Au v Berlach (No 2) [2022] NSWSC 228

Supreme Court New South Wales

Medium Neutral Citation: Au v Berlach (No 2) [2022] NSWSC 228 Hearing dates: 4 March 2022 Date of orders: 4 March 2022 Decision date: 04 March 2022 Jurisdiction: Equity Before: Kunc J Decision: Plaintiff to pay costs of the proceedings on the indemnity basis from 20 February 2021 Catchwords: COSTS – Party/Party – Bases of quantification – Indemnity basis – Calderbank offer made before commencement of proceedings – No issue of principle Cases Cited: Au v Berlach [2022] NSWSC 81 Category: Costs Parties: Gregory Ming Hoi Au (Plaintiff) David Jonathon Berlach (First Defendant) Emily Margaret Berlach (Second Defendant) Representation: Counsel:

S Brennan (Plaintiff) T Lynch SC (Defendants)

Solicitors:

Williams Ryman Wong (Plaintiff) ClarkeKann (Defendants) File Number(s): 2021/168680 Publication restriction: No

Judgment

EX TEMPORE JUDGMENT (REVISED) 1. The Court delivered its principal judgment in these proceedings on 22 February 2022 (Au v Berlach [2022] NSWSC 81) (the Principal Judgment). The matter is before me today in relation to the orders that need to be made to give effect to the Principal Judgment and to resolve the question of costs. 2. These reasons assume familiarity, and should be read with, the Principal Judgment. Defined terms in the Principal Judgment have the same meaning in these reasons. Mr S Brennan of Counsel appeared today for Dr Au, and Mr T Lynch of Senior Counsel appeared for the Berlachs. 3. The Berlachs seek a number of injunctions, positive and negative, to give effect to the Court's reasons in relation to the various items that have been placed by Dr Au on and around the Easement and to give effect to their rights as identified in the Principal Judgment. They also seek an order for their costs on the indemnity basis for the entirety of the proceedings based on a Calderbank letter sent on 5 February 2021 to Dr Au, some four months before this litigation was commenced. 4. The various orders that are sought by the Berlachs to give effect to the Court's reasons have largely been overtaken by events. The Court has been informed by Mr Brennan that, on his instructions, since publication of my reasons Dr Au has removed all of the articles and structures complained of in the proceedings and, in addition, has removed his family and all of their possessions from the Au property, which has now been listed by him for sale. 5. There was some dispute between the parties as to whether Dr Au has in fact removed everything complained about, but it does seem clear from what I have been told by both counsel that nearly everything has been removed. Insofar as there is disagreement about whether there is anything left to be removed, I will adjourn the matter for three weeks to see if that can be resolved between the parties without the need for the Court to make any orders. 6. If the removal of any remaining items cannot be resolved, then my preliminary view is that the appropriate course, particularly in circumstances where Dr Au has vacated and put the Au property on the market, is that I would make orders restraining Dr Au from interfering with the Berlachs removing the last remaining items or doing whatever else is necessary to give practical effect to the Principal Judgment. 7. Turning to the question of costs, on 5 February 2021 this letter was sent to Dr Au by the Berlachs' present solicitors (the Offer): "WITHOUT PREJUDICE, SAVE AS TO COSTS Dear Gregory Right of Way – XXX Oak Road, Matcham NSW 2250 I refer to our enclosed letter dated 22 January 2021 addressed to you and Vanessa Szypica, which contained an offer from our clients to settle this dispute. We have not received a substantive response from you. On a purely commercial basis, and to avoid further legal costs being incurred by the parties in this matter, our clients make the following offer to resolve the dispute: 1. On or before 4:00pm on 19 February 2021, you must undertake in writing that: (a) from the date of acceptance of this offer, you, and ensure and procure that any person on your property, will: (i) not in any way interfere with our clients' rights under the enclosed Section 88B Instrument, including the Easements, Restrictions on the Use of the Land, and Right of Way; (ii) not in any way obstruct the area that is the subject of the Easements and Right of Way; and (iii) always comply with the Restrictions on the Use of the Land as set out in the enclosed Instrument; (b) by no later than 4:00pm on 26 February 2021, you will at your own cost, remove all video, audio and other devices that monitor, record, or broadcast any person(s) on the Right of Way and/or on our clients' property and forever refrain from installing such devices in the future; (c) by no later than 4:00pm on 26 February 2021, you will at your own cost, remove the entirety of the chain wire fence erected on the western side (as marked in the enclosed plan) of the Right of Way and forever refrain from erecting such or similar fencing in the future; and (d) by no later than 4:00pm on 26 February 2021, you will at your own cost, remove all shade cloths, camouflage fabrics, signage, bunting, bollards, star pickets, coloured plastic and all other materials that have been placed on or along: (i) the Right of Way; and/or (ii) the unauthorised fencing erected by you along the Right of Way. 2. Each party will bear its own legal costs in connection with this matter. The offer is a genuine compromise of our clients' claims against you because our clients have agreed to allow the unauthorised fence erected on or along the eastern side (as marked in the enclosed plan) of the Right of Way to remain. This offer is made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333, and will remain open for acceptance until 4:00pm on 19 February 2021, at which time it will automatically lapse. For the sake of streamlining a commercial resolution of this matter, we have set out an execution section below. If you agree to provide the Undertakings, please sign and return a copy of this letter to us by no later than 4:00pm on 19 February 2021. Should this matter proceed to litigation, our clients reserve their right to tender this letter on the question of costs, including in an application for full indemnity costs from the date of this letter in the event that you do not accept this offer and the determination by the Court is no less favourable to our clients than the terms of the Calderbank Offer. All our clients' rights are reserved. We await your reply." 