(2008) 20 VR 481
McKay v McKay [2008] NSWSC 256
One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270
Ex Parte Lai Qin [1997] HCA 6
Source
Original judgment source is linked above.
Catchwords
(2008) 20 VR 481
McKay v McKay [2008] NSWSC 256
One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270Ex Parte Lai Qin [1997] HCA 6
Judgment (7 paragraphs)
[1]
Solicitors:
Watkins Tapsell Solicitors (Plaintiff)
L. Rundle & Co Solicitors (first Defendant)
J.A. Sherwood & Co Solicitors (second Defendant)
File Number(s): 2014/43348
[2]
Judgment
HIS HONOUR: This judgment relates to costs of proceedings that were resolved by the parties prior to a hearing. The dispute appears to be another example of personal animosity between family members overtaking common sense and a real consideration of the method of resolving the issues in such a way that the costs to the parties were proportionate to the importance and complexity of the subject-matter in dispute. That this is not too harsh a comment is demonstrated by the fact that four volumes of documents, consisting of over 1200 pages, were provided, initially, to the court as the evidence to be relied upon by one party, or the other, on the costs application.
The suggestion, made to the Registrar when the notice of motion seeking costs, was set down for hearing, that the argument would be concluded in one-half day, in the light of the evidence proposed to be relied upon, was completely unrealistic. Mercifully, at the hearing, the legal representative of each of the parties, in accordance with the requirement of the court, reduced the number of documents to be relied upon. This did not prevent each, however, from identifying, in submissions, a total of 9 lengthy affidavits that were to be read.
In writing this judgment, I have borne in mind that in Luxmore Pty Ltd v Hydedale Pty Ltd [2008] VSCA 212; (2008) 20 VR 481, Maxwell P and Kellam JA, wrote, at [12]:
"Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons."
[3]
Background Facts
I am satisfied that the following background facts, which I have compressed, are not the subject of any real dispute.
Clarice Merlene Florence Honeman ("the deceased") died on 20 January 1995 having made her last Will on 10 March 1994. This court granted probate in common form of that Will, on 15 August 1996, to the Plaintiff, Beverley Clarice Dehn and to the two Defendants, John Carmichael Honeman and Troy Herald Honeman. (I shall refer to the parties and other persons, where necessary, after introduction, by her, or his, given name. This is for convenience and to avoid confusion, and should not be thought to be discourteous.)
By her Will, the deceased devised one third of her estate to Beverley, one third to John, and one third to such of her grandchildren, Rebecca Honeman, Troy, and Cameron Honeman, as survived her, and if more than one, then equally. Cameron Honeman died after the deceased's death. (Rebecca has played no part in the proceedings.)
At the time of commencement of the substantive proceedings by Beverley, on 11 February 2014, the deceased's estate had been administered to the point where the only remaining asset of substance, which had not been sold, was a development site at Huntingwood, New South Wales ("the Property"). The Property, which is near Prospect, in Sydney, comprises about 5.4 acres.
During the period between 2000 until 2010, the parties, unsuccessfully, attempted to sell the Property. It was not able to be sold, because, inter alia, each of the trustees took the view that the Property had a value well in excess of its actual value. In addition, they thought that it would be worth more if the zoning was altered by the Blacktown Council, but this did not occur until August 2011. There is no reliance upon any unreasonable conduct by one party, or the other, during this period.
As at 1 July 2011, the land was valued for land tax and rating purposes at $8,460,000. An objection was lodged to this valuation and allowed, as a result of which the land was re-valued at $4.25 million. Following revision of the value of the land, negotiations for the sale of the Property at a price between $4.1 million to $4.5 million (during the period from June 2013 until 5 November 2013) unsuccessfully occurred between the trustees and various purchasers.
On 22 August 2013, the Property was valued by Messrs Preston Rowe Patterson at $4.25 million. Even at this price, the Property was not sold.
It was the Property that was the subject of the Plaintiff's Summons for the appointment of trustees for sale under s 66G of the Conveyancing Act 1919 (NSW). (The Property was registered in the name of the parties as the trustees of the deceased's estate.)
John filed a Statement of Cross-Claim on 23 May 2014, in which he sought an order that the Plaintiff be removed as trustee on the grounds that she had commenced the proceedings without the unanimous consent of her co-trustees and had refused to participate in a mediation contrary to the interests of the beneficiaries as a whole. The Statement of Cross-Claim also sought an order pursuant to s 26 of the Civil Procedure Act 2005 (NSW) that the proceedings be referred for mediation.
