Doriana Mary Jones & Anor v Mauro Poletti

Interest on Costs 8Mr Ellison SC seeks an order for interest on the costs awarded to the plaintiffs in the following terms: "(a) Pursuant to Section 101(4) of the Civil Procedure Act, 2005, the interest payable on the costs be calculated at the rate set out in UCPR Part 36 Rule 36.7 on the Allowed Percentage of each amount of costs and disbursements paid by the Plaintiffs or either of them to their legal advisers from the date on which the costs were paid until the first to occur of: (a) Such time as the Defendant has paid the costs to the Plaintiffs or either of them; or (b) Any further order relating to interest on costs in these proceedings. (b) For the purposes of paragraph (a) above, the Allowed Percentage means the formula of (Y/X x 100) % where: X equals the total amount of costs and disbursements which the Plaintiff(s) entitled to receive interest has paid or is liable to pay to their legal advisers in connection with these proceedings; and Y equals the total amount of costs and disbursements agreed or allowed on assessment to the Plaintiffs entitled to receive interest in connection with these proceedings." 9The Court of Appeal has recently reaffirmed the operative principle in the Court's award of interest on costs. Claims for interest on costs are intended to be compensatory on the basis that the person entitled to costs has been wrongly required to spend money on litigation to enforce established rights. In Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 ("Doppstadt") at [403] the Court of Appeal said: "In the absence of any countervailing discretionary factor, it is appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs which it had paid. There is no requirement to establish that the circumstances of the case are out of the ordinary." 10The plaintiff in this case has established through the evidence that substantial amounts of legal fees, namely some $121,000 were paid prior to the hearing. The total costs incurred by the plaintiffs are only slightly more than that amount. There is therefore a real basis for the awarding of interest on such a sum. 11There is nothing obviously unreasonable in the quantum of those costs, given the scope of this litigation. The defendant has incurred more than double that amount of costs in the litigation. 12Mr Baltins submits that the awarding of interest on costs in accordance with the Civil Procedure Act, s 101(4) will produce unfairness to the residuary beneficiaries and will excessively compensate the plaintiffs. This seems to me to be only a general complaint about the rates of interest provided for under the Civil Procedure Act, and is not a persuasive argument. Mr Baltins does not point to any specific circumstances of delay, or other features of this case, which it is said would deny or reduce the plaintiffs' entitlement to interest. 13I propose to order that interest on costs as requested in accordance with order 2, which order is crafted in conformity with the formula for such orders that was accepted in Doppstadt.

