Nahata v Robertson (No 2)

1. [1]

   On 15 June 2023, I delivered judgment in the substantive proceedings, dismissing the plaintiffs’ application for the grant of an easement pursuant to s 88K Conveyancing Act 1919 (NSW): Nahata v Robertson [2023] NSWSC 642 (“Nahata”). This judgment concerns the costs of those proceedings and ought be read together with it.

2. [2]

   Mr Jeffrey Lee was the solicitor for the plaintiffs. He represented the plaintiffs at directions hearings and the two-day hearing. His clients sought a drainage easement over the defendants’ property; a drainage easement was required by the local council in a deferred development consent for the plaintiffs to develop their land. The plaintiffs also commenced proceedings for an extension of the easement over neighbouring properties. Those second proceedings would have been heard together with the substantive proceedings, but were resolved without oral hearing.

3. [3]

   When giving judgment I made the following direction:

4. [4]

   Mr Lee was handed a physical copy of those three documents.

5. [5]

   Directions were made for the filing of evidence and written submissions and for an oral hearing convenient to all the parties, including Mr Lee.

6. [6]

   The defendants, who were represented by Mr Rogers, submit that the plaintiffs ought to pay their costs on an indemnity basis.

7. [7]

   The plaintiffs, who were represented by Mr Pickles SC, accepted that they were liable to pay the defendants’ costs on the ordinary basis, but resisted indemnity costs. However, whatever costs order was made against them, the plaintiffs’ application was that all costs, for which the plaintiffs were found liable, ought to be borne personally by Mr Lee pursuant to s 99 Civil Procedure Act 2005 (NSW) (CPA).

8. [8]

   Mr Lee, who was represented by Ms Keesing, resisted any liability pursuant to s 99 CPA.

9. [9]

   It is convenient to first deal with the defendants’ application for indemnity costs and then the application of s 99 CPA.

Indemnity costs

1. [10]

   The defendants seek their costs on an indemnity basis from the plaintiffs, not because of any offer that was unreasonably rejected, but because of alleged unreasonable conduct on the part of the plaintiffs in the litigation: see eg Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 256-8 (Sheppard J).

2. [11]

   An indemnity costs order is appropriate if “for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case”: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) [1993] FCA 70 at [5] (French J). Such an order will be warranted where proceedings were maintained by a party having “no reasonable prospect of success”: Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [106]-[113] (Basten JA, Giles JA and Young CJ in Eq agreeing).

3. [12]

   A test of unreasonableness should not be upheld on other than clear grounds, where there is demonstrated blameworthiness of the party, against whom the order is made.

4. [13]

   The defendants identify two areas of the plaintiffs’ conduct, upon which they rely, to justify an indemnity costs order, namely:

   1. (1)

      a failure to provide the terms of the easement to them and the Court, such that the whole application was doomed to fail; and

   2. (2)

      the failure to engage meaningfully with the defendants as required by s 88K(2)(c).

5. [14]

   Each is dealt with in turn below.

6. [15]

   The plaintiffs accept that they, through Mr Lee, failed to provide the terms of the easement or provide the easement in registrable form for the purposes of s 88K(7).

7. [16]

   However, the plaintiffs submit that the failure to provide the terms of the easement would not have materially changed the length of the hearing, because the issues of reasonable necessity and the plaintiffs’ attempts to obtain the easement would still have arisen. Nevertheless, the plaintiffs submit that “a reasonably competent solicitor would have been aware of the need to provide terms to the defendant”.

8. [17]

   Mr Lee submits that indemnity costs ought not be ordered, because the defendants had never pointed out the deficiency in the plaintiffs’ presentation of the case. I do not accept that submission. As early as 15 September 2022, the defendants’ lawyers wrote to Mr Lee:

9. [18]

   That passage in Gordon v Lever (2018) 97 NSWLR 90 clearly indicates that a Court cannot make a s 88K order unless the terms of the easement are specified in the order itself and the easement must be in “registrable form” that includes the particulars of the easement for the purposes of s 88K(7).

10. [19]

    Mr Lee refused to engage with that request for the terms of the easement or any later request for information. His persistent attitude was that the plaintiffs’ deferred development consent, that expressly required a drainage easement for final consent, was sufficient information.

11. [20]

    On 15 September 2022, Mr Nahata asked Mr Lee if he had understood Mr Lee correctly:

12. [21]

    Mr Lee’s response was:

13. [22]

    However, at no point did Mr Lee prepare any evidence of “technical details” as to the terms of the easement. The only material tendered to the Court that might be understood as “technical details” were old drawings, and not the drawings that had been approved by the council: see Nahata at [52].

14. [23]

    Despite various requests from the defendants for a detailed survey plan of the proposed easement that might be necessary for s 88K(7), no such survey was provided to the defendants, nor later to the Court.

15. [24]

    I do not accept that it was for the defendants to either seek to strike out the plaintiffs’ case, nor provide them with more detailed reasons why the easement would not be granted. Each of the defendants’ enquiries was met with Mr Lee’s response to the effect of:

    1. (1)

       The plaintiffs’ claim was not defective;

    2. (2)

       The s 88K test was “easy to pass”; and

    3. (3)

       No survey or other evidence was required.

16. [25]

    It would never have been possible for the plaintiffs to obtain an order under s 88K without that specification of the easement: see Studholme v Rawson (2020) 102 NSWLR 490; [2020] NSWCA 76 at [44]-[47] (“Studholme”) (Basten JA with Bell P, as the Chief Justice then was, and Gleeson JA agreeing); Nahata at [51]-[57]. The plaintiffs, through Mr Lee, never considered such specification was necessary and it was never provided. As such, the whole claim was doomed to fail. There was no dispute that there was public utility in the plaintiffs obtaining a drainage easement, however, evidence was required as to why the particular easement sought was “reasonably necessary”, in light of the issues raised by the defendants and the other alternatives. Mr Lee produced no evidence.

