Scott v Elmslie Estate Limited DC Wellington CIV 2010-085-550 [2012] NZDC 1123 (20 July 2012)

Last Updated: 9 January 2020

IN THE DISTRICT COURT AT WELLINGTON

CIV: 2010-085-000550

BETWEEN GAVIN ROBERT SCOTT First Plaintiff

AND PATRICK ROBIN VAN BERKEL Second Plaintiff

AND ELMSLIE ESTATE LIMITED First Defendant

AND TONY GEORGE GRAHAM Second Defendant

Hearing: On the papers

Counsel: Mr J A Langford for Plaintiffs Mr P Michalik for Defendants

Judgment: 20 July 2012

JUDGMENT OF JUDGE T J BROADMORE

[As to Damages and Costs]

Introduction

[1] The plaintiffs and the first defendant are the owners and occupiers of land in Elmslie Road, Pinehaven. The second defendant, Mr Graham, is a director of the first defendant, Elmslie Estate. The plaintiffs have the benefit of an easement over part of Elmslie Estate’s land for the purposes of a right-of-way giving access to their properties.

[2] Over a period of years, differences have arisen between the parties concerning the limits of, and use of, the right-of-way. In the course of those disputes, further issues have arisen between them over consent to Elmslie Estate’s application for resource consent in respect of a house proposed for its land, the costs

SCOTT V ELMSLIE DC WN CIV: 2010-085-000550 [20 July 2012]

of maintaining a power pole, and the potential threat allegedly posed by pine trees on Elmslie Estate’s land in the vicinity of the right-of-way.

[3] These disagreements were brought to a head in May 2010 by the action of Mr Graham in placing two concrete blocks on the right-of-way, so that in practical terms the plaintiffs could not use it for vehicular access to their properties; making threats to demolish a portion of Mr van Berkel’s garage which, so it was alleged, encroached onto Elmslie Estate’s land by a small amount; and demanding rent from Mr van Berkel for a small area on Elmslie Estate’s land used by him for car parking and storing firewood.

[4] After the concrete blocks were deposited on the right-of-way, the plaintiffs applied for an injunction requiring them to be moved. I granted an injunction to that effect on 11 June 2010.

[5] Thereafter, negotiations, including at a judicial settlement conference, did not succeed in resolving the issues between the parties, and the proceeding came on for hearing before me on 23 April 2012. Up until shortly before that date, the defendants had been unrepresented in the sense that they had not formally engaged a solicitor to represent them in the proceeding. Nevertheless, the defendants had obtained legal advice as to their position from time to time. However, at the last moment the defendants retained Mr Michalik to represent them at the hearing. Mr Michalik had not previously been involved.

[6] On the morning of the hearing, the parties advised me that a settlement was possible, and, by the end of the morning, they advised me that a conditional settlement had been achieved. That settlement is reflected in the consent order which I made on 23 April 2012.

[7] However, as noted in paragraph [2] of that order, there remained outstanding issues as to damages and costs, which the parties left for me to resolve on the basis of memoranda to be filed. Such memoranda have now been received. The plaintiffs seek damages and costs. The defendants seek neither. This judgment follows.

Conduct of the parties

[8] The way the parties behaved towards each other as their disputes evolved is, I consider, relevant to the issues of both damages and costs.

[9] The deep context is the bitterness that Mr Graham feels about the way in which the plaintiffs secured an easement for a right of way over Elmslie Estate’s land to improve and legalise access to their respective properties. The question of such access had been an ongoing issue for a number of years. In the late 1990s Mr Graham found himself in financial difficulties and was adjudged bankrupt. The mortgagee of Elmslie Estate’s land1 took possession of it. Mr Graham did not regain possession until 2003 after settling up with the mortgagee. But during the period when the mortgagee was in possession the plaintiffs negotiated the terms of an easement, including financial arrangements for upgrading the right of way; and the easement was surveyed and registered over Elmslie Estate’s land2. Mr Graham is of the heartfelt view that this arrangement was disadvantageous to him.

[10] After Mr Graham regained possession of the land, he became aware that a portion of Mr van Berkel’s garage apparently encroached onto Elmslie Estate’s land to a minor extent. He did not do anything about that for some years.

[11] Later, starting in about 2006, Mr Graham began felling pine trees on the Elmslie Estate land in preparation for a possible subdivision. Mr Scott became concerned about the possible danger of falling trees and spoke to Mr Graham about that. According to Mr Scott, Mr Graham told him that “he did not care one iota about your safety”. Mr Graham has not commented on that allegation.

