Land and Environment Court New South Wales Medium Neutral Citation: Gabriel v Billett (No 2) [2023] NSWLEC 123 Hearing dates: On the papers (written submissions filed 28 and 29 August 2023) Date of orders: 15 November 2023 Decision date: 15 November 2023 Jurisdiction: Class 3 Before: Robson J Decision: See orders at [35] Catchwords: COSTS — Class 3 proceedings — Discretion under Encroachment of Buildings Act 1922 (NSW) — General rule costs should follow the event — Whether usual costs rule is just in the circumstances where offers of compromise were made — Whether reasonable for parties to reject offers — Whether indemnity costs order should be made — Impecuniosity of party — Unsuccessful applicant to pay 50 per cent of respondent's costs of primary proceedings Legislation Cited: Dividing Fences Act 1991 (NSW) Encroachment of Buildings Act 1922 (NSW), s 14 Uniform Civil Procedure Rules 2005 (NSW), r 20.26 Cases Cited: Calderbank v Calderbank [1975] All ER 333 Gabriel v Billett [2023] NSWLEC 85 Hofer v Howell Developments Pty Ltd [No 2] [2001] NSWLEC 42; (2001) 113 LGERA 391 James v Douglas [2016] NSWCA 178 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Perpetual Trustees Victoria Ltd v Suncorp-Metway Ltd [2010] NSWLEC 12 Tzavellas v Canterbury City Council (1999) 105 LGERA 262 Category: Costs Parties: Eric Stephen Gabriel (Applicant) Karen Billett (Respondent) Representation: Counsel: E S Gabriel, self-represented (Applicant) L Nurpuri (Respondent) Solicitors: Self-represented (Applicant) Daniel Butt & Co Solicitors (Respondent) File Number(s): 2023/00011710 Publication restriction: Nil Judgment 1. In Gabriel v Billett [2023] NSWLEC 85, I determined a Class 3 application filed 12 January 2023 (and subsequently amended 16 May and 17 July 2023) by Eric Stephen Gabriel, the owner of land known as 10 Clyde Street, Maclean, seeking relief under the Encroachment of Buildings Act 1922 (NSW) ('Encroachment Act') against Karen Billett, the owner of adjacent land known as 7 Morven Street, Maclean. 2. The proceedings related to an encroachment by an old timber and metal shed emanating from Mr Gabriel's property, part of which traversed upon Ms Billett's property. In my reasons for judgment (on 15 August 2023) ordering the removal of the encroachment from Ms Billett's land, I reserved the question of costs. 3. The substantive proceedings having been finalised, Ms Billett now seeks an order for costs against Mr Gabriel, including an order that some of those costs be paid on an indemnity basis. Mr Gabriel resists any costs order sought against him, arguing that each party should bear their own costs of the proceedings. 4. The parties provided detailed written submissions setting out their respective positions as well as supporting affidavit evidence and the matter proceeded on the papers. Mr Gabriel relies on his affidavit sworn 4 September 2023 and Ms Billett relies on the affidavit of Daniel Francis Butt, her solicitor, sworn 28 August 2023. 5. For the reasons that follow, I find that Mr Gabriel should pay 50 per cent of Ms Billett's costs of the proceedings, and that each party is to bear their own costs of the application for costs. Background 1. As detailed in the primary judgment, the proceedings concerned an old timber and metal shed erected on Mr Gabriel's property, part of which traversed over the rear of Ms Billett's property, covering an area of approximatively 11m² of her land. It was common ground between the parties that the shed encroached upon Ms Billett's land. 2. Mr Gabriel's application was amended on two occasions, including during the hearing where he was afforded a further opportunity to clarify the relief he sought. In his further amended application, Mr Gabriel sought the transfer of an area of approximatively 34.5m² of Ms Billett's property, which included the 11m² occupied by the encroaching part of the shed and some further area adjacent thereto. 3. On 20 February 2023, prior to the hearing on 17 July 2023, Ms Billett attempted to resolve the proceedings by way of an offer of comprise made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') whereby she agreed to abstain from seeking her costs of the proceedings if Mr Gabriel were to remove the encroaching shed. Ms Billett's offer was in the following terms: "Our clients are prepared to settle these proceedings on the following basis: 1. That all parties agree to an order being made for you to remove the encroachment within 30 days of the date of the order; and 2. That there be no order requiring you to pay our clients for their costs charges and expenses of the proceedings in the Land & Environment Court. In order words, if you agree to remove the encroaching shed, our clients will not seek an order from the Court requiring you to pay our clients' costs. This Offer of Compromise is open for your acceptance for a period of twenty-eight (28) days from the date of this letter. If you do not accept this offer, it is our clients' intention to seek an order for the removal of the encroachment at your cost and an order that you pay our clients costs charges and expenses of these proceedings." 1. Mr Gabriel rejected the offer and instead offered on 23 February 2023 to pay $2,000 in exchange for the conveyance transfer of the land on which the encroaching part of the shed stood along with some adjacent area which he considered necessary for the servicing of the structure. He stated: "9. My Offer of Compromise is that I pay a total of $2,000 to your client for the encroach[ing] piece of land, which will include extra area for the servicing my structure under the Australian building Code. 10. The Offer of Compromise is made in accordance with rule 20.26 of the Uniform Civil Procedure Rules 2005 (NSW)." 1. That counteroffer was not accepted by Ms Billett, and the hearing of the matter proceeded on 17 July 2023. On that day, Mr Gabriel opened his case and documentary evidence was tendered by both parties with Ms Billett being cross-examined. 