17. [26]

    The substantive judgment found that the plaintiffs had not satisfied the requirement in s 88K(2)(c) to make “all reasonable attempts … to obtain the easement or an easement having the same effect but have been unsuccessful”: Nahata at [58]-[106].

18. [27]

    The defendants submit that, rather than some attempts having been made, the plaintiffs made no genuine attempts to negotiate, let alone all reasonable attempts.

19. [28]

    Mr Lee submits that there is “no evidence that [further engagement] would have avoided the costs of the proceedings” and that engagement would have been futile, because the defendants did not want the easement over their land. I do not accept that is an accurate statement of the evidence. Further, that submission fails to grapple with the requirements of the subsection and the principles relevant to indemnity costs.

20. [29]

    The focus of the test for indemnity costs is whether the plaintiffs’ conduct of the proceedings was unreasonable.

21. [30]

    It is correct that the defendants were adamant that they did not want the only easement proposed by the plaintiffs. However, they had provided the plaintiffs with reasons for that objection, including by way of an engineer’s report. The defendants had not only proposed possible alternative easements, but also sought further information from the plaintiffs about issues raised by their expert. However, and critically, the plaintiffs never engaged with the expert’s concerns, nor attempted to negotiate with the defendants an “easement having the same effect”.

22. [31]

    Generally, there is an obligation on parties to comply with the overriding purpose of the CPA. However, in the context of a s 88K application, the plaintiffs were required to make “all” reasonable attempts, and they failed to make any attempts. In my view, such conduct in running the litigation was unreasonable.

23. [32]

    The defendants further complain of the attitude taken by the plaintiffs, through Mr Lee, in wasting time over the Court Book, which also required further Court appearances. Mr Lee submits his conduct did not “materially” add to the length of the hearing and costs. The plaintiffs were silent on that issue. As detailed below, I consider Mr Lee’s conduct in relation to the Court Books was unreasonable.

24. [33]

    I accept both grounds provided by the defendants as reasons to order indemnity costs. First, the application was doomed to fail in light of clear authority. The Court could not make an order in the form sought on the material provided. It was also unreasonable for the plaintiffs, through Mr Lee, not to provide the defendants with a survey of the easement at any point in the proceedings. Secondly, the plaintiffs, through Mr Lee, failed to negotiate with the defendants at all about an easement. This behaviour is contrary not only to the overriding purpose of the CPA, but also the elements a party ought satisfy when seeking a s 88K easement. For these reasons an indemnity costs order in the defendants' favour is warranted in the circumstances.

Section 99 Civil Procedure Act 2005 (NSW)

1. [34]

   The importance of the supervisory jurisdiction of the Court over legal practitioners in general law was recently discussed in Beau Timothy John Hartnett trading as Hartnett Lawyers v Anthony Robert Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell [2023] NSWCA 244 by Bell CJ (Adamson JA and Griffiths AJA agreeing). There, the Chief Justice set out the principles at [123] and emphasised at [133] that “[the] highest standards of integrity are expected of members of the legal profession”. As part of the Court’s inherent supervisory jurisdiction, the Court may make a wasted costs order against a legal practitioner.

2. [35]

   The Court also has jurisdiction pursuant to s 99 concerning wasted costs caused by a legal practitioner. That section provides in part:

3. [36]

   There was no dispute between the parties as to the operation of the section. In Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 (“Re Felicity”) at [12], [14]-[15], [21]-[24] Basten JA (with whom Emmett JA agreed and Ward JA, as the President then was, substantively agreed) stated (citations omitted):

4. [37]

   In Tuitupou v Davis [2019] NSWSC 160 at [61]-[65] Ward CJ in Eq (as the President then was) stated:

5. [38]

   A legal practitioner will not have acted improperly or unreasonably “simply because he or she acts for a party who pursues a claim or defence which is plainly doomed to fail”: Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 at [92(b)] (McColl JA, Hodgson and Ipp JJA agreeing). Further, at [92(d)]:

6. [39]

   The object of ordering costs against a lawyer is, in part, to protect clients from a legal practitioner's serious dereliction of duty, or otherwise serious misconduct or gross negligence. Circumstances where a legal practitioner's conduct has been found to meet the requisite level of seriousness, such that a wasted costs order ought be made includes where the practitioner has failed to fulfill procedural responsibility (leading to the incurrence of unnecessary costs), or where the legal practitioner has failed to give reasonable consideration to relevant law or facts related to the claim: see eg Dempster v McAndrew [2003] NSWSC 994 (Campbell J). See also relevant commentary in G E Dal Point, Law of Costs (5th Ed, 2021, LexisNexis).

7. [40]

   When considering the application of s 99, there is a three-stage approach as explained by Brereton JA in Rahman v Al-Maharmeh (No 2) [2021] NSWCA 151 at [22] (Meagher and Leeming JJA agreeing):

8. [41]

   What is required is a careful application of legal principles to the particular facts before the Court.