Restraint on the Sale of the Sylvania Property 14Mr Ellison SC on behalf of the plaintiffs seeks orders in the following terms, to restrain sale of the Sylvania property: "3. The Defendant is restrained from dealing with the estate realty at 21 Murralin Lane, Sylvania other than for the purpose of completing the contract for sale of that property dated 4 July 2014 to Haihui Liao ("the contract") until further order of a Judge of the Equity Division, or of the Court of Appeal. 4. The Defendant place into a controlled moneys account (or such other account as may be agreed to by the parties) to which his solicitor and the solicitor for the Plaintiffs are signatories the sum of $1,300,000.00 out of the proceeds of sale of the land under the contract on account of the provision ordered herein, interest on the said provision and the costs due to the Plaintiff; such amount not to be dealt with other than by agreement of the parties, a Judge of the Equity Division or of the Court of Appeal." 15The relief is opposed. This is so notwithstanding that the parties have recently made open offers to one another about the form in which some relief of the kind sought might be granted. Originally the plaintiff sought that $1.5 million be paid into a controlled monies account. But that has now been modified in correspondence to a claim for $1.3 million. Mr Baltins submits that the payment of no more than $1.2 million is appropriate, were relief to be granted. In support of that he has provided the Court with a calculation grounding his submission for the payment of no more than $1.2 million into a controlled monies account, which calculation is set out below. "Award Becker $450,000 Award Jones $450,000 Interest for 1yr @ 4.5% on $900,000 $40,500 (see section 84A Probate and Administration Act, 1898 The Reserve Bank cash rate @ 4 December 2013 was 2.5%) Costs of plaintiff as per Suttor affidavit dated 26 March 2014 Interest on costs pursuant to UCPR 36.7% being Reserve Bank cash rate of 2.5% + 6% = 8.5% on $121,006.13 beinf the amount referred to in affidavit of Doriana Jones dated 25 July 2014, for 1 year $10,285.52 Total: $1,080,371.52" 16If restraining orders are to be made, Mr Ellison SC's criticism of these figures is well justified. Mr Baltins' figures understate the amount of interest that may be payable to the plaintiffs by approximately $100,000 given the orders as to interest that I have made, and given that the Court of Appeal may not deal with this matter until the middle of next year. Moreover, the future course of this litigation is uncertain and there is no doubt that Mr Baltins' client, Mr Mauro Poletti, has demonstrated that he is ready to spend substantial resources to oppose the plaintiffs' claims, as is already evidenced by the comparative costs of the proceedings. At least the possibility exists of a special leave application to the High Court, if the defendant is unsuccessful in the Court of Appeal. These are all matters that in a general sense I take into account. In my view, $1.3 million is the appropriate sum to be paid into a controlled monies account, if such an order is required. 17But in my view, there is ample basis for the making of such an order. Mr Mauro Poletti opposed all the relief in these proceedings right through the hearing and expended, as I have said, substantial costs in opposing the claims. He swore an affidavit in the proceedings that indicated that the principal asset of the estate, the Sylvania property was worth $2.2 million. It has now been sold for over $3 million. There is no need to cover the correspondence in detail. But between the time of the principal judgment and approximately a week ago there was no response to the plaintiffs' solicitor's letters to the defendant about various consequential orders. This does not fill the Court with confidence that the defendant will be wholly cooperative with the future management of what remains of this litigation. 18But more importantly I also take into account in this context, as I am entitled to, the Court's findings arising out of the hearing reflected in paragraphs [60], [61] and [62] and paragraph [130] of the principal judgment. These findings demonstrate a strong measure of animus directed by Mauro at his sisters. These findings and the fact that the estate is principally comprised by the asset now being sold, the Sylvania property, justify the making of these orders, notwithstanding the fact that there is no present evidence of any breach of Mauro's duties to administer the estate as executor. 19I propose therefore to make the orders sought. 20The Court Orders:

1. Interest as for a legacy under the Probate and Administration Act 1898 be paid on so much of any of the provision awarded herein as remains unpaid more than 28 days after the making of the orders herein. 2(a) Pursuant to Section 101(4) of the Civil Procedure Act, 2005, the interest payable on the costs be calculated at the rate set out in UCPR Part 36 Rule 36.7 on the Allowed Percentage of each amount of costs and disbursements paid by the Plaintiffs or either of them to their legal advisers from the date on which the costs were paid until the first to occur of: (a) Such time as the defendant has paid the costs to the plaintiffs or either of them; or (b) Any further order relating to interest on costs in these proceedings. (b) For the purposes of paragraph (a) above, the Allowed Percentage means the formula of (Y/X x 100) % where: X equals the total amount of costs and disbursements which the plaintiff(s) entitled to receive interest has paid or is liable to pay to their legal advisers in connection with these proceedings; and Y equals the total amount of costs and disbursements agreed or allowed on assessment to the plaintiffs entitled to receive interest in connection with these proceedings.
2. The defendant is restrained from dealing with the estate realty at 21 Murralin Lane, Sylvania other than for the purpose of completing the contract for sale of that property dated 4 July 2014 to Haihui Liao ("the contract") until further order of a Judge of the Equity Division, or of the Court of Appeal.
3. The defendant place into a controlled monies account (or such other account as may be agreed to by the parties) to which his solicitor and the solicitor for the plaintiffs are signatories the sum of $1,300,000 out of the proceeds of sale of the land under the contract on account of the provision ordered herein, interest on the said provision and the costs due to the plaintiffs; such amount not to be dealt with other than by agreement of the parties, a Judge of the Equity Division or of the Court of Appeal.
4. The defendant pay the plaintiffs' costs of the motion.
5. Liberty to apply on 3 days notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 August 2014