McGettigan v Coulter & Anor; Coulter & Anor v McGettigan

Supreme Court of NSW|2021-10-22|Before: Slattery J

Solicitors: The Coulters: M. Field, Field Lawyers John Patrick McGettigan: in person File Number(s): 2018/00174649; 2020/00104101 Publication restriction: No

Judgment

This is the Court's second judgment in these combined Probate and Equity proceedings. In the Probate proceedings, the Court granted to the plaintiffs letters of administration cum textamento annexo in solemn form of the will of the late Brian Bernard McGettigan ("the deceased") dated 19 January 2000; the Court found that the defendant, Mr McGettigan had propounded a false 2016 will of the deceased, and ordered him to pay the plaintiffs' costs of the proceedings: McGettigan v Coulter & Anor; Coulter & Anor v McGettigan [2021] NSWSC 1097 ("the first judgment").
In the first judgment the Court concluded in the Equity proceedings that the plaintiff, Mr McGettigan, had propounded false partnership/sale agreements and leases and dismissed the proceedings with costs. This judgment should be read with the Court's first judgment. Events, matters and persons are referred to in both judgments in the same way.

Payment out of Court

The Coulters seek the payment out of all the funds in Court to them so that they can complete the administration of the estates of Brian and Beverley McGettigan. The amount in Court at this time is $2,069,640.43 ($2,015,890.43 paid into Court by Field Lawyers + $53,750 paid into Court by Cutcliffe).
The evidence filed in support of the Motion supports the inference that the estates still have to meet substantial liabilities associated with these proceedings, which have been outstanding for a considerable period of time. These liabilities not only include the professional costs of solicitors and counsel but disbursements payable to many creditors including this Court, hospitals, process servers, expert handwriting witnesses and general witnesses expenses. Some of these fees have been met by the Coulters out of their own pockets and they seek reimbursement for them out of the estates. It is desirable in the administration of the estates that these liabilities be met in the near term. Subject to issues of appeal, orders should be made paying the funds out of Court to the Coulters.
On 8 September 2021, Mr McGettigan filed a Notice of Intention to Appeal against the first judgment. He says he will file a Notice of Appeal. He initially sought a stay upon any payment out of Court. But during argument the Court indicated to Mr McGettigan that it would take an intermediate course to substantially protect his rights, provided he was diligent in filing an appeal.
As there have already been significant delays before this matter was heard this year, the Court foreshadowed to Mr McGettigan that it would make orders that were conditional upon him filing a Notice of Appeal. Having filed a Notice of Intention to Appeal, Mr McGettigan has until 30 November 2021 to file his Notice of Appeal: Uniform Civil Procedure Rules 2005, r 51.9(1)(a).
The Court explained to Mr McGettigan that it was proposing to make orders which would permit the funds in Court to be paid out unconditionally, if he had not filed a Notice of Intention to Appeal on or before 1 December. But if Mr McGettigan had filed a Notice of Appeal on or before 1 December, then the Coulters would be limited to applying the said funds to meeting estate liabilities and would be required to hold the balance in the Field Lawyers trust account until the completion of the appeal. The Court explained to Mr McGettigan that such an order would preserve the bulk of the estate should he be successful on appeal. In the Court's view, it represented a balance between the need to meet pressing estate liabilities and the object of preserving most of the estate pending appeal.
Mr McGettigan ultimately did not oppose the making of those orders and they are reflected in the orders below. They have the effect that if Mr McGettigan does not file a Notice of Appeal the Coulters will be free to distribute the funds in the administration of the estates.