9. [42]

   In the authorities referred to by the parties, wasted costs orders under s 99 have been made in circumstances where:

   1. (1)

      extensive and poorly articulated allegations of fraud and conspiracy were made without evidence or explanation as to why the grounds were pressed (King v Muriniti [2018] NSWCA 98, per Basten JA and Emmett AJA, Gleeson JA agreeing);

   2. (2)

      “incomprehensible” and baseless oral submissions were made in support of amended grounds of appeal that were sought to be relied upon at hearing, without written submissions or any satisfactory explanation for the lateness of the application (Nadarajapillai v Naderasa (No 2) [2015] NSWCA 209, per Emmett JA, McColl and Macfarlan JJA agreeing);

   3. (3)

      there were serious issues in the evidence adduced, including false statements in affidavits and illegally obtained evidence, and allegations of improper conduct against the opposing solicitor made without evidence (Newell: Muriniti v De Costi (2018) 97 NSWLR 398; [2018] NSWCA 49, per Beazley P, Gleeson and White JJA agreeing);

   4. (4)

      notification alerts indicating that the opposing party was secretly monitoring the solicitors’ review of documents on an online platform were not disclosed (NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838, per Ward CJ in Eq, as the President then was); and

   5. (5)

      untenable and misconceived claims were made that demonstrated a misunderstanding of legal principle in a judicial review application were made (Re Felicity).

10. [43]

    Here, there are two categories of Mr Lee’s conduct that must be assessed:

    1. (1)

       His conduct in relation to the preparation of some Court Books; and

    2. (2)

       His conduct in the litigation generally.

11. [44]

    Each is dealt with below in turn.

Wasted Court Books

1. [45]

   One issue that arose in the preparation for the hearing concerned Mr Lee’s conduct in the preparation of Court Books. The evidence concerning the Court Books also provides some evidence of Mr Lee’s approach to the litigation generally, which is also relevant to the question of whether a wasted costs order is appropriate, for the litigation generally.

2. [46]

   On 17 March 2023, the hearing dates were allocated and the usual order for hearing was made, which required the preparation of a joint Court Book.

3. [47]

   The email correspondence between the solicitors and the Court demonstrates Mr Lee’s refusal to comply with Court orders or work together with the defendants’ solicitors, which belies Mr Lee’s submission that his conduct did not cause wasted costs.

4. [48]

   Below is an example of this incredibly disappointing correspondence from Mr Lee, which includes discourtesy, setting unreasonable deadlines and failure to engage with the overriding purpose of the CPA. It further appears that his client, Mr Nahata, gave him instructions to take a more reasonable approach, however, Mr Lee does not appear to have taken that course.

5. [49]

   On 28 April 2023 and again on 4 May 2023, the defendants’ solicitor, Mr Adam Ahmed, sent email correspondence to Mr Lee seeking co-operation in relation to the Court Book.

6. [50]

   On 4 May 2023, Mr Lee responded that “We will give the whole Court Book to the Court five business days before the trial (not before Tue [sic] 9 May 2023)”.

7. [51]

   On 8 May 2023, not having received any proposed index to the Court Book, Mr Ahmed emailed:

8. [52]

   On 8 May 2023, Mr Lee responded and included in the Real Property List standard pre-trial directions check list table his response:

9. [53]

   Mr Lee provided no explanation as to why he stated that it was not possible to liaise with Mr Ahmed about the Court Book.

10. [54]

    On 9 May 2023, Mr Lee appeared at the pre-trial directions hearing. The transcript on that day includes:

11. [55]

    Other orders were made for the progression of the matter to hearing, including the timing of exchange of objections, and the preparation of a joint chronology, statement of real issues in dispute and written submissions.

12. [56]

    On 10 May 2023, Mr Lee emailed Mr Ahmed including:

13. [57]

    Later that day, Mr Ahmed responded including:

14. [58]

    Mr Lee then responded:

15. [59]

    Later the same day Mr Ahmed responded:

16. [60]

    It appears there was no response to that email and on 12 May 2023 Mr Ahmed emailed Mr Lee:

17. [61]

    On 15 May 2023, Mr Lee responded including: “We informed you earlier that we would not reply to your trial plan. No need for one. The court did not order it”.

18. [62]

    On that same day, Mr Lee sought the defendants’ outline of submissions and joint chronology and stated:

19. [63]

    About 20 minutes later, Mr Ahmed responded indicating that he was not able to open the Google Drive, asking for a chronology as a Word document and asking about the statement of real issues.

20. [64]

    About 15 minutes later, Mr Lee responded without attaching a Word document:

21. [65]

    On 16 May 2023 at 9.22am, Mr Stefanus Tirtadjaja, another solicitor working with Mr Ahmed, emailed Mr Lee:

22. [66]

    At 10.07am, Mr Lee responded:

23. [67]

    At 10.10am, Mr Lee emailed the Court and copied in Mr Ahmed:

24. [68]

    At 10.53am, the Court emailed the parties:

25. [69]

    At 11.08am, Mr Lee responded to the Court complaining about the defendants and including:

26. [70]

    At 11.16am, the Court emailed the parties:

27. [71]

    At 11.35am, Mr Lee emailed the Court including:

28. [72]

    At 1.04pm, Mr Tirtadjaja emailed Mr Lee, and not the Court:

29. [73]

    At 1.21pm, Mr Lee responded setting a deadline for a response of only 9 minutes and demonstrating no understanding of the Court’s orders:

30. [74]

    At 1.28pm, Mr Ahmed complied with Mr Lee’s deadline and responded:

31. [75]

    At 1.31pm, Mr Lee responded:

32. [76]

    At 1.32pm, Mr Lee emailed Mr Nahata forwarding his email correspondence with Mr Ahmed. Mr Nahata responded at 1.42pm:

33. [77]

    At 2.06pm, Mr Ahmed responded to Mr Lee:

34. [78]

    At 2.11pm, Mr Lee responded:

35. [79]

    At 2.21pm, Mr Ahmed responded:

36. [80]

    At 2.24pm, Mr Lee responded:

37. [81]

    At 2.31pm, Mr Ahmed responded:

38. [82]

    At 2.36pm, Mr Lee responded:

39. [83]

    At 3.22pm, Mr Tassell, who represented the other neighbours in the plaintiffs’ other proceedings, responded to both Mr Lee and Mr Ahmed:

40. [84]

