Mulder v Laura Holdings Pty Ltd (No 2)

1. [1]

   The plaintiffs sought an easement pursuant to s 88K Conveyancing Act 1919 (NSW). A substantive judgment was given in favour of granting that easement: Mulder v Laura Holdings Pty Ltd [2023] NSWSC 812.

2. [2]

   The substantive judgment ordered that, unless the plaintiffs sought a different costs order, they would be ordered to pay the defendant’s costs in accordance with the usual order under s 88K(5).

3. [3]

   The plaintiffs seek a different costs order, and the defendant resists any departure from the usual order. This judgment resolves that dispute.

4. [4]

   In addition, the parties were ordered to confer with a view to agreeing final orders. While the parties proffered slightly different final orders other than as to costs, there was no significant difference and I have determined the appropriate form below.

Costs

1. [5]

   The plaintiffs seek an order that they pay the defendant’s costs as if a litigant in person. An order in that form was made in Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293 at [98] (Basten JA, Barrett and Ward JJA agreeing) (Shi v ABI-K).

2. [6]

   The relevant principles concerning the operation of s 88K(5) are not in dispute. For example, in Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2 at [181]–[183] Preston CJ at LEC stated (citations omitted):

3. [7]

   Darke J further elaborated in McGrath v Mestousis (No 2) [2018] NSWSC 32 (McGrath v Metousis) at [7]-[8] (citations omitted):

4. [8]

   In Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76 at [188], Basten JA (with whom Bell P, as his Honour then was, and Gleeson JA agreeing) stated:

5. [9]

   Here, the issue is whether the defendant has relevantly behaved “unreasonably” in the litigation, such as to disentitle it to the usual costs order under s 88K(5), and if so, the appropriate order.

6. [10]

   The plaintiffs rely on the following conduct to demonstrate the defendant’s unreasonableness.

7. [11]

   First, on 22 March 2022 the plaintiffs made an offer to pay $6,000 compensation for the grant of the easement, and that was refused. That sum is said to have been so close to the ordered compensation of $7,000, that it demonstrated the reasonableness of the offer, and the unreasonableness of the defendant not accepting it.

8. [12]

   Secondly, the quantum of the defendant’s costs is said to be unreasonable. By 19 May 2023, the defendant expected its costs of the litigation to be $190,000 plus GST, and the plaintiffs submit that such costs are contrary to the overriding purpose of the Civil Procedure Act 2005 (NSW) and not a burden they ought to bear, relying on Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [36] (Basten, Gleeson and Leeming JJA).

9. [13]

   Further reliance is placed upon Rein AJ’s comment in Owners Strata Plan 13636 v Ryan [2006] NSWSC 342 at [31] (Ryan):

10. [14]

    Below I consider each of those matters.

11. [15]

    While the Court may take into account an offer made in s 88K proceedings, in Shi v ABI-K at [98] Basten JA stated:

12. [16]

    Here, I do not think the plaintiffs’ unaccepted offer assists them, because it was less than the total sum awarded by the Court. In Ryan, a case determined before Shi v ABI-K, the offer taken into account was for $1,000 more than the compensation awarded by the Court. The offer made the plaintiffs in this case was $1,000 less than the compensation awarded. Further, the easement ordered is subject to conditions that were not part of the offer made.

13. [17]

    The defendant resisted the easement on the bases that the easement was not “reasonably necessary”, the loss of amenity could not be adequately compensated and the plaintiffs had not taken all reasonable steps to obtain an alternative easement. None of those arguments were successful. However, the defendant was not obliged to accept the offer proffered, nor risk any type of adverse costs order for that reason alone.

14. [18]

    Other additional unreasonable conduct would need to be demonstrated to warrant the outcome the plaintiffs seek.

15. [19]

    It is alarming that the defendant’s costs are approximately $200,000 for a 2-day hearing concerning an access way to the plaintiffs’ remote rural landlocked land, when neither the plaintiffs nor the defendants permanently reside on their properties.

16. [20]

    By reason of the legislative drafting, the issue is whether those costs ought to be disallowed or reduced by reason of the defendant’s unreasonable conduct in the litigation.

17. [21]

    Mere quantum of costs is not an accepted reason not to award a defendant its legal costs in defending a s 88K application. For example, in McGrath v Metousis at [15] Darke J stated:

18. [22]

    It is clear that costs in relation to particular evidence may be carved out as being unreasonably incurred and inappropriate to be borne by an applicant. Windeyer J took this course in relation to the costs of valuation in evidence in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15795. Darke J took a similar approach in McGrath v Metousis and did not allow the defendant’s costs of preparing evidence that he considered “tenuous at best” (at [23]). He summarised it at [23]:

19. [23]

    Further, Sackar J in Gordon v Lever [2019] NSWSC 571 at [23] acknowledged:

20. [24]

    I consider that the defendant ought not have its costs related to the claim for loss of amenity, including the expert evidence concerning that issue (see substantive judgment at [112]).

21. [25]

    Further, I do not consider the defendant ought to have its costs of the expert evidence of Mr Haskew, in circumstances where the only parts of this report relied upon by the defendant was “navigate-ability in terms of erosion risk and other sort of impact from other weather events”. The issues of maintenance and management of the proposed easement and the connected Crown roads were abandoned and no submission was made as to why erosion risk and impact from weather events would not fall within the concept of maintenance and management. In my view, the evidence of this expert did extend the length of the hearing: see eg Cuzeno Pty Ltd v Owners Strata Plan 65870 [2013] NSWSC 1385 at [151] (Darke J).

22. [26]

    Otherwise, the plaintiffs have not suggested that the Court is in a position to make a properly informed decision about whether the defendant’s costs are grossly excessive (see eg Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 at [42] (Palmer J)). It is therefore not possible to cap the defendant’s costs, for example, as envisaged by ss 98(4)(c) and 98(4)(d) of the Civil Procedure Act.

Orders

1. [27]

   For the above reasons and the reasons in the substantive judgment it is appropriate to make the following final orders:

   1. (1)

      Pursuant to s 88K Conveyancing Act 1919 (NSW), order that a right of carriageway 20 metres wide be imposed on the defendant’s land in Lots 57 and 68 in Deposited Plan 753018 for the benefit of the plaintiffs’ land comprised in Lot 90 in Deposited Plan 753018 on the same terms as are contained in Deposited Plan 649935 (right of carriageway), save that:

   2. (2)

      Direct the plaintiffs to prepare all necessary documents and forms in relation to the registration of the right of carriageway by the Registrar-General.

   3. (3)

      The right of carriageway is not to be registered with the Land Registry Service, until the plaintiffs have procured a registered right of way over Lots 101 and 102 in Deposited Plan 1190056, being the land currently owned by Agriwealth Capital Limited.

   4. (4)

      The plaintiffs pay the defendant's costs of the proceedings on the ordinary basis as agreed or assessed, save for the following costs: