Angius v Salier

Background

1. The background to the present application (and the underlying dispute between the parties), as summarised in the various parties submissions on the present costs applications, is as follows.
2. The plaintiff and the deceased were, prior to the deceased's death, the directors of and shareholders in the companies who have been joined as the second to sixth defendants in these proceedings. Those companies own a number of rental earning properties.
3. The deceased died in January 2012. The first defendant was appointed as the administrator of the deceased's estate on 1 April 2014. Robert is the major beneficiary of the deceased's estate and, in particular, of the deceased's 50% shareholdings in the second to sixth defendants. The administrator has been unable to administer the estate over the last eight years, in large part (Robert says) due to various claims raised by the plaintiff.
4. These proceedings were commenced by the plaintiff in 2016. On 17 February 2017, the plaintiff filed an amended statement of claim.
5. The plaintiff's claims against the administrator related to several properties and included a claim for funeral expenses and a claim (in the alternative to the primary claim) against the second to sixth defendants.
6. Specifically, the plaintiff's claims against the second to sixth defendants were: first, a claim that the second defendant was indebted to him because he lent money to the second defendant to enable it to reduce indebtedness to the Commonwealth Bank of Australia; second, a claim that the third defendant was indebted to him because he incurred costs and expenses in improving a property owned by the third defendant; and third, a claim that the fourth defendant was indebted to him because he paid for poker machines installed at a hotel owned by the fourth defendant and he lent it money to pay legal fees.
7. Robert was not initially joined as a party to the proceedings.
8. On 15 December 2017, a receiver was appointed by the Court to each of the second to sixth defendants (the Receiver) for the purpose of defending the claims made by the plaintiff in the amended statement of claim. The Receiver's powers were extended by this Court on two subsequent occasions.
9. On 31 May 2018, on his own application, Robert was joined to the proceedings by order made by Robb J, his joinder being on a limited basis and on the following conditions (see Angius v Salier [2018] NSWSC 808 (Angius Joinder Decision) at 64-(5)): 1. that Robert's participation in the proceedings would be "at his own risk as to his costs in that he will pay his own costs of the proceedings, unless the Court otherwise orders"; 2. that, unless the leave of the Court be granted, cross-examination by Robert's counsel would be limited to areas not otherwise covered by counsel for the administrator; 3. that, unless the leave of the Court otherwise be granted, Robert's evidence would be limited to the "Togumi Partnership issue" (arising from the allegations at [31] and [32] of the amended statement of claim); and 4. that Robert not file any pleading, whether by defence or cross-claim, without first providing a draft of the pleading to all other parties as well as the receiver of the second to sixth defendants, and that he be given leave by the Court to do so on application on seven days' notice.
10. It is noted that the joinder of Robert to the proceedings was permitted on the basis that orders might be made that would directly affect his rights such that he was a necessary party (see Angius Joinder Decision at [52] per Robb J citing Ashton v Pratt [2013] NSWCA 400 (Ashton v Pratt) at [21]).
11. The issue in relation to the "Togumi Partnership" relates to a dispute involving the third defendant (Togumi Pty Ltd), which has interests in certain property in Windsor (those interests owned in partnership with Robert personally).
12. In March 2019, Henry J determined as separate questions a number of issues concerning the first two sets of claims made by the plaintiff against the administrator (i.e., those relating to the properties and the funeral expenses) (that being the relief claimed in prayers 1(a)-(f) of the amended statement of claim) and a claim for mesne profits made by the administrator against the plaintiff in a cross-claim (see Angius v Salier [2019] NSWSC 184 (Angius Separate Questions Decision)).
13. Her Honour noted (at [40]) that Robert had been joined to the proceedings on a limited basis and on condition that his participation was at his own risk as to his costs.
14. Her Honour ordered (at 166) that each of the plaintiff/cross-defendant, the administrator/cross-claimant and Robert pay his own costs in relation to the hearing of the separate questions.
15. The remaining claim for relief against the administrator was that sought in prayer 1(g) of the amended statement of claim, namely: (g) In the alternative to Order 2 below, payment of the sum of $762,922 and a declaration that [a property at Coogee] is charged to the extent of that amount and any proceeds received by the first defendant from the sale of that property are charged accordingly.
16. The claim sought in prayer 2 of the amended statement of claim (in respect of which the relief claimed at prayer 1(g) was expressed to be in the alternative) was a claim by the plaintiff as against the second defendant (Angius Hotel investments Pty Ltd, to which I will refer as Angius Hotel Investments) for judgment in the sum of $1,525,844.61.
17. On 18 July 2019, the matter was fixed for hearing over two days in late November 2019 in respect of the remaining claims in the proceedings (i.e., the claim for relief against the administrator, being the claim in prayer 1(g) of the amended statement of claim, and the claims against the second, third and fourth defendants). That listing was for the days of 28 and 29 November 2019.
18. On 25 November 2019, those hearing dates were vacated by Parker J (his Honour reserving the question of costs thrown away by reason of that order).
