Determination
60I should deal with the question of the separate issues upon which the Defendants were unsuccessful first.
61In the present case, other than short submissions being made at the conclusion of the hearing, I consider that the construction issue upon which the first and second Defendants failed and the claim for a family provision order by the second Defendant, did not add very much time to the whole of the proceedings. I am of the view that the substantive claim of the Plaintiffs, and the claim for a family provision order by the first Defendant, were clearly the dominant issues in the proceedings. Accordingly, I have not determined the costs issues solely upon the basis that the Defendants were unsuccessful on some of the other issues. I have, however, taken into account that the first and second Defendants made those claims.
62In relation to the Calderbank offer relied upon by the Plaintiffs, it seems to me that it is not determinative of how costs should be borne. Firstly, the amount which the deceased offered to settle the dispute ($500,000) was for more than the parties agreed, ultimately, at the hearing, was payable to the deceased's estate by the Defendants ($495,000). Even then, what was agreed was a compromise on the part of each of the parties that was reached, presumably, to avoid an even lengthier hearing. (This point was made in the Plaintiffs' submissions in reply.)
63Secondly, even with the statement that the offer made was inclusive of interest and costs, at the time the offer was made, no interest was payable, although it had been sought. At that time, the Defendants may, or may not, have been liable for costs incurred by the deceased.
64Furthermore, at that time, the deceased was alive and, had the proceedings been heard during his lifetime, he would have been cross-examined on some of the events that occurred. Whether that would have altered the result of the case, in whole or in part, cannot be predicted, but, in my view, it is a relevant consideration. The case, at the hearing, was significantly different, to the case the Defendants had to meet at the time the offer was made.
65It must also be remembered that the Plaintiffs, during the course of the proceedings, came to accept that some of the money withdrawn, was, in fact, used by, or for the benefit of, the deceased.
66I also wonder whether, at the time the deceased's offer was made, it was a genuine compromise. Initially, the Plaintiffs sought to establish an amount in excess of $600,000 as the amount payable; then, an amount of $524,287; then, $502,451 was the amount submitted could be established; and finally, with encouragement, the parties agreed on $495,000. Although that was said to be a compromise, I am unable to say how much the Plaintiffs would have been able to establish had the amount not been agreed. Whether they would have been able to establish a greater amount cannot be predicted.
67I must also remember that the first and second Defendants each brought a claim for a family provision order, albeit late in the proceedings, and that the first Defendant, at least, was successful.
68It is difficult, in all the circumstances, to conclude that it was unreasonable for the Defendants to reject the offer made, particularly at a time when the prospect of being able to cross-examine the deceased still existed.
69Furthermore, in regard to the claims for a family provision order, each party, for different reasons, relied upon much of the evidence that had been read in respect of the Plaintiffs' substantive claim. Certainly, it became necessary to consider the facts ultimately established on their claim.
70It should be remembered, in this regard, that the Plaintiffs asserted that the conduct of the first and second Defendants was such that each was disentitled, completely, to an order for provision out of the estate of the deceased.
71This is not to say that the conduct of each of the first and second Defendants, in not acknowledging that certain amounts, as identified by Georgina, of $483,740 (see [11] of the principal judgment), during the course of the hearing, is irrelevant. Had these amounts been admitted, it would have narrowed the quantum issues on which a substantial amount of time, prior to the actual hearing, and some time at the hearing, in all likelihood, would have been saved. Even with the admission of the amounts withdrawn, the Defendants could have maintained, the assertion that those amounts had been withdrawn with the knowledge and approval of the deceased. In this regard, in the events that happened, they did not satisfy me that the deceased had consented to, or authorised, the use of the funds withdrawn that the first and second Defendants utilised for their own benefit.
72In relation to the Defendants' offer made on 2 April 2014, it is to be noted that the amount of $200,000 was offered "in full satisfaction of the plaintiffs' claim". At the time the offer was made, the Defendants had filed the Cross-Claim (on 24 March 2014). The offer did not state that it would result in the dismissal of the Cross-Claim and there can be no suggestion, from the reading of the offer, that it was intended to have such a result. It always remained a matter for the Defendants to express the terms upon which any Calderbank offer was to be advanced for the consideration of the Plaintiffs. In this regard, I reject the contentions of the Defendants.
