The primary judgment in this matter was delivered on 1 November 2017: Bkassini v Sarkis [2017] NSWSC 1487.
Substantive orders to give effect to the primary judgment were made on 5 July 2018.
The primary judgment did not resolve all issues in dispute between the parties and a further judgment was delivered on 22 October 2020: Bkassini v Sarkis (No 2) [2020] NSWSC 1465. Following the provision of further information from the defendant to explain that the Court had misunderstood the effect of some of the evidence concerning the costs incurred by the defendant, the Court revised the second judgment.
The primary reason for the delay in the completion of these proceedings has been the need to resolve a dispute between the parties concerning the extent of the rectification and repair works that the plaintiff should be required to carry out in respect of the property known in these proceedings as No 95. In the primary judgment, I found that what is called a Crisp order should be made in favour of the plaintiff in respect of this property giving him a right to reside in No 95 for life or for as long as he wished to do so on certain terms contained in the orders that were made following the primary judgment.
A source of dispute between the parties is that, as I noted at [336] of the primary judgment, the plaintiff claimed in his evidence that No 95 needed rectification and repair, which he assessed required the expenditure of about $104,500. The plaintiff made this claim in the context of explaining the amount of the family provision order that he claimed should be made because of his circumstances.
As it has happened, there were insufficient assets in the deceased's estate to enable the Court to make family provision orders in the plaintiff's favour that included an amount of $104,500 to fund the works contemplated by the plaintiff. Notwithstanding this fact, the defendant's position was that, as the orders made following the primary judgment were made on the basis of this claim by the plaintiff, the Court should hold him to the need to carry out the works that he said were necessary.
The existence of this dispute lead to a significant number of hearings and submissions directed at resolving the dispute. In the meantime, as a result of the realisation of the balance of the deceased's property, it became apparent that the value of her estate was significantly less than the evidence available at the hearing suggested. In fact, at the end of the process, the defendant, as the executor of the deceased's estate, did not have the funds necessary to pay to the plaintiff the amount of the costs that the Court had ordered should be paid to him as a result of his substantial success in the proceedings.
Although it has taken a considerable time to do so, the parties have now substantially agreed the terms of the final orders that should be made by the Court to determine these proceedings. There remain two areas of disagreement.
It will be convenient to demonstrate the position by first setting out the short minutes of order that the plaintiff says should be made by the Court:
1. The plaintiff is to engage Proof Metal Roofing Australia to perform repair works to [No 95] in accordance with the scope of works contained in the quote from that company dated 26 May 2020, and the plaintiff is responsible for payment of the costs of that work.
2. The plaintiff is to engage Stipo Building & Project Services Pty Limited to replace a section of the ceiling in the living room of [No 95] in accordance with the scope of works contained in the quote from that company dated 1 August 2019, with such work to be completed after the repairs to the roof identified in Order 1, and the plaintiff is responsible for payment of the costs of that work.
3. The plaintiff is to engage a licenced tradesperson to carry out the rising damp treatment to [No 95] in accordance with the scope and methodology recommended by Mr Dan Drexler of NSW Master Building Inspector identified at paragraph 18 of his report dated 24 September 2018, and the plaintiff is responsible for payment of the costs of that work.
4. The plaintiff is to engage a licenced tradesperson to carry out the installation of a steel post to [No 95] in accordance with the scope and methodology recommended by Mr Dan Drexler of NSW Master Building Inspector identified at paragraph 11 of his report dated 24 September 2018, and the plaintiff is responsible for payment of the costs of that work.
5. The plaintiff is to organise for the exterior of [No 95] to be painted and, if he is unable to perform that work personally, is responsible for the payment of the costs of that work.
6. The defendant is to pay the plaintiff's costs of the proceedings from the date of the Orders on 5 July 2018.
7. The defendant's liability to pay the plaintiff's costs of these proceedings be secured by way of equitable charge over the defendant's interest in [No 95], and that the plaintiff be entitled to register such charge on the title of the said property.
The defendant accepts that orders 1 to 5 should be made but submits that in lieu of orders 6 and 7 as suggested by the plaintiff, the following alternative orders should be made:
6 Each party is to pay their own costs of the proceedings from the date of the Orders on 5 July 2018.
7 With respect to the costs of the Plaintiff incurred up to the date of the Orders made on 5 July 2018, which the Defendant has been ordered to pay, consistent with order 26 of the orders made by the Court on 5 July 2018, the Defendant's one half interest in the net proceeds of sale of [No 95] (when that property is eventually sold) remaining after the Trustee's administration fee, the monies owing to the Defendant and her husband personally for reimbursement of expenses paid by her and the Defendant's costs, is charged with the payment of the Plaintiff's costs.