19. The vacation of the hearing dates by Parker J was precipitated by an application by the plaintiff's then solicitor, Mr Falk, on 20 November 2019 for leave to withdraw pursuant to r 7.29 of the UCPR. Mr Falk's application was initially refused. However, Mr Falk made a further application on 25 November 2019 for leave to withdraw, following which Parker J ordered that the New South Wales Trustee and Guardian (NSW Trustee) be appointed as the plaintiff's tutor for the purpose of the further conduct of the proceedings.
20. Pausing here, the administrator says that the determination to vacate the November hearing, three days before the date set for hearing, was the direct result of the intervention by the plaintiff or by his then solicitor acting on his behalf.
21. The matter then came before me on 3 December 2019 and I made further orders in relation to the conduct of the proceedings.
22. On 13 December 2019, when the matter came back before me in accordance with those directions, the NSW Trustee filed in Court a notice of motion seeking the revocation of orders that were made on 25 November 2019 by which the NSW Trustee was appointed as the plaintiff's tutor for the conduct of these proceedings. The application for revocation of the appointment of the NSW Trustee as tutor was made, in effect, on the basis that there was no utility in the NSW Trustee being named as the tutor in the proceedings because it has no power to act as tutor in the absence of a financial management order or other guardianship order. I acceded to that application, being persuaded that there were legitimate concerns on the part of the NSW Trustee as to whether it had power to act as the tutor.
23. Also on 13 December 2019, I indicated (and so directed) that any application by any of the defendants for the plaintiff to be medically examined would require an opinion as to his capacity to manage his affairs in relation to the conduct of the proceedings and any such application to be listed for directions on 11 February 2020. I listed the matter for hearing, this time for three days, before me from 25 to 27 May 2020. Further, I directed that any application by the plaintiff's legal representative for leave to withdraw as a solicitor on the record be filed and served by 7 February 2020 and returnable on 11 February 2020. I also referred the disputes in the proceedings to court-annexed mediation on 24 March 2020 for a full day (which mediation ultimately did not proceed).
24. The administrator then filed a notice of motion on 7 February 2020 seeking orders that the plaintiff be medically assessed. I heard that application, ruling on 11 February 2020 that the plaintiff be medically examined (Angius v Salier [2020] NSWSC 114 (Angius Medical Examination Decision)). Relevantly, I noted (at [9]) that the administrator's application to have the plaintiff medically examined was made in circumstances where the administrator was concerned to take steps to have the issue of the plaintiff's capacity to give instructions and have the proceedings determined in order to enhance the prospects of success in resolving the proceedings at mediation; and to reduce or eliminate the risk that a further application to vacate the hearing dates of 25 to 27 May 2020 would be made.
25. I gave leave for Mr Falk to file a notice of ceasing to act for the plaintiff (see at [19]). As I said (at [19]), I considered it invidious for a solicitor (who is an officer of this Court) to be placed in the position where the solicitor was unable, despite the solicitor's best endeavours, to obtain instructions in relation to the ongoing conduct of the matter, noting that Mr Falk had been placed in an impossible position in relation to the performance of his duties and obligations as an officer of the Court.
26. What then followed was that the plaintiff was medically examined by a neuropsychologist (Dr Lonie) to obtain an opinion as to his capacity to give instructions in relation to the present and future conduct of the proceedings and, with relevant legal and expert assistance, to understand and make informed decisions about the current and further issues in the proceedings and management of his affairs (as to which see Angius Medical Examination Decision).
27. Dr Lonie prepared a report filed on 20 March 2020. In that report, Dr Lonie considered overall that the plaintiff had capacity to understand the issues in the proceedings insofar as he could identify the contested matters and the manner in which they related to his estate and his long-term business affairs. However, Dr Lonie expressed concern as to the plaintiff's capacity to make informed decisions about current and future issues in the proceedings. Dr Lonie also considered that the plaintiff would be placing himself at a considerable disadvantage were he to act for himself in the proceedings (see at [101]; [105]).
28. Instructions were at some stage then given by the plaintiff to a new solicitor, Mr Macaulay, to act in the proceedings. What next came before me was an application by Mr Macaulay to cease to act. The circumstances in which that occurred are set out in my reasons of 15 May 2020, on which occasion I appointed a tutor to the plaintiff for the purpose of the proceedings, finding that the plaintiff was "now incapable of providing instructions for the future conduct of the legal proceedings" (Angius v Salier (No 2) [2020] NSWSC 594 at [20]).
29. Following the appointment of a tutor for the plaintiff, a settlement was reached between the plaintiff and the Receiver for the second to sixth defendants to compromise the plaintiff's claims against the second to sixth defendants and the latter parties' cross-claim against the plaintiff/second cross-defendant. That compromise, reached on 19 May 2020 and communicated to my associate on 20 May 2020, was on the basis that the parties pay their own costs. On that basis, the remaining claim in the proceedings (being the plaintiff's alternative claim against the administrator) was also compromised.
30. Accordingly, orders were made on 20 May 2020 dismissing the balance of the amended statement of claim.
31. This brings me to the present applications as to costs. At the time that the balance of the amended statement of claim was dismissed, I was informed that there was a dispute as to costs. Directions were made for the filing of submissions on costs (as adverted to above).
32. I turn now to those submissions.