73I also do not accept the submission made on behalf of the Defendants that the offer contained in the letter of 2 April 2014, was "clearly" intended to dispose of the proceedings, including the Cross-Claim. When one reads the Defendants' offer, what is submitted is far from "clear".
74Furthermore, I note there is no evidence suggesting that, following what I said on the first day of the hearing, the Defendants informed the Plaintiffs that the offer made had been made with the intention that it would dispose of the Defendants' claims as well as those of the Plaintiffs.
75The offer made by the Defendants was made at what may be described as the eleventh hour, shortly before the hearing was to commence. It did not allow very much time, in fact, only two working days, to be considered. Bearing in mind all of the issues in the case, in my view, it was not open for a reasonable period of time and it was not made a reasonable period before the hearing of the proceedings commenced.
76It will be remembered, also, that the judgment in favour of the Plaintiffs was for $495,000. That $175,000, plus interest, will be payable, arises only because of the family provision order made in favour of the first Defendant, and because he consented to it being used as a part repayment of the judgment amount. Without that agreement, the Defendants would have had to pay the Plaintiffs the whole amount of the judgment, plus interest, from which the family provision order in favour of the first Defendant would then have been satisfied.
77It follows that the Calderbank offer made on behalf of the Defendants is not determinative of the issue of how the costs of the proceedings should be borne. It might have been more relevant had it been made upon the basis of the Cross-Claim being dismissed. Even then, the Court would have had to consider the late service of such an offer and whether it allowed the Plaintiffs a reasonable time to consider it.
78Taking all the matters into account, the application by each of the parties for indemnity costs is refused.
79Doing the best that I can, taking into account all of the matters, including the result of the proceedings and how the evidence relied upon was utilised during the hearing, and in order to avoid further disputes as to the quantum of costs, the fair and just order for costs is that the Defendants should pay two thirds of the Plaintiffs' costs and disbursements, calculated on the ordinary basis, of the proceedings, including the costs and disbursements of the Cross-Claim. The difference between those costs and the Plaintiffs' costs, calculated on the indemnity basis, which costs order I shall also make, should be paid out of the $175,000 and interest, which amount is payable by the Defendants to the estate.
80I shall make no order for the Defendants' costs and disbursements, to the intent that they should bear their own costs and disbursements of the proceedings, including those of the Cross-Claim.
81In the principal judgment, I determined that interest should be calculated on the lump sum of $175,000 from the date of the deceased's death until the date of repayment. The parties were not able to agree on the rate of interest.
82The purpose of the provision of interest is to compensate a party for being held out of his, her, its, or their, money: MBP (SA) Pty Ltd v Gogic [1991] HCA 3; (1991) 171 CLR 657, at 663; Grincelis v House [2000] HCA 42; (2000) 201 CLR 321, at [16]. In Ruby v Marsh (1975) 132 CLR 642, at 652, a second purpose was identified by Barwick CJ, which, in my view, is particularly relevant to the facts of this case:
"In the second place, the power to award interest on the verdict from the date of the writ is to provide a discouragement to defendants ... from delaying settlement of the claim or an early conclusion of the proceedings so as to have over a longer period of time the profitable use of the money which ultimately the defendant agrees or is called upon by judgment to pay."
83This does not mean, of course, that the purpose of an award of interest is to punish the Defendant for having been dilatory in settling the Plaintiffs' claims or for any other conduct.
84There is no rate of interest prescribed by s 100 of the Civil Procedure Act. The section relevantly provides:
"(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect."
