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

Background 8 The relevant background to the filing of the notices of motion and the subsequent history are as follows. 9 On 28 July 2009, in no. 1042/03, the payment of $40,000 to Grant was due. 10 By email of 29 July 2009 the defendants' solicitors advised that in no. 1042/03 the first defendant required a sealed copy of the consent order "… with the Chief Clerk's proper signature, so that we can get on with the issue of remitting payment to your client". 11 By letter of 30 July 2009 to the defendants' solicitors, the plaintiffs' solicitors sent a copy of the sealed order in no. 1042/03 signed by the Chief Clerk. Payment of the legacy in accordance with the order was requested. 12 By email of 31 July 2009 the defendants' solicitors complained to the plaintiffs' solicitors that the sealed order in no. 2972/06 did not bear the full signature of the registrar. They requested provision of the registrar's full signature on page three of the order. They advised that their "… client will only attend to seeking finance to pay out your client's legacy once this is done". 13 By letter of 3 August 2009 the plaintiffs' solicitors referred to the service of the sealed orders in no. 2972/06. They confirmed that the first payment was due on 30 September 2009. 14 By email of 6 August 2009, the defendants' solicitors advised the plaintiffs' solicitors that funds would be available to pay out Grant's legacy and interest by 30 September 2009 and payment would be made to their trust account. 15 With their letter of 30 September 2009 to the defendants' solicitors, the plaintiffs' solicitors sent Grant's authority to pay, and requested payment by 1 October 2009. 16 By letter of 1 October 2009 to the defendants' solicitors, the plaintiffs' solicitors observed that the payment of $215,000 due by 30 September 2009 had not been made. They referred to the plaintiffs' right under Order 8 to apply for further relief. They stated that if the amount was not paid by 9 October 2009, application would be made under Order 8 for orders including those in terms substantially similar to those under the present notices of motion. 17 The email of 1 October 2009 from the defendants' solicitors to the plaintiffs' solicitors included: "In respect to the payment of the legacy to Marc Power/his Tutor, I am instructed that my clients have suffered delay in raising finance due to the financial statements relating to the borrowing entities not being prepared in time to obtain finance by 30 September 2009 to pay out the legacies. I am instructed that the financial statements being prepared and necessary to obtain finance will be ready by the end of this week and it is anticipated that the funds will be available by end of October 2009. Furthermore, it is not the Executor in Sydney that is arranging the finance, rather it is the Executor John Russell in New Zealand who is organising and arranging finance, which may be make it less convenient and may take more time to effect from New Zealand particularly as Mr Russell lives in a relatively remote town. Accordingly we are instructed to request that you hold off taking further action as stated in your emailed letter of today, until after 31 October 2009." 18 In a note to the plaintiffs' solicitors of 6 October 2009, the second defendant said: "The Manly Lodge is already on the market and we have substantial interest but no written offers yet. I will be raising a loan to pay out the legacies and legal costs pending the sale of the property. We expect to have the loan raised before the end of the month." 19 On 1 October 2009 the defendants' solicitors advised the plaintiffs' solicitors that her clients needed an extension of time until 31 October 2009 to pay. 20 By email of 8 October 2009 the defendants' solicitors told the plaintiffs' solicitors that information concerning the sale of Manly Lodge would not be provided until after instructions had been received from the second defendant upon his return on 19 October 2009. 21 On 15 October 2009 Marc caused to be lodged a caveat over the sixth defendant's property, Manly Lodge, pursuant to the charge under the orders made on 30 June 2009. 22 By email of 30 October 2009 to the defendants' solicitors, the plaintiffs' solicitors sought confirmation of payment that day, as promised. On the same day the defendants' solicitors advised that they were awaiting the sixth defendant's "… confirmation instructions in regard to whether he has been successful in raising a loan or whether the legacy to your client will be paid out of the proceeds of sale of the Manly Lodge which as you are aware is currently on the market". 