Manns v Attorney General of New South Wales & Ors

CATCHWORDS : PROCEDURE - costs - whether the third and fourth defendants' costs should be assessed on a submitting appearance basis, or on an ordinary party/party basis - third and fourth defendants entered a full appearance - took no active part in the proceedings - offers were made to the third and fourth defendants to be represented by the solicitors for the plaintiff - offers declined - limitations on recovery of costs for the purposes of ensuring fairness to other parties to litigation - third and fourth defendants not entitled to full costs order against the estate merely because they filed full appearance - in substance third and fourth defendants maintained a submitting role - third and fourth defendants' costs to be assessed on a submitting appearance basis

LEGISLATION CITED : Uniform Civil Procedure Rules 2005 (NSW) rr 6.9, 6.11, 6.20

Manns v Attorney General of New South Wales & Ors [2010] NSWSC 12 CASES CITED : Rajski v Computer Manufacturer & Design Pty Limited (1981) 2 NSWLR 798 Rudge v Link [2008] NSWSC 1104

Plaintiff: William Manns First Defendant: Attorney General of NSW PARTIES : Second Defendant: NSW Trustee and Guardian Third Defendant: Deborah Marcella Deregt Fourth Defendant: Mark Francis Manns

Plaintiff: Mr J O'Connor COUNSEL : First Defendant: Mr C Mantziaris Second Defendant: Mr M K Meek SC Third & Fourth Defendants: Mr W Lyubicic (solicitor)

Plaintiff: Dooley & Associates SOLICITORS : First Defendant: Crown Solicitor's Office Second Defendant: NSW Trustee and Guardian Third & Fourth Defendants: Walter T Lyubicic & Associates

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1982/09 WILLIAM MANNS v HER MAJESTY'S ATTORNEY GENERAL IN AND FOR THE STATE OF NEW SOUTH WALES, PUBLIC TRUSTEE NSW, DEBRA MARCELLA DEREGT & MARK FRANCIS MANNS [No 2] JUDGMENT (Ex Tempore on Costs) 1 HIS HONOUR: There is an important principle that is commonly invoked in will construction cases that all persons who may be affected by the result of the suit should be joined as parties so they are bound by the decision: and see r 6.20 Uniform Civil Procedure Rules 2005 (NSW). There is a co-ordinate principle that all people in the same interest in such a suit should be represented by one of them in order to save costs: Rudge v Link [2008] NSWSC 1104 at [4] per Young CJ in Eq. The argument today about the costs of this suit is an illustration of the application of these principles.

2 I gave judgment in these proceedings on 28 January 2010: Manns v Attorney General of New South Wales & Ors [2010] NSWSC 12. In that judgment I directed the parties to bring in short minutes of order to give effect to those reasons for decision. I also indicated that I would hear argument from the parties on the question of the costs of these proceedings. 3 The parties have cooperated in accordance with that direction. They have produced a set of short minutes of order in which all parties agree, except in one respect. I will make the declarations and orders and the notation of fact contemplated in those short minutes at the end of this judgment.

4 The issue on which the parties disagree in the short minutes is paragraph 5, relating to the appropriate costs order. The second defendant, the NSW Trustee and Guardian, propounds order 5 in the following form: "Orders that the third and fourth defendants' costs assessed on a submitting appearance on the party/party basis be paid out of the estate of the deceased."

5 In contrast, the third and fourth defendants submit that a costs order should be made in their favour in a form similar to that propounded by the second defendant, but deleting the words "assessed on a submitting appearance". The point in issue between the parties is whether or not the third and fourth defendants' costs should be assessed, as the second defendant and other parties say, on a submitting appearance basis, or, as the third and fourth defendants say, on an ordinary party/party basis.

6 The relevant factual background is not complex. My judgment of 28 January 2010 at [20] sets out sufficient history of the involvement in these proceedings of the third and fourth defendants, two of the siblings of the deceased: "[20] Paul Manns' sister Deborah and his surviving brother Mark declined to join as plaintiffs in the proceedings. They are also necessary parties to the proceedings. Each of them also has a potential entitlement to a one third share of any assets which may pass upon intestacy. The plaintiff amended the summons on 14 May 2009 to join Deborah and Mark as the third and fourth defendants."

7 The second defendant read a portion of the affidavit of Malcolm Campbell of 15 September 2009 on this application. Mr Campbell is the solicitor for the plaintiff. He had offered to the third and fourth defendants to act for them and invited them to join as co-plaintiffs in the proceedings. He indicated to them that if they did not wish to do that they may have to be joined as defendants to the proceedings: Rajski v Computer Manufacturer & Design Pty Limited (1981) 2 NSWLR 798. Upon the amended summons joining them as third and fourth defendants being served, a conversation set out in paragraph 25 of the affidavit of Malcolm Campbell took place. "[25] On or about 2 June 2009 I had a telephone conversation with Walter Lyubicic to the following effect: I said: "I am returning your call in the Manns matter."

I said: "I have been instructed to act for Debra De Regt and Mark Manns in the Supreme Court proceedings about Paul's will. I am instructed to take an observatory position in the matter. I will file a Notice of Appearance and attend on 5 June 2009"

[26] Since 2 June 2009 I have not received any further correspondence or communications from Ms De Regt, Mark Manns or Walter Lyubicic."

8 Mr Lyubicic, who appears on behalf of the third and fourth defendants, says that an appearance has been filed on their behalf. There is a copy on the Court's file. Their appearance was entered in accordance with r 6.9 UCPR, not in accordance with r 6.11. A submitting appearance was not filed.

