Judgment - EX TEMPORE
Revised and reissued 11 November 2019
On 15 August I delivered my principal judgment in these proceedings: French v Bremner [2019] NSWSC 1033. I made orders dismissing Mr French's claim (the first cross-claim) against Dr Bremner. I also made orders dismissing Dr Bremner's cross-claim (the second cross-claim) against the second cross-defendant, Ms Bakey. It was not possible to make final orders on Dr Bremner's cross-claim against Mr French on that occasion and I directed that Dr Bremner, as the successful party, bring in proposed orders to reflect the conclusions I expressed in my judgment. I also asked for those orders to cover the costs of the proceedings.
The solicitors who acted for Mr French and Ms Bakey at the trial have now ceased to act for them. As a result, it took some time to arrange a hearing on the final form of the orders. Arrangements were made for the hearing to take place on 16 October, and both Mr French and Ms Bakey appeared. It emerged in argument that some further adjustment to the proposed orders was required, and the proceedings were adjourned until today. I excused Ms Bakey from appearing at today's hearing, as the only issue remaining that affects her is one of costs which was fully debated on 16 October. At the last minute Mr French was unable to travel to Sydney to attend today's hearing, but he has participated in the hearing by telephone.
At the hearing on 16 October Mr French foreshadowed an application for a stay of any orders that I might make. As a matter of convenience, I allowed the application to go forward even though the orders had not been made and no notice of motion had been filed. Yesterday, Mr French filed a notice of motion formally seeking a stay, and an affidavit in support. I have heard the application today on the basis that the evidence which I received on 16 October will be treated as part of the evidence in support of the now formalised stay application.
There are four aspects of the proposed orders which require consideration. I will deal with those orders before returning to the stay application.
The first aspect of the orders requiring mention is the calculation of interest on the judgment for approximately $3.15 million which Dr Bremner obtained on his cross-claim (see my judgment at [475(1)]). The interest calculations were given to Mr French before the hearing and he has raised no objection to them. Accordingly, I will award prejudgment interest pursuant to the Civil Procedure Act 2005, s 100 in the sum of $2,641,945.
The second area of debate concerned the two properties at Corringle Beach in Victoria which are owned by Dr Bremner (see my judgment at [7]). Counsel for Dr Bremner sought an order for possession of the properties. This is because it seems Mr French is using them for his farming operations and remains in possession of them.
The difficulty with this part of the proposed orders is that relief in the nature of possession was not sought at the hearing. Counsel for Dr Bremner acknowledged this, although said that orders for possession of the two properties had been sought at an earlier stage of the proceedings. That may be so, but the proceedings were protracted and complicated. Mr French is now self-represented. The view that I take is that the Court should not make orders reflecting claims that were not pursued at the trial if Mr French objects to that course.
In the course of the hearing I explained to Mr French that on the face of it Dr Bremner is entitled to possession. Mr French clearly believes that he is doing some sort of favour to Dr Bremner, and perhaps performing some public good, in looking after the properties. Whether this is so or not is, it seems to me, irrelevant. The properties belong to Dr Bremner and, on the face of it, he has a clear entitlement to possession, which he wishes to exercise. I explained to Mr French that objection to the making of the orders in these proceedings was likely only to provoke further separate proceedings for possession in another court, to which Mr French apparently would have no defence, and which would only lead to further costs. Nevertheless he maintained his objection, and I therefore will not make the orders which are sought.
[2]
Appointment of trustees for sale
The third issue concerns the appointment of trustees for sale to the jointly owned Victorian properties.
I dealt with this in my judgment at [468]-[473]. The applicable Victorian legislation is the Property Law Act 1958 (Vic), Part IV. Section 225 of that Act provides that a co-owner of land may apply to the Victorian Civil and Administrative Tribunal (VCAT) for an order appointing trustees for sale. But, for reasons I gave in my judgment, that power is not exclusive and can be exercised by this Court (see my judgment at [469]-[471]). I concluded that Dr Bremner was entitled to such an order.
The proposed orders provide for Jason Stone, a partner of the accounting firm PKF Melbourne, to be appointed as trustee. The orders provide for certain directions to Mr Stone concerning the realisation of the properties and the division of the proceeds and authorise him to charge at the rates usually charged by PKF Melbourne for appointments of this sort.
The process of having Mr Stone conduct the sale is likely to involve more cost than would be incurred if the parties were able to agree on a regime for sale. This, of course, is no criticism of Mr Stone, or of the rates that he proposes to charge.
I gave Mr French an opportunity to negotiate with Dr Bremner's legal representatives to see whether some agreement about the sale could be reached, but nothing has happened. In these circumstances appointment of a trustee is the only option. Mr French did not object to the directions proposed or to Mr Stone's proposed rates, and I will therefore make orders accordingly.
There is one complication; it concerns the property at Deddick Valley (see [104]). On 16 October I was informed that although the purchase price was paid, the formal transfer of the property was never completed and stamp duty has not been paid. The property thus remains registered in the name of the original vendor.
