Land and Environment Court New South Wales Medium Neutral Citation: Care v Veraz Enterprises Pty Limited [2016] NSWLEC 46 Hearing dates: On the papers Date of orders: 29 April 2016 Decision date: 29 April 2016 Jurisdiction: Class 3 Before: Sheahan J Decision: The Applicant is ordered to pay the First Respondent's costs, as defined in paragraph [29](a). Catchwords: COSTS: encroachment matter discontinued after unsuccessful mediation – "just" order to be made in the circumstances. Legislation Cited: Civil Procedure Act 2005 Encroachment of Buildings Act 1922 Land and Environment Court Rules 2007 Uniform Civil Procedure Rules 2005 Cases Cited: Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack and Ors [2003] NSWCA 302 Harrison v Owen [2011] NSWLEC 143 Hofer v Howell Developments Pty Ltd (No 2) [2001] NSWLEC 42 Latoudis v Casey (1990) 170 CLR 534 ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 Perpetual Trustees Victoria Limited v Suncorp-Metway Limited [2010] NSWLEC 12 Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 Category: Costs Parties: Cristian Victor Care (Applicant) Veraz Enterprises Pty Limited (First Respondent) The Owners Strata Plan No 40704 (Second Respondent) Representation: Counsel: Mr D R Wright, solicitor (Applicant) Mr G M McGrath, barrister (First Respondent) N/A (Second Respondent) Solicitors: Willis & Bowring, Solicitors & Attorneys (Applicant) Graeme Morrison Law (First and Second Respondents) File Number(s): 30896 of 2015 Judgment The Background 1. This case has been discontinued, by consent, with the question of costs left for me to determine "on the papers". 2. The applicant, Mr Care (Lot 2), and the 1st respondent, Veraz Enterprises Pty Limited (Lot 1), are the only two owners in the 2nd respondent's two-lot strata plan, the percentages of their unit entitlement being 40:60 respectively. 3. The applicant filed a Class 3 application on 8 October 2015, seeking relief under the provisions of the Encroachment of Buildings Act 1922 ("the EB Act"). 4. The 1st respondent has been represented and active throughout the matter, but the 2nd respondent has taken absolutely no part in it. On 15 April 2016, both the applicant and 1st respondent filed submissions on costs, and, then, on 20 April, an appearance was filed on behalf of both respondents. 5. The applicant asserted, in the Class 3 application, a failure by the respondents to respond to two communications, dated 13 August and 4 September 2015. Those communications are not before the Court, but the applicant says that they put forward proposals to regularise an alleged encroachment upon common property, dating from 2004. 6. On 12 February 2016, Pain J referred the case, by consent, for private mediation, which occurred on 24 March 2016. 7. Apparently, no resolution was reached at the mediation, but the applicant's solicitor notified the 1st respondent's solicitor on 30 March that the applicant had decided to discontinue. 8. Discontinuation must be in accordance with Rule 12.1 of the Uniform Civil Procedure Rules 2005 ("UCPR"), which provides: (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant: (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. ... 1. As had been agreed on 12 February, before Pain J, the unresolved case then came before me as the List Judge, on 1 April. No orders were sought from the Court, other than for leave (1) to file the notice of discontinuance, and (2) to make written submissions on costs. The Law on Costs 1. In his 30 March letter, the applicant's solicitor went on to suggest to the 1st respondent's solicitor that UCPR Rule 42.19 does not apply to Class 3 proceedings. That Rule relevantly provides: (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. ... 1. The Court also notes UCPR Rule 42.1, which provides: Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 1. Schedule 1 to the UCPR makes clear that Rules 42.1 and 42.19 do not apply to these proceedings. 2. Section 98 of the Civil Procedure Act 2005 provides (emphasis mine): (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. 1. Rule 3.7 of the Land and Environment Court Rules 2007 does not apply to these proceedings – see Rule 3.7(1)(c). 2. However, s 14 of the EB Act provides, in respect of the costs of encroachment proceedings, that the court "may make such order ... as it may deem just in the circumstances ...". Consideration 1. Among the 1st respondent's submissions on costs is a copy of an email sent by its solicitor to the applicant's solicitor, on 11 September 2015, responding to the applicant's earlier communications, to which the Class 3 application, filed some four weeks later, referred. 2. In that email, the 1st respondent's solicitor said to the applicant's solicitor: We note that your client is trying to resolve a dispute concerning the Common property encroachments made by your client when he caused structural alterations to take place on his Strata. Such alterations have dramatically increased the value of his property. We note no approval has been given by the owners of the common property, both past and present to these alterations. Your client's actions has leas (sic) to a reduced value with regard to our client's property in that there is less parking. We note your client has not compensated our client for the use of the property, nor has he paid rent. We understand that your client has a buyer for his property. Would you please provide details of the sale so that a suitable compensation arrangement can be achieved. 1. So far as the Court has been made aware, the applicant's only response to that email was the filing of the Class 3 application. 2. The applicant submits that each active party should pay its own costs, and that the Court should make no order. 3. The 1st respondent seeks an order for its costs, "on the ordinary basis", in view of the discontinuance. 4. Costs are compensatory of the "winner", not punitive towards the "loser": Latoudis v Casey (1990) 170 CLR 534. 5. Here there was no "result", in the sense of an "event" identifying successful and unsuccessful parties. 6. However, the applicant put the 1st respondent to the expense of preparing to defend the proceedings he brought, and then discontinued them. 7. That expense included attendance at four directions hearings and a one day mediation, and the List Judge's file notes of 11 December 2015 refer to the engagement of expert witnesses. 8. There could have been a private mediation between the parties, without any court action being taken. Pain J's referral was "by consent". As it was a jointly taken step, designed to resolve the proceedings, each party should pay its own costs in regard to it. 9. That leaves for consideration the balance of the work and cost incurred on the 1st respondent's behalf. 10. The applicant appears to have acted somewhat precipitously in (a) commencing the litigation in all the circumstances, (b) continuing to litigate the dispute for some time, and (c) suddenly "surrendering" or "capitulating" after an unsuccessful attempt to have the dispute mediated. 11. The relevant considerations in those circumstances are discussed in cases such as Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548; Hofer v Howell Developments Pty Ltd (No 2) [2001] NSWLEC 42; Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack and Ors [2003] NSWCA 302; Perpetual Trustees Victoria Limited v Suncorp-Metway Limited [2010] NSWLEC 12; and Harrison v Owen [2011] NSWLEC 143. 12. I have had regard to all of those cases, which cover a wide variety of circumstances, including in encroachment matters, and I have concluded that the "just" costs outcome in this case is that this Court should, in its discretion, make: 1. an order against the Applicant for party-party costs in favour of the First Respondent, as agreed or assessed, including the First Respondent's costs of making submissions on the costs issue, but not including its costs in respect of the mediation; and 2. no order for costs in favour of, or against, the inactive Second Respondent. 1. I so order. ********** 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: 29 April 2016