Indemnity Costs

The Coulters seek indemnity costs orders in the Probate and Equity proceedings. The application is made on the basis that Mr McGettigan has propounded the false 2016 will, the false partnership/sale agreements and false leases, which have significantly added to the length of the proceedings. The making of indemnity costs orders against delinquent parties in such circumstances is a well-established jurisdiction. The principles upon which such orders are made is briefly summarised below.
Delinquency in the conduct of proceedings may attract an indemnity costs order: Degmam Pty Ltd (in liquidation) v Wright (No 2) (1983) 2 NSWLR 354 ("Degmam"); and Re Smith, ex parte Rundle (No 2) (1991) 6 WAR 299. If the case involves "some relevant delinquency on the part of the unsuccessful party" an order for indemnity costs may be made against that party: Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 152 ALR 83; [1998] HCA 11 at 89. But even deliberate false evidence in proceedings will not automatically qualify as "relevant delinquency", attracting an indemnity costs order: Harrison v Schipp [2001] NSWCA 13 at [132] - [139] ("Schipp"). And on their own, findings of unconscionable conduct or breach of fiduciary duty will ordinarily lead to compensatory or other relief and an order for costs on the normal basis; more must be established for a special order as to costs: Schipp at [136].
What may qualify as "relevant delinquency" has taken a variety of forms in the cases. It includes making deliberately false allegations in a defence and by prolixity and prevarication grossly prolonging the litigation: Degmam. It includes the situation of a defendant, who properly advised, should have known that they would be found liable: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364 at 401. It includes circumstances in which the Court's time and the plaintiff's money were wasted on "totally frivolous and thoroughly unjustified defences": Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362. Some of the matters thought to justify the making of such an order were collected by Sheppard J in Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225; (1993) 118 ALR 248 at 233-4. But beyond identifying a sufficiently "special or unusual feature in the case", no fixed rule can be laid down: Schipp at [139].
This is a very clear case for a making of an indemnity costs order against Mr McGettigan, who has engaged in relevant delinquency in both the Probate and Equity proceedings. If Mr McGettigan had not propounded the false 2016 will, the false partnership/sale agreements, and false leases, these proceedings, which occupied seven hearing days and in respect of which there was a vacated hearing, would have been concluded without significant contest.
The need to call expert handwriting evidence, the need to call the witnesses to the 2000 will, the need to call evidence showing that the 2016 will could not have been executed the way that Mr McGettigan claimed, the detailed cross-examination of Mr McGettigan on the range of false documents that he produced, all would not have been necessary if he had not made deliberately false allegations and pursued an unjustified defence. Properly advised he should have known his case would fail. It can readily be seen from the Court's first judgment that the Court was heavily preoccupied in the trial with seeking to ascertain the provenance of Mr McGettigan's fabricated documents. Mr McGettigan's conduct in the proceedings greatly lengthened them in a way that warrants an indemnity costs order, which the Court will make.

Specified Gross Sum Costs Order

The Coulters seek a specified gross sum costs order instead of assessed costs in respect of their costs of the Probate and Equity proceedings. They seek that this order be quantified on the basis that they have the benefit of an order for indemnity costs.
They claim the sum of $301,454.68 up to the time of the first judgment, together with a further $10,107 in respect of costs and disbursements in respect of the Motion listed today.
The Court's specified gross sum costs jurisdiction is embodied in Civil Procedure Act, s 98(4), which confers a suite of broad discretionary powers on the Court in relation to costs, as follows: "(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount."
Reported Australian case law on the topic of specified gross sum costs orders is scant until the early to mid-1990s when, in cases such as Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 199 ("Beach Petroleum"), judges began more commonly to apply Australian rules that were precursors to s 98(4)(c).
But Courts have long exercised the power to fix a specified gross sum instead of assessed costs as part of the Court's inherent costs discretion, without the need to rely upon specific rules. One early example of the High Court of Australia exercising such inherent jurisdiction is Edgar & Walker v Mead (1916) 23 CLR 29; (1916) 23 ALR 259; [1916] HCA 70 in which Isaacs J (at 46) applied the practice which Jessel MR had described and adopted in Willmott v Barber (1881) 17 Ch D 772: "But taking everything into consideration, including the several findings in favour of the respective parties, and realizing the desirability of putting an end to unnecessary further expense, I act on the principle laid down or recognized by the Court of Appeal in Willmott v. Barber. It was there stated that the discretion of the Judge as to costs is very large and extends even to the course which Jessel M.R. said he sometimes adopted, and generally found the parties were grateful to him for so doing. He thus described the course: "fix a definite sum for one party to pay to the other, so as to avoid the expense of taxation, taking care in doing so to fix a smaller sum than the party would have to pay if the costs were taxed."
The principles for the making of specified gross sum costs orders instead of assessed costs are well settled and reflect many of the considerations mentioned by Isaacs J. Civil Procedure Act, s 98(4)(c) is expressed in general terms and is not limited to cases of a particular type: Australasian Performing Rights Assoc Ltd v Marlin [1999] FCA 1006 (Burchett J). The power to award a Civil Procedure Act, s 98(4)(c) specified gross sum instead of assessed costs is exercised whenever circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum. The case law frequently emphasises the adaptability of the power and that it is not confined to previously defined classes of cases.
Probable inability to pay a costs order is but one example of a proper basis for the making of a s 98(4)(c) order. If the unsuccessful party ordered to pay costs is unlikely to be able to pay the amount of costs ordered, then the successful party is further aggravated by having to fund the additional costs of taxation, those costs also being unrecoverable: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 ("Schipp") at [21] (Giles JA) and Hadid v Lenfest Communications Inc [2000] FCA 628 ("Hadid") (Lehane J).
The adaptability of the power means it can be assessed for deployment in new situations. The specified gross sum can be fixed under s 98(4)(c) by the application of what has been described as a "broad brush" approach, having regard to all the information available to the Court: Schipp at [22] and Hadid at [27] and Penson v Titan National Pty Ltd (No.3) [2015] NSWCA 121 at [7] and [25]. The approach taken to the estimation of costs must be "logical, fair and reasonable" and the powers should only be exercised when the Court considers it can do so "fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available": Schipp at [22] per Giles JA.
A definitive statement of the applicable law on the application of s 98(4)(c) in this State appears in Hamod v State of New South Wales [2011] NSWCA 375 at [813] to [820] ("Hamod"). Some of the relevant principles stated in Hamod are: that before exercising the power the Court should be confident that the approach taken to estimating costs is fair, logical and reasonable; that the terms of s 98(4), together with the more general considerations reflected in Civil Procedure Act, ss 56(1), 57(1)(d) and 60, suggest the factors that merit particular consideration include the degree of any disproportion between the issue litigated and the costs claimed and the complexity of proceedings in relation to their cost; that the power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceeding; that the assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing; that in the exercise of its discretion, the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment; that the costs ordered should be based on an informed assessment of the actual costs, having regard to the information before the Court (for example, by relying on costs estimates or bills); and that the approach taken to estimate the costs to be ordered may involve an impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment.
The jurisdiction to make a specified gross sum costs order is attracted here. Mr McGettigan has made no secret of the fact that he is impecunious. The costs of a costs assessment will not be able to be recovered from him. The Coulters will be vexed by having to go through a costs assessment, the costs of which they are unlikely to recover from Mr McGettigan. So a specified gross sum costs order will be made instead of assessed costs. For the same reasons this may be an apt case for making an application for security for costs of any appeal that Mr McGettigan may lodge in these proceedings: Murray John Carter v Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust [2021] NSWCA 32; Evans v Cleveland Investment Global Pty Ltd [2013] NSWCA 230.
The Court has sufficient materials for it to be able to make a specified gross sum costs order instead of assessed costs on a basis which is fair between the parties. Expert costs assessor's evidence is not necessary to fix the sum. The affidavit of Mr Mark Field of 17 September 2021 extensively summarises the legal work which was undertaken on behalf of the Coulters since the commencement of these proceedings, and informs the Court of many details of that work which supplement what the Court could infer from the Court's knowledge of the evidence. Mr Field's affidavit subdivides the fees claimed up to the time of judgment in the following table: ITEM AMOUNT CHARGED Solicitor's Fees Invoice 30 Oct 2018 $7,848.50 Invoice dated 16 Oct 2019 $62,815.50 Invoice dated 17 Sept 2021 $90,530.00 Counsel's fees Invoice dated 30 Oct 2018 $1,760.00 [I]nvoice dated 17 April 2021 $70,840.00 Invoice dated 17 Sep 2021 $15,620.00 Other Disbursements Invoice dated 30 Oct 2018 $157.44 Invoice dated 16 Oct 2019 $429.64 Invoice dated 25 May 2021 $1,177.92 Invoice dated 17 Sep 2021 $2,038.15 Invoice dated 17 Sep 2021 $2,290.34 As per Annexure B $43,619.59 Michael J Dyson, Costs Assessor $2,327.60 Total $301,454.68 (including GST)