2. Mr Gabriel proceeded without legal representation which, to his own admission, caused him difficulties in formulating his claim as well as delays in complying with interlocutory orders for the filing of the evidence he sought to rely upon. Submissions Ms Billett's position 1. In summary, Ms Billett submits that the Court should exercise its discretion and order that Mr Gabriel pay her costs of the proceedings. She maintains that costs should follow the event and emphasises that she has been successful in obtaining an order for the removal of the encroachment. 2. Ms Billett also submits that Mr Gabriel's conduct throughout the proceedings was unreasonable. In this regard, she emphasises Mr Gabriel's delay in meeting case management orders, his various amendments to his application including at the hearing, and his failure to articulate a claim which fell within the ambit of the Encroachment Act. Ms Billett further submits that the dispute over the encroaching shed had been in essence dealt with in proceedings before the Local and District Courts, and that Mr Gabriel's claim before this Court was merely an attempt to reagitate matters already determined. 3. Addressing matters set out in s 14 of the Encroachment Act, and as part of what Ms Billett states amounts to unreasonable conduct that justifies an award of costs on an indemnity basis, Ms Billett also relies upon her written offer of comprise made to Mr Gabriel on 20 February 2023, which was not accepted. Ms Billett submits that Mr Gabriel would have enjoyed a more successful result by accepting her offer of compromise as he did by the judgment of the Court. 4. In the above circumstances, Ms Billett seeks an order that she be awarded her costs on the ordinary basis from the commencement of the proceedings and on an indemnity basis from the date her offer for compromise expired, being 20 March 2023. Mr Gabriel's position 1. Mr Gabriel opposes the costs order sought by Ms Billett and submits that the parties should bear their own costs. While accepting that he had been unsuccessful in the proceedings, Mr Gabriel raises his inability to retain ongoing legal representation in the proceedings as well as the financial disparity between himself and Ms Billett as factors warranting an exemption from any order for costs. He submits that Ms Billett's awareness of these circumstances provided her with a strategic advantage during the proceedings. 2. Mr Gabriel further submits that there was a proper basis for bringing his case, and that in doing so, he strictly adhered to all relevant legal procedures and presented his case appropriately by reference to the Encroachment Act. 3. Mr Gabriel also relies on his attempts at resolving (including through mediation) the dispute prior to initiating proceedings before this Court as a relevant factor militating against any order for costs being made. He reiterates that well before the commencement of these proceedings, he had offered to purchase the encroached area of land from Ms Billett. He repeats that Ms Billett rejected his offer in the knowledge that he would not be legally represented in the proceedings and would therefore not be able to present his case properly. He further submits that he only initiated these encroachment proceedings after Ms Billett signified her intention to do so. 4. Mr Gabriel also maintains that although he was willing to mediate the dispute as suggested by Pain J at a directions hearing on 10 February 2023, Ms Billett's solicitor declined the suggestion. 5. Finally, Mr Gabriel submits that given his financial position, an adverse costs order would therefore neither be utile nor fair. In addition to his pre-existing "strained" financial circumstances, he submits that he has incurred over $6,000 in costs for initial legal advice and suffered a $3,000 loss of income due to the time spent preparing for the hearing being "no less than 16 hours per day average spent". No other evidence of impecuniosity was provided. Consideration 1. The Court's discretion to make orders for costs under the Encroachment Act is described in s 14 in the following terms: In any application under this Act the Court may make such order as to payment of costs charges and expenses as it may deem just in the circumstances and may take into consideration any offer of settlement made by either party. 1. This provision confers upon the Court a wide and unfettered discretion in determining costs. Despite being contained in a separate statute, the Court's discretion in relation to encroachment matters remains governed by settled principles, including that costs should normally follow the event: Hofer v Howell Developments Pty Ltd [No 2] [2001] NSWLEC 42; (2001) 113 LGERA 391 at [14] (Lloyd J); Perpetual Trustees Victoria Ltd v Suncorp-Metway Ltd [2010] NSWLEC 12 at [19] (Pain J) 2. The parties accept that Ms Billett was the successful party in these proceedings, having both resisted Mr Gabriel's application and obtained orders for the removal of the encroachment. Her success is only qualified to a limited extent by further orders that she is responsible for the costs of such limited removal works when she had sought that this expense fall upon Mr Gabriel. Be that as it may, these circumstances tend to be in Ms Billett's favour. 3. Although it would follow from my above finding that the Court should make the orders sought by Ms Billett, it is necessary for the Court to consider all the circumstances in assessing costs. In particular, s 14 of the Encroachment Act confers a discretion upon the Court to take into account any offers of settlement which have been made. Several such offers were made. As recorded at [8] and [9] above, on 20 February 2023, Ms Billett offered to settle on the basis that Mr Gabriel remove the encroachment and each side bear their own costs; and on 23 February 2023, Mr Gabriel offered payment of $2,000 to Ms Billett for the transfer of the land on which the encroaching part of the shed stood (vaguely defined), to him. Neither of these offers resulted in an accepted compromise when the proceedings came on for hearing on 17 July 2023. 