9 From the time of the conversation referred to in Mr Campbell's affidavit in June of 2009 Mr Lyubicic undertook legal work on behalf of the third and fourth defendants. But that work did not result in him putting any oral submissions or any written submissions to the court or serving them on other parties. He attended at the hearing, announcing his appearance on behalf of the third and fourth defendants on the first day of the hearing, but not otherwise taking an active part in the proceedings.

10 To a large extent that is consistent with the position which he declared in the conversation with Mr Campbell, that he was instructed "to take an observatory position in the matter". In substance, he appears to have conducted himself on behalf of the third and fourth defendants as though he were making a submitting appearance. He says that he has in fact done more work than might strictly lie within the perimeter of a submitting appearance, which is perhaps the reason for this application.

11 On behalf of the second defendant, Mr Meek SC says that I should apply the principle identified at the commencement of this judgment in Rudge v Link and that the estate should not have to bear the costs of multiple sets of legal costs of persons acting in the same interests. It is said that this is especially so in circumstances where clear offers were made to the third and fourth defendants to be represented by the solicitors for the plaintiff. Mr Meek SC contends, that a full costs order should not be made, but a costs order consistent only with the third and fourth defendants appearing to submit.

12 The principle identified in Rudge v Link and in UCPR r 6.20 applies here. Mr Lyubicic submits though that there are features that distinguish this case from Rudge v Link and like cases. He puts two arguments against the application of the Rudge v Link principle in this case.

13 Mr Lyubicic's first argument is that "in fairness" he says the third and fourth defendants are entitled to representation in these proceedings. About that he is right. However, the manner and level of that representation is a matter of choice for the third and fourth defendants upon advice. The general principle that Mr Lyubicic invokes is not an answer to the principle identified in Rudge v Link. The law places limitations on the right of recovery of costs for the purposes of ensuring fairness to other parties to litigation. Fairness to the other parties in this case is also necessary where a clear right of election was offered to the third and fourth defendants to join with the plaintiff. Now, having declined that offer, and in substance having taken an observing role, the law will not allow them a full set of costs against the estate.

14 Mr Lyubicic's second argument is that the third and fourth defendants did not wish to be exposed to the risk of an adverse costs order by being joined as co-plaintiffs. They say they were entitled to save themselves from the risk of an adverse costs order and to decline to join with the plaintiff. They say that is why they took the course that they did, resulting in their being joined as third and fourth defendants.

15 It is difficult to argue with the logic of Mr Lyubicic's submission up to the point of his saying that his clients did not wish to be exposed to adverse costs orders. Many parties decline to join proceedings as plaintiffs for that very reason. What they usually do is then file a submitting appearance which protects them against adverse costs orders. But filing a submitting appearance has the consequence that they are not entitled without the leave of the court to put positive submissions to influence the outcome of the proceedings.

16 The capacity to put on a submitting appearance under r 6.11 UCPR is an effective mechanism to balance the need to ensure that all necessary parties are bound by the decision, but nevertheless to protect parties so bound from the risks of an adverse costs order. The fact that the third and the fourth defendants did not wish to be exposed to an adverse costs order is unexceptionable. The way to effect that was to file a submitting appearance. Instead they chose to file a full appearance. The next step in their logic does not follow. That does not mean that they are entitled as a result to a full costs order against the estate. In this case they, in substance, maintained a submitting role. That defines the basis on which they should receive a costs order. I will therefore make the costs order for which Mr Meek SC contends.

17 I should add that Mr Meek SC has properly conceded that even in relation to a submitting appearance there are some costs that will be recoverable by the third and fourth defendants. Expressed in general terms, those recoverable costs would at least amount to responding to court orders and directions, reading and dealing with court process served upon a submitting defendant and, finally, appearing to observe the proceedings. Allowing costs beyond that kind of work would be unusual on a submitting appearance. These observations may be of some assistance to a costs assessor in these proceedings if the assessment of costs is not agreed.

18 Accordingly, I will make the following orders, declarations and notation of fact. 19 THE COURT: 1. Declares that on the true construction of the Will of the late Paul Clifford Manns ("the deceased") made on 1 May, 1998, clause 4(5) thereof creates a valid charitable trust.

Declares that on the true construction of the Will of the deceased made on 1 May, 1998, the whole of the residue of the estate is subject to the said charitable trust.

Orders that 75% of the plaintiff's costs on the party/party basis, as agreed or assessed, be paid out of the estate of the deceased.

Orders that the first defendant's costs assessed on the party/party basis and the second defendant's costs assessed on the indemnity basis be paid out of the estate of the deceased.

Orders that the third and fourth defendants' costs assessed on a submitting appearance on the party/party basis be paid out of the estate of the deceased.

Notes that the second defendant has selected the following beneficiaries to receive 95% of the net income paid in equal shares from the said trust for the year ending 5 March 2010:

a. Aboriginal Health & Medical Research Council b. Kids HelpLine c. Spinecare Foundation d. Extended Families

The remaining 5% of the trust income is to be retained by the trustee and capitalised for this year in accordance with Clause 4(5) of the will dated 1 May 1998.

Otherwise than as noted in Order 6, grants liberty to the first and second defendants to apply to the Court on 7 days notice in relation to the matters referred to in paragraph [59] of the Court's reasons for judgment delivered on 28 January 2010. **********

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