Annexure B contains a list of the full range of the disbursements incurred. In addition to those fees, Mr Field indicates that the costs of the Motion listed today, 22 October 2021, involved solicitor's costs of $6,380, counsel's fees of $3,300 and disbursements of $427, making a total of $10,107. Thus, the total fees claimed, including solicitors' costs, counsel's fees and disbursements are $311,561.68.
A preliminary issue arises as to the status of the incomplete costs assessment before the costs assessor, Mr Michael Dyson. This costs assessment arises out of the indemnity costs orders Lindsay J made in respect of the vacated hearing commencing on 20 August 2020. Some $2,327.60 has already been expended in the costs assessor's costs. But the costs assessment has been complicated by the fact that Mr McGettigan has sought leave to appeal from Lindsay J's costs orders. That has meant that Mr Dyson has adjourned his costs assessment. It is expected that any appeal launched in respect of the first judgment will be combined with Lindsay J's costs orders. But with the knowledge that the Court now has of the need to administer the estates comprehensively and to finality in the near term, it is convenient for the Court to make orders dealing with all the costs together, including the costs the subject of the costs assessment.
A related complication is that the Court's jurisdiction under Civil Procedure Act, s 98(4)(c) should only be exercised before referral for costs assessment. That will not prevent the Court making a gross sum costs assessment in circumstances where a failed or incomplete costs assessment has taken place, either under s 98(4)(c) or under the Court's inherent jurisdiction, which still subsists notwithstanding s 98(4)(c): Bell v Hartnett Lawyers (No. 2) [2021] NSWSC 1270 at [55] - [74]. Here the better course is for the Court to revoke the costs assessment referred to Mr Dyson and make orders that cover the costs the subject of his costs assessment. This can readily be done. Mr Field's claim for costs of $301,454.68 includes the costs of the vacated hearing of 20 August 2020, which were the subject of the costs assessment before Mr Dyson. The Court will take that approach and will revoke the order referring the proceedings to Mr Dyson for costs assessment.
In fixing a specified gross sum costs order, even in circumstances where there is an existing order for indemnity costs, it has been said that there is an invariable discount on the discount figure claimed based upon the principle costs recovered be reasonable: Zepinic v Chateau Constructions (Aust) Ltd (No. 2) [2014] NSWCA 99 at [38]; Beach Petroleum; Idoport Pty Ltd v NAB; Idoport Pty Ltd v Donald Robert Argus [2017] NSWSC 23 at [13].
But in this case, such a discount will be modest. Field Lawyers' legal fees up to the time of judgment for a three year probate proceeding involving expert evidence and a detailed forensic analysis of false documents to meet Mr McGettigan's constantly shifting case have been very reasonable. Looked at overall, there is no basis for saying that fees of $301,454.68 for such a hearing are excessive. Thus the need to apply a discount to achieve reasonableness is not a pressing consideration.
Moreover, Mr Field agreed to charge a lower hourly rate of $300 per hour between 20 August 2018 and 2 August 2020, because of his pre-existing relationship with Brian and Beverley McGettigan. He had no prior relationship with the Coulters. However, the Coulters were concerned about the overall costs and Mr Field agreed to charge at a discount for the bulk of the proceeding. Mr Field's professional fees were a total of $161,194 up to 21 September 2021. He was only charging at the rate of $300 per hour until a period well into his third invoice of $90,350. Thus, a significant discount has already been built into these fees. But the Court will apply a further small discount of about 5% of the solicitor's fees, rounded down to $8,000 and deduct that from the total amount claimed.
Therefore the Court will make the specified gross sum cost order of $303,561.68 ($301,454.68 + $10,107 - $8,000).