    At 3.30pm, Mr Lee responded:

41. [85]

    At 3.51pm, Mr Ahmed emailed the Court including:

42. [86]

    At 4.13pm, Mr Lee emailed the Court:

43. [87]

    At 4.15pm, Mr Ahmed emailed the Court, copying in Mr Lee:

44. [88]

    On 17 May 2023 at 9.30am, the matter was called for pre-trial directions. No one appeared for the plaintiffs. The following interaction took place between the Court and Mr Rogers, counsel for the defendants:

45. [89]

    On 17 May 2023 at 1.16pm, Mr Nahata emailed Mr Lee:

46. [90]

    Mr Lee affirmed an affidavit dated 19 May 2023, mostly in the form of submissions, in which he stated, “I am aware that the Court Book should be paginated”. His explanation for his conduct amounted to blaming what he described as the defendants’ “belligerence” and failure to co-operate. No apology was proffered for his failure to comply with the Court’s orders, nor to attend on 17 May 2023 to explain his conduct. The defendants were put to the expense of that appearance, which was caused by Mr Lee’s conduct.

47. [91]

    At the commencement of the hearing on 23 May 2023, there was the following exchange:

48. [92]

    Then:

49. [93]

    On the second day of the hearing, on 24 May 2023, Mr Lee made further submissions about the preparation of the Court Book:

50. [94]

    All of those submissions are extraordinary, particularly in light of Mr Ahmed and Mr Tassell’s emails, which demonstrated that the defendants had already prepared a Court Book that complied with the Court’s orders, which had been provided to Mr Lee. Mr Lee also appears to have ignored his client’s email asking him to agree with the defendants, which could have avoided a further Court appearance.

51. [95]

    Mr Lee’s conduct, including his discourteous correspondence with the other lawyers, his knowing false statement to the Court and rudeness fell well below the standard expected of an officer of the Court.

52. [96]

    After judgment was given, on 20 June 2023, Mr Lee provided a letter to the Court, stating that he did not intend to charge his clients for the unpaginated and unhelpful Court Books that he had prepared. He did not otherwise explain his conduct, including his unprofessional and rude conduct in Court. While I take Mr Lee’s letter into account, it does not fully deal with the issue of whether the plaintiffs ought to pay the defendants’ costs of the time-consuming debate and Court appearances about the Court Books.

53. [97]

    Mr Lee does not complain that he has not had notice of the complaint made against him concerning the wasted Court Books, nor that he required more time to answer it. Mr Lee has apologised for his answers to questions from the Court on 24 May 2023 through his solicitor. No other apology for any other conduct is proffered.

54. [98]

    However, Mr Lee’s submission is that his conduct with regards to the preparation of the unusable Court Book does not warrant the application of s 99 because, while Ms Keesing describes it as “regrettable”, she submits it was not “serious neglect, incompetence or misconduct”, and neither was it “improper” in the circumstances. I reject those submissions for the reasons below.

55. [99]

    First, Mr Lee submits that his conduct “[permits] of a reasonable explanation” as a “genuine attempt to assist the Court”. That submission picks up the definition of “unreasonable conduct” in Ridehalgh v Horsefield [1994] Ch 205 (“Ridehalgh”), quoted above, where it was stated that the “acid test” of whether conduct is “unreasonable” is whether there is a “reasonable explanation”. Self-evidently an explanation that is not “reasonable” does not assist. Further, that “acid test” was not suggested to be relevant to whether conduct is seriously incompetent or serious misconduct.

56. [100]

    I do not accept Ms Keesing’s submission that Mr Lee’s conduct has a “reasonable explanation”. Mr Lee’s 19 May 2023 affidavit includes his statement that he understood the Court Books needed to be paginated. However, Mr Lee’s objective conduct demonstrated no compliance with the Court’s orders regarding the preparation of the matter for hearing, despite the purpose of the material having been explained to him by the Court and the defendants’ lawyers, and his claim to understand, and his assurance to the Court that he would be able to comply. I do not consider Mr Lee’s conduct can be reasonably explained by a misconceived attempt to assist the Court, when he chose not to comply, nor seek further instructions from the Court.

57. [101]

    No explanation is given for his failure to prepare the required joint list of issues, chronology and objections for inclusion in the Court Book; instead it appears that there is no reasonable explanation, other than Mr Lee did not consider those documents “needed” as he stated more than once in his correspondence, despite the Court’s order. In all these dealings, his conduct was also contrary to the requirements of s 56 CPA.

58. [102]

    Secondly, Mr Lee submits that a significant consideration is that he was “by the relevant time acting without fee, and at all times with only limited resources and assistance”. I do not accept either aspect of the submission for the following reasons.

59. [103]

    Ms Keesing’s submission that the authorities support Mr Lee’s factual situation is inaccurate. While there are authorities that state that a relevant consideration for the application of the discretion is where a lawyer is “acting without fee”, that consideration has been applied in very different situations to the present. For example, Ms Keesing refers to Robb J’s statement in RRZ Pty Ltd v Fogo Brazilia Holdings Pty Ltd [2021] NSWSC 873 at [61]:

60. [104]

    That case was very different to the present. There, the solicitor knew the plaintiff was impecunious and could not pay his fees. The solicitor also funded counsel’s fees and provided his client with further funds to avoid deregistration by ASIC and to commence proceedings to protect its position. At [60] Robb J stated, taking into account the fact that the solicitor was unfunded and was evidently acting urgently and apparently in the best interests of his client:

61. [105]

    Here, Mr Lee was not “unfunded” or “acting without fee”. There is no evidence here that the plaintiffs were unable or unwilling to pay for Mr Lee’s services. Upon receiving Mr Lee’s 22 March 2023 invoice for $19,976, Mr Nahata responded:

