Wardanski & Anor v Mawby & Anor (No 2)

At the conclusion of litigation which his Honour deemed “unnecessary”, and in which the plaintiffs had been largely unsuccessful, Justice Crowley considered what orders for costs should be made. The primary issues were whether the defendants should be ordered to pay interest and who should pay the costs of the proceeding, and on what basis. Relying upon R 360 UCPR, the plaintiffs sought to argue that they were entitled to an order that the defendants pay their costs on the indemnity basis. His Honour did not accept that proposition. In his view, R 360 UCPR does not displace s 194 Property Law Act 1974 (which applied here since the claim concerned an encroachment upon the plaintiffs’ land). He held that s 194 is intended to be the sole source of the court’s power and discretion to order costs where encroachment applications are made under s 184 Property Law Act 1974.

Crowley J

27 October 2023

At trial, the plaintiffs sought relief pursuant to s 184 Property Law Act 1974 in respect of an encroachment upon their land by structures which the defendants had built, under the mistaken belief that they were within their boundary. [1]. Whilst his Honour did not accede to the plaintiffs’ request that the defendants be ordered to remove the structures, he ordered that they compensate the plaintiffs, transfer the subject land burdened by the encroachment, and realign the property boundary. [2]. Both parties argued that they were entitled to costs from the other and that in addition they should be paid either wholly or partly on the indemnity basis. [5].

The issue of whether interest should be paid

At trial, the defendants were ordered to pay $21,087.50 in compensation. [8]. They were also ordered to reimburse the plaintiffs $5,225.00 for costs which they had incurred in obtaining an advice and survey from an urban planner. [9]. Whilst his Honour was of the view that it was appropriate that interest be paid upon the latter amount, he did not accept that the plaintiffs were entitled to interest concerning the compensation noting that they had not suffered any loss prior to judgment due to being “kept out of their land”. [12]–[14].

The parties’ submissions as to costs

The plaintiffs had made an offer to settle pursuant to Ch 9, Pt 5 UCPR which the defendants did not accept. As such, relying upon R 360 UCPR, they submitted that they were entitled to indemnity costs in circumstances where the judgment was no less favourable than the offer which had been declined. [20]. The defendants argued that R 360 had no application since it was inconsistent with s 194 Property Law Act 1974 and in any event the rule had not been satisfied. They also contended that since the plaintiffs had not been successful in the litigation, they were not entitled to any order for their costs at all. They submitted that, rather, they were entitled to indemnity costs since the plaintiffs had unreasonably rejected a settlement offer made by the defendants and had not bettered that offer in the judgment following trial. [21]. In the event there was inconsistency between the two provisions, then the question of costs would be resolved by s 194 Property Law Act 1974. [22].

The scope and terms of the two statutory provisions

Noting that whilst R 360 UCPR has general application to any proceeding started by claim whereas s 194 applies specifically to applications under Pt 11, Div 1 Property Law Act 1974 as regards “encroachment of buildings”, his Honour remarked that there is “evident inconsistency” between both provisions. [26]. He further observed that the broad and unfettered discretion regarding costs and expenses conferred by s 194 is derived from the remedial nature and purpose of Pt 11, Div 1 Property Law Act 1974. [30]. Whilst the UCPR is subordinate legislation, s 194 is a substantive provision of an Act of Parliament which confers a plenary power. [33], [34].

Did R 360 displace s 194?

Finding in favour of the defendants, his Honour held as follows:

1.The plaintiffs’ proposition that r 360 UCPR overrides s 194 Property Law Act 1974 would require acceptance of the premise that R 360 impliedly amends s 194. [34];

2.It is not the case that subordinate legislation can impliedly repeal or amend a prior Act of Parliament - rather, it must be expressly authorised to do so, which had not occurred here. [35];

3.R 360 UCPR does not displace s 194 Property Law Act 1974. The inconsistency between the provisions is to be addressed by acknowledging that s 194 is intended to operate as the only source of the court’s power and discretion to order costs concerning encroachment applications under s 184 Property Law Act 1974. Whilst that does not render R 360 expendable, its relevance is restricted to what is “just in the circumstances” under s 194. [36]–[37];

4.Notwithstanding the discretion with respect to costs under s 194 Property Law Act 1974 is unfettered, the general rule that costs follow the event applies. [41];

5.The mere fact that the court made orders granting a form of alternative relief sought by a moving party does not mean they were on the whole the successful party and are accordingly entitled to costs. [44];

6.Factors to be taken into account in determining the successful party include the conduct of the parties, the issues that were litigated and whether it was necessary to have recourse to litigation in order to achieve the orders for the alternative relief which were made following the trial. That approach is consistent with the generous discretion conferred by s 194 Property Law Act 1974. The scope of the discretion reflects the subject matter and purpose of applications made to the court under s 184, and the nature and extent of the relief that may be granted by the court. [45];

7.Here, despite the fact that the plaintiffs had been granted an alternative form of relief, having regard to all of the circumstances the defendants were plainly the successful party. [50].

What costs order was appropriate in the circumstances?

His Honour made a costs order in favour of the defendants, commenting that it was “abundantly clear that the plaintiffs largely failed in their claim at trial” and further, that “[t]he encroachment dispute could and should have been resolved without the parties resorting to the court for intervention”. [47], [48].

Disposition

The court ordered that:

1.The defendants pay the plaintiffs an amount of $5,225, together with interest on that amount in the sum of $852.16, for expenses incurred by them in investigating the encroachment.

2.Pursuant to r 687(2)(c) UCPR, the plaintiffs pay the defendants’ costs of the proceedings, fixed at $160,000.

A Jarro