Supreme Court New South Wales Medium Neutral Citation: Llavero v Shearer (No 2) [2015] NSWSC 284 Hearing dates: 24 February 2015 Date of orders: 24 March 2015 Decision date: 24 March 2015 Jurisdiction: Equity Division Before: Young AJA Decision: 1.Order that the plaintiffs' claim for damages for loss of support be dismissed. 2.The first cross-claim made by second further amended statement of cross-claim filed by the first and second defendants on 19 March 2014 is dismissed. 3.That, pursuant to section 3(2)(b) of the Encroachment of Buildings Act 1922 (NSW) ("the Act") and all other enabling powers: a.an easement ("the Easement") is imposed over that part of the land known as 100 Stanmore Road, Stanmore in the State of New South Wales being the land contained in Folio Identifier A/DP315030 ("Servient Tenement") which is marked "X" on the plan appearing at Annexure A to these orders; b.the land to which the benefit of the easement is appurtenant is the land known as 106 Stanmore Road, Stanmore in the State of New South Wales being the land contained in Folio Identifier 1/313819 ("Dominant Tenement"); c.the nature of the Easement is an easement to permit an encroaching structure to remain; d.the terms of the Easement are those set out in Annexure B to these orders; e.the persons having the right to release, vary or modify the easement or to consent thereto are the registered proprietor for the time being of the Servient Tenement. 4.That, pursuant to section 4(1) of the Act, the compensation to be paid by the first and second defendants to the plaintiffs in respect of the Easement is $1,100. 5.The costs of registration of the Easement are to be paid by the first and second defendants. 6.Order that the second cross-claim be dismissed with costs. 7.Order that the first and second defendants pay two thirds of the plaintiffs' costs of the plaintiffs' claim pursuant to s 3 of the Encroachment of Buildings Act. 8.Subject to order 9, order that the plaintiffs pay the defendants' costs of the plaintiffs' claim for damages for loss of support. 9.Order that the first and second defendants not be entitled to any costs: a.for the second day of the hearing; and b.of their estoppel defences, contributory negligence defence, and proportionate liability/contribution defences. 10.Order that the first and second defendants pay the third defendant's costs of the first cross-claim. 11.Any general costs not otherwise provided for of the plaintiffs or the first and second defendants are to be paid by the person incurring the costs. 12.The compensation payable by the first and second defendants to the plaintiffs pursuant to order 8 be set-off against the costs recoverable by any party after such costs have been agreed or assessed, and the net costs be paid by the plaintiffs to the first and second defendants or vice versa as the case may be. 13.Liberty to apply on 7 days' notice. 14.The Exhibits may be returned after 28 days. Catchwords: COSTS – matter of costs dealt with by way of issues – Calderbank letters – indemnity costs – set off – no reason why opponent should get costs for time that was unnecessarily expended REAL PROPERTY – encroachments to land – easement – dominant and servient tenement - Encroachment of Buildings Act 1922 (NSW) Legislation Cited: Conveyancing Act 1919, s 88K Encroachment of Buildings Act 1922 (NSW) Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 John Llavero v Brett Anthony Shearer [2014] NSWSC 1336 Category: Principal judgment Parties: John Llavero (First Plaintiff) Isabel Llavero (Second Plaintiff) Brett Anthony Shearer (First Defendant) Bronwyn Joy Shearer (Second Defendant) Urban Constructions NSW Pty Ltd (Third Defendant) Representation: Counsel: (Plaintiff) Mr TJ Hancock (Defendant 1&2) Ms F Ashworth (Defendant 3) Mr G Carolan Solicitors: (Plaintiff) William Beach Thomas of Thomas and Company (Defendant 1&2) Brionny Fagan of B Lawyers (Defendant 3) Vincent D'Arcy of D'Arcy Sloman Peacock Lawyers File Number(s): 2012/48540 Judgment 1. HIS HONOUR: I heard these proceedings in September last year and gave my decision on 1 October 2014 [NSWSC 1336]. The proceedings were between neighbours. The plaintiffs being the proprietor of number 100 in the relevant street. The first and second defendants, the proprietors of number 106, adjoining. There was a third defendant, the builder employed by the first and second defendants. 2. The facts were that the first and second defendants were doing extensive work on their land and in doing so they encroached to a relatively minor extent onto the plaintiff's land. The plaintiffs complained about this and also complained that the work done was removing their right of support and causing great cracks to appear in their house. 3. Expert evidence was called on both sides. Concurrent evidence was taken at the trial and in the end it was quite clear that all the experts took the view that any cracking in the plaintiff's house was not the result of work on the defendants' land. 4. Accordingly I concluded that the plaintiffs' claim for loss of support must fail with costs, but that, under the Encroachment of Buildings Act 1922 (NSW), an easement should be granted to authorise the encroachment onto number 100. The costs of the Encroachment of Buildings Act case and the costs of the registering the easement to be paid by the first and second defendants. 5. I suggested when standing the matter over for short minutes to be brought in that there should be a set off between the compensation awarded under the Encroachment of Buildings Act claim and the costs that might be payable one side to the other. I acquitted the builder of all blame and indicated it should get its costs. 