Solicitors:
Hawkesbury Legal (Plaintiff)
Christopher M Edwards Solicitors and Accountants (Defendant)
File Number(s): 2022/00382192
[2]
JUDGMENT
In these proceedings, on 2 August 2023, the Court was informed that the plaintiff intended to discontinue the proceedings but that there was an outstanding issue as to costs. This resulted in the proceedings being listed before me on 17 August 2023 to deal with the question of costs. In advance of the hearing on 17 August 2023, the plaintiff filed the Affidavit of Michelle Gosewinckel affirmed 10 August 2023 (Gosewinckel affidavit) and provided written submissions in support of her application for leave to discontinue the proceedings on terms that the defendant pay her costs.
On 16 August 2023, the defendant filed the Affidavit of Harjot Kaur Rathore affirmed 16 August 2023 (Rathore affidavit). During the hearing on 17 August 2023, the defendant provided written submissions in which she sought an order that she be paid her costs of the proceedings on an indemnity basis.
Each of the Gosewinckel affidavit and the Rathore affidavit were read without objection at the hearing and there was no cross-examination of either deponent.
At the conclusion of the hearing on 17 August 2023, I made orders and indicated that I would reserve the delivery of my reasons for doing so.
Elix v Hill [2023] NSWSC 1017 | Case summary | Zoe
The proceedings were commenced by Summons on 19 December 2022 in which the plaintiff sought an order that provision be made for her maintenance, education and advancement in life pursuant to s 59 of the Succession Act 2006 (NSW) in the estate of the late Rosemary Breed who died on 23 December 2021 (the Deceased).
The plaintiff is the daughter of the Deceased. There are four beneficiaries in the Will dated 11 February 2021 of the Deceased (the Will) for which probate was granted on 17 March 2022, being:
1. Robert Breed (Robert), son of the Deceased, who was given a 40% share of the Deceased's estate;
2. the defendant, the executor of the Will and daughter of the Deceased, who was given a 35% share of the Deceased's estate;
3. the plaintiff, also daughter of the Deceased, who was given a 5% share of the Deceased's estate; and
4. Matthew Hill, grandson of the Deceased and son of the defendant, who was given a 20% share of the Deceased's estate.
The estate assets are approximately $858,667 and the beneficiaries have been advised by the solicitor for the estate that they expect that about $824,000 would be available for distribution after the costs of the administration.
The proceedings came before Hallen J on 17 February 2023 when certain directions were made, including a notation by his Honour that "the Defendant has rejected any form of dispute resolution and acknowledges that in the event the Plaintiff is successful, an order for costs calculated on the indemnity basis in her favour will be made".
Throughout the course of 2023, the defendant repeatedly rejected all attempts made by the solicitors for Robert and the solicitors for the plaintiff requesting to resolve the matter either by mediation or by alternative dispute resolution.
On 27 July 2023, Robert's solicitors wrote to the plaintiff's solicitors offering to contribute 5% of his share of the residue of the Deceased's estate to the plaintiff and the plaintiff accepted that offer and proposed that there be a discontinuance with each party paying their own costs.
The defendant maintains that the plaintiff's claim was doomed to fail and provided that as a reason why there would be no mediation and no opportunity for the plaintiff to abandon its claim except on the basis of the plaintiff paying the defendant full indemnity costs. The defendant complains that at no stage has the plaintiff ever provided a reason as to why her provision in the Will was inadequate and has not provided any reason why the plaintiff has abandoned her claim for provision.
While it is not incumbent on a party discontinuing proceedings to provide a reason for doing so, it is abundantly clear that the reason why the plaintiff now wishes to discontinue the proceedings is because she has reached a settlement with Robert pursuant to which she will receive an increased share of the Deceased's estate.
Pursuant to r 12.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), a party is entitled to discontinue proceedings at any time with either the consent of the other parties or with leave of the court. In the present case, it is clear that the consent of the defendant is not forthcoming. In my view, it is appropriate for the proceedings to be discontinued because the plaintiff wishes to do so after having reached a settlement to obtain a greater share of the estate, which was the nature of the relief that she was seeking in the Summons in the proceedings.
Relevantly, r 42.19(2) of the UCPR provides that "unless the court orders otherwise…the plaintiff must pay such of the defendant's costs as, at the date on which a notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued". The relevant principles that apply to the application of that rule were conveniently stated by Ward CJ in Eq (as her Honour, the President, then was) in Furnish & Finish Pty Ltd v Hollands [2020] NSWSC 1593 at [28]-[37]. In summary, those principles are:
1. the award of costs is a matter within the discretion of the Court, which is a broad one which must be exercised judicially and consistently with the Civil Procedure Act 2005 (NSW);
2. the default position in relation to discontinued proceedings is that which is stated in r 42.19 but that rule does not contain a presumption and it remains for the discontinuing party to show some good reason for departing from the ordinary course of awarding costs pursuant to that rule;
3. a consideration in the exercise of the discretion is the reason why the proceedings were discontinued; and
4. where there has been no hearing on the merits of the case, it is not appropriate for the Court to embark on the hearing of the merits in order to determine the question of costs on the discontinuance. 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 continues to be reasonable until the litigation was settled, then the proper exercise of a discretion is usually that the court would make no order as to the costs of the proceedings.
The defendant submits that it should be paid its costs on an indemnity basis for the proceedings.
The discretion to award indemnity costs must be exercised judicially, based on some "special or unusual feature" or "relevant delinquency" that justifies an award. Further, the conduct of the party against whom indemnity costs are sought must be connected with the litigation itself and more specifically, the way the litigation is conducted. See Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [44]; Mead v Watson as Liquidator for Hypec Electronics [2005] NSWCA 133 at [8]-[9]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6].
The defendant asserts that:
1. the proceedings were brought without just cause;
2. nothing has been said as to why the amount of approximately $40,000 which was left to the plaintiff under the Will is not adequate provision;
3. the plaintiff's case was commenced for improper purposes;
4. the Summons was filed 14 days after a threat to apply to have the defendant removed as executor;
5. the value of the plaintiff's assets are more than the value of the estate;
6. the plaintiff has not explained why giving her money affects her case;
7. the defendant has behaved reasonably by steadfastly protecting the assets despite unmerited and trivial complaints; and
8. the plaintiff has either rejected or ignored offers of compromise.
In my view, I cannot embark on an enquiry as to these matters in circumstances where there is no hearing on the merits. Accordingly, none of these matters justify an order for indemnity costs in favour of the defendant against the plaintiff.
I consider that the plaintiff has adequately explained the reason why she wishes to discontinue the proceedings, being that settlement has been reached with Robert pursuant to which she will receive a greater portion of the Deceased's estate than was left to her under the Will. It is not appropriate for me to embark on an enquiry as to the merits of the case that she has brought now that it has, in effect, been settled. The fact that the defendant repeatedly failed to engage in any form of mediation or alternative dispute resolution in the course of the proceedings provides a basis for departing from the starting position stated in r 42.19, that would otherwise result in the plaintiff paying the defendant's costs upon the discontinuance. Accordingly, I consider it is appropriate for each party to bear their own costs.
In these circumstances, the orders I propose are as follows.
The Court:
1. Pursuant to r 12.1 of the Uniform Civil Procedure Rules 2005 (NSW), grants leave to the plaintiff to discontinue the proceedings by filing a notice of discontinuance.
2. Orders that the plaintiff file a notice of discontinuance in the proper form within 7 days of 17 August 2023.
3. Makes no order as to costs such that each party should bear their own costs of the proceedings.
[3]
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Decision last updated: 24 August 2023