[12] In 2008 or 2009, Mr Graham approached the plaintiffs about resource consent for a house he planned to build on the Elmslie Estate land. They both declined to consent to the proposal. Mr Scott says that he was concerned about water seepage

1. Then owned, it seems, by Mr Graham and his brother-in-law: Elmslie Estate did not take title until 2003.
   
2. The precise chronology is unclear because accounts differ. I do not think this matters for present purposes.

from the cut which would have to be made in the hillside to provide a building platform, and whether the earthworks would weaken the hill. Mr Graham says that when Mr Scott declined to consent, he laughed at him and said “what are you going to do now?”. Mr Scott has not commented on that allegation. However, it seems that at a judicial settlement conference the plaintiffs agreed to consider the proposal if Mr Graham would let them have copies of (in particular) a geotechnical report; but Mr Graham had not, as at April this year, provided it.

[13] In December 2009, apparently without any prior discussion or warning, Mr Graham sent invoices to Mr van Berkel covering the garage encroachment, use of part of the right of way for car parking, and use of part of the land for storage. The invoices charged Mr van Berkel a total of $3 per day plus GST for one year from 30 November 2008, amounting to a little over $1,200. Mr van Berkel wrote back in January maintaining that, on legal advice, he had no liability to pay in the absence of a written agreement. Matters seem to have stopped there until Mr Graham placed the concrete blocks on the right-of-way.

[14] There was further tension between the parties over concerns about the safety of a power pole erected on Elmslie Estate’s land. The power pole carried the electricity supply to Mr Scott’s and Mr van Berkel’s properties. Early in March 2009, the lines company circulated affected users stated that the pole was in a potentially unsafe condition, and the position would have to be rectified by the consumers at their own expense. Nothing happened about this for a number of months, but in November 2009 the defendants’ solicitor sent invoices to the defendants purporting to cover the cost of replacing the power pole. There had been no previous contact between the parties about this issue. The plaintiffs took the matter up with the lines company. It was soon established that the company’s original stance was incorrect, that the pole was in fact in a satisfactory condition, and that the lines company would take responsibility for maintaining it in future.

[15] It is not clear when Mr Graham learned about this: the plaintiffs claim that it was in early December. At all events, the defendants continued to seek payment of the invoices. The particular complaint made by Mr van Berkel is that, just before Christmas 2009, the defendants’ solicitor made a direct approach to his bank seeking payment of the invoice which had been sent to him. Mr van Berkel had a mortgage

with the bank. How the defendants, or more particularly their solicitor, could conceivably have thought that there was any basis for the bank to pay the invoice is an unresolved mystery.

[16] The defendants and their solicitor continued to maintain that they were unaware of the change of stance by the lines company and continued to insist on payment until July 2010.

[17] The approach to Mr van Berkel’s bank is the basis of the claim for damages for unlawful interference in the relationship between Mr van Berkel and his bank.

[18] The simmering tensions between the parties over the matters I have just discussed came to a head on 4 May 2010. On that day Mr Graham placed two 2- tonne concrete blocks at the eastern end of the easement. This prevented Mr Scott from using the access way to his property, preventing any vehicle access. There was an encounter between Mr Scott and Mr Graham at this time, but, according to Mr Scott, Mr Graham declined to provide an explanation for placing the concrete blocks there.

[19] A few days later, Mr Graham spray painted a vertical line on the side of Mr van Berkel’s garage, adding the word “cut” to the left of that line. These marks roughly indicate the portion of the garage which admittedly encroached over the northern boundary of the easement. As the easement was over Elmslie Estate’s land and gave no right to Mr van Berkel or anyone else to erect structures on it, there is no question but that it was unlawful. However, at the time there had been exchanges of correspondence between the parties and their solicitors about the encroachment, resting with a letter from Mr van Berkel’s solicitor to Mr Graham’s solicitor at the end of February to which there had been no response.

[20] The final event was that on 11 May 2010, Mr Graham served a trespass notice on Mr Scott, for which he declined to offer any explanation, and attached signboards to a pole on the right-of-way stating, “No Trespassing” and “Vehicles will be towed”.

[21] This sequence of events crystallised the dispute. The plaintiffs commenced this proceeding on 3 June 2010. They immediately applied for and on 11 June were

granted an interim injunction. This required the defendants to remove the concrete blocks and restrained them from interfering with the plaintiffs’ lawful use of the right-of-way or doing anything to Mr van Berkel’s garage.

