De Pasquale Bros Pty Ltd & NJF Holdings Pty Ltd, Re [2000] QSC 4

SUPREME COURT OF QUEENSLAND CITATION: Re: De Pasquale Bros P/L & NJF Holdings P/L [2000] QSC 004 PARTIES: IN THE MATTER of Section 180 of the Property Law Act 1974 and IN THE MATTER of De Pasquale Bros Pty Ltd ACN 009 743 499 (Applicant) and IN THE MATTER OF NJF Holdings Pty Ltd ACN 009 910 481 (Respondent) FILE NO: OS 2 of 1997 DIVISION: Trial Division DELIVERED ON: 21 January 2000 DELIVERED AT: Brisbane HEARING DATE: 30 November 1999 JUDGE: Chesterman J ORDER: The respondent (NJF Holdings Pty Ltd) pay the applicant’s (De Pasquale Bros Pty Ltd) costs of and incidental to originating summons 2 of 1997 to be assessed on standard basis. CATCHWORDS: PROCEDURE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – COSTS OF ISSUES – whether “special circumstances” exist for award of costs against servient owner under s 180(6) Property Law Act 1974 Property Law Act 1974, s 180 Uniform Civil Procedure Rules, r 667(2)(e) COUNSEL: Mr J D Houston for the applicant Mr S Collins (solicitor) for the respondent SOLICITORS: Marsdens Lawyers for the applicant Clarke & Kann for the respondent [1] CHESTERMAN J: On 2 November 1999 I made orders for the costs of action 2026 of 1991 (“the action”) and originating summons 2 of 1997 (“the summons”). On 30 November 1999 I set aside the order for costs made on the summons pursuant to r 667(2)(e) of the Uniform Civil Procedure Rules. The applicant, who had the benefit of the order for costs, consented to its being set -- 1 of 9 -- 2 aside. The parties then asked me to reconsider the question of what order for costs should be made on the summons. I have now done so. [2] The action and the summons were heard together but after the trial had run for a number of days a compromise was reached involving all parties save the second defendant to the action who was not a party to the summons. I tried the issues that were not resolved by the compromise and gave judgment on 23 July 1999. I dismissed the summons because the compromise had made the proceeding unnecessary. [3] The applicant on the summons (“De Pasquale”), who was the first defendant in the action, agreed to restore support to and repair the building owned by the respondent to the summons and the plaintiff in the action (“NJF”). The work necessary to effect reinstatement and repair was agreed. It was also agreed that work to restore support to De Pasquale’s building should occur at the same time and in an agreed manner. [4] The compromise did not touch the question of the costs incurred in the prosecution and defence of the action or of the summons. An adjudication was sought on those questions. I heard argument on 27 October 1999 and, as I have mentioned, made orders on 2 November 1999. [5] Rule 683 provides that: “ (1) If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs. (2) The court may make the order the court considers to be just.” [6] Although the parties knew that their compromise had left the question of costs unresolved after agreement was reached no further evidence was adduced except what was needed to establish their claims against Cavanagh Biggs Pty Ltd. [7] The summons sought relief pursuant to s 180 of the Property Law Act 1974. The orders sought were that De Pasquale “… by its agent, Coffey Partners International … be permitted, and a licence be granted entitling it, to periodically enter upon [NJF’s] premises at such times and for such duration as the court may order for the purposes of:- (a) undertaking investigations and making observations and measurements; and (b) installing measuring devices, namely plastic tell-tales in connection with remedial work to be undertaken upon [De Pasquale’s] premises”. [8] Section 180 provides: “ 180(1) Where it is reasonably necessary in the interests of effective use in any reasonable manner of any land … that such land … should in respect of any other land … have a statutory right of user in respect of that other land, the court may, on the application of the owner of the dominant land but subject to this section, impose -- 2 of 9 -- 3 upon the servient land … an obligation of user or an obligation to permit such user in accordance with that order. … (3) An order … shall not be made unless the court is satisfied that – (a) it is consistent with the public interest that the dominant land should be used in the manner proposed; and (b) the owner of the servient land can be adequately recompensed in money for any loss or disadvantage which the owner may suffer from the imposition of the obligation; and (c) either – (i) the owner of the servient land has refused to agree to accept the imposition of such obligation and the owner’s refusal is in all the circumstances unreasonable; (ii) … … (6) In any proceedings under this section the court shall not, except in special circumstances, make an order for costs against the servient owner.” [9] A pre-condition to an order imposing a right of user is that the owner of the land to be affected unreasonably refuses to benefit the applicant’s land. In addition, the section contemplates that an order for costs against the