Supreme Court New South Wales Medium Neutral Citation: Breen v Clough (No 2) [2018] NSWSC 158 Hearing dates: 19 February 2018 Date of orders: 22 February 2018 Decision date: 22 February 2018 Jurisdiction: Equity Before: Darke J Decision: See paragraph [25] Catchwords: COSTS – departing from general rule that costs follow the event – plaintiffs partially successful at trial – plaintiffs unsuccessful on a substantial aspect of claim – whether that aspect of claim separable – whether various Calderbank offers were unreasonably rejected – whether plaintiffs obtained orders no less favourable than Offer of Compromise Legislation Cited: Civil Procedure Act 2005 (NSW), s 98(1) Dividing Fences Act 1991 (NSW) Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.14 Cases Cited: Breen v Clough [2017] NSWSC 1681 Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Commonwealth of Australia v Gretton [2008] NSWCA 117 Category: Costs Parties: Douglas Martin Breen (First Plaintiff) Tracey Jane Dillon (Second Plaintiff) Christine Mae Clough (Defendant) Representation: Counsel: Mr C Ireland (Plaintiffs) Mr D O'Connor with Ms F McNeil (Defendant) Solicitors: Koutzoumis Lawyers (Plaintiffs) Redmond Hale Simpson (Defendant) File Number(s): 2014/343553 Publication restriction: None Judgment 1. Reasons for judgment in this matter, a dispute between neighbours concerning an easement, were given on 5 December 2017 (see Breen v Clough [2017] NSWSC 1681). The Court made orders on that day, including orders requiring the defendant to undertake certain works at her expense in relation to the inclinator the subject of the easement, and provide certain keys to the plaintiffs. The defendant was also ordered to pay damages to the plaintiffs in the sum of $6,000 (see the earlier judgment at [273]). 2. The parties were unable to agree upon the appropriate order for costs. Pursuant to directions made by the Court, the parties filed written submissions as to costs. The parties also filed affidavits which included evidence of certain settlement offers and some evidence concerning the conduct of the proceedings. At the request of the defendant, the matter was listed for oral submissions on 19 February 2018. 3. The following brief summary of the submissions reveals a great divergence between the parties as to what the appropriate order for costs should be. 4. The plaintiffs submitted that they were the successful parties in the proceedings and that costs should follow the event. They further submitted that some of their costs should be paid on an indemnity basis because the defendant unreasonably failed to accept Calderbank offers made on 23 February 2017 and 3 October 2017, and failed to accept an Offer of Compromise made on 15 May 2017 pursuant to Part 20 of the Uniform Civil Procedure Rules 2005 (NSW). The plaintiffs contend that they obtained an order or judgment on their claim that was no less favourable to them than the terms of the offer, such that Uniform Civil Procedure Rules r 42.14 is engaged. If that is so, the plaintiffs would be entitled to indemnity costs from 16 May 2017 unless the Court ordered otherwise. 5. The defendant submitted that the plaintiffs should pay her costs. She submitted that she was substantially successful, and the limited relief received by the plaintiffs did not justify the large expenditure involved in the prosecution of the plaintiffs' case. The plaintiffs' case was criticised for a lack of precision and undue complexity. It was submitted that numerous "interlocutory defaults" caused the proceedings to take far longer than was necessary, and the hearing itself was unnecessarily extended because the plaintiffs adduced a large amount of evidence that "went nowhere" and advanced propositions that were not accepted or immaterial. The defendant further submitted that the relief ultimately granted to the plaintiffs could have been obtained in the Local Court. 6. The defendant took issue with the suggestion that she had unreasonably failed to accept various offers made by the plaintiffs. She submitted that the outcome achieved by the plaintiffs was not better than that which the plaintiffs had at various times offered to accept. Indeed, the defendant submitted that the plaintiffs acted unreasonably in failing to accept Calderbank offers made by her on 21 September 2017 and 6 October 2017. 7. Section 98(1) of the Civil Procedure Act 2005 (NSW) provides that, subject to the Act and rules of court, costs are in the discretion of the court. Uniform Civil Procedure Rules r 42.1 provides that, subject to that Part of the Rules, the court is to order that 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. 8. The defendant did not explicitly submit that she had won "the event", but she did contend that in reality the contest between the parties concerned whether she had taken action that amounted to compliance with the WorkCover notices that had been issued, and she was substantially successful on that matter. That may be so, but it remains the case that the Court found that in one respect the defendant failed to take action in accordance with the WorkCover notices such that mandatory injunctive relief was issued and damages were awarded. 