[22] The course of events both immediately before the issue of the proceedings and subsequently is also of interest.

[23] On 19 May 2010 Mr Scott visited Mr Graham at his address in Lower Hutt, but Mr Graham refused to discuss the matters with him. According to Mr Scott, he was “forcibly marched backwards 20 metres to the street and told to clear off”. Mr Graham has not denied this.

[24] In July 2010 Mr Graham proposed an overall resolution which was conditional on all parties to the right of way consenting to the defendants’ application for resource consent for construction of the dwelling.

[25] Without going into detail, I am satisfied, having read the briefs of evidence of the plaintiffs and Mr Graham, that Mr Graham remained reluctant to engage in settlement negotiations, remained extremely difficult to contact, changed his solicitor twice, and was unrepresented for a significant portion of the time. It is clear that he was incensed by the plaintiffs’ rebuff over his building plans. As he essentially admits in his brief of evidence for the trial, he went on to the offensive in taking action against the plaintiffs.

[26] I will state the inferences I draw from the conduct of the parties and the conclusions I reach about that conduct in discussing the issues of damages and costs, to which I now turn.

Damages

[27] The plaintiffs claim $10,000 damages covering two aspects of the disputes between the parties:

1. Private nuisance resulting from disturbance of the easement.
   
2. Unlawful interference with the relationship between the second plaintiff and his bank.

[28] I deal with the unlawful interference claim first. It seems to be common ground that Mr Graham’s solicitor approached Mr Van Berkel’s bank in an attempt to get the invoice paid. As I have already observed, it is unclear to me why the solicitor could possibly have thought that it was appropriate for him to approach the bank in this way, much less that the bank might actually make payment. Be that as it may, however, there is no evidence that the bank took any step to alter the nature or quality of its relationship with Mr Van Berkel or to cause him loss in any way. So far as the evidence goes, it simply (and of course correctly) took no action at all in response to the solicitor’s approach – apart from advising Mr van Berkel that the approach had been made. As no loss can be demonstrated, the claim for damages cannot succeed.

[29] The claim in respect of the “disturbance of the easement” is in a different category. That claim can relate only to the deposit of the concrete blocks and to the damage allegedly done to the surface of the driveway. As Mr Graham freely acknowledges in his written brief, he intentionally placed the blocks on the driveway knowing that they would prevent Mr Scott from using it and knowing that he had a legal right to use it for the purposes of vehicular access to his property. He also accepts that he took this step as a means of applying pressure on Mr Scott to give consent for the construction of the house Mr Graham was proposing to erect on the Elmslie Estate land.

[30] Mr Michalik sought to argue that the breaches of the right of way by the plaintiffs - the encroachment of the garage and the parking - were equivalent in character to the actions of the defendants in placing the concrete blocks on the right of way and the issue of trespass notices and therefore had the effect of cancelling each other out.

[31] I do not agree with that. The garage encroachment and the parking issue had nothing to do with Mr Scott, whereas he was the only one affected by the concrete blocks and by what looks to have been some minor damage to the tar seal and gravel surfaces of the right of way when the blocks were removed. So far as I can see, Mr Graham’s only complaint about Mr Scott referable to the right of way was that Mr Scott did not have legal access to his property for the last section of his drive.

But that section was over land belonging to Guildford Timber Limited, a company unrelated to the defendants. Mr Graham could have had no legal standing to advance a complaint about that.

[32] I accept that, with the exception of a complaint about minor damage to the tar seal and gravel surfaces of the driveway, no loss or damage has been sustained by the plaintiffs. It seems that Mr Scott himself repaired the surfaces, but there is no evidence of any actual cost being incurred. As Mr Scott’s claim for interference with his access lies in trespass, it is actionable without proof of loss or damage; but a mere infraction of the plaintiffs’ rights to use the right-of-way, without such proof, would normally give rise only to nominal damages. Nevertheless, as Mr Michalik accepts, exemplary damages may be awarded in tort in cases where a defendant “acts in contumelious disregard of the plaintiffs rights” (Taylor v Beere [1982] NZCA 15; [1982] 1 NZLR 81).

