Australian Unity Retirement Living Management Pty Ltd v Karimbla Properties (No. 10) Pty Limited (No. 3)

The plaintiffs and the defendants share a busy driveway in the Sydney suburb of Bondi. This is the Court’s third judgment that attempts to resolve their disputes about the use of the easements that overlay the driveway.

In the Court's first judgment given on 31 May 2019, the Court resolved the principal dispute between these parties and proposed (but stayed) a detailed set of orders regulating the rights of carriageway over the driveway, so the parties could give them more detailed consideration: Australian Unity Retirement Living Management Pty Ltd v Karimbla Properties (No. 10) Pty Limited [2019] NSWSC 635. A supplementary hearing was required before final orders were made. That supplementary hearing took place on 14 August 2019 and the Court gave its second judgment on 2 September 2019: Australian Unity Retirement Living Management Pty Ltd v Karimbla Properties (No. 10) Pty Limited (No. 2) [2019] NSWSC 1135.

This judgment should be read together with the Court’s first and second judgments. Events, matters and persons are referred to in all three judgments in the same way.

The Court’s second judgment granted general liberty to apply. Pursuant to that liberty, the parties have approached the Court to resolve one more outstanding issue.

The issue may be shortly stated. The Court’s second judgment (at [59]) stated that in the Court’s view "the cross-claimants should have their costs of the Cross-Claim". But despite what had been said in the second judgment at [59], the Court’s orders of 2 September 2019 did not include any specific order for the costs of the cross-claim. But those orders did include a declaration sought in the cross-claim that the right of carriageway marked “B" in deposited plan 1094020 did not permit the fourth plaintiff to access either Lot A in DP 913610 or Lot 1 in DP 626110.

The parties are now in the midst of a costs assessment. A dispute has recently arisen as to whether the defendants’/cross-claimants’ costs of the cross-claim should be assessed against the plaintiffs/cross-defendants as part of that costs assessment. The cross-claimants submit that cost orders should now be made on the cross-claim to regularise the position, which the cross-claimants submit was an oversight at the time the orders were made. The cross-defendants resist the making of this costs order on various grounds dealt with below.

In these reasons, the Court concludes that it will now make an order for costs on the cross-claim under the “slip rule”, Uniform Civil Procedure Rules 2005 (“UCPR”), r 36.17, taking into account the events that have taken place in the proceeding. In order to consider the issues raised, it is necessary to briefly revisit the relevant issues on the cross-claim.

The Court's reasoning in its earlier judgments explains why some final relief was granted on the cross-claim. In the Court's first judgment (at [26]), the Court explained that on the eve of the hearing, the plaintiffs/cross-defendants made a concession relevant to some of the relief sought on the cross-claim:

In the form in which it existed at the time of the principal hearing, the cross-claim principally sought the following relief against all cross-defendants:

The cross-claim pleaded that the cross-defendants had authorised, invited and procured residents and invitees of LMA (the third cross-defendant) to trespass upon the Karimbla land. But immediately before the hearing, the cross-defendants made the concession that acknowledged the substance of the declaration sought on the cross-claim.

Later in the Court’s reasons for decision in the first judgment (at [156]), the Court referred in the following terms to the concession that had been made by the cross-defendants:

But there was an issue between the parties at the time of the first judgment as to whether or not a declaration should be made on the cross-claim. In the first judgment the Court considered this issue (at [182] – [188]):

In the result, the Court did not make a declaration on 31 May 2019 but reserved for further consideration whether or not, in light of the Court’s reasons, the cross-claimants wanted a declaration to be made. At the supplementary hearing, the cross-claimants pressed for the making of the declaration, which was made: second judgment (at [64 (5)]).

The Court’s second judgment dealt with a number of other relevant issues that had been reserved for further consideration in the Court’s first judgment. One of these issues was whether or not a proposed amendment to the cross-claim propounded a claim in nuisance (which had been discussed in the first judgment) should be allowed at that late stage of the proceedings. In the second judgment, the Court disallowed the amendment to the cross-claim, which would have permitted a claim in nuisance to be brought.

