Studholme v Rawson

1. [1]

   BELL P: I have had the benefit of reviewing the reasons for judgment of Basten JA with whose reasons and orders I agree. I wish only to add some observations about what the primary judge referred to in his principal judgment as “an informal directions hearing” at which he “queried why [certain] matters were being put in issue”: [2018] NSWSC 1764 at [43]. This is by way of supplementation to Basten JA’s observations on this topic at [172]-[175] with which I agree.

2. [2]

   In [43] of his principal judgment which appeared in a section headed “Costs – Section 88K(5)”, the primary judge said:

3. [3]

   No transcript was taken of this “informal directions hearing”. The “informal directions hearing” took place in the judge’s chambers without either the plaintiffs or the defendant being present.

4. [4]

   At [44] of his principal judgment, the primary judge expressed his conclusion that “the stance taken by the defendant for so long was inconsistent with the statutory obligation of parties to civil proceedings in this Court pursuant to Section 56(3) of the Civil Procedure Act, 2005”. His Honour continued at [45] stating that:

5. [5]

   At [47], the primary judge concluded that this was:

6. [6]

   Notwithstanding these conclusions, the primary judge deferred making a costs order for the purposes of s 88K(5) of the Conveyancing Act 1919 (NSW) until he had received evidence of the costs involved in the proceedings. At [53] of his judgment, the primary judge said:

7. [7]

   A subsequent costs hearing took place on 26 September 2019. In the course of that costs hearing, counsel then appearing for the defendant (Mr Roucek) sought to read an affidavit of David Benjamin Andrews (Mr Andrews), a solicitor in the employ of the solicitor for the defendant, which annexed correspondence between the parties seeking to reach agreement as to what had been said at the “informal directions hearing” of 19 October 2018. That correspondence included a note by Mr McNally SC who represented the defendant at trial and “appeared” at the informal directions hearing. In the affidavit, Mr Andrews said:

8. [8]

   The “judicial encouragement” referred to was evidently a reference to what the primary judge had said in the course of the “informal directions hearing” of 19 October 2018. As will be seen below, the defendant perceived that that “encouragement” was accompanied by a threat to award costs against her if she did not abandon particular issues.

9. [9]

   The solicitor for the plaintiffs, Mr Briggs, also filed an affidavit responding both to Mr Andrews’ affidavit and also to an affidavit of Mr McNally which had been sworn and filed on 13 February 2019. The transcript of the costs hearing discloses that Mr McNally’s affidavit was not sought to be read even though it had been filed.

10. [10]

    The primary judge rejected both of the solicitors’ affidavits. In the course of argument as to the admission of these affidavits, the primary judge said:

11. [11]

    Later in the transcript, in the context of the tender still being pressed and reference having been made to [43] of the principal judgment which I have set out at [2] above, the primary judge said:

12. [12]

    Notwithstanding the rejection of the solicitors’ affidavits, a short affidavit of the defendant, Ms Elizabeth Patricia Studholme, dated 29 January 2019 was admitted into evidence without objection. In this affidavit, the defendant referred to the “informal directions hearing”, describing it as a “meeting”, and said:

13. [13]

    As Basten JA says in [174] of his judgment:

14. [14]

    Basten JA goes on to say “[t]his situation is troubling”: at [175]. I agree with his Honour for the reasons he expresses. It is not surprising that the defendant wished to adduce evidence as to what had been said in the “informal directions hearing” as it obviously influenced her forensic strategy, and may well have been thought to have been calculated to achieve that outcome.

15. [15]

    In my opinion, the holding of so called “informal directions hearings” in chambers of the kind that took place in the current case is strongly to be deprecated. Not only are they inconsistent with the cardinal principle of open justice but, in the absence of a transcript, they may be apt to give rise to disputes as to what was said which may, in turn, create the need for the participants in such “hearings”, typically counsel, to have to make affidavits as to what was said. Not only is this potentially invidious but, depending on the circumstances, it might jeopardise a counsel’s ability to continue in the case (see Legal Profession Uniform Conduct (Barristers) Rules 2015 (NSW) r 101(d), requiring a barrister to refuse to retain a brief where the barrister has reasonable grounds to believe that the barrister may, as a real possibility, be a witness in the case). This may, in turn, cause potentially significant further expense to the client and great disruption to the orderly ongoing conduct of the case.

16. [16]

    The attempted tender of affidavits by counsel or solicitors as to what transpired in turn may become utterly problematic for the judge. If he or she rejects the tender, a perception may arise that the judge does not wish what was said to be made known; alternatively, if the evidence is admitted but does not align as between the parties and or the judge does not agree with what is said, the judge may have to rule on the accuracy of one or both counsel’s recall, many months after the private hearing when it is notorious that memories, including a busy judge’s memory, can fade.

17. [17]

    None of these most unfortunate and unsatisfactory consequences would arise if the “informal directions hearing” that occurred in the present case or “hearings” like it take place in open court, and are transcribed. Informal short cuts will often produce a false economy.

18. [18]

    The exclusion of the public, let alone parties to the litigation, from a hearing (including a directions hearing) is the antithesis of transparency, and does not conduce to confidence in the administration of justice. This observation is scarcely novel. Almost 400 years ago, in Part 2 of his Institutes at 103, Sir Edward Coke wrote that:

19. [19]

    In Scott v Scott [1913] AC 417 at 445 (Scott), Earl Loreburn said that he could not:

20. [20]

    “Open justice”, subject to stringent exceptions, is a hallmark of the contemporary Australian judicial system. Section 6 of the Court Suppression and Non-publication Orders Act 2010 (NSW) refers to the fact that “a primary objective of the administration of justice is to safeguard the public interest in open justice.” In Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 at [44], the High Court noted that:

21. [21]

    In Rinehart v Welker (2011) 93 NSWLR 311; [2011] NSWCA 403 at [32] (Rinehart), Bathurst CJ and McColl JA said the following in relation to the principle of open justice:

22. [22]

    An “informal directions hearing” of the kind that occurred in the present case, with neither clients present nor a transcript taken, is not to be confused with a “chambers” hearing.

23. [23]

    The tradition of judges sitting out of court and at or in chambers was traced by Dixon J in Medical Board of Victoria v Meyer (1937) 58 CLR 62 at 93ff; [1937] HCA 47 (Meyer), with his Honour describing it as having become a “familiar feature of the judicature system” and something that was “confirmed and increased by statute and by practice”: at 95. The Judiciary Act 1903 (Cth), for example, is replete with references to the jurisdiction of the High Court and of State Supreme Courts invested with federal jurisdiction being exercisable “in Chambers” and dealing with the effect of orders made in chambers: see, for example, ss 16, 17, 34, 69(3), 76(3), 77RR.

24. [24]

    On the other hand, s 11(1) of the Supreme Court Act 1970 (NSW) abolished the distinction between court and chambers; see also, for example, Supreme Court Act 1986 (Vic) s 4(1). The rationale for the abolition of this distinction was explained by the New South Wales Law Reform Commission in its Report of the Law Reform Commission on Supreme Court Procedure, (1969) at 15, cl 31:

25. [25]

    The practice in England as to chambers hearings was described by Sir Jack Jacob in Forbes v Smith [1998] 1 All ER 973 at 974 as follows:

26. [26]

    In the same year, in Hodgson v Imperial Tobacco Ltd [1998] 1 WLR 1056 at 1070 (Hodgson), Lord Woolf observed that:

27. [27]

    In Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1987) 62 ALJR 148 at 149; (1987) 76 ALR 69 at 72, Toohey J addressed the notion of “public chambers”, observing that:

28. [28]

    In the current case, there was nothing public about the “informal directions hearing”. No transcript was taken and no party was present. The judge did not permit evidence of what had been said at it to be adduced.

29. [29]

    Whilst it is both common and entirely appropriate for orders by consent to be made by a judge in chambers, private “hearings” in chambers are, in my opinion, singularly inappropriate, at least in circumstances where no transcript is taken and the parties are excluded. The awkwardness for the defendant, her counsel and indeed the Court produced by the “informal directions hearing” in the present case, and its sequelae in terms of attempts to adduce evidence as to what was said during the “hearing”, provide a salutary illustration of why that is so.

30. [30]

    BASTEN JA: The appellant, Elizabeth Studholme, owns a home at Heights Crescent, Middle Cove, in Sydney. The front of the house faces in a westerly direction. The houses on her southern boundary face on to Cawarrah Road, which runs in an east-west direction where it joins Crescent Heights and then curves to the north-west.

31. [31]

    On the northern boundary of her property there is a laneway running approximately east-west. The laneway permits rear access to five properties on the southern side which front onto Cawarrah Road and a further six properties on the northern side which front on to Heights Crescent. Heights Crescent curves from a north-south alignment in front of the appellant’s house to a more easterly alignment to the north of the laneway. (The layout of the properties may be seen on the annexed plan.)

32. [32]

    The original subdivision in 1947 included the laneway as a right of way six feet (1.83m) in width, burdening the title of the land to the north of the laneway. However, a survey undertaken in 1954 in relation to the appellant’s land contained the following notation:

33. [33]

    On 4 May 2017 the appellant gave notice to the owners of properties along the laneway that she intended to build a fence on the northern boundary of her land, which would effectively reduce the laneway to the six foot right of way. That step would have been to prevent most vehicular access along the laneway.

34. [34]

    In response to the notice, nine of the affected residents (the present respondents) sought and obtained an interlocutory injunction in the Equity Division and sought the imposition of an easement pursuant to s 88K of the Conveyancing Act 1919 (NSW). (It is convenient to continue to refer to those owning properties seeking the benefit of the easement as “the plaintiffs”.)