1. Mr Brennan, with respect correctly, accepted that a Calderbank offer made before the commencement of proceedings could be taken into account by the Court in relation to the exercise of its discretion on the question of the costs of the proceedings. 2. The applicable principles are clear, namely that the effect of a Calderbank offer is not automatic but may be relevant to the exercise of the Court's discretion; it must reflect a genuine compromise; the successful offeror must achieve the same or a better outcome than if the offeree had accepted the offer; and, the Court must be satisfied that it was unreasonable on the part of the offeree not to have accepted the offer. 3. Mr Brennan submitted it was not unreasonable for Dr Au to have rejected the Offer for three reasons. 4. First, he submitted that the period of time allowed for Dr Au to consider the Offer (two weeks) was too short. He particularly drew attention to the need for Dr Au to have adequate time to obtain legal advice. 5. However, I am satisfied by reference to correspondence that has been drawn to my attention between the Berlachs' present solicitors and Dr Au's present solicitors (but retained in relation to a different aspect of the dispute during 2020), that there were lawyers in Dr Au's camp at the time of the Offer (and who in fact became his solicitors on the record in these proceedings) who were well and truly familiar with the long-running dispute between these parties and the issues between them. The submission that Dr Au's rejection was not unreasonable for want of time to obtain legal advice is rejected. 6. Second, Mr Brennan submitted that the time allowed for Dr Au to comply with the various steps contemplated in the Offer was insufficient. He could have accepted the Offer at any time up to 19 February 2021 and, if he had waited until the last day, would only have had a further week to remove the various offending items referred to in the Offer. 7. Again, I do not accept Mr Brennan's submission. Since the publication of the Principal Judgment, on Mr Brennan's own instructions, Dr Au has been able to remove all or nearly all of the offending items including the fence (which would not have had to be removed had he accepted the Offer) within a week or so. Events have proven that the time limited in the Offer for action was reasonable, even if Dr Au had accepted it on the last available day. 8. Finally, Mr Brennan relied on the fact that the Offer required the removal of all the CCTV cameras, whereas the Court has allowed the possibility of a minimum number of CCTV cameras to be left on the Au property for the purpose of security surveillance rather than what the Court was satisfied was snooping that constituted a nuisance (see [120] of the Principal Judgment). 9. In Mr Brennan's submission, this means the Berlachs have not achieved a result as good or better than what was contemplated in the Offer. I do not agree. I accept Mr Lynch SC's submission that where the Berlachs have relevantly succeeded is in the substance of demonstrating that all of the CCTV cameras, as they were then arrayed, were a nuisance, being there for the impermissible purpose of snooping on the Berlachs (see [117] of the Principal Judgment). 10. However, even if I am wrong in that, it must be recalled that the Court's discretion on questions of costs is a wide one, confined only by the obligations to be exercised judicially and for a proper purpose. The Berlachs have proposed, and Dr Au has made no objection to, the use of three cameras to give effect to the reservation in the Principal Judgment. I do not regard what might be seen as a lack of success over a matter of three CCTV cameras out of seventeen is sufficient to outweigh what is the clear consequence of the failure to have accepted the Offer, being now just over a year of expensive and time-consuming litigation which Dr Au has comprehensively lost. 11. It follows that the outcome of the proceedings viewed as a whole, and notwithstanding the matter of the three CCTV cameras which in the circumstances of this case are far less significant than the fence, is a better outcome for the Berlachs than what would have been achieved if Dr Au had accepted the Offer. 12. Finally, I should record that the Court is satisfied that the Offer was a serious and proper attempt at compromise, in particular because it allowed the fence, which the Court has otherwise required to be removed and is a substantial eyesore in the vicinity of the Easement, to remain. 13. For these reasons I find that it was unreasonable of Dr Au not to have accepted the Offer, and that an order should be made for him to pay the Berlachs' costs of the proceedings, that is both the summons and the cross-summons, on the indemnity basis from 20 February 2021, which is the day after the period the Offer was open for acceptance. 14. The orders of the Court are: 1. The plaintiff/cross-defendant is to pay the first defendant/cross claimant's and second defendant/cross claimant's costs of and incidental to these proceedings on and from 20 February 2021 on the indemnity basis. 2. The proceedings are stood over for further directions to 25 March 2022 at 9:30 before me. 3. There is liberty to the parties to send up any consent orders to my chambers before that date if agreement is able to be reached between the parties on any outstanding matters.