Pont v Hawkesbury City Council [2021] NSWSC 876

Supreme Court New South Wales

Medium Neutral Citation: Pont v Hawkesbury City Council [2021] NSWSC 876 Hearing dates: On the papers Date of orders: 21 July 2021 Decision date: 21 July 2021 Jurisdiction: Equity Before: Darke J Decision: Proceedings dismissed by consent. No order as to costs, to the intent that each party bears their own costs of the proceedings. Catchwords: COSTS – proceedings for nuisance – settlement reached involving dismissal of proceedings – whether circumstances warrant departure from usual position stated in Uniform Civil Procedure Rules 2005 (NSW) r 42.20 – where both parties acted reasonably – where Court could not be confident that if matter had gone to trial plaintiffs would almost certainly have succeeded – no order made as to costs Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 42.20 Category: Costs Parties: Colin Andrew Pont (First Plaintiff) Cheryle Anne Pont (Second Plaintiff) Hawkesbury City Council (Defendant) Representation: Counsel: D Jay (Plaintiffs) FFF Salama (Defendant)

Solicitors: Adams Partners (Plaintiffs) Pikes & Verekers Lawyers (Defendant) File Number(s): 2017/388000 Publication restriction: Nil

Judgment 1. These proceedings were commenced by Summons filed on 22 December 2017. They concern a property owned by the plaintiffs at Gross Vale. Orders were sought for the defendant Council to abate an alleged nuisance arising from the discharge of water from a Council-owned road (Bowen Mountain Road) onto the plaintiffs' land, undertake works to repair damaged parts of the land, and pay damages including aggravated and exemplary damages. 2. The Summons was returnable on 16 February 2018. On that occasion a direction was made for the service of evidence by the plaintiffs. Counsel for the defendant informed the Court that the matter had been very close to having being resolved prior to the commencement of the proceedings, and stated that this "will go to the question of costs in the future". 3. The proceedings were eventually resolved save for the question of costs. The settlement process extended over a number of years. A Court annexed mediation was held on 5 September 2018, at which time the parties agreed upon certain Consent Orders that in essence provided for steps to be taken towards the design and later carrying out of drainage works and the creation of a drainage easement in favour of the defendant. 4. The process involved input from various experts including engineers, a surveyor, and a jointly instructed valuer. On 19 May 2021 the parties entered into a Deed of Settlement which provided for the defendant to undertake certain works (as set out in drawings prepared Pells Sullivan Meynink and in accordance with the Consent Orders) by 31 October 2021, the grant of an easement for drainage in favour of the defendant, and the payment of no less than $43,000 to the plaintiffs as compensation for the easement. The compensation was expressed to be in full and final satisfaction of the plaintiffs' monetary claims in the proceedings. The Deed of Settlement recorded that the plaintiffs proposed to seek an order for costs of the proceedings. It was agreed that such question would be dealt with on the papers. Direction to facilitate that had earlier been made by the Court on 21 April 2021, when it was noted that the parties had agreed on terms of settlement disposing of all other issues. The parties further agreed in the Deed of Settlement that, subject to the resolution of the costs application, the proceedings would be dismissed by consent. 5. This judgment deals with the plaintiffs' application for costs against the defendant. The defendant does not seek any costs order against the plaintiffs. 6. In support of the application, the plaintiffs rely upon the affidavit of the first plaintiff sworn on 25 May 2021 and the exhibit to that affidavit. The defendant relies upon the affidavit of Richard Vaby sworn on 16 June 2021 and the exhibit to that affidavit, together with the affidavit of Stephen Griffiths sworn on 16 June 2021. The Court has also read and considered the written submissions of Counsel for the plaintiffs dated 25 May 2021 and 2 July 2021 (in reply), and the written submissions of Counsel for the defendant dated 23 June 2021. There was no dispute concerning the applicable legal principles. 7. The plaintiffs submitted that whilst the usual costs order where proceedings are dismissed is that the plaintiff pay the costs (see Uniform Civil Procedure Rules 2005 (NSW) r 42.20), a departure from the usual position was justified in this case. A number of reasons were advanced in support of that proposition. It was submitted that the plaintiffs were justified in commencing the proceedings in circumstances where more than five years had passed since the defendant had been put on notice of the issues, and where the parties had not been able to reach agreement on the form of and methodology for remedial works. It was submitted that the plaintiffs achieved practical success in relation to their claim by the agreement that provides for rectification work and compensation of $43,000. It was submitted that the plaintiffs would have almost certainly succeeded if the matter had gone to judgment. The plaintiffs further submitted that their costs were significantly increased by the conduct of the defendant in failing to promptly respond to enquiries, correspondence, and reports from the plaintiffs. The plaintiffs submitted that the steps taken by the plaintiffs and the costs incurred by the plaintiffs towards resolving the matter (both before and after the mediation) should also be taken into account. The plaintiffs submitted that these reasons, taken together, justified an order that the defendant pay their costs. 