35. [35]

    Shortly before the trial, Ms Studholme consented to an order imposing an easement over an area extending the right of way by 800mm, so as to provide a right of way a little under 2.7m wide. There remained a strip approximately 115mm wide between the edge of the easement and the wall of the appellant’s home. The issues left for determination by the Court were:

36. [36]

    On 14 December 2018 Pembroke J granted the easement, assessed compensation, and imposed conditions requiring that the plaintiffs undertake certain drainage works on Ms Studholme’s land. [1] The orders were entered on 30 January 2019. On 3 October 2019 the judge made further orders with respect to the costs of the proceedings. Ms Studholme was directed to pay the plaintiffs’ costs, to be assessed from 15 October 2018 on the indemnity basis. [2]

37. [37]

    The principal orders made on 30 January 2019 were as follows: order 1 granted the easement; order 2 required that the plaintiffs pay Ms Studholme compensation of $45,000 and order 6 read:

Issues on appeal

1. [38]

   The appellant’s notice of appeal raised the following issues:

2. [39]

   The notice of appeal pre-dated any order as to costs, but in circumstances where the judge had foreshadowed in the first judgment his views as to the appropriate orders as to costs. An amended notice of appeal was filed on 29 January 2020 which added the costs judgment as one from which the appeal was brought and amended the particulars of the ground relating to costs. It also added further particulars with respect to the ground challenging the assessment of compensation and expanded the claim of actual bias to “apprehended and/or actual bias”.

3. [40]

   The legal structure within which the claimants’ application arose was s 88K of the Conveyancing Act, which relevantly provides:

4. [41]

   The court’s order 1 identified the land owned by the plaintiffs as the land which obtained the benefit of the easement, although the rights conferred by the easement were not identified. Order 1 described a plan said to be attached, which was not attached. (The plan relied on by the plaintiffs was a plan by Brunskill McClenahan & Associates dated 22 June 2017.)

5. [42]

   For reasons explained below, it is necessary to consider the issue of bias (issue (d)) first. If the appellant were to succeed on that ground, the whole of the proceedings below would be set aside and the matter would have to start afresh. As will be explained, that ground should not succeed.

6. [43]

   It will then be appropriate to return to issue (a), addressing the engineering works required by order (6). That ground should be upheld, again for the reasons articulated below. However, on an appeal by way of rehearing, it will not be possible to resolve that aspect of the plaintiff’s application for an easement. Accordingly, the matter will need to be remitted to the Equity Division. That in turn has consequences for the form of the orders which this Court should make. In particular, it raises a question as to whether the scope of the remitter can be limited so as to avoid relitigation of issues unnecessarily.

7. [44]

   This issue arose in Gordon v Lever. [3] The case involved a proposed right of carriageway for the owners of land to the south of the Richmond River, seeking access to a roadway on the northern side of the river following a flood which had washed away a bridge previously used for access to the road. The owner of the proposed servient tenement agreed that an easement was reasonably necessary, but sought to limit the times at which it could be used to those at which the river was otherwise impassable. There were difficulties with the formulation of a term imposing such a temporal limitation. Further, although the primary judge had concluded that a bridge should be built by the applicants for the easement, at a cost of about $48,000, the orders did not address the mechanism by which that was to be achieved, [4] nor as to the maintenance of the track and bridge. [5] Noting the mandatory language of s 88K(3) (“the court is to specify in the orders the nature and terms of the easement”) and s 88K(4) (“the court is to provide in the order for payment” of appropriate compensation), [6] Sackville AJA continued:

8. [45]

   This statement of principle echoed statements made by this Court in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd: [7]

9. [46]

   It follows from this reasoning that if this Court cannot be satisfied as to the appropriate engineering works, it cannot identify the terms and conditions of the easement and therefore whether it is reasonably necessary. It must follow that the whole of the orders made in the Court below must be set aside if one aspect of the conditions was erroneously determined and cannot be redetermined by this Court.

10. [47]

    As explained below, the judge’s assessment of compensation was also flawed, although an assessment of the compensation which should appropriately have been ordered, having regard to the evidence before the trial judge, can be made. However, as the trial judge himself noted, the assessment of compensation may well depend upon the scope of the engineering works and the extent of any intrusion on to Ms Studholme’s land.

11. [48]

    Finally, the challenge to the costs order should also be upheld, but on a basis which allows this Court to dispose of the costs of the trial.

(a) legal principles

1. [49]

   In Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [8] the High Court noted the importance of a party alleging bias (or apprehension of bias) addressing the appropriate relief, in the event that the challenge were upheld. Further, a plurality held that questions of bias should be addressed first. That is because the necessary result is a retrial. There would, for example, be no basis upon which the appellate court could vary orders made below on an appeal by way of rehearing if the trial had wholly miscarried. [9]

2. [50]

   Aspects of the reasoning in support of this approach require elucidation. First, similar reasoning should operate with respect to other elements of procedural unfairness. Secondly, Kirby and Crennan JJ, with whom Gummow ACJ agreed, stated that, in an intermediate appellate court, the party making an allegation of bias should be put to an election as to whether to pursue that allegation, with the consequence that the trial judgment must be set aside and a retrial ordered. [10] That step was not taken in the present appeal.

3. [51]

   In Royal Guardian Mortgage Management Pty Ltd v Nguyen, [11] I expressed concern as to how the possibility of an election would operate in a practical way. It is necessary to consider how such an election would arise in circumstances where it is open to a party to “waive” a complaint of bias (or apprehension of bias). [12] The possibility that a person may waive the right to challenge a judgment on the basis of partiality where, with knowledge of the circumstances giving rise to such a claim, he or she has stood by or failed to raise an objection to the continuation of the proceeding was noted in Vakauta v Kelly [13] and in Michael Wilson & Partners Ltd v Nicholls. [14]

4. [52]

   In the present case, the appellant sought to avoid a finding of acquiescence or waiver by submitting that she could only be satisfied that there had been bias when the second judgment (on costs) was delivered. However, if that were so, then there were difficulties in relying upon a reasonable apprehension of bias, as opposed to actual bias. The joint reasons in Michael Wilson & Partners stated:

5. [53]

   Although the “serious risk” of inverting the proper order of inquiry is no doubt one to be avoided, the conclusion reached by the plurality crystallised into a finding of error because this Court accepted a reasonable apprehension of bias “only by (impermissibly) reasoning backwards from what was decided at trial, and how it was decided, to the conclusion that it might reasonably be apprehended that the judge might have prejudged those matters.” [15]

6. [54]

   It is trite to say that the outcome of the case will not demonstrate pre-judgment; it will be the exercise of judgment. [16] It is also important to keep in mind the focus of the different tests, namely the state of mind of the judge (for actual bias [17] ) and the views of the hypothetical lay bystander (apprehended bias). However, it is not clear that reliance on the reasoning is always impermissible. For example, in Vakauta v Kelly, Brennan, Deane and Gaudron JJ stated: [18]

7. [55]

   Similarly, in Concrete Pty Ltd Callinan J stated: [19]

8. [56]

   Properly understood, the statements in Vakauta and Michael Wilson & Partners must be read in their respective contexts. In Vakauta, the trial judge repeated in his final reasons the opinions said to have constituted prejudgment expressed in the course of the hearing. By contrast, in Michael Wilson & Partners the claim of apprehended bias was grounded on the conduct and making of orders against the applicant in the course of seven ex-parte applications, on which the applicants were not heard and which they had no opportunity to challenge. Acceptance in the final judgment of evidence of witnesses whose credit was not challenged and was not in issue on the ex parte hearings, did not permit reliance on the final judgment to demonstrate apprehension of bias.

9. [57]

   Faced with the possibility that the whole of the trial might have to be repeated, the appellant suggested that the claim of actual bias only infected the costs judgment. However, that attempt at bifurcation does not sit easily with the fact that the appellant was able to formulate grounds of appeal with respect to the costs orders prior to the second judgment. Indeed, the second judgment demonstrated a close connection between findings made in the first judgment and the judge’s conclusions as to the appropriate costs order.

10. [58]

    Bearing these considerations in mind, it is appropriate in this case to deal with the question of bias first. While in many cases it will be difficult to identify the grounds on which bias (or a reasonable apprehension of bias) is asserted, absent a broad understanding of the issues in dispute, in the present case the focus is on the manner in which the issues were addressed and on the procedural steps underlying the determination of the issues. It is therefore both possible and appropriate to address the factual basis of the bias allegations first.

(b) factual basis of allegation of bias

1. [59]

   If, as appeared from the 1954 survey of the appellant’s land, the actual use already extended to a right of way some 2.7m wide, it must be inferred that previous owners of the appellant’s land tolerated such use for some decades before she acquired the property in 1998. A development application made on her behalf in 2002 recorded that, whilst it was proposed to extend the building to an existing wall on the southern boundary of the laneway, there was an express agreement not to extend further into the laneway. Noting objections from those who used the laneway, architects acting on the appellant’s behalf stated in a letter to Willoughby City Council dated 14 October 2002:

2. [60]

   The letter further noted, after expressly identifying the right of way as being “about 6 feet wide” and noting that the current driveway to which one of the neighbours had referred “is partially constructed on the northern metre or so of our property” continued:

3. [61]

   Against this background, the appellant wrote on 4 May 2017 a letter addressed to the owners of the properties fronting Cawarrah Road (that is, on the south side of the laneway) in the following terms:

4. [62]

   The letter then set out six reasons for the appellant taking that position, identified as (i) noise, fumes, privacy; (ii) nuisance; (iii) negligence; (iv) a problem with the wall of the house following laying of the concrete surface to the laneway; (v) light, sun, warmth and air, and (vi) the need for a fence for security.

5. [63]

   Between June 2017 and about April 2018, both the lay evidence from the parties and expert reports were served and filed. Offers of compromise were also served, to which reference will be made below. On 16 October 2018 the associate to Pembroke J wrote to the parties in the following terms:

6. [64]

   Senior counsel for the appellant and for the respondents met the judge in chambers at 9am on 19 October 2018 for what was described in the judgment as “an informal directions hearing”.