respondent to the application, the owner of the affected land, is not to be made except in special circumstances. The terms of the section suggest that an unreasonable refusal to allow land to be used is not enough to justify an order for costs. Something more is needed. However, the generality of the language of sub-section (6) suggests that the respondent’s conduct which amounts to an unreasonable refusal may be of such a character as to constitute a “special circumstance”. [10] The application was brought because De Pasquale wished to repair its own building. It had applied to the Brisbane City Council (“the council”) for a building permit to carry out the necessary work but the council had refused. De Pasquale appealed against the refusal to the Building Tribunal which ordered the council to issue a permit subject to conditions designed to protect NJF’s building from damage during and by reason of the rectification of the A-mart building. To satisfy the Building Tribunal’s condition it was necessary for De Pasquale’s consulting engineers, Coffey Partners, to monitor the condition of the NJF building to determine whether the adjacent remedial work was affecting it. NJF refused to allow De Pasquale’s engineers to enter its premises or to install devices which would tell whether the fabric of the NJF building was moving. [11] It is at once apparent that there are features which distinguish the application from the typical situation for which s 180 was enacted. The norm is a case where a land owner seeks to impose an easement or licence on neighbouring land in order to better enjoy his own. A burden is imposed upon the other land which will often, if not usually, be indefinite in duration. The burden imposed will diminish the extent to which the servient owner can enjoy his own land. -- 3 of 9 -- 4 [12] These features are missing from the present application. The right of entry to inspect the building and the insertion of the measuring devices would have been of limited duration. Moreover, the order was sought for the protection of the NJF building not as a means of increasing De Pasquale’s enjoyment of his own land. Thirdly, the imposition of the conditions would not have diminished NJF’s ability to enjoy its own property. [13] Individually and collectively these three factors are circumstances which are “special” in the context of an application under s 180 of the Property Law Act. They may not, by themselves, be of sufficient importance to justify an order for costs against NJF, but there are other circumstances which make that order appropriate. [14] De Pasquale’s attempts to have its own building repaired began in about September 1991 when its solicitors wrote to NJF’s solicitors, advising that it intended to repair its building in accordance with engineering proposals and drawings already supplied, and asking whether NJF had any objections. The reply expressed “grave concerns” about the proposal which, it was said, “will undoubtedly create further structural movement … without any guaranteed long term solution” but went on to promise cooperation between NJF management and consultants “to explore potential avenues for the rectification of [the A-mart] building”. Two months later NJF commenced the action in which it claimed relief in respect of damage to its own building. [15] A year later, in December 1992, De Pasquale’s solicitors wrote to NJF’s advising that it would not proceed with the earlier proposal to rectify its building because of NJF’s concern. The letter advised NJF that Coffey Partners had prepared plans and specifications for an alternative means of remediation. A copy of the design was enclosed and NJF was asked to comment on the new design. NJF did not respond directly but asked instead to be given access to other engineering reports which De Pasquale had commissioned in connection with an ancillary matter. De Pasquale refused. [16] In June 1993 the council convened a meeting to be attended by the management of NJF and De Pasquale, their respective consultants, and council officers in an endeavour to find a solution to the technical issues in dispute between the two companies with respect to the proposed repair of the A-mart building. NJF’s representatives refused to attend. In October 1993 the council refused De Pasquale’s building application. In May 1994 the Building Tribunal allowed De Pasquale’s appeal. It is apparent that the Tribunal was concerned about the possibility of damage occurring to the NJF building as a result of the proposed rectification work. Coffey Partners, in a report presented to the Tribunal to address the concern, advised that the design details and proposed construction methods recognised concerns with respect to the neighbouring building and that adverse impact on that building would be avoided. The hearing of the appeal was adjourned to allow the Tribunal to obtain a report from an independent expert, Professor Wallace, who advised that if the proposed remedial works were carried out by a competent contractor with expert supervision and monitoring the risk of damage to the adjacent building would not be