Administrator's submissions as to costs

1. As adverted to in the introduction to these reasons, the administrator seeks an order that part of his costs of the proceedings be paid by the plaintiff personally, on the ordinary basis, and the balance be paid out of the deceased's estate on an indemnity basis.
2. Specifically, the orders sought by the administrator are: 1. The plaintiff pay the First Defendant's costs of the balance of the proceedings on the ordinary basis, including costs thrown away by reason of the November 2019 hearing having been vacated as well as the costs involved in relation to the hearing for 25 to 27 May 2020; and 2. The first defendant's costs otherwise be paid from the estate of the deceased on the indemnity basis.
3. The administrator notes that an order that the administrator's costs of the proceedings be paid by the plaintiff would include any interlocutory applications and reserved costs (see r 42.7(1) of the UCPR).
4. The administrator was not involved in the negotiations which led to the agreement reached between the plaintiff, on the one hand, and the second to sixth defendants, on the other, in relation to the settlement of the remaining claims in the amended statement of claim; and hence he says the question of the administrator's costs was left at large.
5. The administrator notes that, pursuant to r 42.20(1) of the UCPR, where proceedings are dismissed, unless the Court orders otherwise, the plaintiff must pay the defendant's costs (and, hence, in the present case the plaintiff would be liable for the administrator's costs of the proceedings to the extent that they have been dismissed).
6. In that regard, it is said that the plaintiff bears the onus to make an application to be relieved of the obligation to pay the costs of the administrator and that the exercise of the discretion to order otherwise than as the rule provides requires some sound positive ground or good reason for departing from the ordinary course (citing Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 at [21]-[29] per Preston CJ of LEC (with whom Beazley P, as Her Excellency then was, and I agreed); Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [53]-[54] per Hodgson JA (with whom Tobias JA agreed) and [69]-[74] per Basten JA; One. Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [6] per Burchett JA). Following from this, the administrator says that there are no such grounds which would warrant departure from r 42.20(1) of the UCPR in the present case.
7. The administrator notes that there have been many interlocutory applications since the commencement of the proceedings and on a number of those occasions the question of costs was reserved. In that regard, the administrator tendered on the present application a bundle of the orders made in relation to those interlocutory applications.
8. In summary, the administrator says the following as to the relevant interlocutory applications and orders made on those applications.
9. First, as to the administrator's notice of motion filed on 4 September 2017 and amended notice of motion filed on 15 November 2017, seeking, inter alia, orders appointing the receiver to the second to sixth defendants for the purpose of the conduct of defence of these proceedings, that this application was necessary because, inter alia, the plaintiff claimed (pointing to [2]-[4] of the amended statement of claim) monetary judgment against three companies of which the plaintiff was a director and the companies had not, at that time, filed any defence to the claim or taken any steps in the proceedings. In addition, the administrator says that it was not clear at the time of the application whether the companies had in fact been served with the amended statement of claim.
10. Further, the administrator says that it was necessary to join the fifth and sixth defendants (also companies of which the plaintiff was a director) in order to seek orders for the appointment of the receiver for those companies and to seek an accounting in respect of the second to sixth defendants, because the report dated 18 May 2017 of the Court appointed expert, Mr Trevor Vella, had identified deficiencies in the way in which the plaintiff operated the companies (referring to [13], [31]-[42], [49]-[54] of Mr Vella's report). It is noted that there were no proper, full and complete cash books, journals or ledgers maintained; and it is said that it was not possible easily to ascertain (or in some cases to ascertain at all) how the figures in the profit and loss accounts and the balance sheet could be traced to underlying source records. It is noted that only Angius investments Pty Ltd operated a bank account and that (Mr Vella identified that) there were discrepancies in the inter entity loan accounts.
11. The administrator notes that his application was before Robb J on 16 November 2017, 17 November 2017 and on 15 December 2017; that the application was opposed by the plaintiff and by Robert; and that the orders ultimately made on 15 December 2017 gave the Receiver limited powers with his Honour reserving the question of costs (see order 11).
12. Second, that the Receiver made application for more extensive powers by notice of motion filed on 28 June 2018 and orders on the Receiver's application were made by Robb J on 6 July 2018 with his Honour again reserving costs (see order 12); and further orders were made on 6 August 2018 with costs again reserved (see order 8). It is noted that those orders were varied on 13 September 2018 and, again, costs were reserved (see order 7).
13. The administrator says that the Receiver's application was necessary because he was given only limited powers by the orders made on 15 December 2017. It is noted that the issues which led the Receiver to apply for additional powers included: the condition of the properties owned by the companies; payment of the taxation liabilities of the companies; and payment of the costs and disbursements of the Receiver. It is said that those issues were not able to be met whilst control of the companies remained largely with the directors (reference being made to an affidavit of Geoffrey Peter Granger sworn 26 June 2018 that was read on that application).
14. Third, the administrator refers to the applications by the plaintiff's former solicitor (Mr Gregory Falk) for leave to cease to act for the plaintiff made on 20 November 2019 and on 25 November 2019 (see Angius v Sailer (No 3) [2019] NSWSC 1648 and Angius v Salter (No 4) [2019] NSWSC 1698, respectively) and the vacation of the hearing dates of 28 and 29 November 2019. It is noted that costs were not reserved on 20 November 2019 but that on 25 November 2019 costs were reserved (see order 4).
15. Fourth, the administrator points out that the matter was listed before me for a directions listing on 13 December 2019 at which the NSW Trustee's application for revocation of orders appointing it as the plaintiff's tutor was heard (Angius v Salier [2019] NSWSC 1854); in respect of which costs were reserved (see order 7).
16. Fifth, by notice of motion filed on 7 February 2020, the administrator sought orders that the plaintiff be medically assessed, which application was heard by me on 11 February 2020 (see Angius Medical Examination Decision). It is noted that (see orders 5 and 6) the administrator's costs were ordered to be paid from the estate of the deceased and the costs of the other parties were reserved.
17. Sixth and finally, the administrator refers to his notice of motion filed 8 May 2020 seeking orders that a tutor be appointed for the plaintiff (noting the directions listing the day before on 7 May 2020 and the hearing of the application on 12 May 2020). It is noted that, by orders 7 and 8 made on 12 May 2020, the costs of the defendants and the tutor for the plaintiff were ordered to be paid by the plaintiff, and the costs of the administrator were otherwise ordered to be paid from the deceased's estate on the indemnity basis.
18. The administrator submits that costs in relation to each of the above interlocutory applications were incurred because of the plaintiff's conduct in relation to the proceedings and/or were a necessary step towards the ultimate dismissal of the claims made (in 1, [2], [3] and [4]) of the amended statement of claim.
19. As adverted to above, to the extent that the administrator's costs are not ordered to be paid by the plaintiff, or to the extent that there is any difference between the administrator's costs and the costs recovered from the plaintiff, the administrator seeks an order that his costs be paid out of the deceased's estate on the indemnity basis.