In his affidavit, sworn 15 April 2014, John had stated that "I do not agree that the relief sought by the Plaintiff is appropriate. I am willing to engage in mediation." It appears that Beverley may not have been so prepared, at least at that time.
On 2 June 2014, the parties, in fact, attended mediation, and were able to settle the proceedings in accordance with Heads of Agreement signed at that time. Whilst the Heads of Agreement deal with the valuation and sale of the Property, it did not provide for the appointment of trustees for sale under s 66G of the Conveyancing Act. In addition, Paragraph 17 provided that the "costs of the proceedings are reserved". There was, however, agreement that the costs of carrying out the terms of the Heads of Agreement would be borne by each party.
On 10 June 2014, the Registrar in Equity noted that the parties had participated in a private mediation on 2 June 2014 and that an agreement had been reached in accordance with the Heads of Agreement. The Short Minutes of Order foreshadowed the filing of a notice of motion seeking judicial advice that the trustees were justified in proceeding with the sale of the Property in the manner set out in the Heads of Agreement. The matter was listed for further directions, before the Registrar, on 1 December 2014.
The matter, however, was mentioned again on 23 June 2014, 21 July 2014, 4 September 2014, and 26 September 2014. On the last date, it was referred to Kunc J, as the Applications Judge, to be heard on 3 October 2014. On that date, his Honour, apparently, delivered a short ex tempore judgment, confirming that the trustees were justified in proceeding with the sale of the Property in the manner set out in the Heads of Agreement which had been signed at the mediation. His Honour ordered that Beverley's costs of the application, calculated on the indemnity basis, be paid out of the estate. Finally, his Honour adjourned the matter until 5 February 2015.
Ironically, John and Troy were not represented on the application for judicial advice.
By Contract for Sale dated 10 November 2014, Beverley, John and Troy, as trustees, sold the Property for $4,510,000. Settlement occurred on 18 December 2014.
At the date of the hearing before me, $4,415,022 (plus accrued interest) was held in a controlled moneys account by the solicitors for the trustees. Despite requests by John and Troy that there should be an interim distribution of some of the proceeds of sale, Beverley refused to agree to any interim distribution, to any of the beneficiaries, unless John and Troy agreed that her costs of the proceedings were paid out of the proceeds of sale. There was no agreement by John and Troy, with the result that none of the beneficiaries have received any part of her, or his, entitlement under the deceased's Will.
When the matter was mentioned before the Registrar on 1 December 2014, it was adjourned until 5 February 2015.
On 28 January 2015, Beverley filed a notice of motion in which she sought orders that her costs of the proceedings should be paid by John and Troy personally, or, in the alternative, from the estate of the deceased. John and Troy opposed the order sought by Beverley and sought an order that the parties each bear her, or their, own costs, respectively, of the proceedings.
Subsequently, the notice of motion was listed before me for hearing on 29 April 2015. As stated previously, it was listed for one half day.
The matter came before me for pre-trial directions on 7 April 2015 at which time I made an order under Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") rule 42.32 (a "Smyth order"), that each party's legal representative serve upon the party he, or she, represented, a notice that specified an estimate of the best outcome that the party is likely to achieve if the party is successful, and an estimate of the worst outcome that the party is likely to undergo if the party is unsuccessful.
I understand that this direction was complied with but it did not lead to the costs issue being resolved. Neither party tendered a copy of the notice that had been served in compliance with the direction. Perhaps, and I am only speculating, each was embarrassed to do so.
The hearing commenced at about 10:45 a.m., at which time, because I had read the affidavits, I informed the legal representatives of my tentative view on some of the issues and particularly the alternative claim made by Beverley that her costs should come out the estate. The following discussion between Bench and bar occurred:
"… insofar as the costs are concerned, indirectly at least, there seems to be some evidence about the costs calculated on the indemnity basis being $67,000. Let's assume for the purposes of the argument that the costs on the ordinary basis come to $50,000, the effect of an order for costs out of the estate would mean, would it not, that the defendant's side, as it were, would be paying two thirds of $50,000, or close enough to $34,000, and the plaintiff, if the costs were to come out of the estate, would be paying $17,000?