(My emphasis)
85In Maestrale v Aspite [2014] NSWCA 182, Beazley P (with whom Macfarlan and Barrett JJA agreed), at [135] - [137], wrote:
"The award of pre-judgment statutory interest is discretionary and there is no prescribed rate of interest that may be awarded. This is to be contrasted with the position in respect of post-judgment interest payable pursuant to s 101: see UCPR, r 36.7, which prescribes the rate at which interest is to be calculated on the judgment debt. Nonetheless, it is desirable for there to be some uniformity in the interest rate adopted, provided that the rate bears sufficient relation to commercial reality: see R W Miller & Co Pty Ltd v The Ship Patris [1975] 1 NSWLR 704. In Heydon v NRMA Ltd (No 2) [2001] NSWCA 445; 53 NSWLR 600, Mason P said, at [30]:
'It would be intolerably burdensome if a court required evidence and argument in every case as to what rate or rates of interest would do justice to the principles which I have endeavoured to summarise. The interests of the parties and of the court, including the interest of consistency as a component of justice, are served by taking a broad, standard approach whereby interest is calculated according to pre-determined rates that the parties can take into account in their dealings during the litigation and in their endeavour to avoid wasteful disputation concerning its outcome.'
In conformity with this view, the Supreme Court's Practice Note 16 (16 June 2010) provides:
'5. Practitioners and litigants should expect that where, pursuant to s 100 (1) and (2) of the Civil Procedure Act 2005, interest in respect of a pre-judgment period is to be included in a judgment, the Court will have regard to the following rates, being rates agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices:
(a) in respect of the period from 1 January to 30 June in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.'
The terms of the Practice Note do not preclude a party from adducing evidence as to the appropriate rate of interest in a particular case, as the remarks of the court in Hexiva Pty Ltd v Lederer (No 2) [2007] NSWSC 49 indicate. In that case, a question arose as to the proper rate of interest post-judgment. Brereton J stated, at [18], that:
'[W]hile as a matter of practice the court is often guided in the award of pre-judgment interest by the prescribed rate, that is always subject to evidence, and even in respect of post-judgment interest, [CPA, s 101(2)], and more so prejudgment [CPA, s 100(1), (2)], evidence may show that another rate is appropriate. Although the calling of accountants and other experts to give evidence on applicable rates of interest in every case, or even frequently, has been discouraged [Serisier Investments Pty Ltd v English [1989] 1 QdR 678; Smallacombe v Lockyer, 575; Wheeler v Page (1982) 31 SASR 1, 7], it must be permissible to a party to call evidence to show that in particular circumstances a rate other than the statutory post-judgment rate is appropriate.'
86I have concluded in the principal judgment that interest should not be paid on the whole amount of $175,000 from the date of the deceased's death (15 May 2011) until the date that judgment is pronounced (in the events that have happened, 30 June 2014). The rate of interest is more difficult to assess since neither party provided any evidence of the particular rate to be paid. It may be that each was of the view that the Practice Note, to which Beazley P referred, would apply.
87In my view, the rate of interest that should be applied is the rate that the deceased was entitled to receive had the bulk of the moneys continued to be invested in the account in which it had been held. Most of the money withdrawn appears to have come from what is described in the correspondence as the "Cash Investment Account (616)": see, [92] of the principal judgment. There is no suggestion of any alternative form of investment that the deceased considered.
88In this way, the deceased's estate will be compensated for being kept out of the monies to which the deceased would have been entitled had it not been for the withdrawal of the amounts by the first and second Defendants.
89The rate of interest on that account should not be difficult to ascertain since the type of account in which the bulk of the deceased's funds were held, and from which most of the money was withdrawn, is known, as is the account number. The financial institution in which the account was held, should be able to inform the parties of the applicable rate of interest available on the account, or if no account of that specific type has continued to exist, the type of account that is the closest to the account from which most of the money was withdrawn. That should provide the appropriate rate of interest.
90In order to avoid complexity, the rate of interest should be determined as at 1 January and then at 1 July of each year and calculated accordingly at 6 monthly rests.
91From the day after judgment is pronounced (1 July 2014) until the date of payment, the amount of interest should be calculated using the prescribed rate, from time to time, under s 101 of the Civil Procedure Act, on any amount unpaid. There is no reason advanced why such an order should not be made.
92In this regard, UCPR rule 36.7 provides:
"36.7 Payment of interest
(1) The prescribed rate at which interest is payable under section 101 of the Civil Procedure Act 2005 is:
(a) in respect of the period from 1 January to 30 June in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced."
93This leaves the final issue of the discharge of the freezing order.
94The freezing order was made on 11 April 2012 by the Equity Registrar in accordance with Consent Orders, of that date, signed by the legal representative of each of the parties. The Consent Orders were made "without admission".
