Maxwell v Maxwell

Applicable principles

1. The applicable principles are not in dispute. There is a broad discretion as to costs (see s 98 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act); Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack)) though the discretion must be exercised judicially and having regard to the overriding statutory purpose mandated by s 56 of the Civil Procedure Act.
2. The usual order is that costs follow the event (pursuant to r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)) unless it is considered that some other order ought to be made (see Commonwealth of Australia v Gretton [2008] NSWCA 117 (Gretton) at [38] per Beazley JA, as Her Excellency then was, with whom Mason P agreed). Issues may arise as to what is the "event" in a particular case. Ordinarily, there will be no differentiation as to success or failure on particular issues although regard may be had to issues clearly separable from the rest of the case on which the party ultimately succeeded (see Waters v PC Henderson (Australia) Pty Limited (1994) 254 ALR 328; [1994] NSWCA 338 at 5 per Mahoney JA, with whom Kirby P, as his Honour then was, and Priestley JA agreed). In some circumstances it may be appropriate to apportion costs on an issue by issue basis (say where the successful party has "unfairly, improperly, or unnecessarily increased the costs" - see Windsurfing International Inc v Petit (1987) AIPC 90-441 (Windsurfing International) at 37,861-37,862 per Waddell J, as his Honour then was).
3. Further, costs orders in civil litigation are well recognised as being compensatory, not punitive, in nature (see Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [37] per Gleeson JA, with whom Meagher and Barrett JJA concurred, in turn citing Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at 543 per Mason CJ); Ohn v Walton (1995) 36 NSWLR 77 at 84 per Cole JA).
4. As all parties here recognise, ultimately, what is required is that the court make such orders as it thinks just in the particular circumstances of the case (the parties variously citing Lombard Insurance Co (Australia) Ltd v Pastro (1994) 175 LSJS 448; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55; [2003] FCA 688; Furber v Stacey [2005] NSWCA 242; and Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10] in that regard). Reference is made by Jamila to the approach to the exercise of the costs discretion that was summarised in Kazar (liquidator) v Kargarian; In the Matter of Frontier Architects Pty Ltd (in liq) (2011) 197 FCR 113; [2011] FCAFC 136 at [9]). Reference is made by the plaintiffs and Plassey to authorities such as State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J, with whom Beazley JA, as Her Excellency then was, and Tobias JA agreed, and Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385; [2011] NSWCA 256 at [97]-[98] per Campbell JA, with whom Macfarlan and Young JJA agreed.
5. The onus lies on the unsuccessful party to demonstrate a basis for departing from the usual rule (Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10] per Brereton J, as his Honour then was).
6. As the plaintiffs note, in probate proceedings, there are two recognised exceptions to the general rule that costs follow the event, those being: where the testator has been the cause of the litigation (the plaintiffs here referring to Dunne v Byrne (1912) 16 CLR 500; [1912] HCA 4 (Dunne v Byrne) at 503 per Lord Macnaghten for the Privy Council; Gray v Perpetual Trustee Company Ltd (1928) 40 CLR 558 (Gray v Perpetual Trustee Company) at 566 per Viscount Haldane; Lippe v Hedderwick (1922) 31 CLR 148; [1922] HCA 44; and Anderson v Scrivener [2002] NSWSC 900 at [54] per Campbell J, as his Honour then was); and where the "circumstances led reasonably to an investigation concerning the testator's will" (citing Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136 at [125] per Ipp JA; Walker v Harwood [2017] NSWCA 228 at [52]-[57] per Macfarlan JA). See the general principles outlined by Powell J in Shorter v Hodges (1988) 14 NSWLR 698 (Shorter) at 709 in this regard. However, even within those two categories of case there remains a discretion as to costs; and indeed there may be some overlap between the exceptions (see in Perpetual Trustee Company Limited v Baker [1999] NSWCA 244 at [14] per Giles JA and Brownie AJA, their Honours referring to what was said by Santow J, as his Honour then was, in Moyle v Moyle (18 June 1998, unreported). The principles outlined by Powell J in Shorter v Hodges have been applied in a number of cases and were repeated by Santow J in Redroff v Miegoch (22 April 1996 unreported).
7. In Page v Sedawie [2005] NSWSC 1311, Campbell J, as his Honour then was, noted that an overlap had been recognised by the Court of Appeal between the two exceptions referred to in Shorter and that, if a case for decision fell within that area of overlap this meant that one of the exceptions suggested that the appropriate order concerning costs should be different to the order which is suggested by the other exception. His Honour said at [30] that "[i]n that area of overlap, the principles which are recognised by the two exceptions are insufficient to produce a result. It is a matter for the trial judge, in light of the circumstances of the particular case before him or her, to decide which costs order better achieves justice". There, his Honour noted that the question whether some special costs order ought to be made in favour of an unsuccessful defendant so as to relieve him (or her) of the burden of costs falls for determination on the basis of whether there were circumstances which afforded reasonable grounds for a defendant's opposition of the grant of probate.
8. Of course, the present proceeding was not a probate proceeding, as such. Nevertheless, there is some obvious similarity insofar as the issues here raised were necessary in order to determine the extent of the deceased's estate (and questions of capacity to make an inter vivos gift were in issue in the context of the deceased's other statements as to his testamentary intentions). In any event, the probate exceptions to the general rule as to costs are applications of the broader principle that, where litigation is between parties with a claim over one fund, the court has jurisdiction to order costs to be paid out of the fund rather than personally by one or more of the litigants (see in this respect G E Dal Pont, Law of Succession (2012, 3rd ed, Lexis Nexis Butterworths) at 724). Here, the litigation is effectively between beneficiaries of one fund (i.e., the beneficiaries of the deceased's estate, bearing in mind that the other beneficiaries - Jamila's children - chose not to take part in the proceeding), and the claim is brought as to whether the gold bullion forms part of the one fund. It follows that the aforementioned principles are of relevance to the present proceeding.

