I gave judgment in this matter on 8 October 2021 but reserved the issue of costs: see Hans-Egon Bruno Bernhard Metzner & Anor v Jaqueline Rita Metzner [2021] NSWSC 1336 ("the October Reasons"). At a directions hearing on 19 October 2021, timetabling orders were made for written submissions on the issue of costs. On 3 and 17 November 2021, the Plaintiffs filed and served their Submissions on Costs ("PCS") and their Submissions on Costs in Reply ("PCSR"). On 3 and 16 November 2021, the Defendant filed and served her Submissions on Costs ("DCS") and her Submissions on Costs in Reply ("DCSR"). It was agreed that the issue of costs would be determined on the papers.
Mrs KJ Young of Counsel appeared for the Plaintiffs and Mr A Harding SC and Ms L Johnston of Counsel appeared for the Defendant on the costs issue.
For the balance of these reasons, I will use the same terminology as I used in the October Reasons.
By the October Reasons, I concluded that:
1. Jackie holds the Property on trust for her parents for the remainder of their lives and shall thereafter retain absolute beneficial ownership of the Property; that is, the Plaintiffs hold a life interest in the Property: see [177].
2. Jackie did not act unconscionably in the Plaintiffs' purchase of the Property in her name or by otherwise advancing her own interests in the manner alleged by the Plaintiffs: see [175]-[176] of the October Reasons.
The Plaintiffs, by the PCS, submit that although they were unsuccessful on some parts of their case, they have obtained a declaration that they have a life interest in the Property and that, having succeeded in part, costs should follow the event. That having been said, the Plaintiffs concede that they were unsuccessful in obtaining several prayers for relief and accordingly, seek an order that the Defendant pay 50% of their costs on an ordinary basis. In the alternative, the Plaintiffs seek an order, having regard to both parties' limited success, that there be no order as to costs as, on one view at least, "there was not an overall winner": paragraph 9(b) of the PCS.
Hans-Egon Bruno Bernhard Metzner & Anor v Jaqueline Rita Metzner [2021] NSWSC 1565 | Case summary | Zoe
The Defendant, by contrast, submits that the Court should order the Plaintiffs to pay her costs because she succeeded on her alternative defence. Moreover, the Plaintiffs were unsuccessful in obtaining any of their prayers for relief as set out in their Statement of Claim: the Court rejected the Plaintiffs' claim that they own the whole of the beneficial interest in the Property and, further, that the Plaintiffs are entitled to a transfer of the Property.
The principles applicable to the Court's determination on issues of costs were articulated at paragraph 6 of the PCS and are not in dispute, but what is very much in dispute is how the result in this case is to be characterised in terms of success.
There were five aspects of Mrs Young's submissions which underpinned the contention that the Plaintiffs should be awarded 50% of their costs:
1. the Plaintiffs had some degree of success because they have been found to have a life interest in the Property and that Jackie "failed entirely" in her main defence of the Plaintiffs' claim;
2. to the extent that Jackie was successful, it "was on the basis of the late amendment" (see paragraphs 17-19 and 21 of the PCS);
3. the fact that the Court permitted the Plaintiffs to lodge a caveat to support their life interest supports the caveat lodged by the Plaintiffs (see paragraph 10 of the PCS and 11 of the PCSR);
4. the late service of Ms Rendall's evidence is relevant; and
5. the close connection between the Plaintiffs' claim and Jackie's defence means that an issues-based costs order should not be made.
Mr Harding attacked each of assertions (1)-(4) for reasons with which I essentially agree. So far as the last point is concerned, I do not read the DCS or the DCSR as advancing a submission that an issues-based costs order should be made.
Jackie did not fail "entirely in her main defence". The Plaintiffs failed entirely in the claims which they advanced and failed in their quest to obtain an order requiring Jackie to transfer the Property to them or to pay an amount to them representing their life interest (the latter claim being one which had not been pleaded). It is true that the Plaintiffs had some measure of success because they were found to have a life interest, but the result in this case is unusual because the "success" which the Plaintiffs obtained (the declaration of a life interest) was not one they had sought or advanced but rather, was the subject of Jackie's alternative defence. Nor do I consider it accurate to describe the outcome as "effectively a draw": see paragraph 4 of the PCS.
This leads to the rejection of the Plaintiffs' second point because Jackie's success in resisting all of the Plaintiffs' claims was not a consequence of the Amended Defence at all. I found that the presumption of advancement applied and had not been rebutted by the Plaintiffs - that is not inconsistent with Jackie's contention that the funds for the purchase of the Property were a gift. The complication is that the funds were provided to Jackie for her benefit but subject to a condition, which Jackie did not ever contest in her correspondence or conversations (and see [137], [141], [147(11)], [166]-[169] of the October Reasons).