62. [106]

    I do not consider this email demonstrates that the plaintiffs were unable to pay Mr Lee’s invoice. Instead, it was a request for a discount and an indication of concern about the size of the costs of the two s 88K applications. Ostensibly, Mr Lee understood it as such, because in his response he was prepared to delay payment and/or allow a further discount. He stated:

63. [107]

    By March 2023, Mr Lee had been paid the total amount that he had required from the plaintiffs. Mr Lee volunteered that he would not agitate for any further payment until “May or June”. While Mr Lee chose not to put his costs agreement in evidence, his email indicates that he chose not to enforce alleged existing contractual rights against the plaintiffs, or invoice for all legal services before the hearing. There is no evidence that Mr Lee was of the view that, if he chose to demand further payment from the plaintiffs, that it would not be forthcoming. There is nothing in the exchange of emails that demonstrates that Mr Lee was “acting without fee” in the relevant sense.

64. [108]

    Similarly, I reject Ms Keesing’s following submission:

65. [109]

    That submission ignores relevant facts. In March 2023, the hearing was some two months away, and, had Mr Lee chosen to, he could have terminated his retainer and the plaintiffs would have had ample time to engage other lawyers for the hearing. Mr Lee’s email indicates that less than $5,000.00 was owing from his last invoice.

66. [110]

    Further, there is no evidence of Mr Lee incurring anything other than $607.20 by way of disbursements from March 2023 to the end of the hearing. Therefore, to suggest that Mr Lee would be “significantly out of pocket” for disbursements is hyperbole. Further, the impact of the related proceedings is overstated. The plaintiffs sought an easement for drainage that would traverse the defendants’ property and then move over that of the other neighbours. It is not suggested that the plaintiffs’ primary evidence and arguments for almost all aspects of both s 88K applications were not the same. It is likely that claims against both neighbours could have been dealt with by one pleading and one proceeding, as they were always going to be heard together.

67. [111]

    Further, Ms Keesing’s submission below is wrong as a matter of fact:

68. [112]

    The hearing was on 22 and 23 May 2023, not March 2023. No invoice issued on 23 March 2023 was in evidence.

69. [113]

    I also do not accept Ms Keesing’s written submission that Mr Lee was acting with “limited resources” and that is a relevant factor to be considered here. Orally, Ms Keesing put it:

70. [114]

    Mr Lee has never represented himself as a sole practitioner or without access to specialist resources. In his early email to the plaintiffs concerning a fee estimate to commence the proceedings, he indicated that his “firm” had five professional staff:

71. [115]

    He consistently referred to his “firm” and that “we” were doing work. At the hearing, Mr Lee was assisted by a solicitor he referred to as his “Senior Associate”.

72. [116]

    Mr Lee’s solicitor’s affidavit complains that Mr Lee did not have assistance at the hearing:

73. [117]

    However, Mr Lee had represented to the plaintiffs that there was no need to engage a barrister for further assistance. On 24 February 2023, he emailed Mr Nahata:

74. [118]

    It reflects poorly on Mr Lee that he represented to his clients that his “firm” could successfully run the hearing, and now he submits that the Court ought afford him leniency when exercising the discretion as to costs, because he was a “sole practitioner”, who had “limited resources and assistance”. I do not accept that Mr Lee had limited resources and assistance. Mr Lee appeared confident that he was able to carry out his duties to his clients, and successfully run the case without further assistance or resources.

75. [119]

    Further, it is common knowledge that, when an index for a Court Book has been prepared and the bulk of documents are to hand, preparation of the physical and electronic Court Book is a simple and relatively inexpensive exercise, which can be achieved by engaging the various office support businesses used by lawyers.

76. [120]

    Other cases relied upon by Mr Lee for this issue do not provide a basis for him resisting a wasted costs order. In Ridehalgh, various solicitors’ conduct was held not to constitute improper conduct deserving of wasted costs orders. There, the solicitors, against whom wasted costs orders were sought, had variously obtained and relied on counsel’s advice, acted in accordance with instructions, not been put on notice of deficiencies in the claim by the opposing side, or had made a reasonable, not careless, legal error in a complex area of law. The facts in those cases are disparate to those involved here, where Mr Lee informed the plaintiffs that it was unnecessary to obtain counsel’s advice, and that the case was “straightforward”, despite the defendants’ explanations about the issues.

77. [121]

    For the reasons above, I consider that the following conduct of Mr Lee was improper and delinquent, rather than merely incompetent and/or unreasonable and without reasonable explanation.

78. [122]

    Mr Lee refused to engage with the defendants’ lawyers about the appropriate form of Court Book, despite clear orders and further explanations from the Court and the other lawyers. His provision of the wasted Court Book to the Court was without the defendants’ consent and contrary to the Court’s orders, despite the defendants indicating they had prepared a compliant Court Book and the plaintiffs asking Mr Lee to consent to that Court Book.

79. [123]

    There is no explanation for Mr Lee’s failure to comply with the directions for a chronology, joint statement of real issues in dispute and to engage in limiting the objections to evidence and include those documents in the Court Book. He appears to have made a unilateral decision that such documents were “not needed”.

80. [124]

    Mr Lee’s decision not to have any person appear for the plaintiffs at the pre-trial directions on 17 May 2023 was based on his communicated decision that it was “not needed”, despite the purpose of that directions hearing to resolve the practical problem of his failure to comply with the Court’s orders.

81. [125]

    Mr Lee’s conduct at the beginning of the hearing on 23 May 2023, and in particular his responses to questions from the Court and his false statement to the Court about his difficulties in preparing a Court Book including pagination, have not been defended. However, there is only an apology for Mr Lee’s conduct on 24 May 2023.