9. It seems to me that the plaintiffs, whilst not succeeding on significant aspects of their claim, achieved a measure of success which, in the context of this rather bitter dispute, cannot be dismissed as insignificant or trifling. Aside from the works ordered to be performed by the defendant, the relief granted goes at least some way towards vindication of the plaintiffs' position that control of the inclinator is not solely the province of the defendant. In my view, notwithstanding that the plaintiffs failed on important aspects of their claim, they should be regarded as having won "the event". That status ordinarily results in an order that the costs of the successful party be paid by the unsuccessful party. However, as Uniform Civil Procedure Rules r 42.1 expressly contemplates, the circumstances of the case may call for a different order. 10. The defendant contends that such circumstances exist in the present case. The defendant referred to the following statement made by Hodgson JA in Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121]: Underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the Court considers to be the responsibility of each party for the incurring of the costs. 1. In response, the plaintiffs contend that the Court should not attempt to attribute responsibility for the incurring of costs based on the parties' success or failure on particular issues. The plaintiffs invoked the principle that unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. In that regard, the plaintiffs referred to Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] where the Court of Appeal also stated, in relation to the cost of trials, that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which the party was unsuccessful took up a significant part of the trial. 2. Characterising and identifying issues, for the purpose of considering the question of costs, can be a somewhat imprecise exercise. It is relevant to consider the case as a whole, including the manner in which it is formulated in the initiating process and any subsequent pleadings, the nature of the evidence adduced by the parties, and the manner and basis upon which the trial was conducted. 3. These proceedings were commenced in November 2014 by Summons. A declaration was sought that the plaintiffs had the right to use the inclinator, and various injunctions were sought to restrain the defendant from obstructing the plaintiffs' use of the inclinator. A mandatory injunction was also sought requiring the defendant to take certain steps in relation to the maintenance, repair and upgrading of the inclinator. A Statement of Claim was filed in November 2015. Similar but more extensive relief was sought, including orders for the removal of certain fences and other alleged obstructions of the use of the inclinator, and damages. The Statement of Claim pleaded: 1. a claim in nuisance (and a related claim in unjust enrichment) based on various aspects of the defendant's conduct in the period from about May 2010 to April 2015 (see paragraphs 8-11 and 38-47); 2. a claim in nuisance based on certain conduct of the defendant from about May 2014 in respect of fencing works near the inclinator (see paragraphs 12-15); 3. a claim in trespass based on the defendant's actions in 2015 in removing fence posts and installing certain fencing on the plaintiffs' property (see paragraphs 16-21); and 4. a claim that the defendant was in breach of an agreement, entered into between earlier owners of the two properties, concerning the maintenance of the inclinator (see paragraphs 22-37). 1. In broad terms, the plaintiffs failed on (a), (c) and (d), and had partial success on (b). Relatively little time and effort was directed to (d), and there was considerable overlap between the evidence called on (b), where the plaintiffs had some success, and (c), where they failed. The position in relation to (a) is rather different. 2. The nuisance claim based on aspects of the defendant's conduct from May 2010 to April 2015 (which was alleged to amount to various infringements of the plaintiffs' rights under the easement) was the focus of a great deal of the evidence adduced. It also occupied a substantial portion of the hearing time, at least as much as any other aspect of the plaintiffs' case. The plaintiffs were unsuccessful on this aspect of their claim, save in respect of one minor matter (see the earlier judgment at [224]). This aspect of the plaintiffs' claim can, in practical terms, be seen as separable from the other parts of the plaintiffs' case. The plaintiffs could have decided to pursue a much narrower case, concerned only with the position which has existed since April 2015, when the inclinator went back into operation and was available for the plaintiffs to use. If so, very little evidence of what occurred in the period from 2010 to 2014 would have been required. The plaintiffs instead pressed on with the broader case that was the subject of the Summons filed in November 2014. 3. In my opinion, a departure from the usual position that costs follow the event is called for in this case to take account of the plaintiffs' lack of success on this part of their case. 4. I am not otherwise persuaded that there should be a departure from the usual position. Aside from the substantial time taken up with the unsuccessful nuisance claim, there was nothing about the conduct of the hearing itself that would warrant a departure. Similarly, the fact that the plaintiffs took a lengthy period to complete the service of their evidence does not itself warrant a departure. Further, I do not accept that these proceedings could have been brought in the Local Court as a matter arising under the Dividing Fences Act 1991 (NSW). Even if some parts of the fencing associated with the inclinator may be a dividing fence for the purposes of that Act, the subject matter of these proceedings went well beyond a matter arising under that Act. These proceedings involved, amongst other things, questions of construction of an easement, claims for damages in nuisance for unreasonable interference with rights under an easement, and injunctive relief (including mandatory orders) in aid of enforcement of rights under an easement. 