7. [65]

   On 25 October 2018 the appellant’s legal representatives advised the respondents and the Court that Ms Studholme would not resist the imposition of an easement. Ms Studholme later swore an affidavit as to the reason for taking that step, which included the following statement:

8. [66]

   The trial had been fixed to commence on 12 November 2018. On 6 November the matter was relisted at the request of senior counsel for the plaintiffs, in effect to allow for further directions to be given in the light of the limitation on the issues in dispute, following consent to the imposition of an easement. In the course of that hearing the judge stated: [21]

9. [67]

   Senior counsel for the plaintiffs, Mr Tomasetti, nevertheless sought to insist that the two engineers, Mr Mackay and Mr Moulsdale, give evidence. The judge then engaged in the following exchange with Mr McNally, senior counsel for Ms Studholme: [22]

10. [68]

    The discussion on 6 November then diverted to a question as to how the costs issue should be dealt with, to which reference will be made below. The judge and Mr McNally then returned to the question of the engineers. The judge indicated a view that the matter would be completed in one day, to which Mr Tomasetti raised a question as to whether he was required to have experts in attendance. The judge appears to have then turned to Mr McNally and the following exchange occurred: [23]

11. [69]

    It may be inferred from these exchanges that the judge had, before the commencement of the trial, formed a view that (i) any resistance to the imposition of an easement expanding the right of way to allow a continuation of current use, that is by an agreed 800mm, was unreasonable; (ii) such an easement was reasonably necessary for the effective use of the plaintiffs’ land; (iii) rear access to their land, given the topography, was not inconsistent with the public interest; (iv) the offers, which were contained in the filed documents, demonstrated reasonable attempts to obtain the easement, which had failed, and (v) accordingly, the only issue to be determined was the scope of the compensation payable to Ms Studholme. Assuming, in favour of Ms Studholme, that it is permissible to look at the judgments for this purpose, the inferences noted above were expressly set out in the first judgment at [4]-[10]. Ms Studholme gave evidence, of which the judge was critical. In particular he stated that, “[s]he has had tribulations in her life but they do not excuse or justify her unreasonable behaviour.” [24]

12. [70]

    It was therefore open to conclude that such views had been formed before the hearing, but on the basis of the filed materials. Whether the pre-trial views were not amenable to change was not clear because, except in determining costs they were of limited relevance once Ms Studholme had accepted an easement would be imposed.

13. [71]

    In addressing the question of costs in the first judgment, the judge stated:

14. [72]

    The judge expressly repeated those findings in the costs judgment at [4]. He also set out in some detail the exchange of offers of compromise which he found to involve genuine attempts to resolve the proceedings on the part of the plaintiffs, describing her responses as “opportunistic and unreasonable”. [25] The judge identified her conduct in precipitating the litigation as “behaving in a peremptory and unreasonable manner” and as “neither reasonable nor rational”. [26]

15. [73]

    The appellant’s case is that, although these pejorative findings were made after hearing oral evidence and considering both written and oral submissions, they confirmed that the judge had formed strong views adverse to Ms Studholme before she gave evidence and before the trial had commenced.

(c) inference of pre-judgment or partiality

1. [74]

   Claims of partiality or pre-judgment based on remarks made by a trial judge in the course of a hearing are inherently fraught. First, the circumstances in which a trial judge expresses any views about the conduct of a proceeding may depend on the model of case management which has been adopted. The Equity Division does not use a “docket system”, but the pre-trial management in this case reveals similar characteristics. In Concrete Pty Ltd, Callinan J made the following observations about such a system:

2. [75]

   There is no doubt that in the present case the trial judge was conscious of the obligation imposed on the Court by Pt 6 of the Civil Procedure Act 2005 (NSW), requiring the court to seek to give effect to the “overriding purpose” which is “to facilitate the just, quick and cheap resolution of the real issues in the proceedings”: s 56(1), (2). He was also conscious of the obligation to adapt procedures to the purpose of resolving the issues “in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute”: s 60. He expressly adverted to those obligations.

3. [76]

   Although a court should be wary of forming a firm view based on documents filed before the trial, some views will inevitably be expressed or implied; the adoption of active case management should not be used as a basis for unwarranted claims of apprehended bias. Such claims should not arise in a case which turns to a large extent on expert evidence where the experts have prepared joint reports, as in the present case. That is because hypothetical lay, but informed, bystanders should have imputed to them knowledge of the nature of the proceedings and the value of active case management in reducing costs and achieving just, quick and cheap resolution of the real issues. Nevertheless, application of the overriding purpose should not be relied on to justify directions which diminish the scope and value of an oral hearing.

4. [77]

   Where a judge expresses his or her tentative views in colourful language, there will be a real risk of an apprehension of bias and, very occasionally, actual bias. The question in the former case is whether such an apprehension is reasonable in all the circumstances. Actual bias will rarely arise because, absent some extraneous interest or other confounding factor, the views being expressed are based on the material before the judge and not on extraneous material or prejudice.

5. [78]

   In giving effect to the dictates of Pt 6 of the Civil Procedure Act and the overriding purpose, two important constraints are to be borne in mind. First, Pt 6 does not provide a basis for departing from principles of procedural fairness as generally reflected in rules of civil procedure. Those principles are reflected in the requirement that the proceedings must be “just”. Secondly, while the judge is entitled to form a view as to what are the “real issues” in dispute between the parties, within limits the parties are entitled to define those issues. The limits are not easily defined, because they will depend upon the relevant legal principles, the available evidence and the professional practice obligations engaged in the particular case.

6. [79]

   Bearing these considerations in mind, the expressions of opinion by the trial judge complained of by the appellant, are explicable on two bases which do not demonstrate a reasonable apprehension of bias, let alone actual bias. The two main complaints raised by the appellant related to her apparent unwillingness to concede the strength of the plaintiffs’ case at trial and, secondly, warnings given that she might face adverse costs consequences if she remained obdurate in her defence.

7. [80]

   The approach adopted by the trial judge must be viewed against the requirements of s 88K of the Conveyancing Act. There were four considerations to be addressed by the Court in considering whether to make an order imposing an easement, namely:

8. [81]

   The second factor was not in issue: there was no suggestion that the plaintiffs’ use of their lands as residential dwellings was in any way inconsistent with the public interest. The proposed easement did not seek to vary or add to the existing uses of the lands, with the possible exception of one block which was in the process of subdivision [28] with the result that one new development would have no street frontage other than the laneway. However, the subdivision was not said to be inconsistent with the public interest.

9. [82]

   The first condition may have been treated by the judge as not realistically in issue because the premises on the south side of the lane fell away steeply to Cawarrah Street so that access from Cawarrah Street was, at least for several of the houses, up steep flights of steps. All of them had become dependent upon vehicular access via the laneway. There was a strong case for the proposition that the laneway was “reasonably necessary” for their effective use of their lands.

10. [83]

    The third and fourth factors were less clearly established in the abstract. If one were to consider whether all reasonable attempts had been made to obtain the easement at the date of the application to the court, the answer might well be no. That was because no attempts had been made prior to the letter from the appellant giving notice of her intention to fence off the three foot strip of her land forming part of the laneway. On the other hand, if as seems the better reading of s 88K, the assessment of “all reasonable attempts” is to be made at the time the court is considering the application, then it would be necessary to have regard to offers which had been made after the proceedings commenced. An assessment of the reasonableness of any offers would need to take into account the requirement that the appellant be adequately compensated for any loss or other disadvantage arising from the imposition of the easement.

11. [84]

    Finally, it is necessary to note the provision in s 88K(5) that, subject to any order of the court to the contrary, the plaintiffs were required to pay the costs of the proceeding. This provision reflects the presumption that the applicants for an easement lack any lawful entitlement to use the land in the way proposed absent the imposition of an easement. They must establish the various elements set out above to the satisfaction of the court, in order to obtain the easement. The imposition of an easement constitutes a derogation from the otherwise unqualified title of the owner. The section does not in terms envisage any obligation on a land owner to concede an entitlement to a proposed easement. In fact, the section envisages that reasonable attempts to obtain the easement have been rejected: s 88K(2)(c). Implicitly, the owner of the land is entitled to reject reasonable offers, require the court to determine the issues, and recover her costs in any event.

12. [85]

    For reasons more fully explained below, the judge’s remarks as to the unreasonable behaviour of the applicant appear to have reflected a standard of reasonable behaviour which did not derive from the statutory scheme. To that extent, they revealed legal error implicit in the approach adopted by the judge; but that is a different matter from pre-judgment or partiality.

13. [86]

    Similarly, while the judge was properly concerned to contain costs, his suggestion that he did not need to hear from the engineers, a position contradicted by both parties and by what in due course happened, demonstrated a failure to grasp at least one important issue in the case. Although in a colloquial sense that might be referred to as an unfortunate “pre-judgment”, it is not an error of the kind which vitiated the proceedings. Rather, it was a misunderstanding of the issues which was in fact partly corrected in the course of the proceedings.

(d) bias: conclusion

1. [87]

   For these reasons, ground 4, relying upon either actual or apprehended bias, must be rejected.

Engineering works

1. [88]

   The proceeding in the Equity Division was commenced by a summons filed on 12 May 2017 seeking an interim injunction to protect access along the laneway, being “approximately 2.7 metres wide beside or upon” Ms Studholme’s land. The summons also claimed an order imposing an easement “on such terms and conditions as the Court thinks appropriate in the circumstances over the land of the defendant … as shown on the annexed plan”. No plan was annexed. There were no pleadings to further define the issues to be resolved by the court.