But the Court also considered the making of costs orders in the proceedings. In the end, the Court decided that some reduction should be made in the generally successful plaintiffs’ costs on account of the fact that much of the evidentiary contest in the case was ultimately directed towards fashioning a final form of relief, upon which the plaintiffs were not entirely successful, thereby warranting some reduction in their costs: second judgment (at [62]). But in the second judgment the Court also dealt (at [59]) with the costs of the Cross-Claim saying the following:

As earlier indicated, the Court made a declaration in the second judgment (at [64](5)) of the kind that the Court indicated it would make in the first judgment.

A costs assessment is now underway and it has been noted that there is no formal order following through what the Court said at [59] in the second judgment. To cure this deficiency, the cross-claimants seek relief under the “slip rule”, UCPR, r 36.17, which provides as follows:

The cross-claimants now seek the making of an order that the cross-defendants pay the cross-claimants’ costs of the cross-claim. They also seek an order, if it is thought to be necessary, making clear that Order 6 of the orders made on 2 September 2019, which relevantly provides that “the defendants pay 75% of the first to fourth plaintiffs’ costs of these proceedings on the ordinary basis…” does not deal with any of the costs of the cross-claim.

Generally, an application to correct an accidental slip or an omission in a judgment or order is brought by motion. But the relatively minor nature of the request made here warrants dispensation with the need for a motion. The wording of the rule makes clear that the rule extends not just to correcting the reasons for judgment but to correcting the form of the actual order.

The purpose of the rule is to correct the records of the Court to make certain that they do truly represent what the Court has pronounced and intended to pronounce: Ainsworth v Wilding (1896) 1 Ch 673 at 678-679 and Ivanhoe Gold Corp Ltd v Symonds (1906) 4 CLR 642 at 669; [1906] HCA 71. The rule is commonly applied in situations where the Court has given reasons that it would order a payment of money, for example, but failed to make the order for repayment: Commonwealth v McCormack (1984) 155 CLR 273; (1984) 55 ALR 185; (1984) 58 ALJR 513; [1984] HCA 57. One way that the need to engage the rule can be tested is to ask, if the issue had been raised at the hearing would such an order have been made, as of course: Barrell Insurances Pty Ltd v Pennant Hills Restaurants Pty Ltd (1983) 49 ALR 384; (1980) 58 ALJR 51.

In the Court’s view, this is an apt matter for the application of the slip rule. It is quite evident from paragraph [59] of the second judgment, and the framing of the orders made on 2 September 2019, that:

Draft orders were submitted by the parties to the Court prior to 2 September 2019, which did not include an order dealing with the costs of the cross-claim and the Court itself omitted to make the order that its reasons had foreshadowed it would make. In the Court’s view, this is a classic case for the application of the slip rule.

The cross-defendants advance a number of arguments against the application of the slip rule in the present circumstances. The Court has found these arguments not to be persuasive. They are to be dealt with below.

First, the cross-defendants argue that a party must establish upon evidence that there has been either a clerical mistake or an error arising from an accidental slip or omission. The cross-defendants say that Karimbla has failed to "explain the error which would invoke the slip rule". But the answer to that is that the Court recognises that there is a demonstrable error in what the Court wished to do, which is reflected in the Court’s own reasons. Evidence of this is not necessary, if it is obvious to the Court from the reasons for decision themselves, as is the case here.

Second, the cross-defendants argue that the slip rule should not apply because the error was not brought to the attention of the Court at the earliest opportunity after the judgment was delivered. They point out that the current application is made more than nine months after costs orders in the proceedings were first made on 2 September 2019. Moreover, the cross-defendants submit that the error was not even adverted to when final consolidated orders were made in December 2019 at the direction of the Court.

