> Land and Environment Court of New South Wales CITATION : Sharp v Swadling [2003] NSWLEC 432 APPLICANT PARTIES : Robyn Sharp RESPONDENT Shand and Franca Swadling FILE NUMBER(S) : 30043 of 2003 CORAM: Pain J KEY ISSUES: Costs :- removal of encroachment before proceedings determined - reasonableness of parties' conduct LEGISLATION CITED: Encroachment of Buildings Act 1922, s 14 Land and Environment Court Act 1979 s 69 CASES CITED: Latoudis v Casey (1990) 170 CLR 534 ; Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1977) 186 CLR 622 DATES OF HEARING: 13/08/2003 EX TEMPORE JUDGMENT DATE : 08/21/2003 APPLICANT Mr A Pickles SOLICITOR Colin Biggers & Paisley LEGAL REPRESENTATIVES: RESPONDENT Mr E Muston SOLICITOR Piggott Stinson Ratner Thom JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 30043 of 2003 Pain J 21 August 2003 ROBYN SHARP Applicant v SHAND and FRANCA SWADLING Respondents Ex Tempore Judgment 1. This decision concerns the question of who should get costs in proceedings brought under the Encroachment of Buildings Act 1922 (the Encroachment of Buildings Act), seeking an easement over land with a cross-claim for the removal of those encroachments when there has been no final determination of the matter. 2. Ms Sharp and Mr and Mrs Swadling are neighbours in Lilyfield. Both recently bought their respective properties in the knowledge that there was an encroachment from Ms Sharp's property onto Mr and Mrs Swadling's property, being part of a carport slab, part of a shallow retaining wall and a whole boundary paling fence. 3. On about 15 April 2003, after these proceedings had been allocated a hearing date of 6 May 2003, the Swadlings had work carried out which caused the removal of the encroaching retaining wall, carport slab and the boundary paling fence. These were the encroachments in relation to which Ms Sharp had sought an easement over their land. As a result of their removal by the Swadlings the purpose of these proceedings was removed. 4. The parties agree that the Court has a discretion whether to award costs in Class 3 proceedings pursuant to s 69 of the Land and Environment Court Act 1979 (the Court Act). It is also apparent under s 14 of the Encroachment of Buildings Act that the Court has discretion in relation to applications under that Act to make orders for costs, charges and expenses as the Court may deem just in the circumstances. 5. Ms Sharp, through her counsel, argued that s 14 did not apply in this situation because no orders concerning the merits of the appeal have been made by the Court. Accordingly only s 69 of the Court Act is relevant. Mr and Mrs Swadling's counsel argued that s 14 could be applied regardless of whether there had been orders made in relation to the merits of the matter. Further, Mr and Mrs Swadling's counsel argued that in any event there had been orders made in the proceedings which were the consent orders made by Cowdroy J at one stage in the proceedings and this was said to be sufficient to ground the application of s 14. 6. I do not think I need to finally consider the issue of whether s 14 of the Encroachment of Buildings Act can only apply when there has been no determination of the merits and consequent orders. Even if s 14 did apply the discretion in relation to costs conferred by that Act is very broad in nature and is not dissimilar to the broad discretion available to me under s 69 of the Court Act. 7. Furthermore, I do not understand either party to be seeking any more than legal costs as opposed to costs of rectification or removal as is specifically referred to in s 14 of the Encroachment of Buildings Act. 8. I intend therefore to exercise my discretion in awarding costs pursuant to s 69 of the Court Act. I should note that the Swadlings' counsel submitted that the Swadlings were almost certain to have succeeded if the matter had been fully tried and the costs should be awarded in their favour. I am unable to determine whether this is correct without embarking on a consideration of the merits and it is not appropriate that I do so in a costs application. 9. The question before me is whether the parties have acted reasonably. In that regard the starting point is the case which both parties referred to, Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1977) 186 CLR 622, in which McHugh J stated that where there has been no determination of the merits of the matter the Court may award costs if one party can be said to have acted so unreasonably that a costs order against it is justified. 