95The freezing order was made on "terms set out in the Penal Notice[s] annexed to [the] orders". Relevantly, the following clauses within the Penal Notices were applied to each of the first and second Defendant:
"4. (a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia ('Australian assets') up to the unencumbered value of AUD $850,000.00.
...
8. This order does not prohibit you from:
(a) paying up to $1,500.00 a week on your ordinary living expenses;
(b) paying $20,000 on your reasonable legal expenses;
(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and
(d) in relation to matters not falling within (a), (b) and (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation."
96The freezing order was subsequently continued, by consent, on each of 7 May 2012, 29 May 2012, 18 July 2012, 15 August 2012, 25 October 2012 and 31 January 2013. On 31 January 2013, the order that was made was in the following terms:
"1. That consent orders made on 11 April 2012 continue pending further order."
97After 31 January 2013, the freezing order was not the subject of any application until 12 March 2014. On that date, the Defendants filed a Notice of Motion seeking, among other things:
"1. That the freezing order made by consent and without admission against the first and second defendants on 11 April 2012 by Registrar Musgrave, Equity Registrar, be varied pursuant to Rule 36.16(3) of the Uniform Civil Procedure Rules 2005 (NSW) to permit the defendants to obtain finance of not more that $100,000.00 against property at... Quakers Hill, such property being an asset subject to the freezing orders."
98 On 27 March 2014, I made the following orders:
"1. Orders that the costs of the Defendant's Notice of Motion filed 12 March 2014 be the Plaintiff's costs in the cause.
2. Directs the parties to deliver to Hallen J's Chambers, by 11:30 a.m. tomorrow, Friday, 28 March 2014, a minute of a proposed consent order recording the variation agreed to of the freezing order signed by or on behalf of the parties."
99Pursuant to those orders, the Court received a minute of order, signed by the legal representative of each of the parties, and dated 28 March 2014. I then made the following order in Chambers:
"1. Orders in terms of Short Minutes of Order dated 28 March 2014, namely:
That subparagraph 8(b) in the Freezing orders made in relation to each of the first and second [Defendants] on 11 April 2012, be varied by substituting the sum of '$35,000' for '$20,000' where it appears in the said subparagraph in each order."
100I did not mention the freezing order at all in the principal judgement. There were no submissions made by either party as to the continuation, or discharge, of that order at the hearing, and, so far as I am aware, the evidence relied upon in support of the making of that order, initially, was not read in the proceedings.
101No evidence was advanced on, or referred to in, the submissions made in the substantive proceedings, for the continuation or the discharge of that order.
102Division 2 of UCPR rule 25 provides for the making of a freezing order. Rule 25.11 provides that the Court may make a freezing order upon, or without notice to, a respondent, for the purpose of preventing the frustration or inhibition of the Court's process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied and that a freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
103UCPR rule 25.14 relevantly provides:
"(1) This rule applies if:
(a) judgment has been given in favour of an applicant by:
(i) the court, or...
(2) This subrule applies to a judgment if there is a sufficient prospect that the judgment will be registered in or enforced by the court.
...
(4) The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur:
(a) the judgment debtor, prospective judgment debtor or another person absconds,
(b) the assets of the judgment debtor, prospective judgment debtor or another person are:
(i) removed from Australia or from a place inside or outside Australia, or
(ii) disposed of, dealt with or diminished in value."
...
(6) Nothing in this rule affects the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so."
104In TZ Ltd v ZMS Investments Pty Ltd [2010] NSWSC 196, Barrett J (as his Honour then was) wrote, at [26]:
"A general law freezing order is warranted only if, in the words of Bryson J in Acquasun Pty Ltd v Coverdale Ram Pty Ltd [2000] NSWSC 1146, there has been 'conduct on the part of the defendants which can reasonably be interpreted as potentially having the effect of frustrating the ordinary processes of the court and the enforcement of its judgments or of being intended to do so or of being in any way evasive indicating dishonesty or otherwise indicating actually or potentially that the assets of the company have been or will be dealt with in an irregular way'."
