District Court New South Wales Medium Neutral Citation: Donnelly v Hunter's Hill Council (No 2) [2020] NSWDC 223 Hearing dates: On the papers Date of orders: 20 May 2020 Decision date: 20 May 2020 Jurisdiction: Civil Before: Dicker SC DCJ Decision: (1) The applications for special or limited costs orders are dismissed. (2) The defendant is to pay the plaintiff's costs of the proceedings and the costs applications on the ordinary basis as agreed or assessed. Catchwords: Costs – appropriate costs order in circumstances where plaintiff successful in obtaining order for damages and injunctive relief against the defendant Council – defendant Council submitted that the tort of private nuisance had not been established – injunctive relief obtained by the plaintiff was not as originally sought in Statement of Claim filed – alternative injunctive relief sought by plaintiff in Amended Statement of Claim filed with leave after the commencement of the final hearing – alternative submissions on costs – application by plaintiff for indemnity costs Legislation Cited: Civil Procedure Act 2005 (NSW), s 98 Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Donnelly v Hunters Hill Council [2020] NSWDC 76 Harrison v Schipp [2001] NSWCA 13 Mead v Watson [2005] NSWCA 133; Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 Category: Costs Parties: Peter Edward Donnelly (Plaintiff) Hunter's Hill Council (Defendant) Representation: Counsel: B C Kasep (Plaintiff) D Kelly (Defendant) Solicitors: Pikes & Verekers Lawyers (Plaintiff) Gillis Delaney Lawyers (Defendant) File Number(s): 2019/00078124 Judgment 1. On 1 April 2020, the court handed down its reasons for decision in relation to a claim by the plaintiff against the defendant Council for damages for the tort of private nuisance and ancillary injunctive relief: Donnelly v Hunters Hill Council [2020] NSWDC 76 ("Judgment"). The defendant had submitted at the final hearing that no private nuisance had been established by the plaintiff and therefore the plaintiff was not entitled to injunctive relief in any of the forms sought in the Amended Statement of Claim filed with leave on 6 February 2020. On 1 April 2020, the court made the following orders: "(1) Judgment for the plaintiff in the sum of $35,470.33. (2) The parties are to bring in short minutes of order within 14 days to reflect the reasons of the court. (3) Liberty to the parties to approach the Associate to Dicker DCJ to relist the matter if necessary for further argument about the costs of the proceedings and the precise form of the injunctive order to be made." 1. In paragraph 128 of the Judgment the court stated the following: "128. As the plaintiff has been substantially successful, my preliminary view is that the plaintiff is entitled to his costs of the proceedings subject to further submissions and evidence." 1. The parties agreed on a timetable for the filing of written submissions as to costs and for the court to determine the issue of costs on the papers unless the court was of the view that further oral submissions were required. 2. The defendant sought orders that the plaintiff was only entitled to limited costs. It submitted that the plaintiff should not be entitled "to any costs up to and including the first two days of the hearing other than with respect to… properly incurred disbursements." 3. The plaintiff sought the following orders: 1. The defendant pay the plaintiff's costs of the proceeding: 1. up until 12 November 2019 on the ordinary basis; and 2. from 13 November 2019 onwards on an indemnity basis. 1. In the alternative, the defendant pay the plaintiff's costs of the proceeding on the ordinary basis. Applicable provisions 1. Section 98(1)-(4) of the Civil Procedure Act 2005 (NSW) (CPA) provides as follows: "98 Courts powers as to costs (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. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to— (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount." 1. Part 42.1 of the Uniform Civil Procedure Rules 2005 ("UCPR") provides as follows: "42.1 General rule that costs follow the event 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. Part 42.35 of the UCPR provides as follows: "42.35 Costs order not to be made in proceedings in District Court unless Court satisfied proceedings in appropriate court (1) This rule applies if— (a) in proceedings in the District Court, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $40,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted." 1. The appropriate order in any proceedings as to costs is in the discretion of the court. However, it has been recently reaffirmed by the High Court that the power to award costs, whilst discretionary, "is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation": Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [24]. As set out above, the usual costs order in any matter is that costs follow the event and are awarded on the ordinary basis. 