2. [89]

   The solicitors for the plaintiffs obtained a report from a design engineer, Paul McKay. Mr McKay’s brief was to determine whether the complaints identified in Ms Studholme’s letter of 4 May 2017 had been “caused or contributed to by the structure, construction and/or usage of the laneway.” Mr McKay investigated claims of damp on the internal walls of the building adjoining the laneway and on the external wall. He also addressed concerns arising from the concrete surface of the laneway which, at the front portion of the wall was set back from Ms Studholme’s wall by 200mm, but which at the rear portion abutted the wall, subject to the insertion of a flexible expansion joint.

3. [90]

   Ms Studholme’s solicitors obtained from a civil engineer, Jeff Moulsdale, a report in response dated 4 October 2017. With respect to areas of damp in Ms Studholme’s bathroom, kitchen and pantry, Mr Moulsdale expressed the view that “the construction of the concrete pavement has directed stormwater runoff towards to the house” increasing the moisture content of the soil and sub-floor air. He also noted scratch marks on the render on the outside of the wall, suggesting vehicular damage. Mr Moulsdale noted that if engineering works were to be carried out on the laneway, it would be necessary to obtain council approval.

4. [91]

   In March 2018, the engineers provided a joint report. This report introduced a new factor based on the availability of architectural drawings prepared for the alterations to Ms Studholme’s house in 2001/2002. A surveyor’s report dated 8 March 2001 included the words “gravel driveway” on the land now sought to be the subject of the easement. At some point thereafter, prior to “early 2004”, the laneway had been resurfaced with concrete slabs. The engineers opined that the 2001/2002 plans “seem to indicate that the level of the land adjacent to Ms Studholme’s property was below the level of the house.” [29] It was inferred that the level was raised approximately 500mm by the laying of the concrete surface. At least, that was said to be the height of the present surface above the existing floor level of the house.

5. [92]

   The inference that a concrete slab half a metre thick was laid on the laneway between 2003, when the house was extended to its current northern wall alongside the laneway, and early 2004 was critical to Ms Studholme’s claim that the rising damp in her northern rooms was caused by water from the laneway. Yet little attention was paid to the guarded nature of the experts’ opinion. (It will be necessary to return to the uncertainty surrounding this critical fact below.)

6. [93]

   The engineers suggested solutions to the problem of water pooling against the northern wall of Ms Studholme’s house and the absence of a damp protection course at a relevant height in the wall. They produced a proposal, identified as “option 1”, to be adopted if the easement were granted. The system was described as involving a number of elements, which were also set out in a diagram. On the appeal, Ms Studholme sought an order requiring that the engineering work shown in option 1 be carried out.

7. [94]

   The trial judge did not consider that all elements of option 1 were necessary. Order 6 adopted part only of the proposal. The judge concluded that it was sufficient that the concrete should be cut away from the house so that it followed the southern edge of the proposed easement. That, it appears, would result in a gap between the edge of the easement and the house approximately 115mm wide, or a fraction wider than a standard brick.

8. [95]

   However, there were problems with the proposal and the orders made which were not, it appears, adverted to at the trial and were not addressed on the appeal. In part that was understandable; the engineers were not asked to address the appropriate conditions regarding the imposition of the easement but rather to address the matters of concern raised by Ms Studholme in her letter of 4 May 2017. On the basis noted above, they accepted that the problem of rising damp arose from the laying of the concrete slab in about 2003/2004. That problem was not said to be inherent in the use of the laneway.

9. [96]

   The difficulties with option 1 may be identified as follows. First, it appears from the engineers’ diagram that subsurface drainage with a 100mm pipe was to be inserted to the north of the easement; that is, under the right of way and thus over land within the title of the house on the northern side of the laneway. The owner of that property was not a party to the proceedings.

10. [97]

    Secondly, option 1 envisaged drainage to a stormwater pit, presumably being the property of the council, at Heights Crescent. It is not known if such a pit exists.

11. [98]

    Thirdly, option 1 involved the construction of three stormwater pits drained by a 150mm pipe. The diagram indicated that the internal floor of the pit was at the level of the floor of the house, namely some 500mm below the level of the laneway. The laneway fell away in the direction of Heights Crescent, but at an incline of 1:30. If there is a stormwater outlet at Heights Crescent, it is no doubt underground. However, if there is not, the drain will discharge into the guttering as perhaps contemplated by order 6 made by the trial judge. It is not entirely clear where the proposed additional pits are to be placed, but if, as seems likely, at least one pit is within 15 metres of the street, there may be an issue as to whether there is a sufficient downhill slope to permit the natural flow of water out of the pit to the Council’s storm water drain.

12. [99]

    Fourthly, part of the option involved construction of the concrete surface up to the wall of the house, with a kerb to redirect water away from the wall. The base of the kerb was to be 250mm from the wall. At least half of that construction would therefore be on land not affected by the easement, if the easement ceases 115mm from the wall. The plan also involved structural interference with the wall in order to create a damp protection course above the level of the laneway. No doubt such work could be undertaken with the consent of Ms Studholme, but consequential orders would be required. Further, it appears that Ms Studholme does not consent to the drainage the subject of the Court’s order, and accordingly there is no legal basis for carrying out the work contained in order 6.

13. [100]

    Fifthly, there is an issue as to whether a development application would be required in order to carry out the proposed work.

14. [101]

    None of these issues was addressed by the engineers (with the exception of Council’s consent), in part because they were not briefed in terms reflecting the powers of the court with respect to the imposition of an easement.

15. [102]

    Order 6 made by the trial judge did not condition registration of the easement upon the carrying out of the designated works; rather, the plaintiffs were required to carry out the works within six months of the date of registration of the easement. Although order 8 required that they obtain any necessary consent or approval from the Council “upon the public land within Heights Crescent”, there is no provision for the possibility that such approval will not be given, nor for the possibility that consent may be required for the whole of the works.

16. [103]

    Further, although the case was not run on this basis in this Court, there seem to be real doubts as to whether the proposed works could be carried out. On the assumption that the easement will stop 115mm short of Ms Studholme’s northern wall (the only figure given), that is a distance of 4.5 inches on the imperial scale. Order 6 requires the excavation of a trench “no greater than 300mm in depth” in that area and the placement of a socked agricultural line in the trench. The size of the agricultural line is not specified, but is, presumably, no less than 100mm. If the measurements relied on by the engineers are correct, the bottom of the trench will be well above any existing damp course; it may well be inadequate. Unless seepage past the perforated pipe is not possible (as to which there was no evidence) this appears to be at best a limited solution to the damp problem in the house. There is no provision in order 6 to prevent stormwater flowing off the laneway into the pit next to Ms Studholme’s wall. That wall will not, at least at the plaintiffs’ cost, be waterproofed.

17. [104]

    There is no provision for maintenance of the drainage system provided in order 6; nor for the system to be provided under the engineers’ option 1.

18. [105]

    The trial judge stated that he was satisfied that “irrespective of the construction of the concrete pavement, ‘the existing ground/gravel level would still have caused capillary action through the render’.” [30] The source of the internal quote was not identified, but may be accepted so far as it goes. The question was the extent to which the concrete pavement had exacerbated the problem because water had infiltrated the outer “leaf” of the cavity wall, and would continue to do so. It seems not to have been disputed that any damp protection course provided in the construction of the wall was below the surface of the concrete pavement, and probably at the level of the earlier gravel surface. (There appears to have been no plan in evidence which showed such a course.)

19. [106]

    The judge also contemplated that stormwater pits might be necessary. He dealt with that issue in the following terms:

20. [107]

    The only evidence of stormwater pits was the evidence of 300 square precast concrete stormwater pits with trafficable grates and 150mm pipes set 450mm below the surface.

21. [108]

    There is much to be said for the trial judge’s view that option 1 proposed by the engineers was not sufficiently tailored to the case, as established on the evidence. On the other hand, there is much to be said for the appellant’s view that the works required by order 6 were inadequate for their apparent purpose. Indeed, there are serious doubts as to whether either option 1 or order 6 is capable of being imposed as a condition of the easement. To the extent that the judge considered he was unable to decide whether stormwater pits were necessary, it is also not possible for this Court to decide the issue, nor to decide some of the other practical issues identified above.

22. [109]

    In these circumstances order 6 made by the trial judge should be set aside and this aspect of the matter remitted to the Equity Division.

(a) admissibility of evidence of offers

1. [110]

   The amended notice of motion contained an additional ground 2(j) which stated that the trial judge had erred in admitting correspondence containing settlement offers made by the plaintiffs to Ms Studholme.

2. [111]

   Such material was tendered and admitted over objection. How it came to be tendered in the course of the hearing on the substantive issues needs to be explained, before its admissibility is considered. There were two bases upon which the offers were potentially relevant.

3. [112]

   First, in order to obtain an easement, the plaintiffs needed to demonstrate that they had made all reasonable attempts to obtain an easement, such attempts having been unsuccessful: s 88K(2)(c). The fact that the application was made urgently in response to Ms Studholme’s letter of 4 May 2017 meant that no attempts had been made to obtain an easement prior to commencement of the proceedings. There was evidence of offers to discuss a proposed resolution of the dispute between the date of the letter and the commencement of proceedings a week later. They came to nothing, but it is fair to say that no firm proposal was put to Ms Studholme in that period. Nor was evidence called from any of the plaintiffs.

4. [113]

   It appears to have been assumed by the plaintiffs that that condition could be satisfied by offers made in the course of the proceedings. There was no suggestion to the contrary in this Court. However, once Ms Studholme conceded that the court could, in principle, impose an easement, that issue no longer required resolution by the court; the offers made in the course of the proceedings became irrelevant for that purpose, as did evidence from the plaintiffs as to their attempts to discuss the status of the laneway.

5. [114]

   The second issue which remained alive at all stages, was the allocation of costs. There was a degree of uncertainty in the course of the proceedings as to whether the trial judge wished to hear submissions on costs before disposing of the substantive issues, or whether there should be a further opportunity for submissions as to costs once the substantive issues had been addressed and orders made with respect to the nature and terms of the easement and the question of compensation.