5. Finally, I am not satisfied that the plaintiffs unreasonably failed to accept either the Calderbank offer made by the defendant on 21 September 2017, or the later Calderbank offer made by the defendant on 6 October 2017. The terms of the offers (considered together with the accompanying offer to provide a key to the gate at Level 6) are not more favourable to the plaintiffs than the outcome they ultimately achieved. The offers do not provide for the defendant, at her own expense, to install a lockable gate at the storeroom landing and provide the plaintiffs with a key; they do not provide for the plaintiffs to be given other keys, including to the electricity box; and they do not involve any payment of damages. It has not been shown that the offers, which I note include an upgrade of the storeroom landing on certain conditions (for example that it not be used in a particular manner), reflect a superior outcome for the plaintiffs. 6. I interpolate here that I am also not satisfied that the defendant unreasonably failed to accept either of the Calderbank offers made by the plaintiffs (on 23 February 2017 and 3 October 2017). If accepted, each of those offers would have required the defendant to remove, at her own expense, certain fences and gates on the plaintiffs' side of the inclinator and allow replacement fencing to be installed in a different position. The precise location of that fencing was clearly an issue of considerable importance (see the earlier judgment at [231]-[236]). The plaintiffs were not successful on that issue. To that extent at least the offers provided the plaintiffs with considerably more than they ultimately obtained. The extent of that benefit is not in my view overcome by the fact that the offers did not provide for the payment of any damages. Ultimately the plaintiffs were awarded damages of only $6,000. 7. Similarly, I do not accept that the plaintiffs obtained orders no less favourable than the terms of their Offer of Compromise dated 15 May 2017. That offer also provided for the defendant to remove the fencing, and pay half the cost of replacement fencing. Given the importance of that issue, the fact that the offer did not provide for the payment of any damages does not persuade me that the plaintiffs ultimately achieved an outcome that was no less favourable. I therefore do not think that Uniform Civil Procedure Rules r 42.14 applies in relation to the Offer of Compromise dated 15 May 2017. 8. Having come to the conclusion that the circumstances warrant a departure from the usual order that costs follow the event, it is next necessary to consider what other order would be appropriate in the exercise of the Court's discretion. 9. One available approach would be to make an order based on a broad-brush assessment of the proportion of the overall costs fairly attributable to the unsuccessful nuisance claim (and the related unjust enrichment claim). One benefit of that approach would be avoidance of the need for an assessment of the costs attributable to that aspect of the plaintiffs' case. Adopting that approach would assist in bringing finality to this bitter litigation, were it not for the fact that an assessment of costs is in any event quite likely to be required. This is because a separate costs order has already been made in respect of the defendant's cross-claim, which was settled when the defendant accepted an Offer of Compromise. Given that likelihood, and the risk that a broad-brush assessment could be inaccurate and thus give rise to injustice, I have decided not to take that course. It seems to me preferable to instead make orders that deal separately with the costs of the unsuccessful nuisance claim. 10. In my opinion, it would not be just for the defendant to have to bear any of the plaintiffs' costs of that aspect of the case. Further, given that the plaintiffs were almost entirely unsuccessful on this practically separable part of the proceedings, I think that it would be appropriate to order that the plaintiffs pay the defendant's costs of the unsuccessful nuisance claim (and the related unjust enrichment claim). This order is preferable in my view to simply allowing each party to bear their own costs of that claim. That would not adequately reflect the reality that it was the plaintiffs who decided to pursue the claim, and they must therefore be regarded as responsible for the costs incurred in respect of it. 11. The result of the above is that neither party should be regarded as having succeeded, or failed, in relation to costs. It is appropriate that the parties bear their own costs of the costs application. 12. The Court will therefore order: 1. That the defendant pay the plaintiffs' costs of the proceedings other than the costs of the nuisance claim referred to in paragraphs 8-11 of the Statement of Claim and the costs of the unjust enrichment claim referred to in paragraphs 38-47 of the Statement of Claim. 2. That the plaintiffs pay the defendant's costs of the nuisance claim referred to in paragraphs 8-11 of the Statement of Claim and the costs of the unjust enrichment claim referred to in paragraphs 38-47 of the Statement of Claim. 3. That the parties bear their own costs of the costs application. ********** Amendments 22 February 2018 - Amendment to the quote set out in [10]. 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: 22 February 2018