Georgeski v Owners Corporation SP49833 - Costs [2005] NSWSC 28

New South Wales Supreme Court

CITATION : Georgeski v Owners Corporation SP49833 - Costs [2005] NSWSC 28

HEARING DATE(S) : Written submissions on costs - 03/12/04, 24/12/04

JUDGMENT DATE : 4 February 2005

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Plaintiff to pay costs of second and third defendants thrown away by adjournment, such costs to be assessed on the indemnity basis. Plaintiff to pay remaining costs of second and third defendants, such costs to be assessed on the party/party basis. No order as to costs of first and fourth defendants

CATCHWORDS : PROCEDURE - costs - no question of principle

Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096 CASES CITED : Manchester Airport plc v Dutton [2000] 1 QB 133

Annette Georgeski - Plaintiff Owners Corporation SP49833 - First Defendant Anne Catherine Hynd - Second Defendant PARTIES : Joan Mary Hutchinson - Third Defendant State of New South Wales - Fourth Defendant

FILE NUMBER(S) : SC 5018/02

Mr M.F. Holmes QC/Ms K. Richardson - Plaintiff COUNSEL : Mr D.A. Smallbone - Second and Third Defendants Mr T.H. Barrett - Fourth Defendant

Warren McKeon Dickson - Plaintiff Dobes & Andrews - First Defendant SOLICITORS : McCabe Partners - Second and Third Defendants I.V. Knight, Crown Solicitor - Fourth Defendant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