6. [115]

   When the matter came before the Court on 6 November 2018 Mr Tomasetti sought “a little bit of guidance procedurally,” noting that “[c]ost is a real issue … I can’t go into the details of that, but I would be working on the assumption that your Honour will deal with that separately from the first issue, or not?” [31] After a brief discussion, the following exchange occurred:

7. [116]

   At the direction of the trial judge, Ms Studholme was the first witness called. [32] She was not cross-examined on “costs issues”.

8. [117]

   Following Ms Studholme’s evidence, the valuers were called and there ensued a discussion as to the next stage in the trial. Directions were given with respect to the engineers, who were to be heard the following day. Submissions were to follow. The following exchange then took place: [33]

9. [118]

   After the engineers gave evidence on 13 November, Mr Tomasetti referred again to Mr Briggs’ affidavit on costs. [34] That gave rise to a debate as to whether it was appropriate to deal with costs before the substantive issues had been determined.

10. [119]

    Mr Briggs’ affidavit, sworn on 11 November 2018, set out a chronology of the steps taken in the proceedings, and annexed correspondence from 4 May 2017 until 9 November 2018. The first of the plaintiffs’ offers was dated 19 May 2017 and addressed to Ms Studholme personally, she not having then engaged solicitors. The letter sought agreement to the appointment of a surveyor and the obtaining of a valuation. It also proposed that an engineering report be obtained to address some of the issues raised in Ms Studholme’s letter of 4 May. Other steps were proposed, such as the installation of bollards or speed humps and restrictions on the use of the laneway. The plaintiffs agreed to pay all the legal costs with respect to the preparation and registration of appropriate documents. In general terms, they sought the registration of an easement over so much of the laneway as was shown by the survey to encroach upon Ms Studholme’s land.

11. [120]

    On 27 June 2017 a second offer was made, again an open offer signed by the plaintiffs personally and addressed directly to Ms Studholme. At that stage, the plaintiffs had obtained a valuation of the land to be the subject of the easement at just under $23,000. They offered compensation in an amount of $46,000. They offered to cut away the concrete adjoining the side wall of the house and replace it with drainage aggregate. They also offered, if she were to install windows in the northern wall of her house over the next six months, to meet any reasonable additional costs of using double glazing to reduce possible noise nuisance. They repeated the offer to pay all her legal costs to date and all reasonable costs associated with establishing the right of carriageway over her property.

12. [121]

    On 27 July 2017 the solicitors for the plaintiffs sent a letter to Ms Studholme’s solicitors. By that stage further valuation and other reports had been obtained and Ms Studholme’s solicitors had given an indication of their costs to date, including the costs of a proposed one day mediation. The same offers which had previously been made were repeated with the addition of an offer to pay Ms Studholme’s legal costs in an amount of $45,000 (some 10% above the indication of costs incurred), together with compensation in the sum of $300,000. The offer was said to be open until 24 August 2017. The offer was not stated to be “without prejudice”.

13. [122]

    Ms Studholme’s lawyers responded seeking further time within which to obtain opinions from a civil engineer, a damp specialist and a surveyor, in order to determine whether the offer was reasonable, with respect to methods for rectifying the rising damp. That response was not provided until 16 August, some eight days before the offer was due to expire. There is no evidence of a reply to that letter, nor any extension of the offer.

14. [123]

    Mediation took place on 26 July 2017, but no resolution of the dispute eventuated.

15. [124]

    The next offer was provided on 14 October 2018 and was headed “Without prejudice save as to costs”. By that stage the parties had joint reports from the valuers and the engineers. The offer said it was made in accordance with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 20.26(2)(d), but in any event sought to be treated as a Calderbank offer. The offer was precise as to the terms of the easement, referring to the report prepared by Brunskill McClenahan & Associates and to the terms prescribed by Sch 8 of the Conveyancing Act, presumably referring to Pt 1 of Sch 8 dealing with a right of carriage way. The offer proposed compensation of $76,500. The offer included the cutting of the existing concrete slab along the southern edge of the proposed easement and the installation, along the full length of Ms Studholme’s land (but wholly within the easement) of a 100mm x 100mm galvanised steel angle to serve as a vehicle wheel barrier and as a means of containing within the area of the existing concrete driveway the excessive waters generated during high intensity storm events. The reference to the “existing concrete driveway” was, read in context, intended to refer to the remaining concrete slab after removal of the portion which extended beyond the boundaries of the proposed easement. The offer was said to remain open until Monday, 22 October 2018.

16. [125]

    Ms Studholme’s solicitors responded with a counter offer on 19 October 2018, which was also headed “Without prejudice save as to costs”. The counter offer adopted the same terms as to the identification of the proposed right of carriageway and, by reference to Sch 8 of the Conveyancing Act, the purposes of the easement. Compensation was sought in an amount of $250,000. Further, the counter offer required the “rectification of the laneway in accordance with” option 1 from the engineers’ joint report. It also required installation of bollards along the northern wall of the defendant’s property and the grant of an indemnity to Ms Studholme with respect to any and all damage caused to her property as a result of vehicular traffic along the laneway. (Somewhat inconsistently, item 3 required that the plaintiffs pay Ms Studholme’s costs of the proceedings, but item 8 required that the proceedings be dismissed with no order as to costs.) The offer was said to be open until 26 October 2018. The counter offer was not accepted.

17. [126]

    It may be seen from this chronology that the trial judge initially took the conventional view that the substantive issues should be determined first, but, having heard from Ms Studholme and the valuers, decided that, subject to hearing submissions, he had heard “enough evidence” to form a view as to the appropriate costs order. However, following the discussion as to Mr Briggs’ affidavit, it was only the tender of the last two “without prejudice” offers to which objection was taken.

18. [127]

    The basis of the objection was that it was contrary to usual practice and wrong in principle for the judge to have access to without prejudice offers prior to determination of the proceedings. The following exchange took place: [35]

19. [128]

    No reference was made to the fact that the issue raised was not merely one of “practice”, but turned on s 131 of the Evidence Act 1995 (NSW), which provides an exclusionary prohibition with respect to all settlement communications. There are exceptions provided to the general rule: s 131(2).

20. [129]

    The prohibition applies to communications made, and documents prepared, “in connection with an attempt to negotiate a settlement of the dispute”. The label “without prejudice save as to costs” will provide evidence as to purpose, but is not a precondition to the exclusion of the communication or document. Nevertheless, an exception applies where persons consent to the evidence being adduced, as appears to have been the position adopted by Mr McNally with respect to the “open offers”. There is also an exception with respect to evidence which tends to contradict or qualify evidence that has already been admitted about the course of an attempt to settle a dispute: s 131(2)(e). Further, evidence of the communication or document may be adduced to contradict or qualify other evidence which is likely to mislead the court: s 131(2)(g). Finally, the prohibition does not apply to a communication or document which is “relevant to determining liability for costs”: s 131(2)(h).

21. [130]

    Because the terms of s 131 were not addressed by the parties to the appeal, until raised by the Court, there was no helpful consideration of which if any of the exceptions might apply. However, it may be accepted that the debate proceeded on the basis that all the offers were relevant to the question of costs. That being accepted, s 131 does not in terms purport to distinguish between different times when evidence may be adduced in the course of the proceedings. It does not, for example, require that evidence relevant only to costs may not be tendered prior to determination of the substantive issues. For that reason, the parties and the judge may have been correct to discuss the issue in terms of a general practice.

22. [131]

    A possible approach to this ground (not put forward by either party) was that, if objected to, the offers should not have been tendered before the resolution of questions of liability, as a matter of procedural fairness. They were tendered to support the view that Ms Studholme had been unreasonable, before the judge had determined whether to accept or discount her evidence of the effects on the amenity of her property from use of the laneway as a carriageway. Yet she had not been cross-examined about them. The potential for prejudice thus affected an assessment of the appropriate engineering works and of the compensation. Those effects were impermissible, as compared with the appropriateness of considering such matters in relation to costs. In short, error lay in failing to adopt the usual practice of not permitting such material to be put before the court prior to determination of issues of liability.

23. [132]

    It is significant that the practice in this regard has been applied generally despite the fact that in most civil proceedings there is no jury and all issues are determined by the judge. There is undoubtedly power in the parties to waive the application of the practice in any case. It is clear that Ms Studholme did not acquiesce in any such course.

24. [133]

    There are also exceptions to the practice. For example, in appellate proceedings it is not uncommon for the court to be aware of offers of compromise which were made at trial before there has been a determination of an appeal with respect to liability or the assessment of damages. Nevertheless, those offers generally do not apply in the appeal, unless revived after the appeal has been commenced and it is most uncommon for the appellate court to be advised of any offer relevant to the appeal before determination of the appeal. It does not follow that there has to be a further hearing with respect to costs: the issue can usually be dealt with on the papers.

25. [134]

    With some hesitation, given the way in which the matter proceeded both in this Court and before the trial judge, I have formed the view that, absent consent on the part of Ms Studholme, the offers should not have been put before the judge before he gave judgment on liability. However, for other reasons the order with respect to the engineering works, must be set aside and the matter remitted for further hearing. Further, as will appear below, the award of compensation cannot stand. This Court is in a position to make the assessment of compensation itself. Unavoidably, it is aware of the content of the offers of compromise made prior to trial. It is not, however, aware if any offers of compromise have been made with respect to the proceedings in this Court.

26. [135]

    Whether the present ground, taken alone would have led to a finding of a substantial miscarriage of justice warranting a further trial, in accordance with UCPR r 51.53, need not be determined.

