Grant Kornel Power v Miklos Power & Ors; Marc Robert Power v Miklos Power & Ors

67 The same question was considered in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622. McHugh J said at 624 -625: '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. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.' (Footnotes omitted) 68 The principles discussed in these cases apply where a court is asked to make an order under UCPR 42.19. This was recognised in Fordyce v Fordham , where McColl JA (Beazley and Santow JJA agreeing) said, after pointing out the default orders provided for under the rules governing discontinuance (see UCPR 42.19): '84 [ UCPR 42.19 is] a relevant, but not determinative, consideration. Other relevant considerations were, as the primary judge concluded, usefully gathered in Lai Qin and Australian Security Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194, notwithstanding, as the discussion below reveals, that they were decided in a different statutory context. … 87 Once it is recognised, however, that the costs discretion conferred by UCPR 42.19 … is unconfined, the matters referred to in the Lai Qin line of authority are plainly pertinent, although, again, not necessarily determinative.'" 36 In Fordyce v Fordham [2006] NSWCA 274 McColl JA referred, with approval, to passages from the judgment of Finn J in O'Neill v Mann [2000] FCA 1680: "81 It might also be noted that even though in O'Neill v Mann Finn J referred with apparent approval to an "an 'underlying policy in the Rules that the discontinuing party should be liable for the other party's costs unless the court orders otherwise", quoting Cooper J in Grundy v Lewis (Federal Court of Australia, 28 May 1998, unreported), his Honour also observed that "…so various can be the reasons for, and circumstances of, discontinuance that that policy cannot safely be said to have hardened into a 'usual rule' where leave is granted such as exists where there has been a determination of a claim on its merits …[t]he conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs." He referred with approval to McHugh J's observations in Lai Qin (at 625) to the effect that no costs order will usually be made where both parties have acted reasonably in commencing, defending and continuing proceedings." 37 Section 98 Civil Procedure Act 2005 relevantly provides: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." 38 Subject to the rules, the discretion is unconfined, but in the end must be exercised with regard to the requirements of justice in the particular circumstances of the case. Consideration 39 The plaintiffs submitted that the filing of the notices of motion was made necessary by the unreasonable conduct of the defendants in failing to comply with the orders, being delinquent conduct which justifies orders for indemnity costs. 40 In no. 1042/03, concerning Grant, reliance was placed on the defendants' unexplained failure to make the payment, as ordered on 28 July 2009, and their insistence on 29 July 2009 that, before proceeding with the question of payment, they required the plaintiffs' solicitors to provide a sealed copy of the order bearing the signature of the court officer. 41 Reference was made to the unexplained breach of the defendants' representation made on 6 August 2009 that payment would be made to Grant by 30 September 2009. In circumstances where the defendants sought no variation of the orders, and had no further communication with the plaintiffs, it was submitted that the plaintiffs were well justified in filing the notice of motion of 20 November 2009 to enforce compliance, and also in exercise of the liberty under Order 5 of the orders made on 30 June 2009. 42 In no. 2972/06, concerning Marc, reliance was placed on the defendants' insistence on 31 July 2009 that, before seeking the necessary finance, they required the plaintiffs' solicitors to provide a sealed copy of the order bearing the signature of the court officer. 43 Reference was made to the notice of intended action for enforcement given to the defendants on 1 October 2009 if the payment due on 30 September 2009 was not made by 9 October 2009, and to the defendants' failure to honour their representations that payment would be made by 31 October 2009. It was submitted that as no confirmation had been given of the availability of funds as suggested in the defendants' solicitors' letter of 4 November 2009, and where no variation of the orders was sought, and no further communication made, the plaintiffs were well justified on 20 November 2009 in taking the foreshadowed action for enforcement and in exercise of the liberty under Order 8 of the orders made on 30 June 2009, the requisite seven days notice having been given. 44 It was put that in respect of both matters the defendants' conduct effectively precipitated the filing of the notices of motion, the purpose of which was achieved when payments in compliance with the orders were made on 11 December and 17 December 2009. It was argued that the defendants' conduct which necessitated the present proceedings was so unreasonable or delinquent as to warrant an order against them for indemnity costs. 