2. In the absence of a valid offer of compromise or a Calderbank offer, the court can still make an order for indemnity costs, including from a specified date. However, there needs to be present some special or unusual feature or circumstance indicating that costs have been incurred unreasonably by a party usually because of delinquency of the other party in its conduct as a litigant: Mead v Watson [2005] NSWCA 133 at [8]-[10]; Harrison v Schipp [2001] NSWCA 13 at [138]-[139]. Relevant background facts 1. The plaintiff has relied on the affidavit of Roslyn McCulloch sworn 7 May 2020. This exhibits extensive correspondence between the legal representatives for the parties where the plaintiff sought attendance of the parties at an Informal Settlement Conference. Whilst initially agreeing to this, the defendant's solicitor was only, it seems, willing to attend a settlement conference where damages only were discussed. The plaintiff was willing for the discussions to be more wide-ranging and sought a meeting on site with certain experts. Clearly the defendant council wanted to retain the camphor laurel tree in its existing position and was not willing to discuss its removal. The affidavit also exhibits the details of an offer made to the defendant by the plaintiff on 4 February 2020 which was rejected by the defendant. The offer included a term for the payment by the defendant to the plaintiff of only $25,000, less than the amount eventually awarded. 2. The defendant relied on an affidavit of Amanda Bond sworn 15 May 2020 which referred to the circumstances surrounding the Informal Settlement Conference and negotiations and an offer during the trial. 3. I refer to the findings made and conclusions reached as set out in the Judgment. In my view, the following facts are relevant to the exercise of the court's discretion as to costs: 1. Proceedings were commenced by the plaintiff, Dr Donnelly, by a Statement of Claim filed on 5 March 2019, seeking damages for the tort of private nuisance and mandatory ancillary injunctive relief against the defendant for the removal of a large camphor laurel tree which is growing on the nature strip owned by the defendant council, immediately in front of the plaintiff's house in Hunters Hill in Sydney, or alternatively, the removal of its roots encroaching on the defendant's land and exerting pressure on the plaintiff's front fence and gate; 2. The findings by the court in the Judgment that the camphor laurel tree roots growing on the defendant's nature strip have caused damage to the fence, gate and the pavers of the plaintiff's property; 3. In its Defence filed 10 April 2019, the defendant denied the nuisance alleged. The defendant admitted the plaintiff had requested the defendant to remove the camphor laurel tree but denied that the roots of the camphor laurel tree constituted a nuisance or that the plaintiff was entitled to the relief then sought which included damages and an injunction; 4. Between 5 November 2019 and 18 December 2019, the solicitors for the plaintiff attempted to arrange an Informal Settlement Conference between the parties with the attendance of certain experts. While the defendant's legal representatives initially agreed to this (email dated 11 November 2019), in due course the defendant's position changed such that it was only willing to discuss damages issues or action which did not involve the removal of the tree in question: see emails dated 13 November 2019, 15 November 2019 and 27 November 2019. It is clear that the primary aim of the defendant was to preserve the camphor laurel tree the subject of the proceedings: 27 November 2019 email and 17 December 2019 letter. The plaintiff submits that the correspondence shows a lack of good faith in the defendant in its willingness to discuss a settlement. The defendant denies this; 5. On 3 or 4 February 2020, an offer was made by the plaintiff to resolve the proceedings: McCulloch exhibit pages 22-24; Bond affidavit paragraphs 4-5. This included an investigation of the tree and its roots, the payment of $25,000 by the defendant to the plaintiff as damages and the payment by the defendant to the plaintiff of his costs of the proceedings as agreed or assessed. There was no formal offer of compromise or Calderbank offer; 6. On 6 February 2020, the plaintiff, following oral evidence being given in the proceedings by experts called by each of the parties, was granted leave to file an Amended Statement of Claim which, in paragraphs 2A-2C, asserted an alternative injunctive regime: see T84.8; T85.46; T89.35; T119.26-40. However, the injunctive relief claimed in the existing Statement of Claim in paragraphs 1 and 2 was in substance still pressed as the primary relief sought; 7. In final submissions, the defendant submitted that a private nuisance had not been established, that if it was established that the damages claimed were not substantiated, and that injunctive relief should not be granted even if a private nuisance was established by the plaintiff even in the amended terms in paragraphs 2A-2C of the Amended Statement of Claim; 8. Judgment was given for the plaintiff in the Judgment in the sum of $35,470.33; and 9. The court found that injunctive relief in terms of paragraphs 2A-2C in the Amended Statement of Claim should be granted, subject to some alterations: see paragraph 124 of the Judgment. Submissions 1. The defendant relied on undated written submissions forwarded to the court on 24 April 2020. In substance, the defendant submitted in chief as follows: 1. The only injunctive relief sought by the plaintiff, and the only relief he would contemplate, before and after the commencement of the proceedings, was for the immediate removal of the camphor laurel tree with alternative relief, restraining the roots of the tree, having the same effect. This was confirmed by the documentary evidence tendered by the plaintiff and the oral evidence of Mrs Donnelly; 2. That remained the plaintiff's position until he was granted leave to file the Amended Statement of Claim seeking a lesser form of injunctive relief as an alternative; 3. The amendment