82. [126]

    I consider that Mr Lee’s conduct had the effect of causing the defendants to incur unnecessary costs in communicating with him with a view to co-operating in compliance with the Court’s orders, and also the cost of additional Court appearances.

83. [127]

    I consider it just to order that Mr Lee pay the defendants’ costs incurred in connection with the wasted Court Books, as this is appropriate compensation in the circumstances. I note the plaintiffs instructed Mr Lee to agree with the defendants on the issue of the Court Books, which would have saved some costs, and Mr Lee ignored that instruction. I accept Mr Lee’s statement to the Court that he will not charge his clients for these wasted costs.

Other conduct of Mr Lee during hearing

1. [128]

   As noted above, when the substantive judgment was given, Mr Lee was informed that at the costs hearing he would be asked to provide evidence and submissions as to why he ought not personally be responsible for the costs of the whole proceedings.

2. [129]

   The plaintiffs also seek an order under s 99 that Mr Lee pay all the costs of the proceedings, because Mr Lee commenced the proceedings for the plaintiffs in a way that demonstrated “a misconception as to a basic element of law”: Re Felicity at [22]. Mr Pickles’ submission was that Mr Lee’s “communications demonstrate a complete lack of understanding of the principles and requirements of obtaining an easement under s 88K”. Various matters are raised and dealt with below.

3. [130]

   Mr Lee did not submit that he had not had a sufficient opportunity to deal with the allegations and he did not seek an adjournment to be afforded further time. Instead, Ms Keesing provided detailed written and oral submissions resisting any s 99 order.

4. [131]

   I note that Mr Lee has given evidence though his solicitor, that he has recorded and not invoiced the plaintiffs for professional time in the sum of $39,338.31 inclusive of GST. He further undertakes to the Court not to seek to recover any further sums from the plaintiffs concerning the proceedings. However, that does not deal with the issue of the defendants’ costs.

5. [132]

   The various criticisms of Mr Lee are dealt with below. The evidence and findings detailed in the context of the Court Books are also relevant to the issues below. As explained below, I consider that Mr Lee’s conduct demonstrated “serious dereliction of duty, serious misconduct or gross negligence” that caused the costs of the whole misconceived proceedings, and that it is appropriate that it is an appropriate exercise of the costs discretion to order that he pay those wasted costs as compensation.

6. [133]

   First, it is alleged that Mr Lee failed to engage as required by s 88K(2)(c) with the defendants. It is not in dispute that a Court can consider engagement by an applicant up to the date of an order: see eg Studholme at [83].

7. [134]

   However, the requirement under the subsection is that the applicant make “all reasonable attempts” to obtain the easement or an easement to the same effect. Mr Lee’s misconceived attitude was that the Court would order the only easement that the plaintiffs sought, being that identified in the deferred development consent. His correspondence with the defendants’ solicitors demonstrates that he refused to engage in the issues raised by the defendants concerning how the stormwater drainage system would operate over the easement, which were matters relevant to whether the particular easement would be ordered or not.

8. [135]

   After the proceedings were commenced there was no engagement by the plaintiffs, through Mr Lee, in relation to any easement. Despite the defendants making various offers, no meaningful response was ever provided by Mr Lee. This demonstrated a misunderstanding as to the operation of s88K, but also the overriding purpose of the CPA.

9. [136]

   Secondly, it is alleged he failed to advise the plaintiffs of the need to engage with the defendants to obtain an easement.

10. [137]

    Mr Lee has not provided any specific evidence of advice he gave the plaintiffs, including in relation to s 88K(2)(c). There are some email communications in evidence.

11. [138]

    I do not accept Ms Keesing’s submission that I ought to find that Mr Lee was not retained to negotiate with the defendants on the plaintiffs’ behalf. His early email to Mr Nahata on 23 June 2022 included:

12. [139]

    Despite referring to s 88K, Mr Lee’s email only informed the plaintiffs that legal proceedings would be necessary if the defendants and other neighbours refused the “requested easements”. There is no reference in his email to the necessity for engagement in relation to other easements “to the same effect”.

13. [140]

    From time to time, the plaintiffs did ask Mr Lee questions and he responded. For example, as early as 8 September 2022, Mr Nahata asked Mr Lee various questions:

14. [141]

    Mr Nahata was clearly concerned about whether an application ought to be made in relation to “multiple paths for easement providing the same benefit”, and against other neighbours.

15. [142]

    On the same day, Mr Lee responded by email:

16. [143]

    That response did not engage with Mr Nahata’s question about “multiple paths for easement providing the same benefit”, namely the possible alternative easement through other neighbours’ land. Mr Lee’s response that the test is “easy to pass” demonstrates a fundamental misunderstanding of the operation of s 88K. Easements are only ever imposed where all of the elements of the section have been met and the Court is satisfied that the discretion ought to be exercised. There are reported cases where applications have failed because of the existence of other equally good or better easements, and that ought to have been known to Mr Lee as he referenced “caselaw” he had read. As stated in Nahata at [64]:

17. [144]

    None of Mr Lee’s correspondence demonstrates any comprehension of the analysis, in which the Court would engage, including considering alternative easements and whether reasonable attempts had been made to obtain an easement to the “same effect”.

18. [145]

    Ms Keesing submits that the plaintiffs had instructed Mr Lee to stop engaging with the defendants’ solicitors about an easement. She relies on a text message sent on 14 February 2023 by Mr Nahata to Mr Robertson:

19. [146]

    I do not accept Ms Keesing’s submission that the text message demonstrates that the plaintiffs excluded Mr Lee from the negotiation process, and therefore they cannot now complain that he acted in accordance with instructions. Instead, that February 2023 text message must be considered in the context of the advice that had been given by Mr Lee to the plaintiffs in 2022, including that the s 88K test was “easy” to pass and not advising of how alternative easements would be relevant to the determination of the application, even where Mr Nahata had expressly asked that question. The plaintiffs appear to have accepted the earlier advice that there was no need to engage about the alternative easement, which explains the 2023 text message.