Jamila's submissions

1. Jamila contends for the orders referred to above on the basis that, on the issues dealt with at the hearing (whether the deceased had the intention to make a gift to her; whether he had the general capacity to effectuate the gift and whether the gift was perfected), which involved consideration of both lay and expert evidence, she was successful. Jamila maintains that her concession as to the legal and beneficial ownership by Plassey of 255 ounces of the gold served to narrow the issues in dispute; and that the length of the hearing was further shortened by the decision not to cross-examine the plaintiffs and their IT expert, Mr Samji (whose expert report Jamila says was immaterial to the issues in dispute).
2. Thus, as to the primary contest of the proceeding (the question of the ownership of the larger and more valuable quantity of gold - 445 ounces), on which there was no agreement and on which Jamila was successful, Jamila contends that (taking a global view of the outcome of the litigation) her success has been the greater and she should be recompensed for her general defence of the proceeding.
3. Jamila's alternative position (as indicated above) is that there be an order that reflects her success in retaining a far greater quantity of the gold bullion in question (approximately 65% of the total in dispute in the proceeding).
4. Jamila also submits that these have primarily been adversarial proceedings between warring siblings (also beneficiaries), as opposed to representative proceedings where the plaintiffs should expect an indemnity from the estate; and hence Jamila submits that the plaintiffs' own costs of the proceedings should not be paid from the deceased's estate. It is submitted that, to the extent that there is any indemnity provided to the plaintiffs, it should be limited to come from their own share of the estate. (Pausing here, as there are no assets of any substance now left in the estate, following the determination in Jamila's favour of the issue as to ownership of the disputed quantity of gold bullion, the issue of indemnification out of the estate will not as a practical matter arise and need not here be considered.)