in the Amended Statement of Claim was only sought after the defendant made clear it would argue that the plaintiff should not be entitled to the equitable relief he sought, requiring removal of the tree, because it was so unreasonable for that to have been the only option he would consider; 4. Notwithstanding the amendment, the plaintiff's primary position remained that he wanted the tree removed; 5. The plaintiff did not get that order. The court found that the immediate removal of the tree was not justified on the evidence; 6. The injunctive relief granted even varied the alternative relief sought by the plaintiff in the Amended Statement of Claim; 7. Costs are in the discretion of the court; 8. The usual order is that costs follow the event: Part 42.1; 9. Given the "uncompromising position" of the plaintiff throughout the proceedings, the defendant had no option but to resist and defend the plaintiff's claim, the essence of which was removal of the tree; 10. The damages awarded were not challenged as to the repair costs. The plaintiff recovered damages less than $40,000. Although he could not have obtained injunctive relief in the Local Court, the injunctive relief granted was not the removal of the tree as sought by the plaintiff; 11. The plaintiff should not be entitled to any costs up to and including the first two days of the hearing other than with respect to properly incurred disbursements. 1. The plaintiff submitted in substance as follows in his written submissions dated 7 May 2020: 1. Contrary to the defendant's submissions, no matter warrants departure from the presumption in Part 42.1 of the UCPR that costs follow the event. The plaintiff substantially succeeded against the defendant and should have his costs; 2. The defendant council should be ordered to pay the plaintiff's costs on an indemnity basis as sought (paragraph 5 above) because of the defendant's refusal to participate in an Informal Settlement Conference or settlement discussions not confined to the issue of damages and for the 4 February 2020 rejection of the offer of settlement; 3. The plaintiff was completely successful on his cause of action in nuisance and obtained a judgment for damages and injunctive relief. These matters are the event in Part 42.1 and the plaintiff has been substantially successful. No good reason has been established to depart from the usual rule; 4. There was no late amendment where the plaintiff substantially altered his case. The amendment did not result in only a "slight measure of success" by the plaintiff. The defendant was not the true victor in the proceedings. The council still vigorously resisted that a nuisance had been established; 5. The conduct of the defendant in refusing to discuss settlement on all issues from 13 November 2019 until 2 February 2020 was plainly unreasonable, a breach of s 56(3) of the CPA and constituted a refusal to negotiate in good faith. This justified an order for indemnity costs from 13 November 2019 to 3 February 2020; 6. The offer made justified an indemnity costs order from 4 February 2020. It constituted a genuine offer of compromise. The offer made is more advantageous to the defendant than the orders ultimately made; 7. Part 42.35 is inapplicable. The plaintiff could not have obtained injunctive relief in the Local Court and commencing proceedings in the District Court was warranted. 1. In undated reply submissions forwarded on 15 May 2020, counsel for the defendant submitted as followed: 1. The costs order sought by the plaintiff should not be made; 2. At no time was any offer from the plaintiff, including that made on 3 February 2020, stated to be an offer of compromise or stated to have costs consequences; 3. No offer was made by the plaintiff in a form which attracts special costs consequences: there was no formal offer of compromise or Calderbank offer; submissions paragraphs 4 and 6; 4. There is no absence of good faith shown by the defendant. The plaintiff in fact would never consider proposals which did not involve removal of the tree: paragraphs 16-27; 5. The plaintiff has no bettered the offer made: submissions paragraphs 7-13. The offer was to pay all the costs of the investigations of the tree roots and $25,000 presumably for loss of enjoyment of the plaintiff's land, stress, inconvenience and embarrassment; 6. There is, accordingly, no basis for awarding indemnity costs against the defendant as sought by the plaintiff. Consideration 1. At all relevant times, the plaintiff sought orders as his primary position for the removal of the camphor laurel tree. The defendant at all relevant times denied that a private nuisance had been committed by it as claimed by the plaintiff. It always sought the retention of the tree if at all possible. It was its view and apparently also that of other local residents that the tree should be retained: letter dated 17 December 2019 from Gillis Delaney to Pikes & Verekers (McCulloch Exhibit page 18); letter dated 29 January 2020 from Gillis Delaney to Pikes & Verekers (Bond affidavit Annexure A). 2. In my opinion, Part 42.35 of the UCPR should not be applied. The plaintiff could not have obtained injunctive relief as sought in the Local Court. The proceedings were complex and hard fought. Substantial expert evidence was relied upon. Having regard to the nature of the case and the way it was conducted and the relief sought, I am satisfied and find that the commencement and continuation of the proceedings in the District Court by the plaintiff, rather than the Local Court, was warranted. Accordingly, the usual order in Part 42.35(2) of the UCPR is in my view inapplicable. 