Supreme Court New South Wales Medium Neutral Citation: Stein v Board [2020] NSWSC 1358 Hearing dates: On the papers Date of orders: 6 October 2020 Decision date: 06 October 2020 Jurisdiction: Equity Before: Darke J Decision: Order that the proceedings be dismissed and that each party bear their own costs of the proceedings. Catchwords: COSTS – proceedings settled save as to costs – no determination following a hearing on the merits – neither party's conduct in relation to the litigation unreasonable – appropriate that each party bear its own costs of the proceedings Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Real Property Act 1900 (NSW), s 74K Cases Cited: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 Category: Costs Parties: Lawson Stein (Plaintiff) Victor Board (First Defendant) Geraldine Stuart (Second Defendant) Representation: Counsel: Ms M Bridgett (Plaintiff) Solicitors: RJI Legal (Plaintiff) Morabito Legal (Defendants) File Number(s): 2019/383557 Publication restriction: None Judgment 1. These proceedings were commenced by Summons filed on 5 December 2019. The plaintiff sought urgent interlocutory orders for the extension of the operation of two caveats lodged over certain lands owned by the defendants at Webbs Creek, NSW ("the land"), pursuant to s 74K of the Real Property Act 1900 (NSW). The Summons sought final relief including declarations that the plaintiff had an equitable interest in the land, an exclusive right as tenant to occupy the land, and a life estate, as well as an order restraining the defendants from interfering with the plaintiff's quiet enjoyment of the land. 2. On that day, Pembroke J made orders by consent extending the operation of the caveats. On 4 February 2020, the proceedings were ordered to continue on pleadings. The plaintiff filed a Statement of Claim on 22 April 2020, and a defence was filed on 12 June 2020. 3. On 21 August 2020, the Court was informed that the proceedings had settled save as to costs. Directions were made for the parties to provide brief written submissions with a view to that matter being determined on the papers. The plaintiff provided submissions dated 27 August 2020, supported by a number of documents that were attached. The plaintiff also relied upon parts of the various affidavits that had been filed prior to the settlement of the proceedings. The defendants provided submissions dated 10 September 2020, supported by an affidavit of the defendants' solicitor, Mr Morabito. The plaintiff provided a further submission in reply dated 25 September 2020. 4. The proceedings concern a partly oral, partly written tenancy agreement entered into between the defendants as landlords and the plaintiff as tenant on 1 July 1999. Pursuant to the agreement, the plaintiff was permitted to reside on the defendants' land for the duration of his life for a payment of $1 per annum. 5. Since the making of the tenancy agreement in 1999, the plaintiff has undertaken maintenance of the land and made improvements to the land at his expense. It is further agreed that the plaintiff paid to the defendants an amount of $132,000 shortly after the tenancy agreement commenced. 6. The plaintiff lodged the caveats on 13 March 2008 and 27 March 2019 respectively. The interest claimed in both caveats is a life estate and beneficial interest by virtue of an Agreement with the defendants dated 1 July 1999. 7. The defendants served lapsing notices on 11 October 2019. The first defendant deposed that he had a concern that the interests claimed in the caveats were erroneous and exceeded the terms of the tenancy agreement, and that they may give rise to legal disputes with the plaintiff's successors once he passes away. 8. The parties entered into a Deed of Settlement and Release on 30 June 2020. In short, the Deed provides that: 1. the plaintiff is entitled to quiet enjoyment of the property for his lifetime for the payment of $1 per annum; 2. the plaintiff acknowledges that he has no proprietary interest in the land other than his right of occupation; 3. the plaintiff agrees to withdraw the caveats and is entitled to lodge new caveats that reflect his equitable interests arising from the Deed of Settlement and Release; and 4. the parties agree that the proceedings have settled save as to costs. 1. The plaintiff seeks an order that the defendants pay the plaintiff's costs on a lump sum basis in the amount of $81,307.47. 2. The plaintiff submitted that the defendants' conduct in the proceedings has been so unreasonable that the Court should order that they pay the plaintiff's costs. It was submitted that the proceedings were forced upon the plaintiff and continued unnecessarily on the pleadings. The plaintiff further submitted that he succeeded in the litigation as the Deed provides for substantially the same relief as sought in the Summons. 3. The defendants submitted that, as the proceedings are to be brought to an end (presumably by means of a dismissal by consent), it is appropriate to make an order that the plaintiff pay the defendants' costs of the proceedings in accordance with r 42.20 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). In the alternative, it was submitted that each party should bear its own costs. The defendants argued that there is no conduct attributable to either party that may be considered "so unreasonable" as to displace the general principle that each party bear its own costs where there has been no determination following a hearing on the merits (see Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625). 4. Rule 42.20 applies in circumstances where the proceedings are dismissed by consent. It does not create a presumption as to costs (see Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 at [78] and [84]). Once it is recognised that the discretion is unconfined, the matters in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (supra) are plainly pertinent, though not necessarily determinative (see Fordyce v Fordham (supra) at [87] (per McColl JA); Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [53] – [54] (per Bryson JA, McColl and Basten JJA agreeing). A similar provision, rule 42.19, applies where the proceedings are discontinued. 5. This is not a case where there has been an "event" decided in favour of one party and against another (see Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [2]). Unless either side is able to identify conduct that is so unreasonable in the sense discussed by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (supra) at 624-625, then the appropriate order is usually that each party bear its own costs of the proceedings. Further, as submitted by the defendants, it would be inappropriate for the Court to now undertake an inquiry to determine the merits of the case (see Nichols v NFS Agribusiness Pty Ltd (supra) at [31]-[32]). I should add that I have not taken into account or sought to resolve disputes in relation to any of the facts that are asserted by the parties and which remain controversial. 6. I do not accept that the conduct of the defendants has been unreasonable. The defendants were concerned that the interest claimed by the plaintiff in the two caveats was greater than any interest that arose from the agreement made in July 1999. In circumstances where the Deed of Release and Settlement provides that the plaintiff has no proprietary interest in the land other than a right of occupation, and further provides for the caveats to be withdrawn, the defendants' concern cannot be regarded as unreasonable. Moreover, on 31 January 2020 Mr Morabito put the defendants' position to the plaintiff's solicitor, Mr Woods, and suggested that the parties mediate and finalise a new deed. Ultimately, that is of course what occurred. Mr Morabito's letter made it clear that the defendants accepted that the plaintiff had rights to reside on the land for life (and use the land for agistment of livestock) and would not interfere with these rights. 7. I do not see this as a case where it would be appropriate that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in costs (see Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 at [5], cited in Nichols v NFS Agribusiness Pty Ltd (supra) at [27]). Nor do I consider that the plaintiff has achieved practical success in the litigation. Whilst the operation of the caveats was extended (by consent), the final relief sought by the plaintiff, which included declarations as to the existence of an equitable interest in the land, was not achieved in the settlement. 8. For the above reasons, I do not think that the defendants should be ordered to pay the plaintiff's costs. Similarly, I do not think it would be appropriate to order pursuant to either rule 42.19 or 42.20 that the plaintiff pay the defendants' costs. It is my view that the proper exercise of the Court's discretion as to costs pursuant to s 98 of the Civil Procedure Act 2005 (NSW) is that each party bear its own costs of the proceedings. In circumstances where the rights of the parties are now recorded in the Deed of Settlement and Release, the Court will also order that the proceedings be dismissed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 October 2020