20. [147]

    Even if Ms Keesing was correct and Mr Lee was not instructed to engage about the alternative easement across other neighbours’ properties, that does not explain why Mr Lee never engaged with the defendants’ concern about the impact of the proposed easement and the want of expert evidence, which also would have been relevant to whether the particular easement sought would be imposed on the defendants. This is considered further below.

21. [148]

    Thirdly, it is alleged Mr Lee failed to engage experts, in order to demonstrate that the proposed easement was one that ought be imposed over the defendants’ land, despite the concern about the impact on the existing retaining wall and other improvements on the defendants’ land.

22. [149]

    On 8 September 2022, Mr Lee received an email query from a lawyer acting for other neighbours “Just confirm … there is no independent expert report on this proposal”.

23. [150]

    Mr Lee forwarded that email to Mr Nahata including:

24. [151]

    On 9 November 2022, it appears the plaintiffs accepted Mr Lee’s advice and Mr Lee wrote to Mr Ahmed:

25. [152]

    Mr Lee’s attitude that no expert evidence or further detail on the proposed easement was required persisted. On 22 May 2023, Mr Lee wrote to Mr Ahmed including:

26. [153]

    Later that day, he sent another email to Mr Ahmed:

27. [154]

    These examples demonstrate that Mr Lee lacked any understanding of the legal test of “reasonable necessity” and a Court’s concern about imposing an easement over a defendant’s land. Many cases involve the comparison of alternative easements to the one proposed by a plaintiff. Further, expert evidence is often required where there are going to be building works constructed on a defendant’s land. Also, Mr Lee’s threat of a personal costs order against Mr Ahmed was gratuitous and unprofessional.

28. [155]

    Here, there was never a dispute about the public utility of the plaintiffs developing their land and obtaining an appropriate stormwater easement. The issue was where that easement ought to be situated, considering the impact on various neighbours, including the defendants and existing improvements on the land. However, Mr Lee appeared to understand that because the local council had provided the plaintiffs with deferred development consent that required a stormwater easement, that public utility overcame any detailed consideration of any other requirements under s 88K. As noted above, he did not recognise any ongoing requirement to attempt to negotiate an outcome either. This had been his position since 5 September 2022, when he wrote to the defendants’ solicitors:

29. [156]

    Further, on 6 February 2023, a few months before the trial, Mr Nahata and Mr Lee had the following email exchange concerning the plaintiffs’ reply evidence. Mr Lee’s advice was that no expert evidence was required in response to the defendants’ expert evidence:

30. [157]

    The advice that no expert report was necessary for evidence, and instead was “to convince N1”, was given in circumstances, where the defendants had provided a detailed engineering report that identified multiple concerns with the proposed drainage easement set out in Nahata at [67]. Mr Lee advised his clients that it was unnecessary to respond to that expert report, which directly related to the question of whether the proposed easement could be imposed over the defendants’ land, where impact on the servient tenement’s land is a relevant consideration to the test in s 88K(1). Mr Lee misunderstood the legal position and assumed that details of the construction of the stormwater drainage system were irrelevant to the application, and such important detail could be worked out “reasonably after [the judgment]”.

31. [158]

    I note that at the hearing Mr Lee relied upon the decision of Bryson AJ in Stepanoski v Chen [2011] NSWSC 1573, which ought to have made clear to him that engineering issues are relevant to whether a particular easement would be imposed: see Nahata at [99]-[105].

32. [159]

    I reject Ms Keesing’s submission that it was necessary for the plaintiffs to demonstrate they were prepared to pay for expert evidence to make good this complaint. The plaintiffs had asked Mr Lee whether it was necessary to obtain expert evidence more than once and were repeatedly advised it was not. There is no evidence from Mr Lee that the plaintiffs raised a concern about costs before the March 2023 email asking for a discount on his invoice.

33. [160]

    At the hearing, Mr Lee sought to make submissions concerning an expert engineering technique he called “horizontal direct drilling” that might be used for the stormwater drainage pipework through the defendants’ retaining wall. He attempted to “prove” that technique by reference to a decision of Darke J in McGrath v Mestousis [2017] NSWSC 995, where there was expert evidence about using that technique in a particular situation. Mr Lee made the following submission:

34. [161]

    I consider the clear inference of the reason why there was no evidence to support Mr Lee’s submission or to rebut the defendants’ expert evidence was because Mr Lee’s advice to the plaintiffs was no such evidence was needed. That demonstrates a fundamental misunderstanding about what was necessary for his clients to prosecute their particular case.

35. [162]

    Fourthly, it is alleged he failed to obtain a survey or provide the terms of the easement, so that the Court could make an order for an easement.

36. [163]

    As noted above, the law is clear that the Court must be provided with the necessary detail, in order to make any order imposing an easement. Mr Lee’s failure to provide that detail, or seek an adjournment to obtain that detail, in my view demonstrates a fundamental misunderstanding of the legal principles involved in a s 88K case. As also noted above, I do not consider it was incumbent on the defendants to do any more than they had done to point out to Mr Lee the requirement for that information; their repeated requests for information were rebuffed, often rudely. As an example, the plaintiffs refer to the 15 September 2022 letter from the defendants, which was sent shortly after proceedings had been commenced and is considered above.