increased “above the current level of risk associated with the site in its present condition”. The Tribunal’s determination included as a condition of the permit that Coffey Partners who were to supervise the -- 4 of 9 -- 5 work should stop construction if there were any development that may present a possible danger to the NJF property. The council was to be notified immediately. Work could only recommence if the superintendent was satisfied that there was no danger to the adjoining property or if the work was amended to avoid the problem. [17] As I have mentioned the Tribunal imposed as a further condition that the NJF building be observed during construction so that work could stop immediately if there were any signs of damage. [18] In April 1995 De Pasquale’s solicitors wrote to NJF’s offering to consult with its engineers with respect to the design of the rectification work and offered to contribute $2,500 towards NJF’s costs of retaining consultants for that purpose. [19] On 6 November 1995 the building application was formally approved by the council. NJF was advised of this fact and was asked to allow access to its building for the purpose of monitoring and installing the tell-tales. Despite several requests for a reply NJF did not respond until 10 January 1996 when its solicitors wrote to say they had no instructions. Further approaches to NJF management were unsuccessful. In April 1996 two employees of Coffey Partners who attempted to examine the exterior of the NJF building as an alternative means of monitoring its condition were warned off the premises by Mr Hunt-Sharp. The employees do not appear to have trespassed. [20] In May 1996 a very brief report prepared by NJF’s engineers asserted that the western wall and footings of the NJF building were on the verge of “catastrophic collapse”. The report was addressed to Mr Hunt-Sharp who apparently sent it to the council which, in turn, sent it to De Pasquale for comment. There was no direct communication from NJF to De Pasquale or Coffey Partners. [21] On 7 June 1996 Coffey Partners wrote to NJF, referring to its engineer’s report, and advised that it “would appreciate any suggestions or comments that Bruce Taylor may have in relation to the remedial work as both … De Pasquale and Coffey are concerned to ensure that work is carried out to everyone’s satisfaction and a reasonable and appropriate engineering solution is applied to the problem. If … fees are of concern … Coffey is sure an acceptable arrangement could be made with Victor De Pasquale”. NJF did not reply. [22] The summons was issued in January 1997. In April NJF suggested that it be consolidated with the action but this suggestion was rejected by De Pasquale who, in May, sought an order that the summons be heard speedily. In July 1997 the summons was set down to be tried in September and an order was made that the parties deliver the reports on which they intended to rely. Shortly before the hearing was to commence De Pasquale applied for an order that the summons be consolidated with the action. It was adjourned to a date to be fixed on the understanding, implied if not express, that it would be heard at the same time as the action. It appears that in October 1997 De Pasquale delivered the Coffey Partner’s reports on which it relied and NJF delivered reports from a structural engineer and a geotechnical expert. -- 5 of 9 -- 6 [23] NJF’s basic premise for resisting an order that it pay De Pasquale’s costs, and for advancing its claim that De Pasquale should pay its costs, is that De Pasquale would not have obtained relief pursuant to s 180. NJF submits that its refusal to allow access to its building was not unreasonable because the proposed rectification of the A-mart building would have damaged its building unless underpinning was provided to at least some part of the western wall of the NJF building, and such support was not included in the proposed work. It is further submitted that because the De Pasquale proposal would have damaged NJF’s building the court would have dismissed the summons. [24] I do not accept this basic premise for a number of reasons. [25] The first is that the factual foundation for the claim that the proposed work would inevitably have damaged the NJF building without underpinning is not made out. NJF’s submission appeals to a number of reports of varying antiquity to attack the credibility of the Coffey Partners’ report on which De Pasquale depended for its position that the work could be done without underpinning and without risk to the NJF building. It is true that some earlier reports differ from Mr Philp’s (of Coffey Partners) relevant report. It is also true that in an earlier draft report Mr Philp appeared to contemplate underpinning to the NJF building as a precaution. However, Mr Philp deposed in an affidavit in support of the summons that earlier investigative work done for De Pasquale, on which NJF relies to criticise Mr Philp, was affected by errors which Mr Philp identified and explained. Similarly, Mr Philp took issue with NJF’s experts and refutes their concerns. He said inter alia “Concerns for the