Costs in restrictive covenant cases in the Supreme Court

Normally, the costs of proceedings under section 84 of the Property Law Act 1958 are paid for by the Plaintiff even where the Plaintiff succeeds in having a covenant modified or extinguished.

In Victoria, the leading case on this principle is arguably Re Withers [1970] VR 319-320 at 320 that held:

… unless the objections taken are frivolous, an objector in a proper case should not have to bear the bitter burden of his own costs when all he has been doing is seeking to maintain the continuance of a privilege which by law is his.

Re Withers applied the principle in Re Rose Bay Bowling and Recreation Club Ltd (1935) 52 WN (NSW) 77, where Long Innes C.J. in Eq. held:

This case is a case in which the applicant has succeeded and objectors have failed. The legal right, however, of the objectors is clear and admitted, unlike the case of In re Edwards where the objector in fact was held to have no rights at all. Having a clear right which was attacked by the applicant I think they were entitled to put their views before the Court. That they have put their views before the Court in a proper manner cannot be disputed, and I do not think that any costs have been unnecessarily or unreasonably incurred by their presence. The applicant in this class of cases, where the objectors have a clear legal right which is being attacked and which is sought to be cut down, is in fact undertaking the task of satisfying the Court that the proposed modification of the restriction will not cause substantial injury to the persons entitled to the restriction, and it is difficult to see how the Court can be satisfied of that fact except after argument or without considering all the material evidence. The applicant cannot be expected to adduce evidence to cut down his own case, nor to argue contrary to his own interests, and consequently in such a case the reasonable and proper costs incurred by the objectors must, I think, be regarded as necessarily incident to such an application, and where those circumstances are present I think it is only right and proper that the applicant should pay all costs reasonable or necessarily incurred by reason of the application, including the proper costs of the objectors. I am of the opinion, therefore, that in this case the applicant should bear the costs as between party and party of the objectors.

Re Withers was subsequently applied by Justice Morris in Stanhill v Jackson [2005] VSC 355 who noted:

The principle set out in Re Withers is consistent with other decisions of the Court, such as that by Gillard J in Re Markin[3], Lush J in Re Shelford Church of England Girls’ Grammar School[4] andMcGarvie J in Re Ulman.[5] In my opinion, it is a sound principle.

Particular care should be taken in the event that one’s status as a beneficiary is in doubt or if declaration proceedings have been commenced, for it may be argued that Re Withers should not apply, in whole or in part.

Also, the Court will ordinarily only allow one set of costs, so it is important for objectors to coordinate their representation and have a pre-agreed arrangement for the distribution of costs in the event that an order for costs is made. Understanding, of course, that an award of standard costs will usually cover most, but not all, costs incurred.

For a more detailed discussions about costs in restrictive covenant applications, see the section on costs at page 79 to 85 in the following notes: 

[1] [1970] VR 319-320 at 320

[2] [2005] VSC 355

[3] [1966] VR 494.

[4] Unreported, 6 June 1967.

[5] (1985) VConVR 54-178.

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