The plaintiff's position is that the defendant should be ordered to pay his costs of the proceedings since the substantive orders giving effect to the principal judgment were made on 5 July 2018, and the defendant says that each party should bear their own costs for that period.
The starting point for the plaintiff's argument was the following order made by the Court on 5 July 2018. Order 4(a)(ii) was a condition to the plaintiff's entitlement to reside in No 95. It was:
the Plaintiff keeps [No 95] in reasonable condition and state of repair, the precise definition and obligations in respect of such reasonable condition and repair to be deferred for the time being and the subject of further orders;
Putting aside certain orders made by the Court that the parties should bear the costs that they incurred in relation to issues raised in the proceedings in respect of which they were unsuccessful, the Court made the following orders concerning the parties' costs generally:
25. The Court makes the following costs orders:
…
(c) The Defendant estate pay 85% of the Plaintiff's costs of the proceedings (other than the costs referred to in subparagraph (a) above) as assessed on the ordinary basis; and
(d) The costs of the Defendant, other than the costs referred to in paragraph 25(b) above, be paid from the estate (or notional estate) of the deceased on an indemnity basis.
The plaintiff noted, as I have observed above, that at the end of the process of realising the balance of the assets in the deceased's estate and paying certain of its debts, there were no funds left to pay any of the plaintiff's costs. As I observed at [107] of the second judgment, the defendant had apparently used the available funds to partially repay herself and her husband for debts owed by the estate. There did not seem to have been any consideration given to the possible need to make pro rata payments to all creditors of the estate.
The plaintiff advised the Court, and I accept, that he does not have sufficient funds to challenge the way in which the defendant applied the remaining funds in the deceased's estate to partially repay its debts. Consequently, as the plaintiff intends to maintain the benefit of the Crisp order, he will not receive payment of the costs of these proceedings to which he is entitled during his lifetime, unless it becomes necessary for No 95 to be sold as a result of the plaintiff needing to move into alternative accommodation.
The determination of the proper order for costs for the period after 5 July 2018 requires a consideration of the steps that have needed to be taken in order to enable the Court to make final orders in the proceedings. Those steps are:
1. Order 29 made on 5 July 2018 was that the matter be stood over to 4 September 2018 for further directions in relation to par 4(a)(ii). That order was made because the outstanding question was the extent of the rectification and repair works that should be made to No 95, and who should be responsible for the cost of those works. The parties had taken a considerable time to agree the substantive orders that were made on 5 July 2018, but they remained in dispute concerning the appropriate repairs and renovations.
2. On 3 September 2018, the Court made directions for the preparation of reports and schedules by the parties concerning the rectification and repair works.
3. On 19 October 2018, after a short hearing, the Court made orders to require the plaintiff to give access to No 95 to a licensed builder selected by the defendant in order to enable that builder to prepare a report. The Court ordered the plaintiff to pay the costs of the defendant's builder attending the property, as the plaintiff had not cooperated with the builder to enable the builder to have access to No 95.
4. On 6 December 2018, I caused my Associate to send an email to the parties to convey to them my views about what had to be done to resolve the outstanding dispute concerning the repairs and renovations to No 95. The observations that were made in the email were substantially based upon the defendant's written response to the plaintiff's schedule of building works. The object of the email was to try to assist and encourage the parties to compromise the residual dispute. By this time it had become apparent that the plaintiff had limited funds available to pay for the works, and that the order and timing of the works were dependent upon when the neighbouring property, known as No 93, could be sold so that the plaintiff could be placed in funds.
5. The matter next came before the Court on 14 December 2018. The hearing lasted from 2:30 PM to 5:06 PM with an adjournment between 3:00 PM and 4:55 PM. During the adjournment, I prepared draft short minutes of order, based upon the parties' evidence concerning the rectification and repair works that they contended were necessary. As there had been no actual hearing based upon the evidence, or any cross examination of the building experts, or submissions, I was unable to resolve the dispute between the parties on a conventional judicial basis. Rather, I prepared a schedule of works, timing and responsibility for the costs that I considered were reasonable, and likely to be determined if there had been an opportunity for a hearing. Apart from the fact that the draft short minutes of order could only be given effect with the consent of the parties, there were some items that I could not determine because of either an insufficiency of information or I considered that it was not appropriate for me to determine, given the unconventional approach I had adopted in order to facilitate a compromise between the parties. The order I made was:
Grants leave to the parties to send to the associate to Robb J draft short minutes of order based upon the form of orders suggested by the Court completed and amended as the parties see fit together with written submissions as to the final form of the orders to be made, with the intention that orders be made in chambers during the vacation.