Strictly speaking, the interest of Mr French and Dr Bremner in the property is not that of joint owners at law but of joint owners in an equitable interest. In effect, the registered proprietor holds the property on trust for them.
However, this does not prevent orders being made under the Property Law Act. For the purposes of s 225, "land" is defined so as to include:
buildings and other structures permanently affixed to land, land covered with water, and any estate, interest, easement, servitude, privilege or right in or over land.
(see: Interpretation of Legislation Act 1984 (Vic), s 38, made applicable by the Property Law Act 1958 (Vic), s 222).
So far as the Deddick Valley property is concerned, the orders therefore provide for Mr Stone to be appointed as trustee for the sale of the estate and interest held by Dr Bremner and Mr French in the property. The orders also contain provisions for Mr Stone to seek the consent of the registered proprietor to transfer title directly to the purchaser; or alternatively, if consent cannot be obtained, to transfer the property into the names of Dr Bremner and Mr French.
The orders require Dr Bremner and Mr French to pay the applicable stamp duty. Recognising that Mr French is unlikely to pay, the orders provide that Dr Bremner may pay the whole of the stamp duty and recover that in due course out of the proceeds of sale.
Mr French initially objected to having to share payment of the stamp duty. He said that Dr Bremner had never paid the stamp duty despite his requests at the time. But on my findings Dr Bremner had no obligation to pay the stamp duty. I think the payment of duty is properly seen as a cost of the sale. Accordingly, it is right that it should ultimately be paid out of the proceeds of sale, and thus, like other sale costs, be shared between Mr French and Dr Bremner as co-owners.
[3]
Costs
The fourth issue concerns costs. Counsel for Dr Bremner submitted that in substance he had succeeded both on Mr French's cross-claim against him and on his cross-claim against Mr French. The orders sought required Mr French to pay Dr Bremner's costs of both cross-claims. Mr French argued, however, that he had not been wholly unsuccessful in the proceedings. In particular he pointed to the fact that Dr Bremner's claim to a one-hundred per cent interest in the Victorian properties by way of resulting trust failed.
Where in legal proceedings a party fails on one line of defence but succeeds on another, or fails in one claim but succeeds in others, the Court will usually make an overall judgment as to the party's success or failure in the proceedings and award costs accordingly. The Court does not usually award costs on an issue-by-issue basis. However, some adjustment may be made if an otherwise successful party fails on an issue which is severable, or there is otherwise good reason to make some adjustment to the costs order.
In the present case it is true that Dr Bremner failed in his claim to achieve ownership of the whole of the jointly owned Victorian properties. But he succeeded in the alternative claim that he made to have orders for the appointment of a trustee. Substantially all of the evidence which is relevant to Dr Bremner's resulting trust claim would have been led in any event, as it was relevant to other issues in the proceedings on which Dr Bremner succeeded.
I think it is clear from the way in which Mr French has conducted himself that even had Dr Bremner not made the resulting trust claim, the claim for an order for the appointment of trustees would still have been opposed. In these circumstances, I do not think that Dr Bremner's failure to obtain the full extent of the relief sought is of sufficient significance to warrant a departure from the usual order that costs follow the event.
So far as the costs between Dr Bremner and Ms Bakey are concerned, counsel for Dr Bremner accepted that Dr Bremner had been wholly unsuccessful in his claims against Ms Bakey, and that this should be reflected in an order for costs.
The debate concerned how the order ought to be formulated. Mr French and Ms Bakey were commonly represented. Counsel submitted that Ms Bakey should receive an order only for the additional costs solely referable to the claim against her. The intent of the proposed order was that Ms Bakey would receive payment only of costs to the extent that they were greater than would have been incurred as a result of representing Mr French, had he been the only party sued on the cross-claim.
Where a plaintiff sues two defendants who are commonly represented, the costs incurred by those defendants fall into three categories. There are costs solely referable to the claim against the first defendant; costs solely referable to the second defendant; and costs referable to both claims jointly, in that they would have been incurred whether the first defendant only was sued or the second defendant only was sued. I will refer to this category as the common costs. A similar division can be made in the costs of the plaintiff.
It is accepted principle that a successful defendant should receive an order for the costs solely referable to the claim against that defendant. Equally, the costs order in favour of the successful defendant should not include any costs solely referable to the unsuccessful defendant. Similar considerations apply to the recovery of the plaintiff's costs against the unsuccessful defendant: see Dimos v Willetts (2000) 2 VR 170 at 178-179 [27] ff.
The debate concerns the extent to which, if at all, the defendant should be entitled to recover some proportion of the common costs from the plaintiff. Neither party referred me to any authority on this question. In particular, it was not suggested that I was required to follow what is sometimes called the "rule of thumb" concerning recovery of costs in cases where a party succeeds against one opposing party but fails against another: see Currabubula v State Bank NSW [2000] NSWSC 232 at [90].