(b) assessment of compensation

1. [136]

   The trial judge accepted that the value of the small parcel of land the subject of the easement should be assessed as 50% of its market value on a calculation based upon a square metre valuation of the whole of the property. That resulted in an amount of $38,250. There was a question as to whether that amount should be increased by way of an allowance for what was described as “blot on title”, or otherwise for “injurious affection” of the remaining land not burdened by the easement. The trial judge treated the two labels as applying to the same concept. [38] Although the valuers ascribed different amounts for the value of the land, injurious affection and blot on title, the judge was clearly correct in finding that there were only two elements to be assessed. The “blot” was no more and no less than the registration of an easement. That required an assessment of the loss of value of that portion of the land which was burdened by the easement and the extent, if any, that there was a loss of value of the unburdened portion of the land. That two step assessment was described by the valuers as the “piecemeal” approach; the alternative approach was to give a value to the whole of the land “before and after” the imposition of the easement. The valuers expressed a preference for the result achieved by the piecemeal approach. The trial judge accepted that approach.

2. [137]

   The allowance for injurious affection itself contained two elements. One was to assess the loss of amenity by reference to the factors of which Ms Studholme complained in her letter of 4 May 2017; the other was to have regard to the potential loss of development value based on the reduced floor space ratio (FSR) resulting from the easement reducing the available space. The judge referred to the fact that “the easement will reduce the ‘developable area’ of her property by 7.8%.” [39] It is not clear where the judge obtained that figure. The area not capable of development may have been the whole of the area to the north of the northern wall of the house, rather than simply the area of the easement. However, that was not 7.8% of the total area; the area the subject of the easement (which was 87% of the land beyond the northern wall) was 3.66% of the total property. In any event, the judge accepted that the reduction “will not have any significant or detrimental impact on the development potential of her land for the reasons explained in the report of Mr Burrell”.

3. [138]

   The appellant complained that Mr Burrell had assumed that no development would be approved in the laneway area because it had historically been used as an access laneway for the plaintiffs’ properties. That, the appellant submitted, was to assume the very factor which was to be disregarded, namely the imposition of an easement.

4. [139]

   The complaint is not necessarily soundly based. The fact that the laneway had been so used, absent an easement, did not mean that the Council would disregard its historical use if the easement were not imposed. If there were an illogicality in Mr Burrell’s assumption, it required that he be called and the possible inconsistency explored. That did not happen and there is no ground of appeal available in relation to that use of his evidence.

5. [140]

   In any event, the valuers, who were called and who gave joint evidence, dealt with the issues somewhat differently. On the basis of their piecemeal valuations, the appellant’s valuer (Mr Ecclestone) arrived at a figure of $295,750; the plaintiffs’ valuer (Mr Lunney) arrived at a figure of $108,250. Each of them allowed a figure for $20,000 for “blot on title”; for the reasons explained above, each figure should be reduced by that amount to avoid double counting. The only figure on which they disagreed was the amount for injurious affection, described as loss of security and loss of amenity. For that element, Mr Ecclestone allowed $237,500, and Mr Lunney $50,000. It appears that the trial judge allowed only a small sum for loss of amenity, thereby rounding the amount of compensation from $38,250 (market value) to $45,000. [40]

6. [141]

   Mr Ecclestone’s figure was based on 10% of his “before” valuation of the land. As Mr Lunney noted, Mr Ecclestone had allowed 10% as the total diminution on a “before and after” valuation; there was no justification for using the same amount purely for injurious affection in the course of a piecemeal valuation. Mr Lunney was correct in that respect. While that exercise cast doubt upon Mr Ecclestone’s use of 10%, he did not propose another approach or a different percentage.

7. [142]

   In addition, Mr Lunney commented in detail on aspects of injurious affection identified by Mr Ecclestone. Each of the comments carried weight and warranted some variation of the 10% of total value figure relied on by Mr Ecclestone.

8. [143]

   More importantly, Mr Lunney provided his own explanation of why he considered the amount that should be allowed for injurious affection was a nominal amount, originally assessed at $25,000. Importantly, in support of a “nominal” figure, Mr Lunney explained in his oral evidence how he had approached the “before” aspect of the calculation: [41]

9. [144]

   The judge stated:

10. [145]

    With respect to the observations in [32], the northern boundary appears, from the photographs accompanying the architects’ report to council with the development application, to be a wall, but not the northern wall of the residence. The latter resulted from the 2003 development. Secondly, the setback from the legal boundary on the northern side of Ms Studholme’s land was in the order of 915mm, not 800mm.

11. [146]

    The second paragraph is more troubling. While it is true that the imposition of the proposed easement will result in no practical change to Ms Studholme’s amenity or enjoyment of her land, the relevant counterfactual should be the circumstances if the easement were not imposed.

12. [147]

    The judge accepted “the possibility in the unique circumstances of this case that the plaintiffs’ have equitable rights against the defendant”. [42] This statement led to a complaint by the appellant that the judge had earlier stated that he “would not take into account whether or not there might have been a case for equitable relief in assessing compensation”. [43] However, I do not think that, following Mr Lunney, that was what the trial judge did. The exercise in valuation is that required by Spencer v The Commonwealth, [44] namely to have regard to the amount a willing but not anxious purchaser would offer and a willing but not anxious vendor would accept, as the market value of the property. That exercise requires a level of acquaintance with the land, which will include the absence of an easement over part of the laneway which intruded onto the land, together with a history of its use. [45] It would be remarkable if, in carrying out a valuation of the land for the purposes of assessing the effect of the grant of an easement, it was not permissible for the Court to take into account the long history of usage of the laneway which was established, by 1954, as covering nine feet, not six feet. If the hypothetical purchaser were to consider the possibility that permission to use the additional 800mm could be withdrawn, so that the land became available for some limited expansion of the use of the overall parcel, (i) the possibility would not be expected to amount to a probability and (ii) would be expected to include a potential cost, if it were to be achieved at all. Accordingly, the “before” value of the land (without the easement) might not be significantly higher than the “after” value (taking into account the imposition of the easement).

13. [148]

    The hypothetical purchaser may believe that an easement has been created by prescription, though not registerable on the title; or otherwise the plaintiffs have rights to continued use of the whole laneway arising from the undertakings given on behalf of Ms Studholme in 2001 and relied on by one or more residents in withdrawing objections to her development application, or in pursuing their own developments along the laneway.

14. [149]

    It appears to have been that possibility for which Mr Lunney was prepared in his initial report to allow a “nominal” amount (by which I take him to mean an incalculable buffer against a possibility) of $25,000. Mr Lunney explained that he increased the amount to $50,000 in the joint report as a compromise. There was no error in the trial judge not accepting Mr Ecclestone’s calculations of either injurious affection or the “before and after” differential. He was also entitled to reject Mr Lunney’s higher figure as not based on his expertise, but on his view of the purpose of a “joint report”. However, it would have been appropriate to allow the amount initially proposed by Mr Lunney, in addition to the market value of the easement, as his (and the plaintiffs’) true position.

15. [150]

    That would have given, in round figures, an amount of $65,000. The award of compensation could be increased to $65,000, on the basis set out above. However, that is not an end of the matter. In noting an agreement between the valuers as to the market value of the small parcel of Ms Studholme’s land that will become subject to the proposed easement, the judge continued: [46]

16. [151]

    The judge also stated that the proposed easement would “do no more than formalise a long-standing state of affairs” and would “result in no practical change to the defendant’s amenity or enjoyment of her land.” [47] These assumptions must be subject to reassessment once it has been determined what engineering works should be carried out for the purpose of the proposed easement.

17. [152]

    Finally, the judge rejected claims based on the loss of amenity resulting from use of the laneway by the plaintiffs’ vehicles. He did so on the basis that “[t]hese factors are not new”. [48] However, in the absence of a determination as to the conditions of the proposed easement, it is not possible to make a final assessment of the compensation payable.

(a) reasoning of trial judge

1. [153]

   The trial judge ordered that Ms Studholme pay the plaintiffs’ costs of the proceedings, to be assessed on an indemnity basis from 15 October 2018.

2. [154]

   The costs judgment, delivered on 3 October 2019, correctly set out the approach to be adopted in determining issues of costs generally, [49] noting that s 88K(5) provides that the landowner’s costs are to be paid by the applicants for the easement, subject to any order of the court to the contrary. The judge considered the circumstances in which it might be appropriate to depart from the general provision in the statute. He referred to the observations in this Court in Shi v ABI-K Pty Ltd [50] in dealing with a proposal to otherwise order on the basis that the landowner had refused an offer of compensation which was greater than that awarded, “by analogy” with principles relevant to a Calderbank letter. This Court held:

3. [155]

   The judge also set out passages from compulsory acquisition cases, apparently accepting the submissions for the plaintiffs that these passages applied by way of analogy with respect to proceedings under s 88K. In particular, the judge set out the following passage from the reasons of Leeming JA in Tempe Recreation Reserve Trust v Sydney Water Corporation: [51]

4. [156]

   The judge then relied on the following passages from Dillon v Gosford City Council: [52]

5. [157]

   The trial judge appears to have derived two broad principles from these authorities. First, the dispossessed owner “who litigates reasonably is ordinarily entitled to costs”, terminology derived from Tempe at [104]. Secondly, whilst failure to accept a reasonable offer which was more beneficial than the outcome of the proceedings will not necessarily justify an adverse costs order against the landowner, it may provide evidence of litigating unreasonably. As will be explained further below, these propositions cannot be accepted without qualification.

6. [158]

   The trial judge made findings that the plaintiff acted unreasonably at all stages. The findings may be summarised in the following propositions:

7. [159]

   The judge set out and considered each of the offers and the counter offer made on behalf of Ms Studholme. His factual findings were made in strong terms in the following passages:

(b) grounds of challenge

1. [160]

   The appellant challenged these factual findings on a number of bases. She said that the principles derived by the judge from cases were either wrongly stated or wrongly applied.

2. [161]

   Some of the findings of fact made by the judge were (i) imprecise as to the conduct in question, (ii) unavailable, in the sense of not being open on the evidence, or (iii) ignored countervailing considerations. There was merit in the appellant’s criticisms, but they failed to grapple with the possibility that the judge was right in particular respects in his assessment and that if, for example, some aspects of the appellant’s conduct were unreasonable, then a more nuanced approach should be adopted to the question of costs. It is appropriate to commence with the legal principles.