[33] In my view, this is such a case. As Mr Graham well knew, Mr Scott and his visitors had every right to use the right of way for vehicle access, and he had not the vestige of a right to interfere with that. As he freely accepts, he chose to block the right of way for the purpose of applying pressure on Mr Scott to achieve the collateral objective of getting Mr Scott to agree to his building plans. The means he chose were clearly unlawful. There were of course lawful means open to Mr Graham to proceed without Mr Scott’s agreement: he could have at least embarked on a formal application to the Council for consent, so that the validity of any objection Mr Scott might have had could be tested.

[34] I consider that this behaviour on the part of Mr Graham merits an award of exemplary damages.

[35] In calculating such damages, I take into account also the following matters: the inconvenience caused to Mr Scott and his family by having to park some distance from the property and walk back and forth to their cars for a period of some 6 weeks; the fact that Mr Graham did not fully comply with the injunction so that access around the blocks remained restricted (there are issues of both contempt of

court and exemplary damages bound up in that); and the modest damage to the surface of the right of way.

[36] I fix the damages at $5,000, payable to Mr Scott.

Costs

[37] The plaintiffs seek costs. Although they have not quantified an amount, they seek an order in their favour on a 2B basis.

[38] Essentially, the plaintiffs say that they had no choice but to issue proceedings in June 2010 after Mr Graham threatened damage to Mr van Berkel’s garage and placed the concrete blocks on the right of way. The injunction issued in the proceeding resulted in the partial removal of the concrete blocks so that the right of way could at least be used by Mr Scott. It also dealt with the risk of any imminent attempt to interfere with the garage.

[39] The plaintiffs maintain that the commencement and continuation of the proceeding was necessary because of the arbitrary and unilateral way in which the defendants dealt with issues arising between the parties, and their failure to engage in meaningful settlement negotiations until the morning of the hearing. As a result, despite the settlement, they say that they are entitled to costs. The final paragraph of the submissions filed by Mr Langford, counsel for the plaintiffs, puts the case for costs in this way:

Matters have progressed to this stage due to the actions of the defendants. The defendants’ actions have been oppressive, underhanded and at times coercive. Despite attempts by the plaintiffs to communicate with the defendants the plaintiffs had to reach the day of hearing before a partial settlement was achieved. The plaintiffs have been put to cost in issuing proceedings and following the process through to hearing. It was only at the hearing, at which the defendants had rational and competent representation, that the matters were resolved. Accordingly the defendants should bear the cost of the proceedings.

[40] That the formal result of the proceeding might be less significant for costs than the process required to reach that result is emphasised by the plaintiffs’ initial

pleading. A remedy sought by the plaintiffs in their initial version of what used to be called the prayer for relief was –

An order that the first defendant engage in open, face-to-face, verbal communications to resolve these and any future issues over the right-of-way, and provide his telephone number to the plaintiffs.

[41] There was of course little prospect that a court would ever make such an order, as I am sure that Mr Langford knew. But the fact that it was included in the prayer for relief illustrates the plaintiffs’ sense of frustration and the significance they attached to having an opportunity for proper debate to resolve their disagreements.

[42] The defendants’ stance is to compare the remedies sought by the plaintiffs in the proceeding with the ultimate outcome as reflected in the settlement agreement. On Mr Michalik’s analysis -

The settlement reflects the usual position with a settlement – that nobody wins and nobody loses. Everybody got something they wanted, and gave up in return something they did not mind giving up, as a price for what they could get back. The principled result would seem to be that costs should lie where they fall, neither party having won, but each party having achieved something they could have achieved in the proceedings, and something extra, that continuing the proceedings could not have delivered.

[43] Alternatively, counsel sought to analyse which party was “the winner” on each issue, reaching the conclusion that the result “might fairly be regarded as a draw”.

[44] The usual position, as Mr Michalik submitted, is that costs follow the event, so that, in general, an award of costs would reflect the degree of success of the party recovering costs. On that basis, the plaintiffs would not be entitled to costs. But I note that Mr Michalik did not take into account the interim injunction which the plaintiffs successfully sought and held, and which, essentially permanently, solved Mr Scott’s immediate access problems.

[45] As r 4.1 of the District Court Rules 2009 makes clear, all matters concerning costs are at the discretion of the Court. That discretion is a general and, by virtue of r 4.1.3, overriding one. I consider that the existence of this overriding discretion is a

critical factor in determining costs in this case; and that in exercising that discretion I should consider the stance of the parties in their approach to the litigation.

[46] Rules 4.6 and 4.7 deal with increased costs and indemnity costs and the refusal of or reduction in costs. They proceed on the basis of entitlements or obligations concerning costs which already exist. But they do not deal with a situation like the present one, where the entitlement to costs is at large and neither party can be deemed the successful one.

[47] Nevertheless those rules give guidance, in my opinion, as to the way in which the overriding discretion should be exercised in this case. Both rules refer to the conduct of a party in contributing unnecessarily to the time or expense of the proceeding by, inter alia, pursuing unnecessary steps or advancing arguments that lack merit, failing, without reasonable justification, to accept legal argument, or failing, without reasonable justification, to accept an offer to settle or dispose of the proceeding. Rule 4.6.4 (which deals with indemnity costs) also refers to a party acting “vexatiously, frivolously, improperly, or unnecessarily” in relation to the proceeding.

[48] I therefore consider that I have a general discretion to order costs if the defendants can be shown to have behaved in a way comparable with the conduct referred to in Rules 4.6 and 4.7. I make it clear that I am not referring to an award of increased or indemnity costs: the question is simply whether, even accepting that Mr Michalik is correct in his analysis of the outcome of the proceeding, the plaintiffs may nevertheless be awarded costs on the grounds of the defendants’ behaviour. The plaintiffs do not seek increased or indemnity costs.

[49] The question remains whether in fact the defendants were guilty of the behaviour asserted by Mr Langford.

[50] In my opinion, the course of events described in an earlier section of this judgment establishes the following matters:

1. Neither Elmslie Estate Limited, nor Mr Graham, gave any prior warning to the plaintiff – for example, by way of a letter setting out his views as to the legal position and suggesting a remedy, or discussions to resolve the position – before presenting invoices in respect of rent for the alleged encroachments, indicating in provocative terms the extent of the alleged encroachment on the wall of Mr van Berkel’s garage, and placing the two-tonne concrete blocks on Mr Scott’s access way.
   
   2. Mr Graham acted precipitately and without any prior advice or explanation to the plaintiffs, in rendering invoices concerning the power pole and then continued for several months to press the point (including making what I have already said was an ill-advised approach to Mr van Berkel’s bank) to secure payment of the invoices when I strongly suspect that he had known from early January 2010 that the plaintiffs had resolved the matter direct with the lines company and that there was no basis for him to seek any payment.
      
   3. During the events which gave rise to the litigation, and after it had been commenced, Mr Graham was unresponsive to efforts made by the plaintiffs to engage him in discussion. It is further not easy to escape the conclusion that Mr Graham was deliberately making it difficult for the plaintiffs to contact him.
      
   4. Mr Graham’s actions were driven by his dissatisfaction with the arrangements made about the easement and upgrading of the right of way at a time when he had no control over what was done; and by his anger and frustration at the plaintiffs’ stance on his building proposal.
      

[51] In the light of these actions and attitudes on Mr Graham’s part, and regardless of the overall rights and wrongs of the situation, the plaintiffs had no alternative but to commence the proceeding. In my opinion, the defendants’ conduct of its case resonates with the conduct identified in the parts of the rules earlier referred to.

Those parts of the rules also go some way towards capturing the flavour of what Mr Langford asserts.

[52] The answer to Mr Michalik’s analysis of the ultimate outcome is that this is one of those cases where the outcome of the process rather than success or otherwise in formal terms is the correct standard by which to measure entitlement to costs. For the plaintiffs, success lay in achieving resolution of disputes which had festered for a decade rather than in receiving an award of money or orders in their favour. The fact is that, had the defendants behaved in the manner sought by the plaintiffs in their initial pleading (see [40] and [41] above), it is unlikely that the litigation would have been required at all. That is evident from the fact that, once Mr Graham had engaged experienced counsel, a settlement was negotiated, on terms which were of benefit to the defendants, within the space of a morning. That negotiation and its outcome speaks for itself as to the consequences of Mr Graham’s discourteous and obstructive attitude to resolution of the matters in dispute.

[53] I therefore consider that I should exercise my discretion to award costs to the plaintiffs despite their limited success in the litigation.

Outcome

[54] The defendants are to pay damages to Mr Scott in the sum of $5,000; and are to pay costs to the plaintiffs calculated on a 2B basis and disbursements as fixed by the Registrar in case of dispute. As the plaintiffs were represented by the same solicitor and their cases were essentially the same and advanced in tandem, only one set of costs is payable. If the quantum of the costs cannot be resolved then I will receive memoranda.

T J Broadmore

District Court Judge