Harris v Bennett and O'Brien

5. On behalf of the infant plaintiff application has been made for an order that the defendants pay her costs of and incidental to their application for summary judgment, including the costs of the appeal together with costs reserved on 28 November 2001 and 26 February 2002.

8. On behalf of the infant plaintiff it is submitted that it be ordered that such costs be taxed on a solicitor and client basis.

11. On 28 November 2001 the Master, on the return of a summons for directions filed on behalf of the defendant on 7 November 2001, made orders in the form of directions in the proceeding and ordered that the further hearing of that summons be adjourned to 13 February 2002. The Master ordered that the costs of that day be reserved to the Master on 13 February 2002. At the time of making those orders no affidavit had been filed by or on behalf of the infant plaintiff in support of her application that provision be made for her maintenance and support from the estate of the deceased.

14. On 26 February 2002 it was ordered by Beach J that the infant plaintiff have leave to rely on three further affidavits on the hearing of the appeal from the order of the Master made on 13 February 2002 dismissing the proceeding of the infant plaintiff. I have referred to those affidavits in my judgment. On 26 February 2002 it was further ordered that the proceeding as constituted by the appeal be referred to the Listing Master who, on that day, made orders relevant to the appeal and fixed a date for the hearing of the appeal. She ordered that costs of that day be reserved. Insofar as proceedings were before the Court and the Listing Master on 26 February 2002 and costs were reserved by the Listing Master such costs were relevant to the appeal as instituted on behalf of the infant plaintiff.

17. I have now received written submissions from senior counsel for the infant plaintiff and counsel for the defendant concerning the application of the infant plaintiff for costs.

20. On behalf of the defendants it is submitted that the costs of the infant plaintiff, relevant to the appeal, should be reserved to the trial judge. It is submitted that the proceedings brought by the infant plaintiff, for an order that provision be made out of the estate of the deceased for her maintenance and support, is tenuous at best and it was appropriate for the defendants to bring a proceeding for summary dismissal of the infant plaintiff's claim in an "endeavour to protect the estate and interests of the beneficiaries" of the will of the deceased. It is further submitted on behalf of the defendants that if an order for costs was made at this time, such order could hamper the discretion of the trial judge as to costs and that it could work an injustice. I do not agree with these submissions. The defendants brought proceedings for summary dismissal of the plaintiff's proceeding. It was their judgement as to whether such a proceeding should be instituted or whether, notwithstanding the infant plaintiff's proceeding being brought, they would contest the infant plaintiff's claim at trial. The reason why the defendants brought such proceedings, insofar as they have been unsuccessful in the same, can hardly be reason, in my opinion, why the question of costs should not be determined at this stage. In my view it is appropriate to deal with the costs of the defendants' application including the costs of the appeal at this point of time. It is not appropriate to reserve those costs to the trial judge. By making an order as to costs of the summary application brought by the defendants including the costs of the appeal from the order of the Master, it can not be reasonably said, in my view, that it is likely to impede in any way or to affect the discretion of the trial judge who will deal with the question of costs subsequent to the trial of the proceeding brought by the plaintiff.

23. The discretion as to costs "of and incidental to all matters in the Court" is vested in the Court pursuant to s. 24(1) of the Supreme Court Act 1986. Such discretion must be exercised judicially.

26. As a general rule an order for costs will follow the event. Further, as a general rule the Court will order costs on a party and party basis. That this is so, is reflected by Rule 63.31 of the General Civil Procedure Rules of the Court which provides:

"Except as provided by these rules or any order of the court costs shall be taxed on a party and party basis."

The Court, however, may order costs on a measure higher than on a party and party basis if there exists circumstances which warrant the Court from departing from the ordinary rule as to costs. The question that must be addressed in each case where costs are sought, other than on a party and party basis, is whether in the circumstances as existing, justice requires that an order for costs be made other than on a party and party basis[1].

31. Pursuant to Rule 63.32(1) and (2)(a) it is provided:

"63.32(1) The Court may order that that costs be taxed on a solicitor and client basis. (2) Without limiting paragraph (1), the Court may order that costs be taxed on a solicitor and client basis where the Court makes an order for - (a) the payment to a party of costs out of a fund;"

35. On behalf of the infant plaintiff it is submitted that the defendants are sued as executors of the will of the deceased and that any costs ordered against them will be paid out of the estate of the deceased which is a "fund" within the term of the rule and accordingly the infant plaintiff is "prima facie" entitled to costs on a solicitor and client basis. In my view it does not follow that if costs are, at this time, ordered against the defendants the fact that the same will be paid from the estate of the deceased gives rise to a prima facie entitlement to the infant plaintiff to have her costs taxed on a solicitor and client basis. In Colgate Palmolive v Cussons[2] Sheppard J at p. 232-35 set out a number of "principles or guidelines" which he had "distilled" from authorities relevant to the exercise of a court's discretion as to costs. One of such "principles or guidelines" as stated by his Honour at p. 232 was:

"1. A problem arises in adversary litigation, i.e. litigation as between parties at arm's length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority."

