies Schedules in forming their opinions and that further work was essential in order to place the schedules of damages into a useful form. I consider that the statements of damages of December 2006 and April 2007 with their accompanying schedules were properly prepared and were in an appropriate format capable of being used by both lawyers and experts in the preparation and conduct of this matter. The same could not be said of the Keddies Schedules.

The plaintiffs submitted that the sheer volume of personal items lost meant that it was inevitable that a number of schedules would need to be prepared. After the early schedules had been prepared, an album of photographs was found which enabled the plaintiffs to identify further items which were lost which were then added to the schedules. Photographs were obtained from family members and from friends, which also caused further changes to schedules. Understandably, however, Judd Lawyers were not in a position to explain why there was such significant discrepancies in the Keddies Schedules during 2005, since they were not the solicitors on the record at the time.

I accept that given the nature of the personal items claimed and the circumstances of their loss, there would be an almost continual updating of the schedules attached to the statements of damages. That would be inevitable. The appropriate way for such adjustments to be dealt with would be to update the schedules with the additions or deletions being specifically underlined, or otherwise identified, so as to enable the recipient of the amended schedules to understand the changes.

This was not done. The procedure adopted was to serve a further statement of damages with new schedules without there being any clear indication of what changes had been made, either by way of addition or deletion of items. It was then necessary for the recipient of the statement of damages to request particulars and to laboriously compare the earlier statements of damages with the most recent one, so as to identify the changes.

I find that the Keddies Schedules in relation to the items of personal property lost were of little value in the conduct of these proceedings. On the other hand, I find that the schedules which formed part of the December 2006 and April 2007 statements of damages were fundamental to the preparation of the matter by both sides and to its ultimate settlement. The difficulty for the court is to make an appropriate costs order to reflect that state of affairs.

Given the volume of items involved, I accept that it was reasonable for the first statement of damages to contain an imperfect set of schedules. In that regard I refer to the schedules attached to the statement of particulars filed on 26 July 2005, which set out most of the 3,600 items of personal property.

It is in relation to the subsequent schedules that the difficulty arises. I accept the force of the plaintiffs’ submission that the schedules of December 2006 and April 2007 could not have been prepared without the existence of the earlier schedules upon which they were based. While that submission is correct, it applies to the schedules served in July 2005, as much as to the later schedules. For the reasons indicated, it is difficult to see what useful function the later schedules of October 2005, November 2005 and August 2006 served.

I have concluded that the defendant is entitled to have its costs of dealing with the plaintiffs’ schedules served on 6 October 2005, 3 November 2005 and 11 August 2006. It follows that the plaintiffs should not have any costs associated with those schedules.

The decision by Judd Lawyers to reformat and restructure the schedules in December 2006 was not only appropriate it was necessary for the proper conduct of the matter. The schedules of December 2006 with some modest adjustments formed the basis for the schedules of April 2007. The plaintiffs should have their costs of preparing those schedules.

Accordingly, the order which I will make in due course is that the plaintiffs should have their costs in relation to the items of personal property which were the subject of the settlements and the consent judgment entered 19 December 2008 with the qualification that such costs should not include the costs of the schedules served on 6 October 2005, 3 November 2005 and 11 August 2006 and that the defendant should have its costs, as agreed or assessed, of dealing with those schedules. Costs of landscaping and vegetable garden

Before outlining the competing submissions on this issue, it is necessary to set out in some detail the factual background to the dispute.

Schedule D provided to the defendant by the plaintiffs as part of the 19 April 2007 statement of damages was entitled “Landscaping to Restore our Property”. Schedule D was in two parts. The first entitled “Vegetable Garden” provided a list of 24 varieties of plant. That first part also included somewhat enigmatically “Sandpit and Earthmoving Tyre” and “Tyre Pond”. The second part of the schedule was entitled “Landscaping” and it included three items described as: 26 – Small rockery gardens (quantity 2) 27 – Plants (quantity 12) 28 – Brick pathway (quantity 1) No further description, particulars or values were set out for any item in Schedule D.