stability of both buildings are the loss of support for footings during the remedial construction works and after. It is this concern which has directed the remedial works to involve progressive installation of casings during excavation of the concrete underpins and gravel piles. The progressive installation of casings will prevent collapse of the excavation and avoid movement of the materials during excavation. The casing will be progressively withdrawn when the concrete is cast and the gravel piles are constructed … the proposed construction does not involve de- watering or depressurisation of the ground water regime beyond the conditions which already prevail” and “It is proper during the execution of these works and for a period thereafter, to include monitoring and observation of both buildings … to confirm that there is no impact on the relevant structures from the remediation works. This engineering management is included in part of the approved building application. It was also a condition of the Building Tribunal referee’s determination that appropriate procedures for monitoring and observation of both buildings be put in place … If unexpected conditions are encountered which cause an unanticipated observation in relation to this monitoring then cessation or amendment of the remedial works will be implemented without delay. The conditions are such that there is no possibility of catastrophic impacts occurring. There will always be ample time to react to unexpected indications from the continual monitoring procedures.” -- 6 of 9 -- 7 [26] At the trial Mr Philp gave evidence directed towards De Pasquale’s claim for indemnity against Cavanagh Biggs in respect of its liability to NJF, and De Pasquale’s own claim against Cavanagh Biggs. His evidence came at a time when the parties had settled their dispute except as to costs. The matters now urged against the acceptance of Mr Philp’s opinions were not put to him though NJF must have appreciated that impeaching Mr Philp’s opinion was essential to its position on costs. Nor did NJF call the experts, whose opinions it now advances, to show that Mr Philp was wrong and that his criticism of their position was mistaken. Nor is it clear to me that the method of repair which Mr Philp asserts was safe is that which was in contemplation when the other reports were commissioned. [27] Without having heard the expert evidence explained and developed in a comprehensive manner it is impossible to appreciate what differences remained between experts, what changes to opinions earlier expressed had occurred, or how the remaining differences should be resolved. [28] Rule 683 seems to contemplate that where proceedings continue in order that the court may decide who should pay costs the parties should present, in an orderly and comprehensible manner, sufficient evidence for the adjudication to be made. There has been no such presentation of evidence in the present case. Usually, though not invariably, the party who wants an order for costs will demonstrate that, had the action proceeded to judgment, it would have been successful. From the incomplete structure left after the compromise and the continued claim against Cavanagh Biggs Pty Ltd the parties make assertion and counter-assertion about their respective rights and what “would have been”. The material relied upon for these assertions lacks organisation, is largely unexplained, and has not been tested. [29] Put shortly, the position is that because the parties have chosen to argue costs without a thorough examination of the expert evidence I am unable to reach the conclusion for which NJF contends. I do not accept its submission that, on this ground, the summons would have been unsuccessful. To the extent that I have an impression it is that Mr Philp got it right. He gave evidence which I accepted. Moreover, his opinions and suggestions form the basis of the work the parties have agreed should be done to repair both buildings. Beyond this tentative conclusion I cannot go. [30] It is said that the terms of the compromise contain an admission by De Pasquale that it could not repair its building without underpinning the NJF building. This does not seem right. By the compromise De Pasquale accepted liability to make good damage to NJF’s building by inter alia underpinning one section of the western wall. At the same time that work is done the columns of the A-mart building will be underpinned. The settlement says nothing about whether, if the NJF building were not repaired, restoration of the A-mart building would require underpinning the NJF building. [31] The second reason is that NJF misunderstands what the summons put in issue. It regards the contest as having been whether the remedial work should have proceeded. The true contest was whether NJF should have been obliged to allow its building to be monitored and observed during the performance of the work De Pasquale was authorised to perform by virtue of the building application. -- 7 of 9 -- 8 [32] Put in this way the answer is obvious. NJF however regarded the summons as affording a rehearing of the Building Tribunal