6. I then said in paragraph [157]: I should note that it should have been apparent quite early in the hearing that this case would largely be decided on the expert evidence and that there was almost unanimity among the experts. I indicated that this was my preliminary view on more than one occasion. However, not only did the Shearers (first and second defendants) counsel continue to press peripheral matters of defence, she also spent considerable amount of time cross-examining the Llaveros on matters of credit. The thought crossed my mind that she had instructions to abuse, but, of course, I put that thought aside as for a barrister to take that course would be most unprofessional. These tactics, however, lengthened the case by up to a day and my present feeling is that I should not allow the Shearers any costs for the second day of the hearing. 1. The appropriate plans of easement were drawn up and because of the long vacation and the fact that I am now only sitting for about half a year, the matter only came back before me on 24 February 2015. The same counsel appeared. Both Mr Hancock for the plaintiff and Ms Ashworth for the first and second defendants handed me up proposed short minutes and there was discussion on them. 2. Both the plaintiff and the third defendant provided written submissions as to costs which I received before the hearing. The first and second defendants only provided written submissions at the hearing, Ms Ashworth saying that there was no order made for filing, only exchange, so she had not thought it appropriate to send the judge the written submission so that he could absorb them before the hearing. This attitude is against best practice and is to be deplored. 3. There seems to be more or less agreement with my initial assessment that the matter of costs should be dealt with by way of issues and that the plaintiff should pay the costs of the failed issue of lack of support and the first and second defendants should pay the costs of the issue under the Encroachment of Buildings Act. However, Ms Ashworth says that her second cross-claim which was seeking an order under s 88K of the Conveyancing Act 1919 was the proper vehicle for making an order for the grant of the easement rather than the Encroachment of Buildings Act. My judgment dealt with the matter under the Encroachment of Buildings Act as I though the thrust of the submissions were directed to that Act. It was quite unnecessary to file the second cross-claim at all. 4. The argument before me on the 24th of February was directed to four issues, viz: 1. Whether the first and second defendants costs should be partially on the indemnity basis; 2. Whether some of the builder's costs should be on the indemnity basis; 3. Whether it was appropriate to deprive the first and second defendants of some costs because of the time wasting way in which their case was presented; and, 4. What should happen to the costs other than the two issues that have been identified. 1. As to the first matter, the first and second defendants rely on an alleged Calderbank letter of the 4th September 2013 (Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586). This letter made an offer to pay compensation of $2,441.64 plus reasonable costs in full and final settlement of the encroachment claim. However, the offer was conditional upon "(a) the plaintiff's agreeing not to file an application for demolition of the encroaching retaining wall with Marrickville Council, and (b) the execution of a binding deed of release, releasing the first and second defendants from all claims against them in relation to any encroachment by the wall and the plaintiff's agreeing to not make any application to Marrickville Council for demolition of the wall or any further issues relating to the wall in futura". 2. Mr Hancock opposes this claim for a number of reasons. 3. In my view, indemnity costs should not be allowed on the basis of this letter, the letter does not admit the encroachment, it offers more in compensation than was eventually ordered, but, it does nothing to clear up the title which was obviously necessary when the parties, in due course, will be selling their land to somebody else. It was not unreasonable for this offer, if it be an offer, to be rejected. I have used the words "if it be an offer" because it was conditional on the plaintiff not forever taking any action with the Marrickville Council over demolition. 4. The second matter also involves a Calderbank letter, this time from the builder's solicitors to the plaintiff's solicitors of the 16th of August 2012. This was a "in principle offer" that if the plaintiff's discontinued and paid the builder's expenses incurred to date, that would be an end to the matter. Costs would be borne by each party. The basis of the offer was that the expert engineer briefed by the builder was firmly of the opinion that there was no case. Mr Carolan says that this offer was a reasonable one seeing that the proceedings had at the date of the letter been going for six months and substantial legal and other costs had been incurred by the builder. 5. Mr Hancock says that the so-called offer was merely a demand to capitulate and offered no compromise at all. Furthermore, the circumstances at the time the offer, if it be an offer, were made were not capable of objective determination because the plaintiff's then expert, Mr Stubbs, was of a contrary view which he later withdrew. Again I do not consider that it was unreasonable in the circumstances for this offer to be rejected. 6. It follows that I do not intend to make any order for indemnity costs. 