On 18 June 2007 by consent I ordered that Dr Clements and Mr English be single experts for the purpose of reporting on the scope of work, if any, required to reasonably reinstate the trees and landscape of “Mingara” lost as a result of the fire. There were other orders relating to facts and assumptions to be put to those experts. In due course Dr Clements and Mr English inspected the property. They produced a report dated 30 October 2007.

In their report they confirmed their understanding that they were required to report on the scope of work required to reasonably reinstate the trees and landscaping and they referred specifically to the results of their inspection and to photographs which had been made available to them. Included in those photographs was photograph 363. This photographs showed a small vegetable garden surrounded by chicken wire and some timber posts.

In paragraph 7.0 of their report, Dr Clements and Mr English set out their recommended scope of works as follows: “In terms of the scope of works required to reasonably reinstate the trees and landscaping of the property owned by the McWilliams, it is recommended that: A domestic vegetation patch be reinstated as specified on pages 3 and 4 of quote by D. Sidebottom Landscapes (total cost of quote $13,103.70) provided suitable nutrient control measures are implemented to minimise risk of nutrient runoff to the bushland; …”

On 29 April 2008 argument took place before me as to whether the plaintiffs were entitled to challenge the report of Dr Clements and Mr English. It was the plaintiffs’ contention that the report had not properly taken into account the assessment of Mr Sidebottom. They submitted that they were entitled to a further report from Mr Sidebottom to clarify the cost of restoring the landscaping lost with particular reference to the vegetable garden. The plaintiffs submitted that this was a matter beyond the expertise of Dr Clements and Mr English.

The defendant opposed the obtaining of any further report. It submitted that the report based on the photographs showed that the vegetable garden was a flat piece of terrain, surrounded by chicken wire, showing no signs of horticultural or landscaping improvement except for the vegetables planted. The defendant submitted that the report found no landscaping as such to have existed at the time of the fire but for environmental reasons it offered the recommendation that if such gardens were to be re-established, they should be landscaped and provided with imported nutrient rich soil in order for the gardens to be productive. The defendant submitted that this was not reinstatement. I granted leave to the plaintiffs to obtain a further report from Mr Sidebottom.

Mr Sidebottom produced two reports dated 13 and 14 August 2008 which assessed the plaintiffs’ landscaping loss at $63,533.64. Mr Sidebottom’s assessment identified items and quantities different to those claimed in Schedule D and not elsewhere described in the plaintiffs’ lay evidence. On 17 December 2008 the plaintiffs served a further affidavit of Mr McWilliam (the second plaintiff) made 15 December 2008 in which he deposed that the lawns and gardens upon “Mingara” although not previously referred to in the plaintiffs’ evidence were at the time of the fire as described in the August 2008 reports of Mr Sidebottom.

The defendant requested particulars of this claim. On 19 December 2008 judgment was entered in favour of the plaintiffs in the amount of $13,807.50 for tree regeneration as identified in the joint report of Dr Clements and Mr English. The judgment noted that the parties remained in dispute as to whether the scope of work identified in the joint report satisfied the entirety of Schedule D.

By 16 February 2009 the parties were still at issue on this question and I ordered that they file and serve written submissions setting out the factual and legal basis for their respective positions in relation to the outstanding claim under Schedule D. The defendant served its submissions on 27 February 2009. On 6 March 2009 when the matter came before the Court, senior counsel for the plaintiffs withdrew that claim. (See [27] hereof.)

The Sidebottom reports of August 2008 described gardens, turf and plants which had not been previously referred to in the plaintiffs’ evidence, nor in Schedule D. There also appeared to be an overlap (such as paving) with items in other schedules. It seems to me that the Sidebottom reports of August 2008 did expand the plaintiffs’ claim significantly beyond that set out in Schedule D.

The defendant submitted that it had been forced to incur substantial costs in meeting this additional claim, including the costs of preparing written submissions. The defendant submitted that in circumstances where this additional claim was abandoned without any notice, it should be entitled to recover those additional costs.

The plaintiffs submitted that the correct way of approaching this question was to apply Pt 42 r 42.19 UCPR, a rule which dealt with the payment of costs where a notice of discontinuance is filed. The plaintiffs specifically relied upon the qualifying words “unless the Court otherwise orders”. The plaintiffs submitted that the defendant did not have an unqualified right to recover its costs in relation to the expanded Schedule D claim if the plaintiffs could point to good reasons why that claim was not proceeded with.