Plaintiffs' submissions

1. The plaintiffs (and Plassey) contend, to the contrary of Jamila's position, that the appropriate order is for each party to bear his, her or its own costs of the amended statement of claim and that there be no order as to the costs of the cross-claims.
2. In this regard, it is submitted that the amended statement of claim was effectively the pursuit, in a de facto sense, by the estate to recover assets of the estate (namely, the 455 ounces of gold). The plaintiffs say that there was in reality no one other than them who could properly have pursued the claim for the estate, noting that if the recovery did not succeed then the estate had very little by way of assets.
3. The plaintiffs point out that, as a result of the orders made (including the dismissal of the amended statement of claim), Jamila is the owner of 455 ounces of gold, and the estate of the deceased has little by way of assets (being approximately $33,000) (referring to material in evidence at the hearing as to the assets of the estate). The plaintiffs also note that the direct consequence of Jamila's cross-claim (seeking orders as to the entirety of the gold bullion) was that Plassey had to defend its ownership of 255 ounces of gold and (as Jamila had not returned the gold) Plassey had to file the second cross-claim and seek orders in respect of the 255 ounces of its gold held by Jamila, and the return of that quantity of gold to Plassey.
4. The plaintiffs submit that they were justified in bringing their claim; that the language used by the deceased in the making of the gift was equivocal and that, after making the gift, the deceased's conduct justified the plaintiffs questioning the validity of the gift (noting that the deceased had asked Jamila to return the gold to him; and on many occasions referred back to the plaintiffs for advice, including advice on how to get Jamila to return the gold).
5. It is thus submitted that it was the conduct of the deceased that in effect caused the litigation; noting that in Dunne v Byrne, where the relevant difficulty was occasioned by terminology chosen by the testator, the costs of both parties were paid out of the estate; and that a similar approach was taken in Gray v Perpetual Trustee Company. While it is a regular exercise of discretion for there to be an order for the estate to bear the costs of the litigation where the conduct of the testator has been the main cause of the litigation, as noted above the effect of the order that has been made in respect of the gift is that there is very little in the estate by way of assets. The plaintiffs point out that this means that the deceased's Intention of Inheritance document and the provisions that he made in the Will for beneficiaries other than Jamila are now spent (and, indeed, that Jamila's own children are now without any legacy from their grandfather); and Jamila is effectively the sole recipient of the bulk of the deceased's estate by reason of the inter vivos gift.
6. In circumstances where the estate will not have the funds to meet any cost order, the plaintiffs submit that the appropriate order on costs should be that each party bears, his, her, their or its own costs of the proceeding (in respect to the dismissal of the amended statement of claim); and (as noted) if such an order is made, that there be no costs order in respect of the cross-claims.
7. If such an order is not made then the plaintiffs submit that, to achieve a just result, the order should be that the plaintiffs pay 50% of Jamila's costs on the ordinary basis and that the following orders should be made as to the cross-claims.
8. As to the first cross-claim, the plaintiffs point out that this was filed in about June 2020 after there had been a demand on behalf of Plassey for a return of the gold in the possession of Jamila that rightfully belonged to it, and it is noted that not long after the filing of the first cross-claim, the affidavit of the deceased's accountant (which made clear that Plassey was the owner of 255 ounces of gold in the possession of Jamila) was served on Jamila but that Jamila did not withdraw her cross-claim until 23 February 2022. It is submitted that, in those circumstances, Jamila "unfairly, improperly, or unnecessarily increased the costs" of the proceedings (to use the language in Windsurfing International).
9. As to the second cross-claim, it is noted that Plassey filed this cross-claim on 18 November 2020 but, again, Jamila did not consent to an order for the 255 ounces of gold to be returned to Plassey until 23 February 2022 (the 11th hour). It is submitted that Jamila had ample opportunity to consent to a return of the gold owned by Plassey; and that her unexplained conduct in not consenting to the relief Plassey sought until 23 February 2022 has only increased the cost of the litigation.
10. Thus, if the plaintiffs' primary position is not accepted, the cross-defendants seek their costs of the first cross-claim and Plassey seeks its costs of its cross-claim.

Determination

1. I consider that the appropriate order is for each party to bear his, her or its own costs of the proceeding as a whole (including the cross-claims), in circumstances where I accept that the issue that arose for determination was principally one of the deceased's own making (not least because of the changes in the stance that the deceased took as to the gift to Jamila) and that the course taken by the plaintiffs in seeking a determination of the ownership of the gold was in effect for the benefit of the estate (albeit that, as beneficiaries, they would personally have shared in a distribution from the estate had the gold been returned to the estate). Moreover, on the ordinary basis Jamila would be liable for the costs of the first cross-claim and to meet Plassey's costs of the second cross-claim so that there would need to be some account taken of the off-setting costs claims in due course if the plaintiffs' principal position as to costs is not adopted.
2. In all the circumstances, I consider that it is appropriate to apply the reasoning that underlies the exercise of discretion in probate cases where the deceased has been in effect the cause of the litigation but that, as there are no estate assets now available to meet such an order, each party should bear his, her or its own costs. Ultimately it was the deceased's own conduct which led to the confusion surrounding the circumstances of the inter vivos gift and there is no doubt that the deceased at various times sought the help of his sons to recover the gold held by Jamila, which makes their conduct in pursuing the claim against her explicable. Moreover, I do not consider that it would be a just result in all the circumstances for the plaintiffs (who sought to honour their late father's apparent wishes and who properly instituted proceedings to procure a benefit for the estate in circumstances where there was confusion surrounding the gift) to be liable for Jamila's costs of the proceedings notwithstanding her success in relation to the proportion of the disputed gold that has ultimately been found to be the subject of a perfected gift to her.
3. For the above reasons I order as follows: 1. In addition to the orders made on 3 August 2022 and for completeness, order that the first cross-claim be dismissed. 2. Order that there be no order as to the costs of the proceedings (including of the amended statement of claim and the respective cross-claims) with the intent that each party bear her, his or its own costs.

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