COSTS.
Legislation Cited: Conveyancing Act 1919 (NSW) s 66G
Cases Cited: Immigration and Ethnic Affairs, Re Minister for
Ex parte Lai Qin (1997) 186 CLR 622
Source
Original judgment source is linked above.
Catchwords
COSTS.
Legislation Cited: Conveyancing Act 1919 (NSW) s 66G
Cases Cited: Immigration and Ethnic Affairs, Re Minister forEx parte Lai Qin (1997) 186 CLR 622
Judgment (3 paragraphs)
[1]
Solicitors: Hassett Lee & Co Lawyers (plaintiff)
John Hertz Associates (defendant)
File Number(s): 2016/83657
[2]
Judgment
I delivered reasons for judgment in this matter on 31 March 2017, and made orders on 29 May 2017, after having given the parties time to consider the orders that should be made.
I ordered that the plaintiff's summons be dismissed and also that the defendant's cross claim be dismissed.
I made directions for the parties to deliver short written submissions on the issue of costs on the basis that I would deal with that issue in chambers.
As a preliminary matter, I note that the parties to these proceedings were involved in related proceedings in this court concerning the estate of their mother, known as The Estate of Agatha Kagelaris (2015/271484-1). Those proceedings were dealt with by Lindsay J on 22 February 2016 when his Honour made various orders. I mention these other proceedings because the defendant, by his counsel's submissions dated 5 June 2017, asked for an order that the plaintiff pay his costs incurred in the other proceedings.
In his orders made on 22 February 2016 in those proceedings, Lindsay J reserved all question of costs, and reserved to the parties liberty to apply to the Probate List Judge in relation to the costs of the proceedings. Those orders therefore contemplated that any application concerning the reserved costs in those proceedings be made to Lindsay J.
As I am not familiar with the course of those other proceedings or why Lindsay J made the orders that he did, it would not be convenient for me to deal with those reserved costs, even if Lindsay J had not given the parties leave to apply to him to deal with those costs.
In these circumstances I do not propose to deal with the costs of the probate proceedings.
In order to deal with the costs of these proceedings I must first note the relief claimed by the two parties.
In his summons, the plaintiff sought an order that the grant of probate of the will of the parties' mother made on 22 February 2016 to both parties (being an order made by Lindsay J on that date) be revoked, and a fresh grant of probate be made to the plaintiff alone.
The plaintiff also sought an order that the defendant vacate what has been called the Tudor Street property, and an order that a selected estate agent be appointed to sell the property by public auction, and the proceeds of the sale be distributed equally between the parties.
The defendant by his cross claim sought a declaration that the parties' mother held the Tudor Street property on trust for the defendant at the date of her death, and an order that the plaintiff take the steps necessary for the defendant to be recorded as the registered proprietor of the property.
Finally, the defendant sought an order under s 66G of the Conveyancing Act 1919 (NSW) that trustees for sale be appointed of two other properties that were held by the parties as tenants in common.
In addition to making the formal orders referred to above, the court noted a somewhat complex agreement between the parties as to how each of the three properties that were owned by the parties, either as executors of their late mother's estate or in their personal capacities, would be sold and how relevant mortgagees would be repaid. The court effectively mediated the terms of this agreement. It is not necessary to go into the detail, but it may be noted that the parties had an objective of facilitating the ability of each party to acquire the particular property in which that party had lived for many years in a way that was consistent with the price being determined by the market. A subsidiary objective was to work out terms so that the properties could be sold by estate agents rather than formal trustees for sale, so that the costs of the exercise could be reduced.
The position taken by the plaintiff was that even though both claims had been dismissed, and even if the court approached the question of costs on the prima facie basis that costs should follow the event, the court should order the defendant to pay the whole of the plaintiff's costs of the proceedings because very little of the evidence and court time was devoted to the claim in the summons. Alternatively, if the court was minded to require the plaintiff to bear the costs of the claim in the summons, the appropriate order was a single order that the defendant pay 90% of the plaintiff's costs, which would have the effect that 10% of the plaintiff's costs would be attributed to the defendant's costs of succeeding in the dismissal of the summons.
As a separate matter, the plaintiff submitted that the defendant should be ordered to pay the plaintiff's costs of a notice of motion filed on 15 December 2016. By that notice of motion, the plaintiff sought an order that the defendant be directed to instruct a particular company that had provided residential care to the parties' mother during her lifetime to pay to him all monies held by it on account of the mother. The point was that the plaintiff had topped up the fees payable by his mother that she was not able to pay from her own income, the company had made an over-charge, and the plaintiff claimed to be entitled to receive the amount of the over-charge to recompense him for the money that he had paid for the care of his mother. It is not necessary to go into the detail, but the plaintiff claimed that the defendant had meddled in the matter with the consequence that the company had declined to pay the money to the plaintiff. The claim made in the notice of motion was never resolved by the court, because after some time the defendant agreed to give the instruction requested. Consequently, the court has never considered the claim in the notice of motion on its merits.