Conclusions and Orders

The Court has indicated that it would refer Mr McGettigan's conduct to the Attorney-General and the Prothonotary. Orders are included in the orders here to give effect to that intent.
For these reasons, the Court makes the following orders, notations and directions: 1. Order subject to Order (2), that all the monies paid into Court by Field Lawyers on 11 February 2021 in the sum of $2,015,890.43 and by Cutcliffe on 16 February 2021 in the sum of $53,750, and any interest earned thereon ("the subject funds"), shall be paid out to Rhonda Anne Coulter and Glen Patrick Coulter, the plaintiffs in the Probate proceedings, as joint tenants as administrators of the estates of Brian Bernard McGettigan and Beverley Teresa McGettigan and into the trust account of Field Lawyers on or after Friday, 3 December 2021, and the subject funds may thereafter be dealt with by Rhonda Anne Coulter and Glen Patrick Coulter in their discretion as administrators of the estates of the late Beverley Teresa McGettigan or Brian Bernard McGettigan. 2. If John Patrick McGettigan, the defendant in the Probate proceedings, files a Notice to Appeal against the Court's judgment of 31 August 2021 in the Court of Appeal on or before 1 December 2021, then Order (1) of these orders shall be varied by adding at the end thereof the words "to discharge the liabilities of those estates but may not otherwise be distributed from those estates and must be retained by Field Lawyers in trust until the conclusion of the Court of Appeal proceedings, or until further order." 3. The Court will adjourn matters 2021/00030045 and 2021/00030066 into the Equity Registrar's List at 9.30am on Thursday, 4 November 2021 for directions. 4. Request the Registrar in Equity to forward a copy of the Court's reasons dated 31 August 2021 (McGettigan v Coulter & Anor; Coulter & Anor v McGettigan [2021] NSWSC 1097) to the Prothonotary and to make available, as may be required, the full transcript of these proceedings and the exhibits for inspection by any officers authorised in that behalf by the Prothonotary. 5. The Court refers these reasons to the Attorney-General of NSW for consideration as to whether any further action is warranted against Mr John Patrick McGettigan in respect of this Court's findings that he has fabricated documents including a testamentary instrument and the impress of the seal of the Supreme Court of NSW. 6. Revoke the referral to the costs assessor Mr Michael J. Dyson of any costs orders in these proceedings. 7. Order that the Coulters pay the outstanding costs of Mr Michael J. Dyson in respect of his part-completed costs assessment within 14 days of receiving the subject funds. 8. Order Mr McGettigan to pay the costs of Ms Rhonda Anne Coulter and Mr Glen Patrick Coulter of these proceedings on the indemnity basis. 9. Order that instead of assessed costs that Mr McGettigan pay the Coulters' costs as a specified gross sum of the proceedings fixed in the sum of $303,561.68 including GST.

Amendments 26 October 2021 - [15], [16] - citation references added. [22] - full case citation added. [31], line 10 - "estates" instead of "estate". Order (1), line 11 - name correction. Order (2) - quotation closed. Order (5) - hyphenated "Attorney-General". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 October 2021

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