45 For the defendants it was submitted that no order for costs should be made. It was put that the fact that the payments were made after the filing of the process did not represent a substantial victory for the plaintiffs having regard to the specific relief sought. The argument was that the payments should be regarded as made under the orders of 30 June 2009, and not as a consequence of the filing of the notices of motion. 46 It was also put that, in the circumstances, it was neither necessary nor reasonable for the plaintiffs to file the notices of motion when they did. Although it was accepted (T p 33) that the defendants should have sought a variation of the orders, they asserted that they were endeavouring to make the payments, and were advising the plaintiffs of their progress, and that there was no evidence that they were intentionally evading compliance. It was put that despite notice being given on 1 October 2009, reasonablness required the plaintiffs to have enquired further of the defendants as to their prospects, and to have tested the genuineness of their explanations, before commencing these proceedings. 47 Further, the defendants submitted that in the circumstances the court lacked jurisdiction to make the orders sought, namely an order under s 15(1)(a)(iii) of the Act appointing a trustee of the shares in the sixth defendant, and an order under s 15(1)(a)(iv) empowering the trustee to exercise the rights of a shareholder in the sixth defendant, and consequential orders. These provisions are in the following terms: "15 Consequential and ancillary orders (1) To enable effect to be given to an order for provision out of the estate or notional estate of a deceased person (whether or not an order made in favour of an eligible person), the Court may: (a) make orders for or with respect to all or any of the following matters: … (iii) the appointing of a trustee of property in the estate or notional estate, (iv) the powers and duties of any trustee of property in the estate or notional estate," 48 As I understood it, the effect of the submission was that the court's power to make orders under s 15(1) was to enable effect to be given to an order for provision out of the estate. It was put that it was not open to make such an order in these cases because the dates for making payments under the orders had passed, and thus it was no longer possible to give effect to them, the moment having passed. Thus it was put that before an enabling order could be made it must be shown that such an order was necessary to obtain compliance or fulfilment of the relevant order. It was put that in circumstances where the payments had been made the orders sought could not be made and thus the plaintiffs were doomed to fail had the issue proceeded to determination on the merits. 49 In making an assessment of the reasonableness of the conduct of the parties prior to the filing of the notice of motion on 20 November 2009 it is relevant to start with the orders. In no. 1042/03 the defendants were obliged to pay Grant's legacy within 28 days. In no. 2972/06, the defendants were obliged to pay Marc's legacy in instalments of $215,000 by 30 September 2009, and the balance of $115,000 by 30 October 2009. Order 5 in no. 1042/03 and Order 8 in no. 2972/06 effectively allowed any of the parties to apply to the court for further orders, including orders for implementation of the orders for payment. 50 As the orders were given in open court they took effect when they were made (UCPR Pt 36, r 36.4(1)(a)). Unless the orders were varied, the defendants' overriding obligation was to obey them. In each case the plaintiff was entitled to proceed on the basis that they would. 51 In no. 1042/03 the defendants sought no indulgence from the plaintiff or from the court before time for payment expired. Their solicitors' letter of 29 July 2009 suggests only that the defendants, although in breach of the order, would not arrange the required funds until provided by the plaintiffs with a sealed copy of the order signed by the court officer, with the consequence that payment would be further delayed. Having regard to the terms of UCPR Pt 36, r 36.4(1)(a) in my opinion this requirement was unreasonable and unwarranted. Nevertheless, on the next day the plaintiff's solicitors sent the signed form of order. 52 On 6 August 2009 the defendants represented that payment of Grant's legacy with interest, would be paid to his solicitors' trust account by 30 September 2009. Doubtless on the faith of this representation, on 30 September 2009 the plaintiff's solicitors sent Grant's authority to pay and requested payment by 1 October 2009. No payment was made. There was no further communication prior to the filing of the notice of motion. 