In my view, the starting point is to recognise that if Ms Bakey had been separately represented, there would be no question about her ability to recover the common costs. Separately retained lawyers would have been required to prepare for the case and attend the hearing, even though it mainly concerned claims against Mr French. I ask myself why Ms Bakey should be in a different position simply because she jointly retained lawyers with Mr French.
Another consideration is that no one seems to suggest that the plaintiff is not able to recover the common costs from an unsuccessful defendant even though there is no right to recover those common costs from a successful defendant. I ask why a successful defendant should not be in the same position.
For these reasons I do not think that the costs order to which Ms Bakey should be entitled should be limited to the costs solely referable to the claim against her. In my view the only limitation is that it should be made clear that the costs to which Ms Bakey is entitled should not include any costs solely referable to the claim against Mr French.
The order I propose to make to reflect this conclusion is that Dr Bremner pay Ms Bakey's costs of his cross-claim as against her (see Dimos v Willetts at 187 [45]). For the benefit of the costs assessor, should it come to that, I make it clear that my intention is that Ms Bakey should recover an amount of costs reflecting the costs she would have paid, or been liable for, had she been sued on her own. Thus, in the case of pre-directions hearings, she would be entitled in the ordinary course to recover all of the costs of a general directions hearing, but some apportionment will need to be made to reflect the fact that if Ms Bakey had been sued on her own the evidence would have been much less extensive.
Of course I do not know what arrangements were made between Ms Bakey and Mr French for the payment of costs, nor who was liable for whose costs. Ms Bakey asserted that she had paid large amounts of money towards her costs. But that has not been verified; it will be a matter for assessment in due course.
I make it clear that my decision will operate within the confines imposed by the indemnity principle, so that if there are costs of conducting Ms Bakey's defence which she did not pay and was not liable to pay, then such costs will not be recoverable under this order.
In the same way the order for costs in favour of Dr Bremner on his cross-claim against Mr French will be an order for costs of the cross-claim as against Mr French, and will be calculated by reference to the costs which would have been incurred had Mr French been sued on that cross-claim on his own.
[4]
Stay application
This brings me to Mr French's application for a stay. On 15 October, the day before the hearing on 16 October, Mr French filed an application in the High Court of Australia to have the proceedings removed into that Court. He submitted that in the light of that application I should stay all further proceedings. Mr French also asserted that if I proceeded to make orders which were put into effect and resulted in the sale of the properties this would have adverse effects on the state of the properties and the welfare of the stock on them.
These two points give rise to separate considerations. So far as the application for removal to the High Court is concerned, I have only the application itself and Mr French's affidavit in support. There is no evidence before the Court as to what has happened to the application. I assume it will proceed to hearing in due course, but I have no information about when that hearing might be.
It is important to emphasise that the application is one to have the proceedings removed for hearing in the High Court. The proceedings are not an appeal. The question raised by the application is whether the remainder of the proceedings should be removed to the High Court to be completed there.
It is not necessary for me to deal in any detail with the grounds Mr French has advanced for removal. It is enough to say it is far from self-evident that the application will succeed. No order has been issued by the High Court requiring me to stay my further consideration of the matter. In my view the proper course for me is to go on with the case and complete it until and unless I am told otherwise.
I therefore do not regard the making of the application as a ground for a stay. The real question is whether there is sufficient prospect of a successful appeal against my decision to justify a stay in the circumstances of the case.
I have no doubt that the execution of my orders for the appointment of a trustee and the sale of the property will disturb Mr French's farming operations. Whether that rises to the level of interference with "animal welfare" may be doubted, but it seems to me that the critical question is whether there is a sufficient prospect of those orders being disturbed by the Court of Appeal to require me to embark on the exercise of weighing Dr Bremner's prima facie entitlement to enforce the order against the inconvenience it may cause if the order is ultimately set aside.
Mr French has filed a Notice of Intention to Appeal against my judgment, but no Notice of Appeal has been filed. I therefore do not know what grounds he proposes to put forward nor the parts of my judgment which he proposes to challenge.
Furthermore, it is clearly established that a co-owner of property is entitled virtually as of right to the appointment of trustees for sale (see my judgment at [472]). There are exceptions to that where the conduct of the co-owner has raised some form of equity or estoppel against the sale of the property, but such cases are rare. Nothing in the evidence before me suggests that this is one of them.
Accordingly, the Court is faced with an application for a stay where there is nothing whatsoever to indicate that an appeal against the orders in question would be successful. Mr French's application must therefore be refused.
It will be necessary to make some changes to the proposed Minute of Order to reflect my decision. I propose to direct Dr Bremner to bring in a further version of the orders reflecting my decision. Those orders can then be made in Chambers. The orders should also provide for Mr French's application for a stay to be dismissed with costs.
The orders of the Court are:
I direct that Dr Bremner bring in Short Minutes of Order to give effect to this judgment.
[5]
Amendments
11 November 2019 - typographical error
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: 11 November 2019