23 By email of 4 November 2009 the defendants' solicitors advised the plaintiffs' solicitors of the second defendant's instructions: "1) In respect to the sale of the Manly Lodge, we are now instructed that there are currently 15 potential buyers and a written offer is expected any time soon. If no written offer is received by 15 November 2009. Mr Russell is planning to fly to Sydney from 15 November 2009 to assist the three real estate agents the property is listed with to close a deal with one of the current interested parties. 2) In the meantime, and as you are aware, Mr Russell has also applied for a loan in order to pay out the legacies and costs. The loan will be paid out from the proceeds of the sale of the Manly Lodge. We are instructed that his loan application has been favorably received and likely to be successful and he will confirm this to us as soon as he has obtained confirmation of finance approval which has not yet come through." 24 As at 20 November 2009 no payments had been made in compliance with the orders made on 30 June 2009. The notice of motion referable to both matters was filed on that day, returnable on 1 December 2009. 25 On 1 December 2009 the notice of motion was adjourned to 3 December 2009 before me. 26 The letter of 2 December 2009 from the defendants' solicitors to the plaintiffs' solicitors in no. 2972/06 included: "There can be no doubt that the parties were misguided in the estimating time that it would take to realise the property the subject of the trust or to otherwise raise funds for payment of the amounts referred to under the consent orders. As an interim measure to address the payment of the sum of $370,000 outstanding pursuant to the consent orders our client has taken steps to obtain interim finance at significant cost to Deruve Pty Limited to enable all current obligations to be met. We expect to be in a position to draw down these funds within seven days from today. We enclose a copy of a letter from the funder for your consideration. As a backup we have also arranged interim funding with CSL Money to raise $1.6 million with draw down available subject to valuation by 14 January 2010." 27 On 3 December 2009 the defendants objected to consolidation of the proceedings. The hearing was adjourned until 17 December 2009. The notice of motion in no. 1042/03 was filed on 10 December 2009, and the amended notice of motion in no. 2972/06 was filed on 17 December 2009. 28 Also on 3 December 2009, in no. 2972/06, the defendants' solicitors requested the plaintiffs' solicitors for details of the accounts to which the payments should be made. 29 By letter of 4 December 2009, in no. 2972/06, the plaintiffs' solicitors advised details of the account, and that the total sum payable was $332,958.90. 30 In their email of 4 December 2009 to the plaintiffs' solicitors, the defendants' solicitors requested withdrawal of the caveat to enable transfer of the funds. They said that once the funds had been paid, consent orders for dismissal of the notice of motion would be submitted for consideration. 31 In their letter of 8 December 2009 the plaintiffs' solicitors informed the defendants' solicitors that, subject to agreement as to the withdrawal of the caveat, they would agree to orders that the notices of motion be dismissed, with costs on an indemnity basis. 32 In the email of 9 December 2009 in no. 1042/03 the plaintiffs' solicitors advised the defendants' solicitors that the amount then payable was $40,887.67. This amount was paid on 11 December 2009. 33 The notices of motion were listed before me at 2pm 15 December 2009 at the request of the defendants' solicitors. Marc's solicitors appeared. There was no appearance for Grant, or for the defendants. The proceedings were adjourned to 17 December 2009, and on that day were adjourned for hearing until 12 February 2010. 34 On 17 December 2009, in no. 2972/06, the sum of $333,664.10 ($NZ422,919.93) was paid to Marc's account. Principles 35 The relevant principles which guide a court on the question of costs where proceedings have been resolved without a hearing on the merits have been recently considered. In Prodromos Anastasi Foukkare v Angreb Pty Ltd [2006] NSWCA 335 Beazley JA said: "66 In Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 Hill J summarised the principles that have emerged from the case law as to how the Court should approach the exercise of discretion in respect of costs when there has been no hearing on the merits. He said (at 201): (1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order … (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial … This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them … (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation … (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted …'