M Salazar Properties Pty Ltd v Jeffs [No 2]
[2024] QSC 86
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- Unreported Judgment
- Appeal Determined (QCA)
- M Salazar Properties Pty Ltd v Jeffs [No 2][2024] QSC 86
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M Salazar Properties Pty Ltd v Jeffs [No 2][2024] QSC 86
M Salazar Properties Pty Ltd v Jeffs [No 2][2024] QSC 86
SUPREME COURT OF QUEENSLAND
CITATION: | M Salazar Properties Pty Ltd v Jeffs [2024] QSC 86 |
PARTIES: | M Salazar Properties Pty Ltd (applicant) v Justin Noel Jeffs (respondent) |
FILE NO: | BS10187/22 |
DIVISION: | Trial division |
PROCEEDING: | Originating application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 16 May 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | On the papers |
JUDGE: | Hindman J |
ORDERS: | As per Attachment A |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – PARTIES AND NON-PARTIES GENERALLY – where if costs awarded against the applicant the respondent sought non-party costs order against the directors of the applicant – whether the directors’ involvement in the conduct of litigation and their interests in the grant of easement justify making of costs order against them on principles discussed in Knight v FP Special Assets Ltd (1992) 174 CLR 178 Property Law Act 1974 (Qld), ss. 180, 181 Knight v FP Special Assets Ltd (1992) 174 CLR 178 |
COUNSEL: | Nil |
SOLICITORS: | Nil |
ADVOCATES (with leave): | J Merlo / M Salazar for the applicant D Jeffs for the respondent |
Introduction
- [1]On 29 February 2024 reasons for judgment were delivered following a two day trial that took place on 7 and 8 September 2023. The reasons recorded at [159]–[162] the envisaged form of final orders to be made. A preliminary view about the costs of the proceeding was recorded at [163]–[167]. The orders made on 29 February 2024 were:
- On conditions to be recorded in a final order, the Court imposes on Lot 197, RP116684, title reference 14287174 a statutory right of user pursuant to section 180(1) of the Property Law Act 1974 (Qld), in favour of Lot 199, RP116684, title reference 14287176.
- The parties are directed to, by 4pm on 27 March 2024, deliver by email to the associate to Hindman J draft orders agreed by the parties to reflect the Court’s reasons or if there is not agreement, draft orders each party contends reflects the Court’s reasons.
- The parties are directed to, by 4pm on 27 March 2024, advise the associate to Hindman J by email if they wish to be heard in relation to the issue of the costs of the proceeding.
- [2]The parties did not agree a final form of orders and did wish to be heard about costs. The parties agreed those two matters could be dealt with on the papers. To facilitate that occurring, the Court has received and considered the following additional material filed by the parties:
- court document 72 - submissions for the respondent
- court document 73 - affidavit of J Jeffs
- court document 74 - affidavit of M Salazar
- court document 75 - affidavit of D Meredith
- court document 76 - submissions for the applicant
- court document 77 - submissions in reply for the respondent
- court document 78 - affidavit of J Jeffs
- court document 79 - affidavit of M Salazar
- court document 80 - further submissions for the applicant.
- [3]Some preliminary comments about that material are useful to record. First, the finalisation of this proceeding at first instance will pay no regard to the fact that the applicant has apparently filed an appeal. Orders will be finalised, by this decision, in the usual course. Second, the process of finalising orders will pay no regard to further evidence or submissions that could have been adduced by the parties at trial. This process is not an opportunity for the parties to have a “second bite at the cherry”.
- [4]The orders I make are set out in Attachment A.
Form of orders excluding costs
- [5]Where I consider it necessary to do so because of submissions that have been made by one or both of the parties, I further explain in brief terms below why I have made the orders in the form made (excluding in respect of costs that is separately dealt with below).
Order 1
- [6]The statutory right of user should not be imposed without the compensation being paid. I have assessed the compensation to be paid. The order is drafted in those terms. The order is unaffected by the fact of any appeal having been filed by the applicant; it is for me to finalise the orders I am making.
- [7]The compensation includes an amount estimated on account of the respondent’s future reasonable legal costs involved in the registration of the easement. Leave to apply is given in order 16 as per [149] of the reasons for judgment. It should not be assumed that if application is made further compensation will be ordered. That will be a matter for the Court to determine based on the evidence before it on any such application. I note that the applicant appears (sensibly) to accept that it should pay all of the respondent’s reasonable legal costs involved in the registration of the easement – see at 5(b)(ii) on page 32 of the applicant’s further submissions, court document 80. If that position is maintained, that may obviate the need for any application by the respondent pursuant to the liberty to apply given.
Order 3
- [8]The included diagram is sufficient for the purpose of the order. Registration of the easement may require a more formal drawing, perhaps even a survey plan, but that is a matter for the land registry to consider.
Order 5
- [9]There was no suggestion in the evidence at trial that the works proposed by the applicant would interfere with the respondent’s existing drainage infrastructure. What was identified as being required was the installation of stormwater infrastructure for the benefit of the applicant, but built in a way (with appropriately sized pipes) that might one day also be utilised by the respondent if the respondent was ever to develop his land. The applicant did not adduce any evidence that without interfering with the respondent’s existing drainage infrastructure, the applicant’s proposed drainage infrastructure could not be installed within the easement sought. In those circumstances I am not prepared to compel the respondent to have his existing drainage infrastructure interfered with as a condition of the easement.
- [10]The applicant and respondent might be able to agree about the removal of the respondent’s existing drainage infrastructure with the applicant’s new drainage infrastructure being utilised by the respondent, or about changes being made to the respondent’s existing drainage infrastructure by the applicant, but that is a matter for them at the present time. It was not the basis upon which the proceeding was heard and determined.
Order 6
- [11]The applicant’s proposal for the drainage infrastructure to be installed in the easement was precise in its terms. That proposal has been considered. The compensation associated with that specific proposal has been assessed.
- [12]That the applicant made its application in the proceeding in circumstances where it appears it does not have complete certainty as to the local council’s precise requirements for the drainage infrastructure is an issue of its own making. I am not prepared to leave details such as these to the discretion of the local council as different infrastructure may justify different compensation.
Order 9
- [13]The evidence was that the construction period required by the applicant was approximately 7 days.
- [14]I had proposed to allow a construction period of 30 continuous days to allow for any unforeseen contingencies. I consider that generous. The proposal of the applicant for the construction period to basically be unlimited if certain conditions are met is not acceptable. I will allow a revised 45 continuous days construction period, without modifying the compensation required to be paid.
Orders 14 and 15
- [15]These orders have been added to facilitate the registration of the easement. The more proscriptive proposed orders of the applicant in this regard are not presently shown to be necessary on the evidence available.
Other issues
Limiting time for the imposition of the easement
- [16]I am not prepared to impose time limits on the imposition of the statutory right of user as proposed by the respondent (for example, by the Court’s order being of no effect if development approval is not obtained by the applicant from the local council within a specific period of time) or on the time for the commencement of construction of the relevant drainage infrastructure. The statutory right of user will not come into effect until the compensation is paid. There are too many variables to impose any type of end date.
- [17]After the statutory right of user comes into effect, if the applicant does not within a reasonable time “use” the easement as contemplated, then application might be made by the respondent to extinguish the easement – ss. 180(4)(d), 181 PLA.
Respondent’s proposed order 6
- [18]These proposed orders are not required.
Letter of consent
- [19]No letter of consent directed to the local council as requested by the applicant should be required once the statutory right of user is imposed and the easement registered. In truth, the respondent does not consent. Instead, the Court has made orders that will permit a statutory right of user to be imposed on conditions. The local council will undoubtedly act upon the Court having made those orders and the fact of the easement and its terms once registered.
Costs of the proceeding
- [20]I refer to my preliminary view in respect of costs expressed at [163] – [167] of the reasons for judgment. It should be emphasised that the costs with which the Court is concerned are legal costs and the only legal costs incurred in this matter (apart from any Court fees that may have been incurred) of which there is evidence is $40,000 incurred by the respondent with HWLE.[1]
- [21]The position of the respondent in respect of costs is (in summary):
- the respondent’s costs actually incurred in the amount of $40,000 ought be paid;
- the liability to pay the respondent’s costs should be extended beyond the applicant to both Ms Salazar and Mr Merlo.
- [22]The position of the applicant in respect of costs is (in summary):
- the matter of costs ought be left to the appeal court;
- otherwise, no order as to costs;
- otherwise, indemnity costs order against the respondent;
- otherwise, costs 50/50 on the standard basis, assessed on scale;
- otherwise, the respondent should only recover from the applicant 50% of his standard costs.