10. Both parties sought to impress on the Court the unreasonable nature of the other party's behaviour prior to the commencement of proceedings. The Respondents sought to demonstrate that the commencement of the proceedings by Ms Sharp was unreasonable. The Court was directed to: (a) correspondence between the solicitors for the vendors of both properties when they were sold to each of the current litigants; (b) correspondence between the solicitors for each of the litigants before the finalisation of the sale of the property to Ms Sharp whose purchase was settled after the Swadlings purchased their property; and (c) correspondence between the parties themselves proposing meetings to discuss settlement which meetings did not ultimately take place because, it appeared from the correspondence, the parties could not agree if Ms Sharp's solicitor should be present or not. 11. As I have already said, both parties were aware of the encroachment from Ms Sharp's property onto the Swadlings' property before they settled on the purchases of their respective houses. It is unnecessary for me to set out in detail all this material as I found it to be of limited assistance in determining the reasonableness or otherwise of the parties' actions. 12. While the circumstances are clearly unfortunate in that both parties, as new owners of adjoining properties, inherited an existing problem created by previous owners of the two properties and are also unfortunate in that there could not be a satisfactory settlement before these proceedings were commenced, that does not mean that Ms Sharp was unreasonable in commencing the action. Ms Sharp is legally entitled to do what she did in commencing these proceedings. The fact that the parties were unable to settle the dispute between them does not assist the Court in determining if either party's behaviour was reasonable without considering the merits of the matter which I am not going to do. 13. The next issue therefore to determine is whether the Swadlings' actions in having the encroachment on the land removed was reasonable in the context of this litigation. In circumstances where the Swadlings had filed a defence and cross-claim in the matter, a hearing date was obtained and preparation for hearing undertaken by the parties, I consider that it was unreasonable behaviour on the Swadlings' part to remove the encroachments about three weeks before the hearing of the matter. The consequence of that action was that these proceedings were rendered nugatory. Ms Sharp is entitled to have her costs paid by the Swadlings in these circumstances. I specifically note that costs are compensatory, not punitive, as is stated in the well known case of Latoudis v Casey (1990) 170 CLR 534 and Ms Sharp is entitled to compensatory costs orders in these circumstances. 14. This matter does not require me to determine two fundamental issues raised in submissions from the parties' counsel. The Swadlings' counsel argued that, as his clients were exercising their common law rights to abate any trespass on their property, there could be no suggestion that their actions were unreasonable in having that encroachment removed. Ms Sharp's counsel argued in response that an application under the Encroachment of Buildings Act has the effect of removing the Respondents' existing common law right of redress for trespass by an encroachment. I consider I do not need to make findings on these matters given the circumstances I have already outlined in the previous paragraph. 15. I need to also consider briefly the issue of indemnity costs. Ms Sharp's counsel submitted costs should be awarded on an indemnity basis. He submitted that, although this case does not fall into one of the usual categories of cases in which the award of indemnity costs is considered, the relevant principles includes considering whether there is an unusual feature in the case that warrants such an order, for example, misconduct by one of the parties. I have to say I do not agree that in these circumstances the Swadlings' behaviour justifies an award of indemnity costs. Their actions may well have been entirely lawful and certainly do not amount to misconduct in my view so that I am not minded to award indemnity costs. 16. Another matter that was put to me by the Swadlings' counsel concerns whether I should award costs against Ms Sharp in relation to several adjournments before this Court following the removal of the encroachment on 15 April 2003. This submission was put on the basis that the orders sought by Ms Sharp's solicitors were arguably beyond the Court's jurisdiction. As the adjournments were by consent of the Swadlings I do not consider it appropriate to review the merits of whether the Court did have jurisdiction in relation to the matters before the Court. I do not intend therefore to make the order sought by the Swadlings' counsel in relation to those adjournments. Orders 17. The Court orders that: 1. The Respondents must pay the Applicant's costs of these proceedings. 2. The exhibits be returned. 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.