The plaintiffs submitted that their claim for landscaping was a good one, but the best the plaintiffs could hope for would be an amount of somewhere between $13,000 and $20,000. Since the defendant was contesting that claim, a hearing on that issue would be necessary before it could be resolved. The plaintiffs were concerned that substantial costs in the order of $50,000 would be incurred in order to recover a comparatively modest amount. Applying the principle of proportionality, they decided in those circumstances not to proceed with the claim.

The plaintiffs accepted that the situation was not precisely covered by Pt 42 r 19 but submitted that it was an analogous situation. They submitted that the amount to be recovered was out of all proportion to the costs likely to be incurred. This situation was analogous to where proceedings were discontinued because to pursue the claim further would be futile. The plaintiffs submitted that their difficulty in relation to this claim was exacerbated in that by that time most of the other outstanding claims had been settled.

In reply the defendant referred to paragraphs 4-9 of the affidavit of Mr Judd, sworn 12 December 2008, and the annexed report of Mr Sidebottom of 13 August 2008. Having once again read that material, it is clear that as of December 2008 the plaintiffs were making a claim in the order of $63,000 in respect of Schedule D and additional landscaping which had not previously been included in Schedule D. Significantly, the somewhat basic and small vegetable garden shown in the photographs was described in this report as “the perma-culture vegetable garden area”.

I have concluded that the defendant had no option but to prepare to meet the claim as articulated in the affidavit of Mr Judd of December 2008 and as detailed in the report of Mr Sidebottom of 13 August 2008. Had the plaintiffs wished to modify that claim subsequently in any way, they could have served an offer of compromise or advised to what extent some of the items in the Sidebottom report were not being claimed. That was not done. At no time was the defendant advised that the real claim was somewhere between $13,000 and $20,000.

I have also concluded that the steps which the defendant took to meet the claim, including requests for particulars, having the matter fixed for hearing and preparing written submissions were reasonable. In circumstances where the claim in its entirety was withdrawn without notice on 6 March 2009, it is reasonable that the defendant have its costs of meeting that claim. Costs of this motion

When this costs application was allocated a hearing date, I directed the parties to prepare an agreed bundle of documents which would constitute the evidence upon which each party would rely. Rather than comply with that direction, each side after some perfunctory correspondence prepared its own bundle of documents. The plaintiffs prepared three rather modest folders, which contained most but not all of the evidence which they ultimately relied upon. The defendant in something of an overkill, prepared four very substantial folders which contained all of the evidence which was before me in July 2008, together with all of the correspondence passing between the parties and transcripts of mentions which had taken place between 2004 and March 2009.

When the matter was argued, both sides quoted extensively from folder one of the folders prepared by the defendant. Extensive use was also made of folder four. I have found both folders extremely useful in reviewing the evidence and preparing these reasons for judgment. No reference was made by either side, either in written submissions or in oral submissions, to either folder two or folder three of the folders produced by the defendant.

Since the defendant has largely succeeded in relation to the matters argued in this application, I propose to award the defendant its costs. However, because of the needless production of folders two and three, I propose to qualify that order to the effect that the defendant shall not have its costs relating to the preparation and service of folders two and three, prepared for this application. Orders

The orders which I make are as follows: (1) The defendant is to pay the plaintiffs’ costs of the proceedings in accordance with the various judgments which have been entered in their favour. That order is qualified as follows: (a) The plaintiffs are to pay the defendant’s costs as agreed or assessed incurred by it in relation to dealing with the statements of loss and accompanying schedules served on it on 6 October 2005, 3 November 2005 and 11 August 2006. (b) The plaintiffs are to pay the defendant’s costs incurred between 16 August 2008 and 6 March 2009 in meeting the claims in respect of Schedule D and landscaping generally, as set out in the reports of Mr Sidebottom of 13 and 14 August 2008. Such costs to be as agreed or assessed. (2) The plaintiffs are to pay the defendant’s costs of this application, save that the defendant is not to have any of its costs associated with the preparation and service of folders two and three prepared by it for use in this application. Such costs to be as agreed or assessed.