[Counsel for the Plaintiff]: That's correct, your Honour.
HIS HONOUR: So on that argument, it is either: This is a fight about $17,000 or thereabouts, or $34,000 or thereabouts?
[Counsel for the Plaintiff]: Yes.
HIS HONOUR: That's what it amounts to.
[Counsel for the Plaintiff]: That's right.
HIS HONOUR: And there are 1500 pages of documents that are being relied upon as part of this case when those amounts are involved?
[Counsel for the Plaintiff]: I said on your example, your Honour, because the defendant's position is not that even $34,000 should be attributed to, but their position has been that the parties should all bear their own costs, so it's a bit more than $17,000."
I then allowed the legal representatives to discuss the further conduct of the proceedings. They were unable to reach agreement and the costs hearing proceeded at about 11:30 a.m., and continued, with some interruptions, until 4:00 p.m., or shortly thereafter. Then, it was necessary for me to reserve my decision.
[4]
The Submissions
I shall not burden these reasons with all of the allegations and counter-allegations about the conduct of one party, or the other, raised in the affidavits. Each asserts, for different reasons, that the conduct of the other party, or parties, was unreasonable, and that their, or her, behaviour warrants the order for costs that they seek, or she seeks.
However, in broad summary, Beverley asserts that the Property was not able to be sold, since August 2011, after it was re-zoned, because of the unreasonable conduct of John in a number of different respects, but importantly, in raising an "issue" of flooding as a reason needing investigation, which delayed the sale, and because he failed to explain, or identify any basis for it being an issue; because he would not agree to meet unless the Plaintiff was personally present (rather than present via telephone); because he would not approve a draft contract for sale for about 2 months after a copy thereof was provided; and he would not execute the agency agreement to enable a real estate agent to be appointed. In respect of Troy, she identifies a delay that occurred because he was travelling overseas, which resulted in the marketing of the Property being deferred. In relation to both John and Troy, Beverley asserts that they refused, neglected, or failed, to provide any basis for the expressed belief as to the value of the Property, to justify refusal to accept offers that were made.
In relation to the last matter, the evidence reveals that the offers that were made increased from $4,100,000 (in March 2013) to the ultimate sale price of $4,510,000 (in November 2014), an increase of 10 per cent in 20 months. However, it should be noted that there was an offer of $4,500,000 in November 2013, which John and Troy, apparently, were not prepared to accept.
These matters, singly or together, prompted Beverley to submit that there was "a continued unwillingness on the part of the defendants to sell the Property at a realistically achievable price". She also submitted that it was necessary to commence the proceedings following which the parties were able to reach agreement on the way in, and the price for, which, the Property was to be sold and that, but for the commencement of the proceedings, the Property might still not be sold. Furthermore, the ultimate outcome, being the sale of the Property, as compromised by the Defendants, in substance, led to what was sought by the Plaintiff in the proceedings, reflecting a substantial capitulation by the Defendants.
Yet, counsel for Beverley was prepared to concede that "it is entirely correct to say that any best pricing would be to the benefit of all beneficiaries" (T14.23-T14.24). He submitted, however, in circumstances of John and Troy not disclosing their reasons for believing the Property was worth more than the offers received, that demonstrated unreasonable conduct on their part.
John and Troy submitted that Beverley had acted unreasonably in commencing proceedings and in not agreeing to mediation to resolve the dispute about the sale of the Property before commencing those proceedings. They point to the fact that she did not seek the opinion, advice or direction of the court before she commenced proceedings, which is typically given when a trustee is considering whether to commence litigation. At general law, a trustee contemplating litigation was at risk, as described by Lindley LJ in Re Beddoe; Downes v Cottam [1893] 1 Ch 547, at 557:
"But a trustee who, without the sanction of the Court, commences an action or defends an action unsuccessfully, does so at his own risk as regards the costs, even if he acts on counsel's opinion; and when the trustee seeks to obtain such costs out of his trust estate, he ought not to be allowed to charge them against his cestui que trust unless under very exceptional circumstances."
Senior counsel also submitted that it was only following the service of the Statement of Cross-Claim that Beverley agreed to mediation, and it was only at the mediation that the Heads of Agreement were reached. They relied upon the timing of the Statement of Cross-Claim and Beverley's agreement to attend mediation as the basis for this submission.