37. [164]

    Even during the trial, Mr Lee failed to engage with the need for a survey or details for the purpose of obtaining an easement. Instead, he suggested that obtaining surveys was not possible, was too expensive or was not needed. None of those matters were supported by any evidence. His submissions were:

38. [165]

    I reject Ms Keesing’s submission that it was “not unreasonable … for Mr Lee to proceed at all times on the understanding that the terms of the proposed easement were not in question”. Had Mr Lee understood the requirements of s 88K, then those terms and specifications would have been prepared and presented to the Court, the approved plans would have been in evidence, and the defendants’ queries would have been answered. He represented to his clients that he understood the “law” concerning s 88K and gave advice and prepared the case on that basis. However, there is no evidence of any such understanding on his part.

39. [166]

    Fifthly, it is alleged that Mr Lee’s conduct of the hearing itself demonstrated serious incompetence and/or serious misconduct.

40. [167]

    I accept that various aspects of Mr Lee’s conduct during the trial wasted time and was not of assistance to his clients or the Court. For example, contrary to the Court’s pre-trial directions, Mr Lee had not engaged with the defendants’ objections to his clients’ evidence. When given the opportunity to deal with each of the objections, Mr Lee did not engage with the Evidence Act 1995 (NSW) in any way. For example:

41. [168]

    Further, Mr Lee was often discourteous and did not seem to understand how an officer of the Court ought to behave. A few examples are:

    1. (1)

       At the view of the properties, he sought to have opinions of Court staff concerning their visual assessment of the height of trees recorded on transcript to support a submission he wished to make.

    2. (2)

       At the commencement of his submissions, he threw papers, such that an adjournment was required so he could compose himself.

    3. (3)

       He consistently interrupted, and threatened appeals, even before a ruling was made.

42. [169]

    I do not accept Ms Keesing’s submission that the “regrettable” exchanges with the Court did not add to the length of the hearing or the costs incurred. Had Mr Lee complied with the orders to confer on objections, considered the application of the rules of evidence and not been argumentative and interrupted, time would have been saved. While this conduct alone is insufficient to make an order under s 99, it remains a relevant consideration to the exercise of the costs discretion.

43. [170]

    Taking all the matters into account, I consider that there is no reasonable explanation for Mr Lee’s conduct other than serious incompetence, or serious misconduct or neglect of his professional obligations, that is beyond mere incompetence. I have given full allowance for the exigencies of the litigious environment in which Mr Lee was acting, having regard to his representations that he was a lawyer of over 30 years’ experience, and no barrister was needed for the hearing. Mr Lee’s conduct was not a mere mistake or error of judgment. Instead, I consider Mr Lee’s conduct in question involves a failure by him “to fulfil [his] duty to aid in promoting in [his] own sphere the cause of justice”: NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838 at [574] (Ward CJ in Eq, as the President then was).

44. [171]

    Further, this is a case where the proceedings were commenced on the basis of Mr Lee’s misconception as to a basic element of law, namely, what an applicant must prove in a s 88K case. While bringing such an application for an easement was not of itself misconceived, because the plaintiffs required an easement to develop their property, Mr Lee never considered it necessary to bring forward to the Court any of the essential evidence for the application to be successful; instead, he was adamant that the plaintiffs’ deferred development consent was all that was required and the defendants’ refusal to agree to the particular easement sought absolved the plaintiffs from engaging with the defendants’ legitimate concerns. Mr Lee did not revise his attitude at any time, despite the correspondence and offers made by the defendants’ lawyers and despite questions from his own clients. That dogged and fundamentally misconceived attitude demonstrates “serious dereliction of duty, serious misconduct or gross negligence”.

45. [172]

    This is not a case where some evidence or witness failed to provide support for the case, such that a different outcome might have been possible. Instead, here, there was no evidence, upon which the Court could legitimately exercise the discretion to order an easement over the defendants’ land, despite the public utility in them developing their land and having some form of easement for stormwater drainage. I consider that Mr Lee’s conduct caused the costs of the whole proceedings to be wasted. I consider it just to order that Mr Lee compensate the plaintiffs for the wasted costs.

Other non-compliance with Court orders

1. [173]

   At the costs hearing, Ms Keesing was asked whether Mr Lee had complied with the Court’s direction given on 15 June 2023 when judgment was delivered, to notify the plaintiffs of the Court’s orders concerning the future determination of costs and provide them with a copy of the judgment, a copy of NSW Supreme Court Practice Note Eq 5 and s 99. I ordered Mr Lee to provide an affidavit to the Court as to whether he had complied with that direction. He provided an affidavit within the timeframe ordered.

2. [174]

   Mr Lee’s affidavit is to the effect that he did not comply with the 15 June 2023 direction. He affirms that he:

   1. (1)

      attended Court when judgment was delivered with his “assistant”;

   2. (2)

      did not take notes;

   3. (3)

      did not hear the direction; and

   4. (4)

      did not check the transcript.

3. [175]

   That day he sent a reporting email to his clients. Only after the plaintiffs asked for a copy of the judgment, he provided one to them.

4. [176]

   On 28 July 2023, Mr Lee was provided with the transcript from 15 June 2023, but did not comply with the direction.

5. [177]

   Mr Lee apologises in his affidavit for not complying with that direction.

6. [178]

   While this failure by Mr Lee to comply with a Court order is not relevant to the issue of the costs of the proceedings, it does not reflect well on Mr Lee that he failed to comply with another Court direction to provide his client with that important information. The failure to take notes or listen to the Court’s direction has not been explained. A solicitor and officer of the Court ought to do better.

Orders

1. [179]

   For the reasons identified above, the appropriate orders are:

   1. (1)

      Plaintiffs to pay the defendants’ costs on an indemnity basis, as agreed or assessed.

   2. (2)

      Mr Jeffrey Lee, solicitor, to pay the plaintiffs the whole of the costs, for which the plaintiffs are liable, pursuant to s 99(2)(b)(ii) Civil Procedure Act 2005 (NSW).