4. I have a concern over the modesty of the concession proffered in Ms Billett's offer, it being limited to her not seeking her costs. This is especially so given that the proceedings had only recently been commenced by Mr Gabriel, and limited costs had presumably been expended at the time the offer was made. In my opinion, instead of involving an element of compromise, Ms Billett's offer more readily required Mr Gabriel to forgo much of his pleaded claim. In these circumstances it was not unreasonable for Mr Gabriel to reject the offer. 5. Similarly, I consider that Mr Gabriel's offer, which sought the transfer of an undefined parcel of land for a minimal sum of money seemingly without regard to any proper valuation of that land, can fairly be characterised as unreasonable. In these circumstances I consider that Ms Billett did not act unreasonably in refusing the offer made by Mr Gabriel, as well as Mr Gabriel's other attempts at compromising the dispute, as it was her understandable desire that she enjoy the full measure of her property. I therefore do not give significant weight to either offer in my consideration of costs. 6. I also note that there were various exchanges between the parties in relation to mediation both before and after suggestions were made by Pain J at an earlier directions hearing on 10 February 2023. 7. To the extent that Ms Billett seeks indemnity costs on the basis of Mr Gabriel's unreasonable conduct, or on the principles in Calderbank v Calderbank [1975] All ER 333, it is necessary that some "relevant delinquency" be established on the part of the person against whom indemnity costs are sought: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [44] (Gaudron and Gummow JJ). Examples of such conduct warranting the exercise of discretion to award indemnity costs include unreasonable refusal of an offer of compromise; commencing proceedings for some ulterior motive; or continuing proceedings despite having been properly advised that they had no prospect of success: James v Douglas [2016] NSWCA 178 at [63]-[64] (Meagher JA, Leeming and Simpson JJA agreeing). 8. I do not consider that Mr Gabriel's conduct in these proceedings meets the description of the type of "delinquency" said to justify an order for the payment of costs on an indemnity basis. Noting Ms Billett's submission that Mr Gabriel's delay in complying with case management orders and difficulties in presenting his claim properly were unreasonable, I accept that Mr Gabriel benefited from some forensic indulgences owing to his status as a litigant in person, including leave to amend his application on a number of occasions and the receipt and consideration of various submissions. It is well recognised that litigation involving a litigant in person is usually less efficiently conducted and therefore tends to place a greater burden of time and costs on the other party. 9. Moreover, while Mr Gabriel was ultimately unsuccessful in the proceedings, I do not accept that his claim was demonstrably hopeless. In essence, Mr Gabriel sought the transfer of a parcel of land including at least the land underneath the encroaching shed, and at its highest some adjacent land thereto. Whilst the Court did not have jurisdiction to award the latter relief, it otherwise had power to determine the encroachment matter raised by Mr Gabriel. 10. I consider encroachment to be a highly discretionary jurisdiction and that Mr Gabriel had some evidence to support his case, although Ms Billett's evidence proved to be more sound. Mr Gabriel's hope that he could regularise the encroachment, given its alleged heritage status, and Ms Billett's acquiescence of the encroachment for a period of some years, was not totally unfounded. This was not a case, therefore, where the applicant, properly advised, should have known that he had no prospect of success. 11. Noting the mandate in s 14 of the Encroachment Act to make an order that is just in the circumstances, I take notice of Mr Gabriel's submissions about his "strained" financial situation. While I am inclined to accept his assertion to that effect, I note that no evidence of his means was put before me and, in any event, it has been determined by this Court that impecuniosity of a party is not a reason to decline to make an order for costs where the normal rule of costs applies: Tzavellas v Canterbury City Council (1999) 105 LGERA 262 at [12] (Bignold J). 12. I also take into account that the parties had been involved in a not unrelated dispute in the Local Court (at Maclean) and the District Court (at Coffs Harbour) in proceedings under the Dividing Fences Act 1991 (NSW) which I referred to at [14] in the primary judgment. Although not determinative, I have given some weight to the fact that those (and these) proceedings, as not unusual in both encroachment and fencing matters, concern disputes between neighbours and relate to an encroachment and a fence that were obviously in existence (and presumably known about) at the time that each party purchased their respective properties. 13. Taking into account all of the above circumstances, I consider that it is appropriate that Mr Gabriel pays one half of Ms Billett's costs of the proceedings. There will be no order for indemnity costs and each party is to bear their own costs of the application for costs. Orders 1. The orders of the Court are: 1. Eric Stephen Gabriel is to pay 50 per cent of Karen Billett's costs of the proceedings (on a party and party basis) other than the costs related to the application for costs as agreed or assessed. 2. Each party is to bear their own costs of the application for costs. ********** 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: 15 November 2023