Plaintiff's submissions as to administrator's costs

1. The primary submission of the plaintiff is that he should not be ordered to pay the administrator's costs. He submits that, to the extent that there are unresolved questions of costs, the administrator's costs should be paid out of the deceased estate on the indemnity basis. In the alternative, the plaintiff submits that he should not be ordered to pay the administrator's costs in the form set out in the administrator's submissions (as extracted above).
2. In support of the plaintiff's primary submission, the plaintiff says as follows.
3. First, that the claim against the administrator was in the alternative to the plaintiff's primary claim against the second defendant (as is, indeed, the case). The plaintiff says that not only was that primary claim (against the second defendant) dismissed without a hearing on the merits but the order made was that the parties pay their own costs.
4. Second, that the administrator avoided the costs of the hearing which was listed for three days commencing on 25 May 2020 (as is, indeed, also the case).
5. Third, that the vacation of the November 2019 hearing was caused by the Court's order on 25 November 2019 that the NSW Trustee be appointed as the plaintiff's tutor for the purpose of the conduct of the proceedings.
6. Fourth, that while the 25 November 2019 order was revoked by the Court on 13 December 2019, the question of the plaintiff's capacity remained a "live issue" (pointing to order 6 of the orders made on 13 December 2020 and what was said by me on 11 February 2020 when ordering that the plaintiff be medically examined - see at [9] of my reasons as earlier referred to).
7. Fifth, that on 15 May 2020, when appointing a tutor to the plaintiff for the purpose of the proceedings, I found that the plaintiff was "now incapable of providing instructions for the future conduct of the legal proceedings" (see at [20]).
8. Sixth, that the appointment of a tutor meant that no further application to vacate the hearing occurred and ultimately led to the resolution on 20 May 2020 of the substantive issues listed for hearing on 25 to 27 May 2020.
9. Finally, that there is a fund available to pay the administrator's costs (being the estate of the deceased) and that the costs were incurred by the administrator in his capacity as administrator of the deceased estate.
10. The plaintiff submits, having regard to the above matters and emphasising that there is the fund constituted by the deceased estate that is available to pay the administrator's costs, that there is a proper basis that the plaintiff not be ordered to pay the administrator's costs pursuant to r 42.20(1) of the UCPR.
11. Specifically, the plaintiff argues that r 42.20(1) of the UCPR is designed to avoid a party being out of pocket for its costs of having to defend proceedings and those proceedings then being dismissed; but that in the present case the administrator will not be out of pocket (again, since an order may be made that his costs be paid out of the deceased estate on the indemnity basis; noting that this is contemplated by the administrator in his submissions at 9 and [14] as a "fallback" position and that orders of this kind have already been made in these proceedings).
12. As to the plaintiff's alternative submission (that, if he should personally bear any of the administrator's costs, it should not be pursuant to an order in the terms that the administrator has proposed), the plaintiff says that the administrator's proposed order: does not take account of the circumstances in which the November 2019 hearing was vacated; and is lacking in precision by the inclusion of the words "the balance of the proceedings ... including ... as well as the costs involved in relation to...". It is submitted that any order should be specific to the actual work undertaken and take account of orders already made in favour of the administrator.
13. In this regard (and on its alternative submission only, as I understand it) the plaintiff submits that the appropriate form of costs order would be as follows: 1. The First Defendant's costs in relation to the preparation for and any attendances at hearings listed on 16 November 2017, 17 November 2017, 15 December 2017, 6 July 2018, 6 August 2018, 13 September 2018, 20 November 2019, 25 November 2019 and 13 December 2019 be paid from the estate of the late Laura Angius on the indemnity basis. 2. The Plaintiff pay the First Defendant's costs in relation to the preparation of the document entitled "Outline of Submissions For First Defendant" dated 4 May 2020. 3. The First Defendant's costs in relation to the hearing listed on 25 May 2020, to the extent that they are not covered by Order (2), be paid from the estate of the late Laura Angius on the indemnity basis.
14. As to the above proposed alternative form of order, the plaintiff submits as follows.
15. The plaintiff says that the orders made in which costs of various of the interlocutory hearings were reserved (to which the administrator has referred in his submissions and which are tendered in support of the application) do not provide the "necessary evidentiary foundation" for the submission that the administrator's costs were incurred because of the plaintiff's conduct and/or were a necessary step towards the ultimate dismissal of the remaining paragraphs of the amended statement of claim (i.e., 1, [2], [3] and [4] of the amended statement of claim).
16. As to the motions and the hearings on 16 and 17 November 2017 and 15 December 2017 (in relation to the application for the appointment of a receiver), the plaintiff says that the fact that the Court considered it appropriate that a receiver be appointed should not lead to the plaintiff being liable for the costs of that application. It is noted that Robert also opposed the relief sought by the administrator on this application and it is submitted that, in those circumstances, the appropriate order is that those costs be paid out of the deceased estate.
17. As to the hearings on 6 July 2018, 6 August 2018 and 13 September 2018, the plaintiff says that these were a consequence of the Receiver's motion. It is said that these did not come about due to the plaintiff's conduct in the proceedings and that there is no evidence that the administrator needed to incur costs in relation to the Receiver's motion and the hearings on those dates. It is said to be "telling" that the Receiver did not seek his costs at that time and it is said that the Receiver was "content" when the orders were made on 20 May 2020 that he bear his own costs.
18. As to the hearings on 20 November 2019, 25 November 2019 and 13 December 2019, the plaintiff repeats the above submissions.
19. As to the administrator's notice of motion filed on 7 February 2020 and the hearing on 11 February 2020, it is noted that the administrator's costs of the motion were ordered to be paid from the deceased estate on the indemnity basis (see order 5 made on 11 February 2020) (and thus it is said that these costs have already been "taken care of") and that the reserved costs of the other parties "are of no concern" to the administrator.
20. As to the directions hearing on 7 May 2020 and the administrator's motion filed on 8 May 2020, it is noted that the administrator's costs were ordered to be paid by the plaintiff on the ordinary basis (see order 7 made on 12 May 2020) and otherwise were payable from the deceased's estate on the indemnity basis (see order 8) (and thus, again, it is said that they have already been taken care of).
21. The plaintiff accepts (but only on the basis of his alternative submission) that there is a basis for him to pay the "discrete" costs of the administrator in articulating why the administrator had no liability based upon the plaintiff's alternative claim (referring to the "Outline of Submissions For First Defendant" dated 4 May 2020) (hence the plaintiff's proposed order 2). However, the plaintiff says that he should not be liable for the administrator's costs for the hearing that did not proceed "due to the sensible settlement concluded on 20 May 2020, including any cancellation fees". It is submitted that, to the extent that there are any such "'costs'", they should be paid from the deceased's estate (hence the plaintiff's proposed order 3).

Robert's submissions as to costs

1. Robert accepts that he was joined as a party to the proceedings on 31 May 2018 on condition that he would be "at his own risk as to his costs in that he will pay his own costs of the proceedings, unless the court otherwise orders" but emphasises the final words of that condition (namely, "unless the court otherwise orders").
2. Robert says that the settlement reached between the Receiver, on behalf of the second to sixth defendants, and the plaintiff for the settlement of the proceedings on terms that the proceedings be dismissed, and that each party bear their owns costs, was without any prior consultation with him. He says that it is not in issue that the total costs of the Receiver to date, including management and legal costs, are in the order of $1.6 to 1.7m. Accordingly, Robert says that the current settlement effectively means that he will bear 50% of the costs of the second to sixth defendants (as noted earlier, Robert is the beneficiary of the deceased's 50% shareholding in those companies). Robert submits that this is a significant factor to take into account in the exercise of the costs discretion.
3. Robert seeks an order that the plaintiff pay his costs, on the ordinary basis, from 31 May 2018 (when Robert was joined to the proceedings) to the conclusion of the proceedings, including all interlocutory orders where costs were reserved (and in this latter regard Robert adopts the administrator's submissions dated 29 May 2020).
4. In support of that submission, Robert refers to Muhibbah Engineering (M) BHD v Trust Company Ltd [2009] NSWCA 205 (Muhibbah) where Handley AJA (at [39]) noted the summary by McHugh J in Re Minister for Immigration and Ethnic Affairs ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 (Lai Qin) of the relevant principles where there has been no hearing on the merits. In Lai Qin, in an oft-quoted passage, McHugh J said: In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties ... In some cases, however, the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
5. Robert notes that in Muhibbah, Handley AJA made references to the "long delays" in the proceedings (at [42]) and to various "admissions" in the affidavit evidence (at [43]), concluding (at [45]) that the question for the Court was whether the primary judge was "able to conclude" that the appellants had acted so unreasonably that the respondent should have its costs. It is noted that Young JA agreed with Handley AJA (see at [2]), and said (at [18]) that "[i]f parties made a settlement subject to the Court considering what is the appropriate order for costs, the Court must resolve the matter of costs, justly, but simply and as cheaply as possible".
6. Although Sackville AJA in Muhibbah dissented, and considered that it was difficult to see how the primary judge in that case could have concluded that the conduct had been so unreasonable as to warrant an adverse costs order without making specific findings demonstrating that the conduct had been unreasonable (see at [66]), Robert points to what his Honour also said (at [48]-[50], which it is not necessary here to reproduce) and notes that, in BP v State of New South Wales [2019] NSWCA 223, the Court of Appeal noted (at [28]) that their Honours in Muhibbah (although divided about the outcome) agreed as to the relevant test (namely, that the award of costs in those circumstances was predicated on the ability of the court to find that one of the parties had acted unreasonably and the other reasonably).
7. Robert also points to Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (Nichols), which I consider in more detail in due course, where the Court of Appeal (Basten JA at [8]; Meagher JA at [13] and Payne JA at [33]) affirmed that an order for costs against one party could be made in a case which had resolved without a hearing on the merits if it could be shown that that party had invited the litigation by its unreasonable behaviour or had unreasonably pursued litigation.
8. In the present case, Robert submits that the conduct of the plaintiff has been unreasonable so as to justify the making of an order for the plaintiff to pay Robert's costs based on the above principles.
9. In particular, it is said that the plaintiff has acted unreasonably throughout these proceedings, including causing significant delays and disruption in the conduct of the proceedings by: repeatedly amending his statement of claim; repeatedly breaching orders for the preparation of his evidence; repeatedly terminating the services of his legal teams; repeatedly refusing to give instructions to his legal teams; continuing to "intermingle rentals after the deceased's death" (necessitating the administrator to file an application for the appointment of the Receiver and thereby causing the estate to incur further costs); causing his former solicitor, Mr Falk, to seek leave to cease acting for the plaintiff on two separate occasions; causing the three-day hearing in November 2019 to be vacated; and creating a situation where he became a self-represented litigant (thereby necessitating the appointment of a tutor and all costs, including medical costs, having to be incurred) in circumstances where he had retained and instructed a legal team and attended for cross examination in the proceedings before Sackar J conducted on 24, 25 and 26 September 2018 (referring to Angius v Angius [2018] NSWSC 1772).
10. As an example of the delays in these proceedings, Robert says that there has been some one and a half years allowed to the plaintiff to prepare his evidence (pointing to orders made on 5 April 2018 by Robb J extending the time for the filing of the plaintiff's evidence from 28 February 2018 to 18 April 2018; on 18 July 2019 by me extending those orders to 18 August 2019 with a "guillotine" order; and on 16 August 2019 by Henry J further extending those orders to 30 August 2019). Robert says that the plaintiff's evidence in the hearing before Henry J resulted in a finding requiring the plaintiff to pay the estate the sum of $19,661.42 (see Angius Separate Questions Decision at 166); yet the plaintiff pursued those proceedings.
11. Robert further says that the wording of [15] of the plaintiff's amended statement of claim (by which the plaintiff seeks a claim to the extent that the above payments were made by him personally and not Angius Hotel Investments) "strongly suggests" that the plaintiff's evidence was deficient "despite" the orders of Robb J as to the nature of the evidence required and the observations of Henry J in her Honour's reasons (see at [63]). Robert also points to an affidavit served on behalf of the plaintiff (an affidavit of Doug May), which he says contains admissions (at [16]) that Mr May believed the moneys paid for the $809,000 claim came from rental income from Angius Investments Pty Ltd. (Pausing here, Robert does not in his submissions trouble to place into context this affidavit, such as who Mr May is or what his role in the proceedings or underlying dispute is or was, nor does he tell me anything as to whether or not it was read in the proceedings before Henry J.)
12. Robert says that, on the plaintiff's own evidence, the plaintiff admits that there was a "serious intermingling" of company rental moneys with his own accounts (referring to the plaintiff's affidavit of 30 April 2018 at [25]) and says that the plaintiff took no steps to have such intermingling clarified by proper objective evidence and/or expert evidence.
13. Robert submits that the above matters justify an order that the plaintiff pay Robert's costs from 31 May 2018, including all reserved costs; and that such a costs order should not be limited to the claim by the plaintiff against Togumi Pty Ltd. In this respect, it is said that, following his joinder, Robert participated in all proceedings before the Court, including before Henry J, which did not involve Togumi Pty Ltd; and that his participation was necessary, including in the current proceedings, because of his familiarity with the facts and circumstances surrounding the plaintiff's claims "and the matters that required further exploration".
14. By way of example (which Robert here emphasises), Robert says that the Receiver initially conceded the plaintiff's poker machines claim for $809,000 against the fourth defendant and filed submissions and offers "fully conceding that claim" but that, because of the seventh defendant's "participation, intervention and [s]ubmissions", the Receiver was "finally persuaded to re-investigate that claim" and ultimately agreed with Robert's position. Robert says that, but for his participation and submissions, a significant injustice would have resulted (noting that this claim was also ultimately dismissed).

Plaintiff's submissions as to costs sought by Robert

1. The plaintiff emphasises that, at the time of Robert's joinder, Robb J said (Angius Joinder Decision at [60]) that: 60. … Robert must strictly play the role of 'second fiddle' of which experienced lawyers will be familiar, where Robert's role will primarily be to augment the conduct of the proceedings by Mr Salier [the administrator] in a disciplined and limited manner.
2. The plaintiff says that the following matters are material in this regard. First, that Robert's joinder was directed to his partnership interest in the property at Windsor, which was a "very discrete" issue in the proceedings. Second, that despite the fact that Robb J was of the view that Robert was a necessary party (citing Ashton v Pratt at [21]), that status did not "convert into some right to have his costs paid by the plaintiff if the plaintiff was unsuccessful on that particular claim" (to the contrary, the plaintiff says that Robert's participation in the proceedings was predicated on him paying his own costs unless the Court otherwise ordered). Third, that the conditions imposed on Robert's joinder clearly envisaged that his role would be limited to one of "augmentation".
3. The plaintiff points to [32] to [39] of the second to sixth defendants' amended submissions dated 28 April 2020 with respect to the hearing listed for 25 May 2020 which dealt with the claim against the third defendant, and notes that those submissions made the following points: first, that the plaintiff's evidence did not satisfy the plaintiff's onus; second, that the evidence and conclusions of the Court appointed expert, Mr Vella, ought be accepted in preference to the plaintiff's evidence; third that, on the basis of the evidence in Mr Vella's report, the amount claimed by the plaintiff had already been credited to his loan account with the Togumi Partnership; and fourth, that the claim should be dismissed.
4. The plaintiff notes that the "Togumi claim" is dealt with at [10] to [13] and [16] to [21] of Robert's submissions dated 4 May 2020 with respect to the 25 May 2020 hearing. It is said that those submissions make the same "fundamental points" as made by the second to sixth defendants in their submissions. The plaintiff says that, to the extent that there are any "other specific points", they are "augmentation" (as contemplated by Robb J - see above); and that, to the extent that Robert's submissions deal with matters beyond the Togumi claim, they are beyond what was envisioned by Robb J (and, in any event, are "augmentation" of points already raised by the second to sixth defendants in relation to other claims).
5. The plaintiff says that Robert should pay his own costs of the proceedings; and that, as there is no cogent reason otherwise to order, Robert should be ordered to pay the plaintiff's costs with respect to his application.