- [23]I reject the applicant’s submissions. Insofar as the submission was made as to the respondent being ordered to pay any part of the applicant’s costs, I note there are no special circumstances required by s. 180(6) PLA that would justify such an order. My view of costs remains consistent with the preliminary view expressed at [165] of the reasons for judgment. The applicant should pay the respondent’s costs fixed in the amount of $40,000.
- [24]I am satisfied that the applicant’s conduct about the proceeding, and the nature of the proceeding, is such that fixing the costs in the amount actually incurred by the respondent is appropriate. I note that s. 180(5)(e) PLA does not restrict me to ordering costs on any particular basis (such as standard or indemnity costs); but if it were necessary to so conclude, I would have allowed costs on the indemnity basis given the conduct of the applicant that I have already explained in the reasons for judgment. I have carefully considered by reference to the available evidence the work carried out in respect of the legal fees charged to the respondent and the fees do seem to me to be reasonable for the work performed, properly recoverable on the indemnity basis.
- [25]The only remaining question then is whether either or both of Ms Salazar or Mr Merlo should also be ordered to pay those costs.
- [26]The prima facie general principle is that an order for costs is only made against a party to the litigation.[2]
- [27]This general limitation applies because, ordinarily, only the actual parties are directly responsible for the conduct of the proceeding. A consequence of the general limitation is that exceptional circumstances are required to justify an order for costs being made against a non-party.[3]
- [28]The discretion to award costs against non-parties is explained in Knight v FP Special Assets Ltd (1992) 174 CLR 178. It was held in that case that a non-party costs order will ordinarily be made “when, in the circumstances of the particular case, it is just and equitable that a non-party pay the costs of a party to the litigation”.[4]
- [29]I consider that there are several factors about this case that make it appropriate that the costs order also be made against Ms Salazar. They are:
- there is reason to believe that the applicant is not a company of substance;
- Ms Salazar has played an active role in the conduct of the litigation;
- Ms Salazar has an interest in the outcome of the litigation;
- the specific unreasonable conduct of Ms Salazar referred to in the reasons for judgment;
- the applicant was on notice of security for costs being an issue in the proceeding from 7 September 2022. A fair estimate of standard costs was provided to the applicant on 28 September 2022;
- in response to the request for security for costs, Ms Salazar expressly recognised that an answer to any such application might be personal undertakings by writing in her letter of 31 October 2022 – “The provision of personal undertaking by those who stand behind the company (irrespective of whether the persons have sufficient means to meet an adverse costs order) is a material factor in the discretionary balance which may ‘weigh heavily’ in the discretionary balance” (footnotes omitted). She went on later, “For the avoidance of any doubt the applicant and persons behind the Applicant are ready willing and able to consider the question of security for costs should your client properly particularise its request.”
- both Ms Salazar and Mr Merlo were expressly advised by the respondent that a non-party costs order would be sought against them on the indemnity basis shortly prior to the trial commencing (letter dated 2 September 2023).
- [30]In respect of Mr Merlo, whilst the issue is finely balanced, I do not consider it is appropriate that a costs order be made against Mr Merlo. Whilst Mr Merlo has some indirect interest in outcome of the litigation through Ms Salazar, was a director of the applicant for a time and played an active role in the conduct of the litigation, I think overall his conduct should be viewed in the context of informally performing the role of a solicitor, acting on instructions. His conduct, although concerning at times, did not rise to the level where if he had been a solicitor acting that a non-party costs order would have been made against him.
Attachment A
Imposition of statutory right of user
- Upon the applicant paying to the respondent the sum of $63,000 as compensation, the Court imposes on Lot 197, RP116684, title reference 14287174 (the servient land) a statutory right of user pursuant to section 180(1) of the Property Law Act 1974 (Qld), in favour of Lot 199, RP116684, title reference 14287176 (the dominant land) on the conditions set out in this order.
- The statutory right of user imposed comprises an easement and a licence.
The easement
- The easement is a permanent easement in respect of an area of the servient land and is to have the dimensions of not more than 20.6m in length and 1.3m in width as demonstrated (not to scale) on the diagram below.