FRIDAY, 4 FEBRUARY 2005

5018/02 – ANNETTE GEORGESKI v OWNERS CORPORATION SP49833 & 3 ORS - COSTS JUDGMENT 1 On 22 November 2004, I dismissed the plaintiff's claims for declaratory and injunctive relief in respect of alleged trespass by the second and third defendants upon a jetty and slipway forming part of land subject to a licence granted to the plaintiff by the fourth defendant (the Crown in right of New South Wales): see Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096. At the same time, I made declarations as between the plaintiff and the first defendant by which a submitting appearance had been filed (see paragraphs [9] and [10] of the judgment). 2 In relation to costs, I indicated an inclination to think that the plaintiff should pay the costs of all defendants and said that I would entertain submissions on costs. I directed that written submissions be filed. Submissions were in due course filed by the second, third and fourth defendants and by the plaintiff. As a result, it is necessary for me to determine matters in contention as to costs as between the plaintiff and the second and third defendants. I shall come back to the position of the first and fourth defendants in due course. 3 The second and third defendants maintain that they are entitled to, first, an order that the plaintiff pay the costs thrown away by reason of an adjournment granted on 28 May 2003, second, an order that the plaintiff pay the second and third defendants' costs of the proceedings and, third, an order that the costs payable by the plaintiff be assessed on the indemnity basis. 4 The basic facts in relation to the first matter (the adjournment) are that the proceedings were, on the plaintiff's application, placed in the short notice list on 28 April 2003, that on 19 May 2003 the parties' solicitors were notified by the Registry that the matter would be heard by Campbell J on 29 May 2003, that on 28 May 2003 the plaintiff applied to Campbell J for an adjournment, that his Honour granted the adjournment for reasons he then published and that the question of costs was, on that occasion, reserved. 5 In his judgment of 28 May 2003, Campbell J said that the "active defendants" (by which he obviously meant the second and third defendants) had raised a "new point" after the commencement of the proceedings. That point was to the effect that the jetty was not the property of the plaintiff. As a result, his Honour said, the plaintiff (and perhaps the active defendants) might need to put on further evidence, a degree of complexity necessitating pleadings had been introduced and the Crown, as the owner of the river bank and river bed, could be seen to have a potential interest in the proceedings. After the adjournment, the matter continued on pleadings and the Crown was joined as fourth defendant and took an active part in the proceedings, although not seeking to maintain any cross-claim. 6 In relation to costs, Campbell J said: "The active defendants made application for the costs thrown away by the adjournment. Almost simultaneously, they recognised that there is a need to place evidence before the Court about when it was that they raised the point which has led to this adjournment. In these circumstances, I reserve the question of the costs thrown away by the adjournment." 7 The evidence thus referred to by Campbell J is now to be found in the tender bundle (Exhibit D). The "new point" was raised in a letter of 7 April 2003 from new solicitors for the second and third defendants to the solicitors for the plaintiff. That the recipients of that letter had understood the "new point" is shown by their reply of 24 April 2003 in which they disputed its validity. By letter dated 2 May 2003 from the solicitors for the second and third defendants and letter dated 21 May 2003 from the plaintiff's solicitors, the debate was continued. A more fulsome statement of the position of the second and third defendants was contained in their solicitors' letter of 23 May 2003. The issues raised in the letter of 7 April 2003 and debated in the subsequent correspondence are, in a realistic sense, the very issues eventually determined by my judgment. 8 It is clear that the plaintiff, through her solicitors, was on notice of the "new point" from 7 April 2003 and that those solicitors appreciated its significance to the due determination of the parties' dispute when, on 28 April 2003, they made a successful application to have the matter placed in the short notice list, thereby representing that it was ready to be heard whenever time could be found in the court calendar. 9 The matter should not have been treated by the plaintiff as ready for hearing on 28 April 2003. The need for possible joinder of the Crown as land owner and for further evidence should have been appreciated by the plaintiff's solicitors after receipt of the letter of 7 April 2003. In that event, the setting down for hearing on 29 May 2003 and the adjournment application of 28 May 2003 would have been avoided. It is therefore appropriate to make an order that the plaintiff pay the costs thrown away by reason of the adjournment. 10 The written submissions filed on behalf of the plaintiff refer to matters relevant to the quantum of such costs thrown away. Those matters are not of such a nature as to be taken into account by the court in deciding whether an order for costs should be made. They may well be pertinent, however, to the task to be undertaken by a costs assessor in determining quantum. 11 The next matter for consideration is the application by the second and third defendants for an order that the plaintiff pay their costs of the proceedings. On the basis of the general rule that costs follow the event, such an order is justified. I do not understand the plaintiff to say that there is any special factor putting this case outside the general rule. 12 There is then the question whether the costs to be paid by the plaintiff should be assessed on the indemnity basis. I shall consider that issue separately in relation to the costs thrown away by reason of the adjournment and the general costs of the proceedings. 13 As I have said, the plaintiff should not have treated the matter as ready for hearing on 28 April 2003. It was entirely wasteful of the time and resources of the then defendants and the court for the plaintiff to set in train on that date the course of events which saw a hearing date of 29 May 2003 allocated and then, at the plaintiff's own request, vacated. That waste should never have been forced upon the defendants and their costs thrown away should accordingly be assessed on the indemnity basis. 14 As to the appropriate basis of assessment of the costs of the second and third defendants of the action generally, I mention first the contention of the second and third defendants that the proceedings relating to the jetty and the slipway were commenced and continued as a means of improperly putting pressure on the second and third defendants to consent to the extinguishment of the right of footway enjoyed by them (and by the proprietors of lots in their strata development, as well as the owners corporation), being a right of footway providing access from the strata property to the river bank. This, it is said, caused the proceedings to have the hallmarks of an abuse of process, thus providing a basis for the award of indemnity costs. 