The caveat which had been lodged by the Plaintiffs asserted that the Property in Jackie's name was held beneficially for them. That caveat was one which could not be supported. The caveat which was permitted was one which reflected the Plaintiffs' life interest only and no such caveat had ever been lodged, nor any such limited interest ever sought by the Plaintiffs.
Whilst Ms Rendall's evidence was served late in the piece, the DCS points out that:
1. Ms Rendall had indicated an unwillingness to give evidence when first approached by the Defendant's solicitor due to complications of her pregnancy and having given birth. She only later indicated a willingness to provide evidence.
2. Ms Rendall, if available, was available to be interviewed and called by the Plaintiffs, and the Plaintiffs solicitors had subpoenaed Shire Conveyancing to produce its file in November 2019.
3. Although the Plaintiffs' solicitors had Ms Rendall's file note, neither Egon nor Rita referred to it in their affidavits - Egon did not refer to his meeting with Ms Rendall in his first affidavit and Rita, in her affidavit, said nothing about the file note.
The suggestion that the late filing of the Amended Defence "deprived [the Plaintiffs] of the opportunity to make offers of settlement based on a considered view of the entirety of the Defendant's case during the course of the proceedings" cannot be accepted. Once the alternative defence was raised, it was open to the Plaintiffs to embrace that alternative defence by amending their pleadings, which they did not do. There were opportunities for settlement (see T12.42-45 of the transcript from the directions hearing on 4 June 2021 and see the transcript of the hearing at T184-T186), but obviously, no agreement was reached. I do not accept the contention that the case could not have been resolved on the basis ultimately determined at any time with or without the Amended Defence having been filed. I therefore do not accept that the late filing of the Amended Defence is a reason for granting any costs to the Plaintiffs.
In relation to the Defendant's claim to costs, this is largely a mirror image of the reasons for rejecting the Plaintiffs' claim for costs. The Defendant succeeded in rebutting all of the Plaintiffs' claims as advanced.
There was much dispute in the submissions on costs about whether the Court's rejection of Rita's evidence and the introduction of various issues asserted to be "irrelevant, peripheral issues" support the Defendant obtaining, or not obtaining, her costs. I do not think that the Court should descend any further into the detail of whose evidence was accepted and whose was rejected and whether, for example, the Burradoo Property purchase or the Gift Letter (introduced by Jackie) was significant or not. The matter of Jackie's solicitor having passed on a transcript to Kieran was unfortunate as I have explained in the October Reasons but so was the maintenance of allegations which should not have been advanced by the Plaintiffs through Counsel: see [112], [131] and [134] of the October Reasons.
As the Defendant's submissions point out, for the purposes of determining costs, the "event" is the practical result of a particular claim (see Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] per Ward, Emmett and Gleeson JJA) and a broad, evaluative assessment of what justice requires is required: Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113 at 113-114. As was said in James & Ors v Surf Road Nominees Pty Limited & Ors [2005] NSWCA 296 at [36] quoting Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261, even on the question of separable issues, where there has been a mixed outcome in proceedings justifying apportionment, the exercise of discretion will often depend upon matters of impression and evaluation. It is also certainly open to a court to make no order as to costs where both parties have had substantial success: see Hogan v Trustees of the Roman Catholic Church (No. 2) [2006] NSWSC 74 at [40].
The practical consequence of the Court's determination is that Jackie will, when both her parents have passed, have the full interest in the Property. Having regard to the Plaintiffs' failure on the case advanced by them, the invalidity of the caveat lodged by them and the fact that they have succeeded in obtaining only what Jackie's alternative defence advanced, together with the fact that due to their advanced years, the Plaintiffs' life interests so determined are quite limited, I think that Jackie has had by far the greater measure of success. However, because Jackie, in her defence, did not admit that her interest in the Property was subject to her parents' life interest (even by the Amended Defence) it is not entirely accurate to describe the result as merely "a continuation of the status quo": see paragraph 23 of the DCS. In these circumstances, I think a fair outcome on costs is that the Plaintiffs should pay 70% of the Defendant's costs.
It was agreed at the directions hearing on 19 October 2021 that the issue referred to at [134] of the October Reasons should be deferred until the issue of costs was determined. I will have the matter listed at a time convenient to the parties in that connection.
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Decision last updated: 02 December 2021