1. Unfortunately, the dispute between the parties remained intractable, and they were unable to bridge the gaps that were left open by the draft short minutes of order that I had prepared. Instead, the parties delivered to the Court submissions concerning the orders that should be made that demonstrated that they remained far apart. The matter came before the Court again on 20 August 2019, and I made further orders directing the parties to deliver to my Associate revised proposed orders and any supporting material. As it was not feasible for the Court to set aside time for a contested hearing on the relatively minor repairs and renovations that were in issue between the parties, I made the following order 3:
Reserves the Court's position as to how it will resolve outstanding issues including as to whether they can be resolved by judicial determination or some other means.
1. At a hearing on 14 May 2020, the parties advised the Court that the result of the sale of No 93 had been disappointing, and that, after the defendant had paid debts of the deceased's estate, only $86,000 remained available to provide a fund to the plaintiff in accordance with the orders made by the Court on 5 July 2018. It would be necessary for this amount to provide a small contingency fund to the plaintiff and also to pay for whatever rectification and repair works could then be afforded. This was a revelation that changed the course of the proceedings in that, although the parties had been unable to come to an agreement as to what rectification and repair works were appropriate to be paid for by the plaintiff, both had contemplated that more funds would be available than in fact turned out to be the case. That substantially constrained the works that the Court could require the plaintiff to pay for.
2. The second judgment that was published on 22 October 2020 was in response to the hearing that took place on 14 May 2020 and subsequent materials received from the parties. It contained a more detailed explanation of the course of these proceedings after the substantive orders were made than I have included in this judgment. I made the following statement concerning the earlier draft short minutes of order that I had prepared:
20 The draft short minutes of order that I provided to the parties did not include any costs order. That was because I understood that the costs of specifying the effect of order 4(a)(ii) made on 5 July 2018 would be encompassed by the costs orders that were made on that date.
1. Because of the complexity of the issues dealt with in the second judgment, it will be necessary for me to assume that the reader is aware of the terms of that judgment.
2. The second judgment concluded with the following observations:
151 As the parties are already both in positions of substantial deficit as a result of the amount of legal costs that they have incurred, in my view the appropriate course is for the Court to decide the repair works that William should now be required to carry out, without the Court calling for even more information to remedy the deficiencies as to the costs of certain repair works that have been identified above.
152 Unfortunately, the reality of present circumstances justifies the Court in only requiring William to carry out the repair works identified in the report that he provided to the Court by William dated 25 June 2020. Those works may not be entirely adequate, but they will have to do. This is so that William will be able to retain a modest fund to meet contingencies over the balance of his life. Those contingencies may include further repair works that may become necessary to preserve the structural integrity of No 95.
Costs
153 It will be necessary for the Court to give the parties an opportunity to make further submissions on the issue of costs. While the 13 May 2020 draft short minutes of order showed that each party seeks an order that the other pay his or her costs, that subject was not addressed in any of the recent reports to the Court.
154 The parties have not made clear what the effect would be of an order expressed in terms that one party pay the other's costs.
1. Then, on 15 October 2021, the defendant's solicitor sent to my Associate the email which attached the parties' final proposed short minutes of order that I have set out at [9] and [10] above.
The basis upon which the plaintiff submitted that the Court should order the defendant to pay the plaintiff's costs of the proceedings since 5 July 2018 was that it is customary that clarification of the Court's orders is normally covered by the costs order made in the substantive proceedings. He relied upon the following observation by Greenwood J in Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2019] FCA 1349 at [47]:
As to the costs after reservation and the costs after pronouncement of judgment, I am satisfied that the costs incurred after reservation are adequately accommodated by the discount. As to the costs after judgment, I am satisfied that these classes of costs are inevitably incurred when parties are seeking to determine the scope of orders which adequately reflect the reasons for judgment and inevitably there will be caucusing between parties about the scope and breadth of orders where views will differ about those matters. To the extent that the applicant sought orders which were thought by Redbubble to be more expansive than they ought to have been, these contested positions are not uncommon in trying to sort ought the final form of orders giving expression to a judgment in a complicated matter.
The plaintiff submitted that, accordingly, the remaining costs issue in these proceedings is distinguishable from the following well-known principles as stated by McHugh J in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at 624-625 (footnotes omitted):
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
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. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. 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. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties 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. This approach has been adopted in a large number of cases.