53 In no. 2972/06, on 31 July 2009 the defendants' solicitors stated that arrangements for finance would only begin after the plaintiff provided a sealed order signed by the court officer. Having regard to UCPR Pt 36, r 36.4(1)(a) and the terms of the orders themselves, this requirement, also, was unreasonable and unwarranted. 54 In response to the notice of intended action of 1 October 2009 the defendants represented that payment would be made by 31 October 2009 and requested no action be taken until after that date. They failed to honour their representation. Their solicitors' letter of 4 November 2009 indicates no more than that funds were not yet available, and there was no certainty as to when they would be. There was no further communication prior to the filing of the notice of motion. 55 In my opinion, the evidence supports the finding, which I make, that from the time the orders were made the defendants proceeded on the basis that they were entitled to make the payments as and when they chose, and that the times prescribed might be freely ignored. The fact that they did not come back to court for a variation of the orders to accommodate a need for an extension of time reinforces this finding. 56 The plaintiffs acted reasonably in agreeing to the extensions of time sought by the defendants. The letter of 1 October 2009 gave fair warning of intended action, and met the requirements of Order 8 in no. 2972/06. The defendants' submission that the plaintiffs ought to have made further enquiries of the defendants before proceeding is rejected. 57 I am satisfied that, in the circumstances, the defendants' course of conduct left the plaintiffs with neither certainty nor confidence as to whether and when the payments would be made. In my opinion, the plaintiffs were left with no choice but to take action by filing the notice of motion to enable effect to be given to the orders. There can be no doubt that the defendants precipitated these proceedings, and the plaintiffs acted reasonably in commencing them. In the circumstances the defendants should pay their costs of the proceedings. 58 I also find that the defendants' conduct in each matter, taken overall, was conduct which was unreasonable and delinquent in the sense referred to in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, par 44 so as to justify an order that they should pay the plaintiffs' costs on an indemnity basis. 59 The orders were made by consent. It is evident that the times for payment were agreed upon in order to accommodate the defendants' arrangements for the obtaining of funds. Absent variation, the defendants were under a continuing obligation to obey them. It is apt to refer to the observation of Gleeson CJ in Baltic Shipping Company, The Mikhail Lermontov v Dillon (Mikhail Lermontov case) (1991) 22 NSWLR 1 (p 9): "The general policy of the law is that people should honour their contracts. That policy forms part of our idea of what is just." 60 The defendants' obligation arose from the making of the orders to which they consented. Its existence was quite independent of any steps which the plaintiff took or did not take to enforce them (Bates v Lloyd [2005] NSWSC 1253, par 16). Furthermore, as a matter of policy, the maintenance of confidence in the administration of justice requires obedience to the orders of the court. 61 The finding that the defendants' conduct justified the plaintiff's action renders it unnecessary to deal with the defendants' submission that had the claims for relief under s 15(1)(a)(iii) and (iv) of the Act proceeded for determination on the merits they were doomed to fail. However, in deference to the submission it is appropriate to state my opinion that it was without substance and must be rejected. 62 As the prefatory words of s 15(1) make plain, the court may make orders for the purpose of giving effect to an order for provision out of an estate. The clear legislative intention is to provide the court with a wide discretionary power to make such orders under sub-pars (a) and (b) as are necessary for fulfilment of, or compliance with, orders already made. In this case, the substance of the relevant orders was the obligation to pay the legacies. The fact that the specified time for payment had passed could not preclude the court from giving relief to ensure that the obligation was discharged. In my opinion the orders sought by the plaintiff were, in terms, within s 15(1)(a) and for which they had arguable claims. It should not be overlooked that, from the outset, the defendants accepted (T p 36) that the purpose of the notices of motion was to enforce compliance with the consent orders made on 30 June 2009. 63 Accordingly I make the following orders:

(1) in no. 1042/03, the notice of motion filed 10 December 2009 be dismissed;

(2) in no. 2972/06, the amended notice of motion filed 17 December 2009 be dismissed; and

(3) in each of no. 1042/03 and no. 2972/06 the fourth, fifth and sixth defendants pay the plaintiffs' costs on an indemnity basis. **********

29/10/2010 - Under slip rule - Paragraph(s) 63(3)

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.