105In Lake v Crawford (No 2) [2010] NSWSC 419, Harrison J reiterated that the jurisdiction to grant freezing orders is not intended to enable a plaintiff or judgment debtor to obtain security for its judgment in advance of execution but, rather, is founded on the jurisdiction of the Court to prevent abuses of its process by preventing a defendant or judgment debtor from embarking on a course of conduct that would have the effect of defeating the Court's jurisdiction and noting that the fact that a judgment may not be satisfied for reasons of impecuniosity does not mean that there is an abuse of process.
106As in Lake v Crawford (No 2), the court is not aware of any dealings by any of the Defendants that have the characteristics of an attempt to avoid the reach of these proceedings such as the dissipation or disposal of assets or anything similar. As Harrison J wrote, at [24], in that case:
"Moreover, nothing arguably or apparently untoward, suspicious or surreptitious attends anything that the first defendant has done. To adopt the plaintiff's contention that the unanswered request for assurances and undertakings gives rise to an adverse inference against the defendants upon the basis of which this Court should act would be blatantly and inappropriately to reverse the onus of proof. The plaintiff's evidence has not reached the stage that requires the defendants to do anything more in an evidentiary sense than to remain silent. That is what they have done."
107I am not satisfied that the Plaintiffs have established a basis for the continuation of the freezing order. Their application appears to rest on no more than the financial and material circumstances of the first and second Defendants. Nor is there evidence of any refusal to provide an undertaking in relation to any further encumbrance or dealing with any property they own. There is no evidence to show that there remains a reasonable apprehension that the assets of the first and/or second Defendants will be dissipated in a manner designed to frustrate the processes of the Court. Accordingly, I propose to discharge the freezing orders that were made.
108In the circumstances, the Court:
(a) Orders that there be judgment for the Plaintiffs, as executors of the estate of Reginald Fulton, deceased, as against each of the Defendants, on the Plaintiffs' claim, in the sum of $495,000 ("the Judgment Sum").
(b) Orders, sufficient cause having been shown, that the time for the making of the first Defendant/Cross-Claimant's application for a family provision order be extended until 24 March 2014, the date of the filing of the Cross-Claim herein.
(c) Orders that the first Defendant/Cross-Claimant is to receive a lump sum of $320,000 by way of provision out of the estate of the deceased ("the family provision order").
(d) Orders that there be no interest paid on the family provision order.
(e) Notes that the first Cross-Claimant/first Defendant directs the Plaintiffs, as executors of the estate of the deceased, and they agree, to use the family provision order to repay part of the Judgment Sum, leaving a balance of $175,000 payable to the Plaintiffs as the executors of the deceased's estate.
(f) Orders that the balance of the amended Statement of Claim be dismissed.
(g) Orders that balance of the Cross-Claim be dismissed.
(h) Orders that, from the date of death of the deceased (15 May 2011) until the date judgment is pronounced (30 June 2014), the amount of interest payable should be calculated on the amount of $175,000 using the rates payable, from time to time, on the account described as the Cash Investment Account from which most of the deceased's funds were withdrawn.
(i) Orders that, from the day after the date judgment is pronounced (1 July 2014) until the date of payment, the amount of interest payable should be calculated on the amount of $175,000, or part thereof, outstanding, using the prescribed rate, from time to time, under the Civil Procedure Act, s 101.
(j) Orders that the Defendants pay two thirds of the Plaintiffs' costs and disbursements, calculated on the ordinary basis, of the proceedings including of the Cross-Claim.
(k) Makes no order as to the Defendants' costs and disbursements of the proceedings, including the Cross-Claim, to the intent that they should pay their own costs and disbursements.
(l) To the extent that the Plaintiffs' costs and disbursements are not recovered from the Defendants, those costs and disbursements, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate of the deceased.
(m) Orders that the freezing orders made on 11 April 2012 against each of the first and second Defendants be discharged.
(n) Grants liberty to any party to apply, in these proceedings, for consequential and ancillary orders for the purpose of, or with respect to, giving effect to, and implementing, the orders made.
(o) Orders that the exhibits be returned forthwith to the parties who tendered the exhibits to be held by them in compliance with Practice Note No SC Gen 18, para 28.