I consider that the appropriate costs order to be made for the period after 5 July 2018 is that the defendant estate pay the plaintiff's costs on the ordinary basis and that the defendant be entitled to her costs out of the estate on the indemnity basis. That is, the conventional costs order in family provision proceedings should be made for that period. I have used the expression "the Defendant estate pay the plaintiff's costs" for consistency with the form of words adopted by the parties in preparing order 25(c) in the short minutes of order made on 5 July 2018.
It is not appropriate that the defendant be ordered to pay the plaintiff's costs personally, as appears to be the effect of order 6 proposed by the plaintiff. It may be that the plaintiff did not intend that the defendant would have to pay the costs personally, but that would be the effect of the words that he has used.
I do not think that it is appropriate that the Court order the parties to bear the costs of the outworking of the orders made on 5 July 2018 personally, even though the dispute as to the appropriate terms of the final orders became protracted.
Although the parties ultimately agreed on the terms of the orders governing the rectification and repair works that the plaintiff would be required to carry out, it would not strictly be accurate to treat that outcome as a settlement of the dispute within the Lai Qin principle. At [152] of the second judgment that I have set out above, I recorded my conclusion that the rectification and repair works that the plaintiff should be ordered to carry out should be substantially as proposed in the plaintiff's report. Although that outcome may have been imposed by the circumstances that I have explained in this and the second judgment, it did amount to something of a victory for the plaintiff. It is at least a sufficient victory in the context of a family provision application to justify the conventional costs order.
Furthermore, as I have explained above, I, and probably also the parties, assumed that the additional costs would be encompassed within the costs orders made on 5 July 2018. It was only after the dispute had continued for some time that the defendant and then the plaintiff introduced into their proposed short minutes of order an order that would have required the other to pay the continuing costs.
The second issue that requires determination is whether the Court should make order 7 as proposed by the plaintiff or as proposed by the defendant in relation to how the costs order made in favour of the plaintiff will actually be paid out of the deceased's estate.
I propose to make order 7 as proposed by the plaintiff. The defendant has not suggested by her submissions or evidence that, if the Court orders that payment of the plaintiff's costs, as payable under order 25(c) made on 5 July 2018 and these orders, is to be made out of the deceased's estate's half interest in No 95 and charged upon that interest, there is a real risk that the plaintiff will receive an unfair preference over other creditors of the deceased's estate.
It is already likely that the plaintiff has been treated unfairly because the estate's debt to him for costs was not treated equally with other debts of the deceased's estate that were apparently partially paid out of the limited funds available. I accept that the plaintiff is not in a position to try to secure his rights because he does not have funds to litigate the issue.
If at some stage in his life the plaintiff finds it necessary to move to alternative accommodation, which will mean that No 95 must be sold so that he can be provided with that alternative accommodation, the plaintiff may well then need the amount of his costs for the purposes of his living expenses.
Finally, the deceased's will in this case contains a term that authorises the defendant to pay herself for her time in performing the role of the executor. That term gives rise to the possibility that, between 5 July 2018 and the time when the Crisp order ceases to have effect, the defendant will have increased the amount that she is owed by the deceased's estate. Payment of that debt out of the deceased's estate would come within "the Trustee's administration fee" in the version of order 7 proposed by the defendant.
In all of the circumstances, the simple order 7 proposed by the plaintiff should be made, to minimise the likelihood of further dispute and litigation between the parties or their legal representatives.
For the avoidance of doubt, I rely upon the power in s 59 of the Succession Act 2006 (NSW) to make order 7, as well as any power that may be available under s 98 of the Civil Procedure Act 2005 (NSW).
For these reasons, I will make the orders set out above at [9], save that order 6 will be in the following terms:
Subject to the costs order made against the Plaintiff in favour of the Defendant on 19 October 2018, the Defendant estate is to pay the Plaintiff's costs of the proceedings from 5 July 2018 on the ordinary basis and the Defendant is entitled to be paid her costs for that period out of the Defendant estate on the indemnity basis.
At [163] of the second judgment, I made a number of observations concerning the plaintiff's proposal to seek a gross sum costs order. I said that I would deal with such an application on its merits, but it would need to be made in a proper manner. If the parties cannot agree the amount of the costs that the deceased's estate should pay the plaintiff, there is much to be said for the dispute to be resolved by the Court in a way that might obviate the parties' inclination towards endless disputation. If such an application is to be made by the plaintiff, it should be made relatively soon.
[3]
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Decision last updated: 10 December 2021