Determination

1. The present applications illustrate the force of the admonition expressed in authorities such as Lai Qin and Nichols as to conducting an hypothetical trial (in effect, satellite litigation) in relation to costs in proceedings that have been resolved prior to a hearing on the merits, at least insofar as the submissions made by Robert (and by the plaintiff in response to those submissions) invite the Court to embark upon an exercise of assessing the adequacy of the evidence that had been filed or served in the proceedings prior to their dismissal by consent (and without a hearing on the merits beyond that conducted by Henry J on the separate questions for determination).
2. The general proposition is that, where there has been no hearing on the merits, it is not appropriate for the Court to conduct what would amount in effect to an hypothetical trial in order to determine an application for costs (see, for example, Lai Qin at 624 per McHugh J). More recently, in Nichols (to which Robert has referred), Payne JA said (at [30]): 30. If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
3. Similarly, Basten JA said (at [8]-[9]): 8. Secondly, although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon. 9. Thirdly, if contrary to the views set out above, it was appropriate to investigate whether the applicants or the respondent had been unreasonable, either in their conduct prior to the proceedings, or in their conduct of the proceedings, the approach adopted was untenable. Thus, regard was had to the motives of the respondent in commencing proceedings, but no account was taken of the motives of the applicants in capitulating. Further, once it is clear that there is a real dispute as to a significant fact in issue in the proceedings, it is inappropriate to determine that matter, other than in making an interlocutory ruling, by accepting one party's case without permitting the other party an opportunity to challenge the opposing party's witnesses.
4. As was made clear in Nichols (and as Robert appears to accept in his submissions), if the question of unreasonableness cannot be answered without reviewing (in that case, a large corpus of) evidence and resolving, on a tentative basis, disputed questions of fact then the Court should not embark upon that exercise.
5. Here, it must be remembered that to date the matter has been before me solely on interlocutory stoushes between the parties and at directions hearings. For me now to form a view, as Robert here seemingly wishes me to do, in relation to the unreasonableness (or otherwise) of the plaintiff's conduct in pursuit of these proceedings by reference to "admissions" said to have been made in affidavit evidence of the plaintiff (or on his behalf) or by reference to the perceived deficiencies in the affidavit evidence of the plaintiff, would be to embark upon the very kind of exercise disavowed by the Court of Appeal. Indeed, to my mind, such a course is not appropriate.
6. As to whether other aspects of the conduct of the proceedings are so unreasonable as to warrant an adverse costs order in circumstances where the balance of the claims in the amended statement of claim have now been dismissed by consent without a hearing on the merits, I make the following observations.
7. First, it is relevant that the settlement of the proceedings was reached following agreement between the plaintiff and the second to sixth defendants without consultation or involvement in the settlement negotiations of either the administrator or Robert. Therefore, neither the administrator nor Robert can be criticised for now cavilling with the proposition that they should bear the costs of the proceedings.
8. Second, there is no doubt that the plaintiff has, by his conduct, been responsible for increased cost and delay in the proceedings. That is apparent from the sequence of events set out above from the time that his former solicitor (Mr Falk) sought leave to withdraw from the proceedings. Mr Falk made plain to me (when the matter came before me after Parker J had refused to allow Mr Falk to withdraw from the proceedings) that Mr Falk's difficulty was in obtaining instructions from the plaintiff. I accepted that it was impossible for a solicitor, as an officer of the Court, to comply with his or her professional and ethical obligations to the Court if his or her client refuses to provide instructions for the conduct of proceedings (as I understood was the case vis-a-vis the plaintiff and Mr Falk).
9. Mr Falk's concern when the application was made to Parker J was that the plaintiff lacked the mental capacity to provide instructions but, in the absence of medical evidence, Parker J was not prepared to reach such a conclusion. That led to the application for the plaintiff to be medically examined which in turn led to the expert opinion that he did have capacity to provide instructions for the conduct of the proceedings (to which I referred in my subsequent judgment). Yet, what then transpired was a seeming re-run (one might say a case of déjà vu) of the difficulty experienced by Mr Falk in obtaining instructions. Mr Macaulay was in due course appointed as the plaintiff's solicitor and he then (again, not long before the scheduled May hearing although not as close to the hearing as the November application had been) sought leave to withdraw on the basis that he was unable to obtain instructions from the plaintiff.
10. It would be one thing if the plaintiff had been found to have lacked mental capacity from the outset of this exercise. However, Dr Lonie's report did not so conclude. Therefore, it can only be concluded that it was the plaintiff's own intransigence or perversity in refusing to provide his successive solicitors with proper instructions that led to the vacation of the hearing dates in November last year and the cost of the various interlocutory applications leading up to the appointment of the tutor this year.
11. To my mind, that conduct is so unreasonable, applying the test in Lai Qin, as to warrant the making of costs orders against the plaintiff in favour of the administrator (and equally in favour of Robert) in respect of the vacation of the November 2019 hearing and the interlocutory applications since then, none of which would have been necessary had the plaintiff conducted his litigation appropriately by providing his solicitor(s) with proper instructions.
12. With that said, I do not consider that this warrants a costs order in relation to the earlier applications to appoint a receiver, since those were based not on the failure of the plaintiff to provide proper instructions but on the basis of deficiencies identified in the expert report prepared for the substantive dispute and the extant evidence. As such, to assess this would require me to delve into the underlying factual dispute between the parties which, for the reasons I have just explained, is not an appropriate course.