3. In order to obtain any relief, the plaintiff had to establish that a private nuisance had been committed by the defendant. Although there was no real issue as to the repair costs, the defendant strongly resisted the claim for damages for the alleged tort of private nuisance. In addition, the defendant resisted the claim by the plaintiff for damages for a loss of enjoyment of his land, stress and inconvenience: paragraph 117 of the Judgment. The only way the plaintiff could establish any entitlement to injunctive relief was by establishing a private nuisance. This required the plaintiff to bring the proceedings against the defendant. 4. It is true that the plaintiff did not obtain the injunctive relief originally sought in the Statement of Claim or strictly as ultimately sought in paragraphs 2A-2C of the Amended Statement of Claim. However, it would seem that the plaintiff's application to amend the Statement of Claim was at least partly driven by the oral evidence given by the experts, particularly the oral evidence of the plaintiff's expert Mr Paroissien: see T84.10. The alterations to the injunctive relief sought in paragraphs 2A-2C of the Amended Statement of Claim as ultimately ordered by the court were relatively minor and partly took into account the current COVID-19 pandemic in granting more time to the defendant to comply with the orders. 5. The defendant submits that having regard to the plaintiff's "uncompromising" attitude, the only option it had was to resist and defend the plaintiff's claim, the essence of which was the removal of the tree. I reject that submission. The defendant also at all times disputed that a private nuisance had been established and challenged strongly at least one head of the damages claimed by the plaintiff. 6. I have carefully considered the matters set out in the defendant's primary submissions and reply submissions on costs. Nothing in those submissions persuades me that I should depart from the usual order as to costs in the present proceedings. The plaintiff has obtained orders both for damages and a form of injunctive relief which contemplate the repair or replacement of his property damaged, the rebuilding of the fence and gate near the tree and a regime for the potential removal of the tree depending on the expert arborist and engineering opinions. An amount of damages has also been obtained. Looking at the matter overall, in my view the plaintiff has been clearly substantially successful in the proceedings. I accept the plaintiff's submissions on this issue. 7. I am not persuaded that an order for indemnity costs is appropriate as sought by the plaintiff. I accept that on the evidence the defendant was not really willing to negotiate except as to the quantum of damages. However, it appears that its primary position was to attempt to preserve the tree and deny the existence of a nuisance which would have provided the basis for arguing injunctive relief. The retention of the tree was central to the defendant. Having regard to the nature, canopy and age of the tree, that was a not unreasonable approach to take in negotiations. However, it risked a costs order if it lost the proceedings. The establishment of a nuisance was also challenged and involved a close examination of the relevant authorities in submissions. Overall, the conduct of the defendant as revealed in the correspondence was in my view not a clearly unreasonable approach to take which would warrant an indemnity costs order. 8. The second indemnity costs order sought by the plaintiff from 4 February 2020 should also, in my view, not be made. It is true that the plaintiff obtained similar relief and obtained an order for higher damages than the $25,000 specified. However, the offer was made during the proceedings after two days of hearing. Paragraph 7 of the offer relating to the costs involved of the preceding items seems to be in addition to the payment of $25,000 "by way of damages" in paragraph 8 which was ultimately amended in the final orders made. I accept that the offer was a genuine offer of compromise by the plaintiff. However, contrary to the plaintiff's submissions, in my view, it was not unreasonable for the defendant to reject the offer having regard to the stage of the proceedings when the offer was made and the terms of the offer which I have referred to. There is no special or unusual feature in the present case within the applicable authorities to attract an indemnity costs order. No offer was made by the plaintiff at any stage which amounted to a formal offer of compromise or a Calderbank offer. 9. Accordingly, in the exercise of my discretion as to costs, the plaintiff is entitled to his costs of the proceedings on the ordinary basis. This, in my view, should extend to the costs of the application. The defendant failed in establishing the limited costs order it sought. Whilst the plaintiff failed in establishing indemnity costs, the material assisted in the understanding of the application and it was the defendant which initially proposed a different costs order to the usual order. Determination 1. For the above reasons, I make the following orders: 1. The applications for special or limited costs orders are dismissed. 2. The defendant is to pay the plaintiff's costs of the proceedings and the costs applications on the ordinary basis as agreed or assessed. ********** 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: 20 May 2020