7. The third matter is far more awkward. I was very disappointed with the presentation of the case of the first and second defendants. Their pleadings were very poorly presented and as I indicated in the judgment their statement of issues were almost impossible to understand. They gave no real assistance to the Court at all in these matters. Then, issues were pursued in cross-examination which had little chance of success. Then cross-examination was extensively directed to the credit of the Llaveros when it was clear to everybody except the counsel cross-examining that the case was going to be decided on expert evidence. All this took a considerable amount of time. To add to all this, counsel could not even furnish written submission on the orders to be made to the judge, whereas everyone else did. 8. It is very difficult for judges to do more to control cross-examination than to make suggestions to counsel that the cross-examination is not of assistance on those particular issues. Where counsel, as this counsel did, decline to take up the judge's suggestions and spend a large amount of time on irrelevant issues, it is usually inappropriate for the judge to intervene because there is a presumption that counsel knows her own case better than the judge. However, none of this is any reason why the other parties should, if counsel's clients are successful in the proceedings, have to pay the successful party for the extra time that they were in court whilst this waste of time was being carried out. They will have to pay their own costs, but there is no reason why the opponent should also get costs for time that was unnecessarily expended. Accordingly, I adhere to the view that I took in my earlier judgment. 9. The fourth issue is what happens to the costs other than the costs of the encroachment of building case and loss of support case and the cross-claims. There is very little apart from those matters, though the costs of the 24th February would be one. I consider it appropriate that as between the plaintiff on the one hand and the first and second defendants on the other hand, each should pay their own costs. 10. Although the orders which I am making can set out a plan, which the parties have eventually agreed upon, it may be that the Registrar General will require some further plan and there may be other problems with implementation of the orders, accordingly, I should grant liberty to apply on seven days notice. If I am not sitting, the application could be made to the Registrar. 11. Accordingly, my orders are as follows: 1. Order that the plaintiffs' claim for damages for loss of support be dismissed. 2. The first cross-claim made by second further amended statement of cross-claim filed by the first and second defendants on 19 March 2014 is dismissed. 3. That, pursuant to section 3(2)(b) of the Encroachment of Buildings Act 1922 (NSW) ("the Act") and all other enabling powers: a. an easement ("the Easement") is imposed over that part of the land known as 100 Stanmore Road, Stanmore in the State of New South Wales being the land contained in Folio Identifier A/DP315030 ("Servient Tenement") which is marked "X" on the plan appearing at Annexure A to these orders; b. the land to which the benefit of the easement is appurtenant is the land known as 106 Stanmore Road, Stanmore in the State of New South Wales being the land contained in Folio Identifier 1/313819 ("Dominant Tenement"); c. the nature of the Easement is an easement to permit an encroaching structure to remain; d. the terms of the Easement are those set out in Annexure B to these orders; e. the persons having the right to release, vary or modify the easement or to consent thereto are the registered proprietor for the time being of the Servient Tenement. 4. That, pursuant to section 4(1) of the Act, the compensation to be paid by the first and second defendants to the plaintiffs in respect of the Easement is $1,100. 5. The costs of registration of the Easement are to be paid by the first and second defendants. 6. Order that the second cross-claim be dismissed with costs. 7. Order that the first and second defendants pay two thirds of the plaintiffs' costs of the plaintiffs' claim pursuant to s 3 of the Encroachment of Buildings Act. 8. Subject to order 9, order that the plaintiffs pay the defendants' costs of the plaintiffs' claim for damages for loss of support. 9. Order that the first and second defendants not be entitled to any costs: a. for the second day of the hearing; and b. of their estoppel defences, contributory negligence defence, and proportionate liability/contribution defences. 10. Order that the first and second defendants pay the third defendant's costs of the first cross-claim. 11. Any general costs not otherwise provided for of the plaintiffs or the first and second defendants are to be paid by the person incurring the costs. 12. The compensation payable by the first and second defendants to the plaintiffs pursuant to order 8 be set-off against the costs recoverable by any party after such costs have been agreed or assessed, and the net costs be paid by the plaintiffs to the first and second defendants or vice versa as the case may be. 13. Liberty to apply on 7 days' notice. 14. The Exhibits may be returned after 28 days. Annexure 'A' Annexure 'B' [cf Conveyancing Act 1919 (NSW) Sch 8, Pt 13] 1. The owner of the Dominant Tenement: (a) may insist that the parts of the structure ("the Encroaching Structure") on the Dominant Tenement which, when this Easement was created, encroached on the Servient Tenement remain, but only to the extent they are within the site of this Easement, and (b) must keep the encroaching structure in good repair and safe condition, and (c) may do anything reasonably necessary for those purposes, including: (i) entering the Servient Tenement, and (ii) taking anything on to the Servient Tenement, and (iii) carrying out work. 2. In exercising those powers, the owner of the Dominant Tenement must: (a) ensure all work is done properly, and (b) cause as little inconvenience as is practicable to the owner and any occupier of the Servient Tenement, and (c) make good any collateral damage. 3. The owner of the Servient Tenement must not do or allow anything to be done to damage or interfere with the Encroaching Structure. ********** 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: 24 March 2015