13. Insofar as the administrator relies upon r 42.20(1) of the UCPR to argue that the starting point should be that the plaintiff pay his costs and says that the plaintiff has not established some positive ground or good reason to depart from the ordinary course, there is an obvious tension between that proposition and the principles clearly articulated in Lai Qin (and applied in numerous decisions since then). My conclusion (as set out above) is that the requisite element of unreasonableness is here established in relation to the conduct of the proceedings since 20 November 2019 (when Mr Falk first sought leave to withdraw as a solicitor) but not before.
14. As to the arguments raised by the plaintiff in opposition to a personal costs order, I make the following observations.
15. The fact that the primary claim was dismissed, without a hearing on the merits, with an order (by consent) that the parties pay their own costs says nothing about what costs order should be made on the alternative claim that therefore did not arise for determination. The plaintiff chose to make such an alternative claim and no doubt costs have been expended by the administrator in anticipation of its defence.
16. Similarly, the fact that the administrator "avoided" the costs of the three day hearing in May 2020 by reason of the settlement of the primary claim seems to me to be beside the point. After all, so, too, did the plaintiff. Further, costs would have been incurred despite the vacation of that hearing.
17. As to the suggestion that the vacation of the November 2019 hearing was caused by the appointment of the NSW Trustee as the plaintiff's tutor, that submission ignores what led up to that appointment (namely, the intransigence or perversity on the part of the plaintiff in refusing to provide proper instructions for the conduct of the proceedings). The fact that the plaintiff's capacity remained a "live issue" as at December 2019 is also not to the point, not least because the subsequent medical opinion disposed of that issue from a medical perspective and yet the intransigence and perversity persisted.
18. As to the reliance placed by the plaintiff on the appointment of the tutor, namely that thereafter there was no further application to vacate the hearing, that may well be said to have been a vindication as to the decision to appoint a tutor but it is hard to see its relevance to the application for costs. Similarly, the submission that the appointment of the tutor "ultimately led" to the resolution of the substantive issues in dispute is difficult for me to assess. Certainly, there was a temporal link and one might well speculate that such a resolution would have been unlikely without the appointment of a tutor (having regard to the history of the proceedings to date). However, it is inappropriate here to engage in speculation (and, in any event, it says nothing about the plaintiff's conduct before that time).
19. Finally, the fact that there are funds in the deceased estate out of which the administrator would be able to indemnify himself in respect of the costs of the litigation does not take into account that, by so doing, the administrator would be depleting the funds available for the beneficiaries of the estate as a whole. In this respect, I see no reason why the beneficiaries should pay for the plaintiff's unreasonableness in the conduct of this litigation.
20. As to the suggestion that the rationale of the rule as to costs (namely, to compensate the party incurring costs) does not require an order that the plaintiff bear the costs when there is a fund out of which they could otherwise be borne, while I accept that it is well recognised that costs orders are made on the basis, generally speaking, of compensation and not as a punitive measure (see, for example, Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59), this again does not accommodate the fact that payment of the costs out of the estate will be to the disadvantage of beneficiaries other than the plaintiff.
21. Therefore, subject to particular wording of the orders to reflect the above reasons, I will make personal costs orders against the plaintiff in favour of the administrator for the period from 20 November 2019.
22. For completeness, I note that the costs orders will relate only to costs in respect of which no order has already been made (i.e., the reserved costs). I am not here varying (nor do I understand that I am here being asked to vary) any extant costs orders.
23. As to Robert's costs, as already indicated above, I am not persuaded that I should embark upon an exercise of determining where the merits lay as between Robert and his father (the plaintiff) in this dispute. Moreover, I place weight on the fact that Robert was permitted to be joined as a party to the proceedings for a limited purpose and on the basis that he accepted that it was at the risk that he would bear his own costs. While I accept that this condition did not (and, indeed, does not) mean that Robert was to bear his costs under any circumstance (it being only a "risk" and not an inevitability), I see no reason to depart from that basis.
24. The fact that Robert (as the beneficiary of half the shareholding in the second to sixth defendants) might in a practical sense be said by the consent orders effectively to bear 50% of the costs of the second to sixth defendants (on which Robert places weight in relation to the present costs application) seems to me (apart from the apparent piercing of the corporate veil) not sufficiently to take into account that the dismissal of the claim against the second to sixth defendants was without a hearing on the merits (and, again, hence the principles articulated in Lai Qin are applicable).
25. Accordingly, I do not accept that there should be an order that the plaintiff pay Robert's costs on the ordinary basis from the time of his joinder as a party to the proceedings. That said, and as already adverted to, the unreasonableness of the plaintiff's conduct of the proceedings from 20 November 2019 will equally have had an effect on the costs incurred by Robert in these proceedings and I see no reason why the same conclusion should not follow in relation to his costs for that part of the proceedings.

Orders

1. For the above reasons, I make the following orders: 1. Order that the Plaintiff pay on the ordinary basis the costs of the First Defendant (other than any costs the subject of extant costs orders) and the costs of the Seventh Defendant of the proceedings from 20 November 2019 to date, including any costs thrown away by the vacation of the November 2019 hearing dates and including the costs of these applications. 2. Order that otherwise the First Defendant's costs of the proceedings be paid from the estate of the late Laura Angius on the indemnity basis.

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