8. The defendant submitted that each party should pay its own costs of the proceedings. In that regard, some emphasis was placed upon the dealings between the parties prior to the commencement of the proceedings. That is the matter that was alluded to by Counsel for the defendant on 16 February 2018. In particular, reliance was placed upon communications on 15 July 2016 and 5 April 2017 between the defendant and the plaintiffs' solicitors which were said to give rise to an agreement to a rectification works proposal put forward by the defendant. The defendant submitted that in circumstances where there was an agreement, the commencement of the proceedings (by new solicitors acting for the plaintiffs) was not justified, there being no need for them. The defendant submitted that even if no binding agreement had been concluded, such that there was merely an agreement in principle, the defendant's proposal was substantially carried through to the Deed of Settlement. The defendant thus submitted that it could not be said that the plaintiffs achieved practical success in the proceedings. The defendant further submitted that it should not be concluded that the plaintiffs would have almost certainly succeeded had the matter proceeded to final hearing. In this regard the defendant again referred to the agreement it says was reached prior to commencement. The defendant submitted that it was possible that ultimately orders may have been made consistently with the agreement, with the Court refusing to make any costs order in favour of the plaintiffs. Finally, the defendant took issue with the suggestion that it had at any time acted unreasonably, or caused the plaintiffs to incur additional costs. 9. I would not conclude that the terms of the communications on 15 July 2016 (from the defendant to the plaintiffs' solicitors) and 5 April 2017 (from the plaintiffs' solicitors to the defendant) gave rise to a legally binding agreement for the undertaking of works and the granting of an easement, but I think there was at least an agreement or consensus that the drainage problems would be dealt with by proceeding with works as proposed by the defendant and the grant of a suitable easement to enable on-going maintenance of the drainage works by the defendant. It is clear that differences between the parties remained as to associated matters, including as to how the carrying out of the works would be supervised. In these circumstances, and having regard to the length of time that had elapsed since the problems emerged in about March 2012, I do not think it was unreasonable for the plaintiffs to commence the proceedings in December 2017. I also note that it appears the plaintiffs held some concern that a limitation period was about to expire. 10. However, I do not accept that this is a case where the plaintiffs should be seen to have achieved practical success in the proceedings, or by reason of the proceedings. It seems to me that the agreement ultimately embodied in the Deed of Settlement is as much the product of a continuation of negotiations that had started and had come some way prior to the commencement of the proceedings, as it is the product of the proceedings themselves. The proceedings had not progressed very far before mediation was ordered, and an agreement was reached at the mediation (in September 2018) that was an important step towards the final agreement the subject of the Deed of Settlement. In the meantime, the parties were not taking steps in the proceedings to bring them to final hearing. 11. Neither do I accept that this is one of those cases where the Court can be confident that if the matter had gone to trial the plaintiffs would have almost certainly succeeded. The reports of experts that are in evidence certainly suggest the existence of a good arguable case, but success would ultimately depend on the plaintiffs establishing that the defendant's use of its land amounted to an unreasonable interference with the plaintiffs' use and enjoyment of their land. It is not manifest that the plaintiffs would have succeeded, or would almost certainly have succeeded. Of course, as the plaintiffs accepted, it is not appropriate for the Court to undertake an enquiry into the merits of the respective cases in order to determine the question of costs. 12. Finally, I am not satisfied that any conduct of the defendant caused the plaintiffs' costs of the proceedings to be significantly increased. An examination of the documents in evidence shows that prior to the proceedings there were occasions when the defendant seemed slow to respond to the plaintiffs or to the plaintiffs' solicitors. The same could be said against the plaintiffs. In any case, these occasions are remote from the costs of the proceedings themselves. 13. Viewed overall, this seems to me to be a case where both parties have conducted themselves reasonably. The parties engaged with each other constructively (albeit not continuously) over a lengthy period during which negations occurred and the assistance of experts was obtained. A measure of agreement was reached along the way, culminating in the Deed of Settlement in May 2021. In all the circumstances I think there is good reason to depart from the usual position that pertains when proceedings are dismissed, but not so as to justify an order for costs against the defendant. In my opinion, the appropriate exercise of the Court's discretion as to costs is to make no order as to costs, to the intent that each party bears their own costs of the proceedings.