Beverley then submitted that her agreement to attend mediation was because the parties received a revised land tax assessment, by way of final notice, and the threat of legal proceedings, and was not brought about by the service of the Cross-Claim.
During the oral submissions, I raised whether a party had acted unreasonably could be determined on a hypothetical basis, and without cross-examination, and that the matters of complaint, by one side or the other, would need to be put to each party to give her, or him, an opportunity to respond and explain the conduct. Without such cross-examination, it might not be fair for the court to reach the view that she, he, or they, had acted unreasonably.
Counsel for Beverley submitted that it was unnecessary because the question the court "properly needed to resolve [was] what [was] the purpose of the proceedings, and, as a practical result, that is what [has] been achieved, albeit through the settlement process. That's an event… entitling her to costs".
Senior counsel for John and Troy also submitted that it was unnecessary as Beverley would have failed in her application for s 66G relief because "there may be circumstances which require the order to be refused, including where an application is brought by one of several trustees (see Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068)". In any event, she had failed in her claim for relief because there were no orders made under s 66G Conveyancing Act, but rather, the parties had agreed to the mechanism by which sale of the Property could occur without any such order, which mechanism had proved successful. In other words, the sale of the Property occurred by agreement of the parties not by an order of the court under s 66G or otherwise. That was not an "event", for the purposes of UCPR rule 42.1, entitling her to costs against them personally.
I should note that it was not submitted, on behalf of Beverley, that either John's, or Troy's, belief that the Property had a greater value was not held bona fide. They did not submit that the course that Beverley advocated was one that she thought was not in the best interests of the beneficiaries.
[5]
The Law
There was no debate about the principles that apply to determine the issue of costs. However, there are various bases which may be applicable some of which were not adverted to by the parties in submissions.
Reference was made to the general principles and to s 98 of the Civil Procedure Act, 2005 which provides that costs are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent costs are to be paid, and to UCPR rule 42.1, which provides that if the court makes any order as to costs, it is to order that the costs follow the event unless it appears that some other order should be made as to the whole or any part of the costs.
As was pointed out in Sze Tu v Lowe (No 2) [2015] NSWCA 91, at [39], the "event" is generally referred to as the "practical result of a particular claim".
Neither party, however, referred to UCPR rule 42.25, which provides.
"(1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be.
(2) The court may order that the person's costs not be so paid if:
(a) the trustee or mortgagee has acted unreasonably, or
(b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund."
This rule clearly operates by way of an exception to UCPR rule 42.1. It does not require, so it would seem, the trustee to have been successful, so long as he, or she, has not "acted unreasonably" or has "acted for his or her own benefit rather than for the benefit of the trust".
I should also refer to the general law principle that a trustee is entitled to an indemnity (or, where costs have been paid, reimbursement) from the estate for expenses incurred in the execution of the will and in the administration of any trusts. That principle now has statutory form in s 59(4) of the Trustee Act 1925 (NSW).
I should also mention that in relation to claims for relief under s 66G of the Conveyancing Act, the usual position as to costs of an application for the appointment of trustees for sale is, namely, that the costs of both parties be paid out of the proceeds of sale by analogy to partnership actions. This is because the costs of the application for the appointment of trustees for sale are to be regarded as an incident of joint ownership: McKay v McKay [2008] NSWSC 256, at [7]; Kardos v Sarbutt (No 2) [2006] NSWCA 206, at [28]; Spathis v Nanos (No 2) [2008] NSWSC 470, at [3]; Barel v Segal (No 3) [2012] NSWSC 1319, at [9]-[12]; Botros v Frank [2013] NSWSC 712, at [18]-[22]; Thomson v Sweeney [2013] NSWSC 1383, at [6].
However, as has been pointed out, the statement as to what is a "usual order" in applications under s 66G of the Conveyancing Act is nothing more than a rule of practice that is required in every case to yield to consideration of the facts of the particular case: Botros v Frank, at [19]; Thomson v Sweeney at [10].
Then, it is necessary to refer to some of the authorities that are relevant to the case where the matter had not proceeded to a final hearing but had resolved by agreement of the parties.
The case most regularly referred to is Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; 186 CLR 622, in which it was written that that the Court cannot hold a hypothetical trial of undetermined issues under the guise of a costs application. McHugh J wrote, at 624 - 625:
"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.