In response, the defendant relied upon an offer of compromise made in a letter from his solicitors to the solicitors for the plaintiff dated 4 November 2016, on the basis that it was an effective Calderbank offer. The plaintiff's solicitors rejected the offer 4 November 2016.
The defendant submitted that the appropriate costs order would be that each party pay their own costs up to 4 November 2016 and that the plaintiff pay the defendant's costs on the ordinary basis from 5 November 2016 to the completion of the proceedings. It is not clear why the defendant did not claim the costs from 5 November 2016 on the indemnity basis.
I note that the defendant relied upon the judgment of Black J in Re Swan Services Pty Ltd (in liquidation) [2017] NSWSC 692 at [8]-[9] in support of his submission.
I am satisfied that the 4 November 2016 letter was not an effective Calderbank offer. That is primarily because the principal terms of the offer were that the defendant would receive sole title to the Tudor Street property (which was the property that he claimed was held on trust for him), and the property in which the plaintiff has lived for some time would be transferred into the plaintiff's sole name. Only the third property in which neither party has lived for some time would have been sold, and the proceeds divided between the parties. This offer was made on the assumption that each of the properties to be transferred solely into the name of one of the parties had the same value as the other. That is an assumption that has always been contested by the plaintiff.
It cannot be said that the outcome of the proceedings was more favourable to the defendant than the terms of the settlement offered in the 4 November 2016 letter. That letter in substance concerned the outcome of the defendant's cross claim. That claim has been dismissed, so that the defendant has not established that he has the sole beneficial right to the Tudor Street property.
Accordingly, I will not make the order for costs sought by the defendant.
As it has happened, the plaintiff was wholly successful on the cross claim. It is true to say that the issues raised by the cross claim involved considerably more preparation, evidence and hearing time than the issues raised by the summons.
That said, it would not be appropriate for the court to ignore the costs of the summons, particularly as the court has not been required to address what may have happened in relation to the preparation of that aspect of the matter. It did not require much attention during the hearing, because I took the view relatively early that it would not be appropriate for the court to make the orders sought in the summons concerning the estate of the parties' late mother. In effect, I took the view early in the hearing that it was so unlikely that I would be persuaded to make any order disturbing the order that had earlier been made by the Probate List Judge concerning the making of a grant of probate to both the plaintiff and the defendant, that I should inform the parties of my view, with the hope that their knowledge of that matter may enable them to shorten the hearing, which it did. That course may have created an appearance that less was involved in the claim made in the summons than was in fact the case.
Further, it should not be ignored that the plaintiff also claimed an order that the defendant vacate the Tudor Street property, as well as orders that the property be sold by a selected estate agent. That may have been a sensible course to avoid unnecessary costs, but it was not an order that could be made by the court, as it did not conform with s 66G of the Conveyancing Act 1919 (NSW). Although, ultimately, an arrangement was reached that was consistent with this aspect of the claims for relief in the summons, that was only by the agreement of the parties.
In these circumstances I do not think I could make a fair or reliable broad estimate of the proportion of the plaintiff's costs that should be paid by the defendant, simply by my own consideration of the proportion of the hearing taken up by the issues raised by the summons on the one hand and the issues raised by the cross claim on the other hand.
It may well be that a reduction in the plaintiff's costs of the proceedings of 10% would be a fair outcome that would spare the parties from having to separately assess the costs of the summons and the cross claim. However, for the court to make this alternative order as suggested by the plaintiff would involve guesswork on the part of the court.
The orders that should be made are that the plaintiff pay the defendant's costs of the claims for relief in the summons and the defendant pay the plaintiff's costs of the claims for relief in the cross claim, in each case on the ordinary basis.
It would be wise for the parties to come to an agreement as to the proportion of the costs of the plaintiff to be paid by the defendant, as it is clear that on balance the net result will be that the defendant will be required to pay to the plaintiff a high proportion of the plaintiff's costs. However, it is for the good sense of the parties to negotiate a particular proportion, because I do not think that I have enough information to make a judicial determination of that proportion.
The defendant should also be ordered to pay the plaintiff's costs of the notice of motion referred to above on the ordinary basis. While it is true that the claim in the notice of motion was effectively settled, the defendant did not at any stage make any pretence of having a basis for resisting the order made. It appears to me that he simply declined to cooperate with the plaintiff, which had the effect that the plaintiff was required to incur legal costs and was kept out of his money for a considerable time. This is therefore an appropriate case for the court to order that one party to a compromised claim should pay the costs of the other notwithstanding that the court has not been required to determine the claim on its merits: see Immigration and Ethnic Affairs, Re Minister for; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6.
The orders I make therefore are:
1. The plaintiff is ordered to pay the defendant's costs of the summons on the ordinary basis.
2. The defendant is ordered to pay the plaintiff's costs of the cross claim on the ordinary basis.
3. The defendant is ordered to pay the plaintiff's costs of the notice of motion filed on 15 December 2016 on the ordinary basis.
[3]
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Decision last updated: 25 September 2017