determination. The real position was that De Pasquale was permitted by that determination to repair its own building as long as it did not damage the NJF building. Access was required to ensure the condition was satisfied. [33] NJF’s formulation of the issue has a deeper significance. NJF sought to use the conditions imposed by the Building Tribunal for its protection as a means of frustrating De Pasquale’s repair of its own building. This was, in my view, an improper basis for opposing the summons. NJF expediently used the condition that its building be monitored as a substitute for obtaining an interlocutory injunction restraining the work. It achieved its end without having to discharge the onus of proof and without having to provide the usual undertaking as to damages. There are obvious difficulties in attempting now to assess the fate of a motion for an interlocutory injunction brought in 1997 or 1998 but I would think it likely to have failed. It is significant that the Building Tribunal, an independent arbiter, determined that the work could proceed without damage to the NJF building but put measures in place which would reveal immediately if that confidence were misplaced. In that event work would stop and not continue until it could be done in such a way as not to harm the NJF building. The court would probably have refused the injunction unless there were evidence of actual damage which would have been quickly available as a result of the monitoring if the work proceeded. [34] The third reason is that NJF identifies the wrong date as being that at which the success of the summons should be gauged. Its submission is that had the summons proceeded to a hearing in September 1997 “the court would have been entitled to refuse the relief sought”. But the time to test its likely outcome is mid 1999 when it and the action came on for trial. By this time some engineering and geotechnical issues had been clarified and refined. Further tests had been conducted and opinions expressed in the light of more complete information. NJF abandoned its earlier contention that its whole structure was likely to collapse. This contention was the principal expressed reason for NJF opposing the summons. [35] NJF also submits that the summons was inappropriate and unnecessary because the relief claimed could and should have been sought by way of counter-claim in the action. I do not accept this. There is no obvious connection between the subject of NJF’s action and the relief claimed in respect of repairing the A-mart building. Whether the relief was claimed by summons or by way of counter-claim costs would have been generated. Nor is it right to say that De Pasquale should have waited to obtain relief until NJF bothered to bring its action to trial. It issued its writ in November 1991 and thereafter proceeded at a snail’s pace. It gave no indication that it was serious about bringing its action on for trial or of complying with any time limit contained in the rules. [36] It is to be recalled that NJF gave no reasons for its refusal apart from Mr Taylor’s report which was not sent directly to Coffey Partners and which, in the end, was not relied upon by NJF. I do not accept that it was ever likely that the NJF building was in danger of a catastrophic collapse. It is significant that NJF refused to allow its engineers to confer with Coffey Partners, either to arrive at a satisfactory solution, or to persuade Coffey Partners that work could not proceed without underpinning the NJF building. -- 8 of 9 -- 9 [37] I think it a fair inference that NJF sought to frustrate the repair of the A-mart building because it could not interest De Pasquale in accepting liability to repair its building. I suspect that Mr Hunt-Sharp did not want De Pasquale’s building to be repaired unless NJF’s building was also restored. However, it did nothing to press its own action on for trial or even to properly formulate what relief it sought. [38] The reasons which would probably have led a court to refuse to grant an injunction preventing the work would probably have resulted in De Pasquale obtaining the relief claimed in its summons. The Building Tribunal, a specialist body, had determined that the work could proceed without damage to the NJF building. It had done so having commissioned an independent report from an eminently qualified geotechnician. The proposed monitoring was an appropriate safeguard which would have led to the cessation of work immediately it was apparent that the NJF building was being effected. [39] NJF’s refusal to allow monitoring of its building was unreasonable. The nature of the refusal, its ulterior purpose and the abandoned basis for it, make it appropriate to regard it as a special circumstance for the purposes of s 180(6) of the Property Law Act. Together with the circumstances I described in paragraph [13] the case is sufficiently “special” to make it appropriate to order that the respondent, NJF Holdings Pty Ltd, pay the applicant’s, De Pasquale Bros Pty Ltd, costs of and incidental to originating summons 2 of 1997 to be assessed on the standard basis. -- 9 of 9 --