…
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.
...
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..." (Footnotes omitted)
It is also necessary to refer to One.Tel Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, in which Burchett J wrote, at [6] - [8]:
"In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs... [I]n Australian Securities Commission v Berona Investments Pty Ltd [(1995) 18 ACSR 772], as Cooper J put it... (at 777), "events had overtaken the proceedings". The relief originally sought was no longer required, and the proceedings were terminated without any decision on the merits. Neither side had won or lost...
By contrast with the decisions I have been discussing, the present matter involves a clear winner. The applicants, by their proceeding, sought to challenge the validity of certain notices, and to have them set aside. The respondent, after initially defending those notices, encountered at least an evidentiary difficulty, and acknowledged that they were to be set aside. That means that the applicants have succeeded… [T]he result one party sought was achieved without a hearing, but not by a 'settlement' in the ordinary sense, or as McHugh J used the word, and certainly not by what his Honour called 'extra-curial means'.
In any event, if, as the respondent contends, I should determine the question of costs by assessing whether, to borrow the language of McHugh J in Ex parte Lai Qin (at CLR 625; ALR 3), 'both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation [came to an end by the respondent's decision not to seek to uphold his notices]', I would arrive at the same result… On the Deputy Commissioner's own stance now, his stance earlier must have been unreasonable, at least once he had ascertained the true position. Yet that stance was maintained by opposition to the applicant's motion to amend, and by service of the notice to admit facts. It was only abandoned after the applicants defeated the attempt to obtain admissions."
This passage was approved by Hodgson CJ in Eq in Tsaprazis v Goldcrest Properties Pty Ltd [2000] NSWSC 765, at [33], and more recently, by Nicholas AJ in Owners Strata Plan 73162 v Dyldam Developments Pty Ltd [2014] NSWSC 1789, at [36].
In Ibrahim v PERI Australia Pty Ltd [2013] NSWCA 328, Beazley P (with whom Leeming JA agreed) after identifying a series of cases including those identified above, commented, at [17]:
"Although each of those cases related to different facts, the principles that are to be derived from them, in circumstances where a Court is requested to make a costs order, when proceedings have not been heard to termination include the following: whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success."
Ultimately, as these, and other, cases have established, the court considers the facts and the circumstances of the particular case and exercises its discretion in relation to costs judicially on the basis of what is just bearing in mind that the substantive case was not heard and determined.
[6]
Determination
The only matter agitated by each of the parties related to the unreasonable conduct of the other. It was not in dispute that each party was not acting for herself, or himself, but rather for the benefit of the beneficiaries of the Property which included some other persons.
Having read the submissions and the documents upon which each party ultimately relied, I am satisfied that it was not unreasonable for Beverley to commence proceedings to try to obtain the evidence of John and Troy going to the value of the Property. From her point of view, and on the then available information, there was nothing to suggest that a price greater than that offered in November 2013 was likely to be achieved. (I note that the proceedings were commenced in February 2014. By that date, an offer of $4.5 million had been made. But it had lapsed. Thereafter, the evidence reveals that the sale price increased only by $10,000.)
Nor am I able to conclude that the conduct of John and Troy, in attempting to obtain a higher purchase price was unreasonable. As stated earlier, it was not submitted that their belief in this regard was not a bona fide belief.
Furthermore, once the proceedings were commenced, it was not unreasonable for John and Troy to seek mediation at which Beverley would be required to attend in order to work out the method of final valuation and how the sale would proceed. They sought this through an order for mediation, without which, it would seem, mediation would not occur.
It was only as a result of the combination of the two events, one taken by the Plaintiff, and the other taken by the Defendants, that a sale of the Property was achieved by their agreement and without the necessity for court orders. Without both steps having been taken, the Property may not have been sold, other than by obtaining an order of the court. That would not have been achieved, in all likelihood, without a lengthy and contested hearing, which could have involved complex factual matters and where credit could have been an issue.
This is not a case where either party capitulated in resolving the dispute. Both wanted the same result. It was simply unnecessary, thereafter, to proceed with the litigation since it appears that each achieved what she, and they, respectively wanted in the best interests of all beneficiaries.