3. [162]

   While the circumstances of a compulsory acquisition bear some similarity to the imposition of an easement, the similarity is superficial. A compulsory acquisition is undertaken by the executive arm of government for a public purpose; the imposition of an easement is undertaken by a court, usually in resolving practical difficulties of access to private land as between land owners. Secondly, with a compulsory acquisition it is the landowner who initiates the litigation and seeks to justify a higher award of compensation than that offered. A s 88K application is initiated by those claiming the benefit of an easement. Thirdly, the elements of the litigation are quite different. Thus, with respect to compulsory acquisition, the only relevant issue before the Land and Environment Court in its class 3 jurisdiction is the assessment of compensation on just terms. The issues to be addressed in applying s 88K of the Conveyancing Act are more varied and include matters going to the reasonable necessity for the imposition of the easement, being a matter which has no analogy in the valuation jurisdiction of the Land and Environment Court.

4. [163]

   Fourthly, the legal regimes applicable to the allocation of costs in each case are not identical. The relevant rules applicable in both Dillon and Tempe turned on the unfettered discretion to award costs under s 98 of the Civil Procedure Act. That principle is qualified by the rules, and particularly UCPR r 42.1 which provides that generally costs follow the event. However, r 42.1 did not apply with respect to class 3 proceedings in the Land and Environment Court. [53] Accordingly, as explained in Dillon at [60], “the discretion remains unfettered, in the sense that there is no presumption that costs should follow the event.” As further recognised in Dillon, by reference to a number of cases involving compulsory acquisition, the unfettered discretion is generally exercised in a particular way, namely that “a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense.” [54]

5. [164]

   The guidance given by that principle provides limited assistance in considering liability for the costs of an application under s 88K of the Conveyancing Act. Further, the relationship between such court created guidance for the exercise of the discretion and the statutory rule with respect to offers of compromise also involves different considerations from those arising where there is a statutory rule favouring one party. (Dillon involved no offers of compromise, but Tempe did.)

6. [165]

   There are, as explained in the passage from Shi set out above, two aspects of s 88K which must govern the allocation of costs in proceedings under that section. First, there is the general rule that the costs of the land owner will be payable by the applicant for the easement: s 88K(5). Secondly, there is the requirement that all reasonable attempts have been made by the applicant to obtain the easement, which attempts have been unsuccessful, the court’s satisfaction as to which is a precondition to an order imposing an easement: s 88K(2)(c). These provisions led the Court in Shi v ABI-K to conclude that “[t]he statutory scheme is not consistent with the proposition that an applicant can obtain a right to costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement.” [55] The conclusion was worded in that way because the basis on which the land owner was required to pay the applicant’s costs was that compensation had been offered in amounts which exceeded the amount determined by the court. It does not follow that the reasoning is restricted to offers of compensation; rather, a reasonable attempt to obtain an easement will generally have to address all of the requirements identified in subs (1)-(4) of s 88K. The significance of an offer will need to be assessed on that basis.

7. [166]

   An appeal court will generally be reticent in reviewing the findings of a trial judge that the conduct of one party has been unreasonable. Not only is this an evaluative judgment about which minds may readily differ, but it is a judgment based upon the experience of running the trial which the appeal court lacks. Nor, as is often said, are such impressionistic matters easily conveyed in written reasons. Nevertheless, the broad basis of such a finding should be identified in the reasons and may be testable against the objective circumstances.

8. [167]

   As noted above, some of the findings made were imprecise as to the conduct in question. In part, the imprecision resulted from the use of hyperbole and colourful language. Apart from the assertion that she had rejected reasonable offers of compensation, which will be addressed below, the judge stated that she had done more in that “she has not litigated reasonably.” Yet the only factor relied upon beyond the rejection of the offers appears to have been the abrupt manner in which the letter was sent on 4 May 2017, which gave rise to the litigation. It is convenient to commence with the latter criticism.

9. [168]

   The finding, at [30], that Ms Studholme’s conduct “in generating the dispute that led to the litigation ... deserves to be criticised” should be accepted. The sending of the letter of 4 May 2017 with the threat effectively to close the laneway to vehicular traffic on five days’ notice, without any warning or prior discussion, was unreasonable conduct. It led to the commencement of the proceedings and the application for an interlocutory injunction. Orders were made by consent halting the construction of the fence pending resolution of the proceedings under s 88K on 16 May 2017. Ms Studholme was not represented at that time and appears to have instructed solicitors in the week between 19 May and 25 May 2017.

10. [169]

    The application for interlocutory relief was incidental to the application for an easement under s 88K and not a necessary part of the s 88K proceedings. Had Ms Studholme acted reasonably at that stage, the interlocutory application would not have been necessary. It is appropriate that she pay the plaintiffs’ legal costs incurred between 4 May and 17 May 2017.

11. [170]

    The rest of the matter concerned the imposition of an easement and the terms on which it was to be imposed. Although the judge formed the view that an order imposing the easement was “inevitable” that was an overstatement if it covered all aspects of the application. Because there was a hearing in relation to disputed issues concerning drainage and costs, it is clear that the judge did not intend such an broad finding. In substance, it must be assumed that three factors were seen as beyond reasonable resistance, namely (i) that the easement was reasonably necessary for the effective use of the plaintiffs’ land, (ii) that their use of their lands was not inconsistent with the public interest, and (iii) that all reasonable attempts had been made by them to obtain the easement, unsuccessfully.

12. [171]

    Satisfaction of the court as to these matters was a precondition which the plaintiffs bore the burden of establishing. How they went about it was a matter for them. If they incurred substantial costs in obtaining reports from a range of experts, that was presumably because they did not see the outcome on those issues as inevitably favourable to them. If they misjudged what was required, that was not a reason to require Ms Studholme to pay their unnecessarily incurred costs. She had no obligation to consent to the imposition of an easement.

13. [172]

    To the extent that the judge considered that Ms Studholme was responsible for the plaintiffs’ costs of establishing that the imposition of the easement was reasonably necessary, such costs ceased to be incurred as at 25 October 2018, when the issue was conceded. That event should not be left unexamined. At the hearing in relation to costs on 26 September 2019 counsel for Ms Studholme sought to read an affidavit setting out what had been said by the judge in chambers to counsel for each party on 19 October 2018. The evidence was tendered in part in response to the statement in the substantive judgment in which the judge had expressed the view, at [43], that “the defendant’s stance” in relation to the abandoned issues “was never justified.” The judge continued:

14. [173]

    At the hearing with respect to costs, the judge interrupted counsel for Ms Studholme to say, “but my judgment does not say explicitly that there was a necessary connection between the abandonment and the informal directions hearing, although it may seem to imply that because of the syntax. … I will make it quite clear in my judgment on costs that I am not founding my decision on any connection whatsoever”. The affidavit setting out the discussion in chambers was rejected. [56] Despite that ruling, the judge admitted Ms Studholme’s affidavit of 29 January 2019 which referred to the meeting in chambers and stated:

15. [174]

    It is possible that such views were not expressed by the trial judge in chambers prior to the hearing of the application, but, given the clarity with which the judge expressed on more than one occasion in his reasons his criticism of Ms Studholme for failing to abandon her defence at an earlier point in time, the only plausible inference is that he did indeed convey to Ms Studholme’s senior counsel what appears to have been conveyed to her.

16. [175]

    This situation is troubling. As the owner of the proposed servient tenement, Ms Studholme was not obliged to accept the imposition of an easement; indeed, she was entitled to reject reasonable offers without necessarily exposing herself to costs of the proceedings if they went to trial. It was no part of case management for the judge to threaten that she might face an adverse costs order if she continued to resist the orders sought by the plaintiffs. The fact that such a statement was made in the privacy of chambers where the discussions were not recorded and that evidence as to what was said was rejected as irrelevant to the costs hearing, does not remove the unease created by the statement. As noted above, active case management is not to be discouraged, but the judge’s position as the ultimate arbiter of the dispute must not be compromised by expressing premature views combined with statements as to the possibility of adverse costs orders if a party does not accept such views.

17. [176]

    Merely putting the plaintiffs to proof of the various elements contained in s 88K could not, of itself, provide any basis for an adverse costs order.

18. [177]

    Before turning to the issues which were not conceded, it is convenient to note the aspects of the findings which were not reasonably open to the judge, and contraindications which were ignored.

19. [178]

    One particular criticism was not open. At [28], the judge said that Ms Studholme was “opportunistic and unreasonable, apparently believing – no doubt on advice from her former solicitor – that she had no responsibility for the plaintiffs’ costs and would ultimately receive her own costs from them.” There were three propositions contained in that finding, none of which had been put to Ms Studholme in cross-examination. The findings should not have been made, let alone in pejorative language.

20. [179]

    A significant example of a finding which ignored contraindications was the statement at [34] that “the plaintiffs are entire[ly] blameless.” That statement ignored the undisputed fact that they (or some of them) laid a concrete roadway over part of Ms Studholme’s land without consultation or consent. So far as the evidence went, it was an extraordinarily substantial structure involving an increase of half a metre in the height of her land against her northern wall. It was that conduct which was thought to have caused the rising damp in her house. Whether or not it had that effect was a central issue in the proceedings. The trial judge must have accepted the engineering evidence that it did have such an effect, because he ordered that the plaintiffs carry out drainage work against her wall. Accordingly, to describe the plaintiffs as entirely “blameless” was unjustified.