15 I accept that the plaintiff would have preferred to see the right of footway extinguished. There had been earlier proceedings about it. It is also true that the plaintiff introduced into settlement negotiations the idea that the right of footway should be extinguished, something that her solicitors said (in a letter dated 17 February 2004) would "no doubt bring these proceedings to an end". But that element of a proposed compromise was not introduced into negotiations by the plaintiff until well after the proceedings had been commenced. The statement that extinguishment of the right a footway would put an end to the proceedings was, it seems to me, no more than a recognition of the reality that, if the right of footway ceased to be available to the second and third defendants, their consequent lack of any practicable means of access to the river bank would mean that they no longer had any reason to resist the claims to exclude them from the jetty and the slipway. I do not think that the evidence provides any basis for a finding of ulterior purpose as asserted by the second and third defendants. The right of footway existed at all material times. While the plaintiff would have preferred that it not exist, its continued existence (which she had to accept) meant that she had a legitimate interest in seeking to resolve, by means of the proceedings, the question of the rights of the second and third defendants to enter upon the jetty and the slipway lying at the lower end of the footway. 16 The other bases on which the second and third defendants press their application for indemnity costs may be summarised as follows: 1. The alleged events which formed the ostensible occasion for commencing the proceedings were trivial. 2. The claim for injunctive relief was pressed without regard to the practice of refusing injunctions to restrain trivial trespass. 3. The demands made by the plaintiff at the time of commencing the proceedings or in contemplation of the proceedings were plainly excessive. 4. The plaintiff pressed on in the face of clear warnings as to the main point on which she ultimately failed, which warnings elicited no more than threats of strenuous agitation for costs. 5. The plaintiff was unwilling to compromise except on unreasonable terms. 17 As to items 1 and 2, it is true that there was evidence of only generally innocuous entry upon the jetty and the slipway, but the second and third defendants nevertheless maintained that they were entitled to enter – or, at least, that they wished to have the court adjudicate on the matter. The claim for injunctive relief was, in a sense, ancillary to the claim for declaratory relief and the proceedings were, in my view, an appropriate vehicle for the determination of the rights relevant to the claim for declaratory relief. The inclusion of the claim for injunctions did not change the basic nature of the proceedings. 18 In relation to item 3, the second and third defendants point out that the plaintiff amended and refined her claims on no less than six occasions, "generally in a less ambitious direction". The final formulation was eventually found to be "excessive", in that the claims were dismissed. Each more "ambitious" version was correspondingly more "excessive". The fact that a plaintiff begins by asserting broadly based claims and refines and reduces them as pre-trial dialogue continues (and, as in this case, even after the trial begins) is not, of itself, indicative of unreasonable behaviour of a kind relevant to the award of indemnity costs. Indeed, the progressive moderation of the claims should be regarded as a responsible reaction to emerging arguments. 19 Item 4 involves, in essence, an allegation that the plaintiff persisted with a case that she should have known would fail. That allegation is unwarranted. Apart from anything else, the provisions of the licence from the Crown declaring the improvements to be "the property of" the plaintiff raised genuine issues as to the true nature of the plaintiff's rights in respect of the jetty and the slipway; and the decision of the English Court of Appeal in Manchester Airport plc v Dutton [2000] 1 QB 133 provided a cogent basis for arguing that the plaintiff could succeed in her claims even if she failed to show that she had a right of exclusive possession. The case was an arguable case capable of being responsibly advanced. 20 In relation to Item 5, the second and third defendants do not say (indeed, cannot say) that the plaintiff acted unreasonably in rejecting any offer of compromise made by those defendants. Such an offer was made by the third defendant on 28 October 2002. It involved consent orders which, in essence, would have not only recognised a limited right for the plaintiff to exclude persons from the jetty and the slipway but also made stipulations with respect to the right of footway and required the plaintiff to withdraw certain allegations in relation to the third defendant. The proposed orders thus went beyond the subject matter of the proceedings. The plaintiff resisted the additional elements but the third defendant pressed them and no agreement was reached. Rather, the plaintiff made a counter proposal by letter dated 5 March 2003 to both the second and third defendants. That counter proposal was revised (adversely to the defendants) on 20 June 2003, apparently after an offer made by the relevant defendants on 13 June 2003. At a subsequent point, the proposed extinguishment of the right of footway entered into the settlement correspondence. There can be no doubt that that correspondence was robust, with the respective parties maintaining their positions, apparently without any great enthusiasm for compromise. But I do not discern in it any element of unreasonableness that would warrant an order for indemnity costs. 21 Although these proceedings involved a degree of heat on both sides, the matters upon which the second and third defendants base their argument that costs generally should be assessed on the indemnity basis do not, either separately or cumulatively, warrant such an order. Costs to be paid by the plaintiff to the second and third defendants (apart from the costs associated with the adjournment with which I have already dealt) will be assessed on the party/party basis. 22 The first defendant (owners corporation) filed a submitting appearance except as to costs and took no part in the proceedings. Nor did it file submissions on costs. There will accordingly be no order as to costs of the first defendant. 23 A submission filed by the Crown Solicitor on behalf of the fourth defendant outlined the basis on which the plaintiff, the second defendant and the third defendant had agreed to the joinder of the Crown as fourth defendant, namely that (a) the Crown would bear its own costs regardless of the outcome of the proceedings; (b) the Crown would not seek costs against the plaintiff, the second defendant or the third defendant; and (c) the plaintiff, the second defendant and the third defendant would not seek costs against the Crown.