Senior counsel submitted that Beverley may not have been successful in obtaining an order of the court under s 66G of the Conveyancing Act. Yet, as was put to senior counsel for John and Troy, the likelihood was, in view of the date of death of the deceased, and as all parties were agreed that the Property had to be sold, that some order for sale would have been made at the hearing, if for no other reason than to allow completion of the administration of the deceased's estate. It is a submission that does not lead to a different conclusion.
This does not mean that engaging in mediation should not have been a considered alternative, and perhaps, a less costly way, for Beverley to proceed. The result of mediation, once it occurred, is obvious.
In my view, balancing all of the facts and circumstances, and in the exercise of my discretion, I am of the view that each party should receive her, or their, costs of the proceedings, calculated on the indemnity basis, other than the costs of the notice of motion, out of the estate. Each, after all, for different reasons, was endeavouring to achieve a result which was in the best interests of all of the beneficiaries. For her part, Beverley was seeking to sell the Property expeditiously, which sale and the distribution of proceeds would have enabled the completion of the administration of the deceased's estate. For their part, John and Troy were wishing to obtain the best possible price for the Property, again, a result which was in the best interests of all of the beneficiaries. Whilst the aim of each party was not mutually exclusive, it was the conduct of the other, or others, which hindered the aims being met.
In relation to the notice of motion, neither party has achieved complete success. In this regard, even though Beverley did seek an order that her costs of the proceedings be paid out of the estate, she did not concede the entitlement of John and Troy to obtain their costs on the same basis. John and Troy simply submitted that each party should pay her, or their, own costs respectively, which did not take into account Beverley's entitlement to costs.
In addition, I consider that the approach of both parties to the notice of motion was, in all the circumstances, quite unreasonable. Neither, it seems to me, considered s 56(3) of the Civil Procedure Act, which imposes on each party a duty to assist the court to further the overriding purpose set out in subs (1) (to facilitate "the just, quick and cheap resolution of the real issues in the proceedings") when it exercises any power given to it by the Act.
In relation to the notice of motion, I consider that the just order is that each party should bear her, or their, own costs respectively.
In coming to a conclusion about how the costs of the proceedings should be borne, the court has considered the timely disposal of the proceedings, including the avoidance of further disputes between the parties which will have the effect of delaying even further the distribution of the balance of the estate. I should mention, in this regard, that, in my view, Beverley's refusal to agree to an interim distribution of some of the proceeds of sale demonstrates some unreasonableness on her part. However, I have not taken her conduct, in this regard, into account in coming to the conclusion to which I have come. I have, however, taken it into account in determining the form of the order which I propose to make.
In deciding the terms in which any order for costs is to be made, the court must also seek to act in accordance with the dictates of justice which includes trying to avoid the parties, and indirectly, other beneficiaries, in further disputes about the assessment of costs.
Neither party referred to s 98(4)(c) of the Civil Procedure Act and the Court's power to make an order to the effect that the party to whom costs are to be paid is to be entitled to a specified gross sum instead of assessed costs. Whilst, in my view, this is an example of a case in which such a gross sum should be ordered to be paid, the matter was not raised at the hearing so I do not consider that such an order should be made. Hopefully, when the legal representatives consider the quantum of costs, some practical way of proceeding will be reached. In this regard, the terms of the deceased's Will should be borne in mind.
So that there is no further delay in the distribution of the estate, and in the event that the parties are not able to adopt a sensible, practical, approach to the calculation of the quantum of costs that have been ordered to be paid, I shall order that the amount of no more than $150,000, or such other sum as all parties agree in writing, should be retained from the proceeds of sale, in order to satisfy the costs that I have ordered should be paid out of the estate. This should enable a reasonable part of the balance of the proceeds of sale to be distributed as soon as possible without the delay of the assessment of the costs of one, or both, of the parties.
The Court:
(i) Orders that each party is to receive her, or their, costs of the proceedings, respectively, other than, her, or their, own costs of the notice of motion, calculated on the indemnity basis, out of the balance of the estate of the deceased.
(ii) Makes no order as to the costs of the notice of motion, to the intent that the Plaintiff is, and the Defendants are, to bear her, and their own costs, respectively.
(iii) Orders that $150,000, or such other amount as all parties agree in writing, shall be retained, from the proceeds of sale, in order to meet the costs of the parties that are ordered to be paid out of the estate pending their agreement, or failing agreement, pending the assessment of costs.
[7]
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Decision last updated: 18 June 2015