21. [180]

    It is convenient to turn next to the rejection of the plaintiffs’ offers, dealing separately with the two issues of the engineering works and assessment of compensation. With respect to the former, there is some irony in the combination of the reluctance of the judge to hear any evidence from the engineers and Ms Studholme’s position that the engineers for each party had reached an agreement as to what was required and she proposed that the court adopt that agreement. If the judge did not need to hear from the experts, presumably at that stage he intended to accept their joint recommendation. The judge’s decision not to accept the joint position of the engineers was open to him, though perhaps primarily because there had been further analysis of the basis of the joint recommendation in the course of the oral testimony. Be that as it may, the finding that Ms Studholme’s position in that regard was unreasonable is difficult to understand. It cannot have been unreasonable to pursue at trial the joint recommendation.

22. [181]

    The second substantive issue between the parties concerned the amount of the compensation payable to Ms Studholme. Again, there was a joint report of the respective parties’ experts. On the preferred “piecemeal” approach, Ms Studholme’s expert reached a figure of $295,750; the plaintiffs’ expert reached a figure of $108,250. On the “before and after” approach, Ms Studholme’s valuer assessed the diminution in value as $237,500. Understandably, Ms Studholme contended for the higher valuation proposed by her valuer, Mr Ecclestone. However, on the basis that the lower valuation of Mr Lunney for the plaintiffs was $108,250, she contended on appeal that it was reasonable for her to expect that the judge would adopt a figure within that range.

23. [182]

    Again, on the basis of the oral testimony it was undoubtedly open to the judge to adopt a figure below that range; for the reasons set out above, this Court would also adopt a figure below that range, though somewhat higher than that of the trial judge. However, there is no indication in the costs judgment as to why it was unreasonable for Ms Studholme to pursue a claim falling within the range accepted by the expert valuers.

24. [183]

    The judge’s characterisation of the plaintiffs’ offers as genuine attempts to resolve the proceedings, being soundly based and rational, should be accepted. However, it did not follow that rejection of those offers was unreasonable. After the initial interlocutory proceeding, there was no basis to find that Ms Studholme’s behaviour founded an order displacing the application of s 88K(5).

25. [184]

    The offer which formed the basis of the order to pay indemnity costs was that made by the plaintiffs on 14 October 2018. That offer proposed compensation in the sum of $76,500, an amount significantly below the lower amount proposed by the plaintiffs’ own expert in the joint valuation report. That fact did not mean that the offer was unreasonable; however, it does mean that Ms Studholme’s rejection of the offer was also not unreasonable.

26. [185]

    The second element of the offer of 14 October 2018 involved removing the existing concrete slab so that it did not abut the wall of the adjacent building. However, that offer fell far short of the proposed solution in the joint engineers report. It failed to allow any amelioration of the drainage problem which resulted from the laneway having been supposedly constructed to a height of some half metre above the floor level of the appellant’s home. Again, the offer was not unreasonable, but neither was the appellant’s rejection of it. The counter offer which sought rectification of the laneway in accordance with option 1 contained in the joint report of the engineers could not be described as unreasonable.

27. [186]

    It remains to consider how an offer of compromise, whether in accordance with UCPR r 20.26, or one effective as a Calderbank offer, can operate with respect to a proceeding under s 88K of the Conveyancing Act. Broadly speaking, offers of compromise under the UCPR and the general law operate within the context of a rule that provides that costs “follow the event”, in the sense that the successful party will recover its costs from the unsuccessful party. An offer of compromise either leads the court not to apply the general rule under r 42.1, or it resets the parameters of success. [57] Thus, a party which obtains a judgment less beneficial than the offer becomes the unsuccessful party. The costs provisions in the UCPR applicable to offers of compromise which have not been accepted reflect that approach. [58] However, such an approach can have no direct application where the primary rule is that one party must pay the other party’s costs regardless of the outcome, as provided by s 88K(5).

28. [187]

    Unless the statutory provision in s 88K(5) overrides the rules relating to offers of compromise, the power of the court to order otherwise under s 88K(5) must be exercised in accordance with the provisions of UCPR r 42.14. The parties assumed that both UCPR r 42.14 and the Calderbank principles applied to offers made in proceedings under s 88K. That is a large assumption; it is not possible to think that either can operate without qualification. Where the offeror betters a non-statutory offer, Calderbank requires the court to decide if the rejection of the offer was unreasonable. As explained above, that is not the approach permitted by s 88K(5). Where the offeror betters an offer complying with r 20.26, a costs order in favour of the offeror will follow unless the court is affirmatively satisfied some other order should be made. The better view is that a rejected offer is a relevant factor to be considered in allocating costs contrary to s 88K(5), but carries no particular weight.

29. [188]

    It is not possible to prescribe the circumstances in which an owner of land will be deprived of his or her costs in resisting an application under s 88K of the Conveyancing Act. Further, departure from the general rule does not entail a particular result. For example, if the court were satisfied that the land owner had acted so unreasonably so as to warrant a departure from s 88K(5), there would be a number of options open. The court could (i) deprive the applicant of some part of his or her costs; (ii) deprive the applicant of all of his or her costs so that neither party would pay costs; (iii) order that the owner pay some part of the applicant’s costs; (iv) order that the owner pay all of the applicant’s costs to be assessed on the ordinary basis, or (v) order that the owner pay some or all of the applicant’s costs to be assessed on an indemnity basis. These options are in ascending order of departure from the statutory position and require increasing degrees of unreasonableness on the part of the owner.

Conclusions with respect to costs

1. [189]

   The order made by the trial judge cannot stand, except to the extent that Ms Studholme should pay the plaintiffs’ costs incurred between 4 May and 17 May 2017.

2. [190]

   Thereafter, the objective circumstances do not demonstrate that Ms Studholme acted unreasonably. Nor, despite a suggestion in the costs judgment, is there a basis to conclude that her solicitors gave her inappropriate advice.

3. [191]

   To the extent that the trial judge relied upon her imputed subjective motivations, those findings should be rejected. There was objectively nothing to suggest she was abusing the processes of the court, nor was such a suggestion put to her.

4. [192]

   The abandonment of her resistance to the imposition of an easement meant that the evidence of the experts on those matters was not tested, the subject of submissions, or of assessment by the trial judge. Even if the evidence provided by the plaintiffs were to be preferred on those issues, she was not obliged to concede. If the judge indicated that she was likely to face an adverse costs order if she did not concede, such a suggestion would have been improper.

5. [193]

   It follows that, subject to Ms Studholme paying the plaintiffs’ costs incurred between 4 May and 17 May 2017, the plaintiffs must pay her costs of the trial.

Conclusions

1. [194]

   The most puzzling aspect of this case is the nature of the work undertaken by the plaintiffs (or some of them) in resurfacing the laneway in 2003/2004. None gave evidence of this, because the judge said he did not need to hear from them. Their affidavits were not read. The engineers said that the concrete surface of the laneway was half a metre above the level of the floor in the rooms adjoining the laneway. That, they believed, was not the case when her development plans were prepared in 2001/2002. As noted above, the basis for that conclusion was quite uncertain. The plaintiffs did not, it seems, seek approval for the concreting work, so there were no plans for it in evidence. (Council approval may not have been required; the town planners did not address that issue.)

2. [195]

   The engineers’ bland statement of their opinion in this regard was puzzling for at least four reasons. First, the laneway is said to have a gradient of 1:30. If Ms Studholme’s floor was level and not stepped, it cannot have been at the same level of the laneway for the depth of the house. Secondly, it is implausible that the plaintiffs laid concrete half a metre thick. No one investigated this suggestion. Thirdly, there is a letterbox in the wall on the northern side of the laneway which, so far as can be told from a photograph, appears to be at a normal height. Fourthly, it is clear that the laneway was not raised at the bottom end where it joins the street.

3. [196]

   One might speculate that the practical way to test the theory that the increased height of the laneway led to the rising damp is to cut away the concrete and test its depth. The importance of some determination of this issue for the resolution of the case is self-evident. Until the cause of the damp can be determined, the extent of the drainage to be paid for by the plaintiffs as a condition of the grant of the easement cannot be determined. It therefore follows that at a further hearing in the Equity Division, further evidence may need to be obtained.

4. [197]

   Order 4 made by the trial judge required that a registrable instrument be executed by Ms Studholme and delivered to the solicitor for the plaintiffs within 28 days of the date of the orders, which were made on 12 November 2019. It is not known whether this step has been taken, but given the need for a further timetable, the order should be set aside. Order 5 is dependent on non-compliance with order 4. Order 6 is the primary focus of the proposed remitter.

5. [198]

   Order 1, granting the easement, should be varied to identify the nature of the easement, so that it provides that the easement be for a right of carriage way for the purposes of Sch 8, Pt 1 of the Conveyancing Act 1919, and to attach the relevant plan. However, no order can be made granting the easement until the necessary terms and conditions have been determined, as explained in Moorebank and Gordon v Lever, discussed above. Accordingly, despite Ms Studholme’s acceptance that an easement should be imposed on her land, an order cannot be made to that effect until the terms and conditions of the easement have been determined. The subsequent substantive orders, 2-10, are interdependent and must also be set aside.

6. [199]

   The Court should make the following orders:

   1. (1)

      Allow the appeal and set aside orders 1-10 made in the Equity Division on 30 January 2019 and order 1 made on 3 October 2019.

   2. (2)

      Order that the defendant pay the plaintiffs’ costs in the Equity Division incurred between 4 May and 17 May 2017.

   3. (3)

      Subject to order (2), order that the plaintiffs pay the defendant’s costs incurred in the Equity Division.

   4. (4)

      Remit the proceeding to the Equity Division for the purpose of determining the appropriate terms and conditions of the grant of an easement for a right of carriage way for the purposes of Sch 8, Pt 1 of the Conveyancing Act 1919 in favour of the plaintiffs.

   5. (5)

      Order that the respondents pay the appellant’s costs in this Court.

   6. (6)

      Grant the respondents a certificate under the Suitors’ Fund Act 1951 (NSW).

7. [200]

   GLEESON JA: I agree with Basten JA.