39. At the time when the defendants sought summary judgment against the infant plaintiff and at all times relevant to the appeal against the order of the Master the infant plaintiff has been at "arms length" from the defendants. In the proceeding brought by the infant plaintiff for an order to be made by the Court that provision be made for her maintenance and support, out of the estate of the deceased, it is necessary for her to establish that the deceased "had responsibility" to make provision for her proper maintenance and support out of his estate. The defendants strenuously resist the contention of the infant plaintiff that the deceased had such responsibility. In the event that an order be made in the proceeding brought by the infant plaintiff that provision be made for her maintenance and support out of the estate of the deceased, it may well be that an appropriate order as to costs provides that her costs be paid from the estate of the deceased and that such costs be taxed on a solicitor and client basis[3]. Even in the event of the infant plaintiff being not successful at trial it would still be within the discretion of the trial judge to make an order in favour of the infant plaintiff for costs to be taxed on a solicitor and client basis and paid from the estate of the deceased. However, at the point of time relevant to this decision, in my view it can not otherwise he held that in this proceeding the infant plaintiff and the defendants are at "arms length" and it does not follow that by reason of the plaintiff being successful on her appeal that circumstances exist which warrant or dictate that an order should be made that she should have her costs of and incidental to the appeal on a basis other than between party and party.

42. In Czerwinski v Syrena Royal Pty Ltd[4] Warren J at p. 1-2 of her judgment said:

"A review of the authorities reveals that there are a number of grounds whereby the court in the exercise of the discretion should award solicitor and client costs. These grounds may be briefly set out as follows: 1. Where the bringing of the application was high handed: AGC Limited v De Jager [1984] VicRp 40; (1984) VR 483, 502. 2. If the application had no chance of success: Colgate-Palmolive Company v Cussons Pty Ltd, supra, 231. 3. If the application was hopeless: J. Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No. 2) [1993] FCA 42; (1993) 46 IR 301, 303. 4. If the application was unnecessary: Regata Developments Pty Ltd v Westpac Banking Corporation, unreported judgment of the Federal Court, 5 March 1993. 5. If the application was not brought for a bona fides purpose but to achieve an ulterior purpose: Regata Developments Pty Ltd, supra. 6. If the application was commenced in wilful disregard of known facts or contrary to well established law: Fountain Selected Meats [(1998) [1988] FCA 202; 81 ALR 397]. 7. If the justice of the case warrants solicitor and client or indemnity costs: Andrews v Barnes (1887) 39 Ch D 133. 8. If there are special or unusual features that warrant the exercise of the discretion to order solicitor and client or indemnity costs: Fountain Selected Meats, supra, 400."

Such matters as referred to by Warren J in her judgment are each examples where in the circumstances of a particular case justice requires that costs be ordered on a solicitor and client basis as against a party and party basis.

47. On behalf of the infant plaintiff it is submitted that when regard is had to the nature of the application of the defendants, that is for summary dismissal of the infant plaintiff's proceeding, the conduct of the defendants and the size of the estate of the deceased that there exists circumstances which warrant an order being made for costs of the appeal in favour of the infant plaintiff on a solicitor and client basis. It was submitted that the application of the defendants was not supported by precedent, that it was unmeritorious and had no reasonable prospect of success. As to the submission made, insofar as it is reliant upon the size of the estate of the deceased, I shall hereafter refer to that matter as relevant to a further submission made on behalf of the infant plaintiff. The fact that it would appear that in Victoria there had not been a previous application made by a defendant pursuant to Rule 23.01(1)(a) in proceedings brought pursuant to Part IV of the Administration and Probate Act 1958, before the application in this case, does not give rise to any reason why the usual order for costs should not be made. As appears from my judgment I held that it was competent for the defendants to bring proceedings pursuant to Rule 23.01(1)(a) in a proceeding of the nature now before the Court. As determined by me and for the reasons expressed by me in my judgment the application of the defendants failed. The nature of the application of the defendants, in my view, does not give rise to any circumstance in this case why costs should be ordered in favour of the infant plaintiff on a solicitor and client basis.

50. It was further submitted that the application of the defendants was made for "ulterior purposes" being that it was sought to defeat the infant plaintiff's claim "not on its merits" but by means of the "impecuniosity of her litigation guardian". In Colgate-Palmolive and Czerwinski both Sheppard J at p. 233 and Warren J at p. 1-2 each respectively identify as a class of case where costs have been awarded to a successful party on a solicitor and client basis, as being a case which has not been brought for bona fide purposes but for some ulterior motive. In his submissions senior counsel for the infant plaintiff has made reference to events which he asserts occurred before the Master on 28 November 2001 and other matters which it is contended give basis for this submission. I do not accept that the events referred to when considered singly or taken together give support to this particular submission. I do not accept that it has been established that the defendants brought the application pursuant to Rule 23.01(1)(a) for some "ulterior motive".

