Jean Luc Clavel and his wife, Sarah, claimed former neighbours John and Kim Savage waged a campaign of intimidation and harassment, since 1994, to force them to leave Great Mackerel Beach, a remote hamlet at Pittwater, north of Sydney.

They also sued the state of NSW, alleging NSW Police had acted maliciously by serving criminal charges and apprehended violence orders - to aid the Savage family in their alleged plan.

During a hearing in the NSW Supreme Court in 2010, the Crown Solicitor's Office had offered the Clavels a settlement of $200,000 in damages and $400,000 in costs.

Instead, the Clavels pushed on, only to lose the case against the Savages and police.

In March this year, Supreme Court Justice Stephen Rothman reflected on a range of flashpoints that had allegedly featured stone throwing, laser beams and accusations surrounding the escape of a pet rabbit, leading him to draw comparisons to Alice in Wonderland.

Justice Rothman found the stone-throwing, abuse and shining of a red laser beam to be wrongful conduct on Mr Savage's part, but held these incidents did not cause any psychiatric injury suffered by the Clavels.

By the time Justice Rothman ordered the Clavels to pay both defendants' legal costs, it had been 10 years since either family had lived at the location.

In dismissing the case, Justice Rothman said: "A neighbourhood dispute of this kind, no matter how serious, that does not involve continuing rights or relationships, cannot justify the costs involved in this litigation".

But the costs haven't stopped mounting just yet. The Clavels have lodged an appeal.

Fairfax Media