![M Salazar Properties Pty Ltd v Jeffs [No 2] [2024] QSC 86](/judgmentview/image?name=361669.001.png&id=361669)
- The easement entitles the owner of the dominant land and their servants or agents, whether on foot or by vehicle, to break the surface of, dig, open up and use the easement to construct, lay down, install, deepen, use and manage, maintain, repair, alter, renew, remove, replace or inspect drains or drainage pipes or drainage pits or any other drainage infrastructure installed for the purpose of draining or transmitting roof water or stormwater from the dominant land to Perdita Street.
- The easement does not entitle any interference with existing drainage infrastructure servicing the servient land.
- The drainage infrastructure permitted within the easement:
- insofar as it includes drainage pipes, must be pipes of not less than 300mm in diameter;
- insofar as it includes any infrastructure visible or at or above ground must be no more than two drainage pits with dimensions each of no more than 600x600mm.
- There are further conditions of the easement that:
- except in an emergency situation, any access to the easement must be notified in writing to the owner of the servient land not less than 2 business days before access;
- after any access to the easement, the easement must be reinstated by the owner of the dominant land to the condition it was in prior to access;
- the owner of the dominant land is to at all times maintain insurance of not less than $10 million in relation to the easement (for the benefit of the owner of the servient land and any mortgagee of the servient land) for any damage suffered by any person as a consequence of accessing the easement or relating to the drainage infrastructure installed within the easement pursuant to order 4;
- the owner of the dominant land is required to produce evidence of the insurance held pursuant to the preceding clause to the owner of the servient land within 5 business days’ of written request;
- the owner of the dominant land is responsible for all maintenance of the drainage infrastructure installed in the easement pursuant to order 4.
The licence
- The licence is a temporary licence in respect of an area of the servient land having the dimensions of 24m in length and 6m in width as demonstrated (not to scale) on the diagram above (the construction zone).
- The temporary licence is for a period of 45 days (consecutive) (the construction period) to commence upon the giving of not less than one week’s written notice from the owner of the dominant land to the owner of the servient land.
- The temporary licence entitles the owner of the dominant land and their servants or agents, during the construction period, whether on foot or by vehicle, to access and use the construction zone for the once off purpose of constructing and installing drains, drainage pipes, drainage pits and any other drainage infrastructure in the easement for the purpose of draining or transmitting roof water or stormwater from the dominant land to Perdita Street.
- The temporary licence entitles the owner of the dominant land and their servants or agents to remove fencing adjacent to the construction zone on Perdita Street to the extent necessary to facilitate access to the construction zone during the construction period on condition that:
- the owner of the dominant land advises the owner of the servient land in writing as to when the fencing is to be removed;
- the owner of the dominant land must reinstate some form of fencing overnight such that the servient land is secure overnight;
- the fencing must be reinstated by the conclusion of the construction period in the same condition that it was in prior to access.
- There are further conditions of the licence that:
- the owner of the dominant land is to, during the construction period, maintain insurance of not less than $10 million in relation to the construction zone (for the benefit of the owner of the servient land and any mortgagee of the servient land) for any damage suffered by any person as a consequence of accessing the construction zone or relating to the construction;
- the owner of the dominant land is required to produce evidence of the insurance held pursuant to the preceding clause to the owner of the servient land at least 2 business days’ prior to the construction period commencing;
- the construction zone is to be reinstated by the owner of the dominant land to the condition it was in prior to its use by the owner of the dominant land, within the construction period.
- The licence does not entitle any interference with existing drainage infrastructure servicing the servient land.
Registration of the easement
- Once order 1 takes effect, the parties are to take all necessary and reasonable steps to have the imposed easement registered.
- The applicant is responsible for the payment of any fees payable associated with the registration of the easement, including obtaining any plan of survey required.
- The respondent has leave to apply to the Court for a variation of the compensation payable in respect of the imposition of the statutory right of user in the event that the reasonable legal costs incurred by the respondent about the registration of the easement exceed $5,500.
Costs of the proceeding
- The applicant and Maricris Salazar are jointly and severally liable to pay the respondent’s costs of the proceeding fixed in the amount of $40,000.
- The costs in order 17 are not required to be paid in addition to the compensation ordered for the imposition of the statutory right of user (as recorded in order 1).
- The costs in order 17 are payable immediately and at all times until the compensation ordered for the imposition of the statutory right of user (as recorded in order 1) is paid.