53. Further, it has been submitted that on the question of costs and in particular the application made that costs be ordered in favour of the infant plaintiff on a solicitor and client basis, the Court should take into account the fact that the estate of the deceased is large and that the infant plaintiff falls into a special category being that she is a minor of tender age, that she has emotional and psychological problems and requires special assistance with her education. These matters are each dealt with by me in my judgment as matters relevant to the issue under consideration on the appeal. In my view they do not form a basis or give rise to circumstances which would warrant an order for costs being made other than as between party and party. Further, it was submitted on behalf of the infant plaintiff, that in the absence of her recovering all of her legal costs, she would be grossly prejudiced in the further conduct and prosecution of her claim on its merits. Although I am aware of the financial circumstances of the infant plaintiff and her mother, her litigation guardian, as I have referred to in my judgment, there is no matter before the Court which would warrant the conclusion being drawn that by reason of their financial circumstances the infant plaintiff's capacity to pursue her claim on its merits will suffer and be prejudiced as asserted nor has it been established that the ulterior purpose, for which the defendants brought their application for summary judgment, was to deplete the financial resources available to the infant plaintiff such that she would not be able to prosecute her claim on its merits.

56. In Spencer v Dowling Winneke P at p. 147 after stating that in litigation in superior courts the usual measure of costs awarded is "costs on a party/party basis" and stating further that a court has power to award costs "on a higher measure if circumstances require it" his Honour said:

"This practice in the superior courts is in my experience universal although it is well recognised that there is occurring an ever increasing gap between party/party costs and those actually incurred... This practice has continued to apply notwithstanding expressions of view by individual judges that it is capable, in today's circumstances, of working in justice: see, for example, per Rogers J (as he then was) in Qantas Airways Ltd v Dillingham Corp (unreported, NSW Supreme Court, 14 May 1987. The practice is designed to reflect a compromise between the interests of successful and unsuccessful litigants."

60. The fact that a defendant has large financial resources whereas a successful plaintiff has little or moderate financial resources and may suffer disproportionately to a defendant if he or she does not recover costs on a solicitor and client basis does not provide the reason why such plaintiff should have his or her costs on a higher measure than as between party and party.

63. The fact that the estate of the deceased is large and the financial resources of the infant plaintiff and her mother, her litigation guardian, are moderate does not provide good reason why in the exercise of my discretion I should order that the plaintiff should have her costs of and incidental to the order of the Master and the appeal on a higher basis than as between party and party.

66. The costs of and incidental to 25 November 2001 which was the return day of the summons for direction are presently reserved and should remain reserved to the trial judge.

69. Having regard to the aforesaid matters the conclusion that I have reached is that as the infant plaintiff was successful on her appeal it should be ordered at this time that the defendants should pay her costs of and incidental to their summons returnable on 13 February 2002, the costs of the day of 13 February 2002 and the costs of and incidental to the appeal from the order of the Master made 13 February 2002 including the costs reserved on 26 February 2002. However, the conclusion that I have reached is that in this case no circumstance exists which would warrant or dictate that the orders for costs should be made in favour of the infant plaintiff on a basis other than as between party and party.

72. It is ordered that the defendants pay the infant plaintiff's costs of and incidental to the defendants' summons returnable on 13 February 2002, the hearing before the Master on 13 February 2002 and the appeal of the infant plaintiff from the order of the Master made on 13 February 2002 together with the cost reserved by order of the Listing Master made on 26 February 2002 and that such costs be taxed as between party and party.

75. On behalf of the defendants' application was made, in the event of the Court making an order that they pay the infant plaintiff's costs of the application to the Master and the costs of the appeal, that they be granted an indemnity certificate pursuant to s. 4(1)(a) of the Appeal Costs Act 1998. Having regard to the provisions of s.4(1)(a) of that Act it is competent for the Court to grant an indemnity certificate in an appeal from a Master in circumstances as constituted by the present appeal: Blackall v Trotter (No. 2)[5]; Parkesinclair Chemicals Pty Ltd v Asia Associates Inc & Anor[6].

78. In the circumstances of this case it is appropriate that such certificate be granted.

81. It is ordered that there be granted to the defendants pursuant to s. 4(1)(a) of the Appeal Costs Act 1998 an indemnity certificate in respect of costs.

[1] Spencer v Dowling [1996] VSC 51; (1997) 2 VR 127 Winneke P at 147.

[2] [1993] FCA 536; (1993) 46 FCR 225.

[3] Dehnert v Perpetual Trustees Etc. Ltd [1954] HCA 47; (1954) 91 CLR 177 at 191-2.

[4] [2000] VSC 135.

[5] [1969] VicRp 115; [1969] VR 946.

[6] Unreported [2000] VSC 336.