But this argument is not persuasive. The issue has now arisen in the way that might be expected, during a cost assessment. It is understandable that it may have been overlooked until the cost assessment was in train. The delay does not cause any obvious prejudice. The same judge is available to review the reasons given in the first and second judgment and to consider whether the order is made to reflect those reasons. The delay is not gross. Delay is not an answer to the Court amending the orders. The text of the slip rule does not contain a time limitation for the obvious reason that an error needing correcting may sometimes only first be recognised a considerable time after an order is made.

Third, the cross-defendants argue that it is clear from the competing submissions that this issue is contentious and therefore the slip rule should not be engaged. But the Court does not have to resolve any contentious issue of fact or law between the parties here. All that the Court is doing is comparing the orders made with the reasons given and correcting the former to conform with the latter. Merely because there are competing submissions from the parties does not mean the slip rule cannot be engaged.

Fourth, the cross-defendants contend that the proposed amendment to Order 6 of the orders made on 2 September 2019 is not necessary. They point out that orders under the slip rule should not be made merely out of an "abundance of caution".

But the Court wishes to make the orders as clear as possible to the parties, given that this dispute has arisen from existing orders. The Court does not have to amend Order 6 of the orders made on 2 September 2019 to achieve this.

Fifth, the cross-defendants argue that the Court may have taken the cross-claim into account in reducing the plaintiff’s recovery by 25 per cent. The cross-defendants submit that a mistake should not be treated as accidental if the proposed amendment requires the independent discretion or is a matter on which a real difference of opinion may exist: Storey Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446.

The cross-defendants’ submission that any costs that might now be awarded are already reflected in the order made, with respect to the 25 per cent diminution in the plaintiff’s costs recovery in the September 2019 orders, is not correct. The Court’s intent, as made clear in its reasons for decision and its orders, were: that the 25% discount was not a discount on account of the cross-claim but on account of the extent of the argument concerning final relief; and Order 6 of the orders does not purport to encompass any aspect of the cross-claim.

Sixth, the cross-defendants say the matter is now with the costs assessor who has indicated that the cost of the cross-claim, if any, are claimed on the subject application would be rejected. It will be a matter for the costs assessor to deal with any amendments as efficiently as the costs assessor can in light of the late correction to the Court’s orders made in this judgment. If they cannot be dealt with in this cost assessment, they will have to be dealt with in some other way. But the efficient disposition of the issues between these parties indicates they should, if possible, be dealt with in the current costs assessment.

The Court will therefore make the omitted orders for the costs of the cross-claim. But in fashioning those orders, the Court will exclude any costs associated with attempts to amend the cross-claim after the first judgment. Those amendments were unsuccessful and the cross-claimants and should not be compensated for the costs of pursuing those amendments. The appropriate course therefore is to limit the recoverable costs on the cross-claim to costs incurred before 31 May 2019.

On the question of fashioning the orders, the cross-defendants argue that an order for the costs of the cross-claim should be limited in time and reduced to a portion of the cross-claimants’ costs given that the cross-claim significantly changed in character on 22 June 2018, when damages were not pressed by the cross-claimants and the claim for a mandatory injunction was abandoned. The cross-defendants say that because significant changes were made to the cross-claim less than two weeks before trial that no more than 25 per cent of the cross-claimants’ costs should be recovered.

This argument is not persuasive. It is not uncommon for pleadings to be amended in various ways but for the ultimate relief sought to be obtained or conceded as it was here. Bringing of the claim was justified by the success achieved in court. The Court will not discount it any more than limiting the cost to later than 31 May 2019.

Finally, the cross-defendants say they should have their costs of and associated with the application. But the omission was as much the omission of the Court as it was of any party and it is not appropriate for the Court to make an order for costs on this application. They will lie where they fall on this issue.

It is not necessary to amend any previous orders to correct the record. If possible to avoid the unnecessary wastage of costs, the Court wants to avoid further amending the orders that were consolidated in December 2019. Accordingly, the Court makes the following order and notations: