P Barnes (as executor of the estate of the late Lawrence Barnes) v D Barnes

Issues

1. In issue between the parties was whether: 1. an indemnity costs order should be made; 2. a lump sum would be ordered; 3. the costs should be made payable out of the estate; and 4. Mr Darren Barnes should be given the further time he seeks to vacate the property.

Should there be a further 90 day opportunity to vacate?

1. Mr Darren Barnes accepted that the May judgment warranted an order granting a writ for possession of the property being made. But he argued that the orders should recognise his need for a further opportunity to vacate the property, with a period of 90 days being appropriate in the circumstances disclosed in his 16 June 2023 affidavit.
2. They included that Mr Darren Barnes suffers post-traumatic stress disorder resulting from two violent incidents of assault which affect his capacity and efficacy. Given the significant demands foreseeably associated with him finding new residential accommodation, compounded by the significant plant, equipment, and other material he has stored on the property, he argued that an extended period of 90 days to vacate was warranted. That was submitted to afford him a realistic period to provide vacant possession, 28 days being insufficient for him to do so.
3. The affidavit attaches a letter from the psychologist Dr Alexander, which explained the circumstances in which Mr Darren Barnes was twice assaulted, injuries which he then suffered and post-traumatic stress disorder which he developed as a result. Dr Alexander also explained his opinions about episodes of functional blindness which he considers Mr Barnes suffers from, as well as his views about the consequences of those conditions for him at the earlier hearing, when he could not adequately self-represent, because of the stress he was subjected to and its consequences.
4. This further 90 days to vacate was opposed by Mr Phillip Barnes in circumstances where the judgment had been delivered in May; the delay in finalisation of the outstanding submissions due to delinquency on Mr Darren Barnes' part, with the result that he had already received at least a further six weeks to vacate; and the orders proposing that Mr Darren Barnes have yet another 28 days to vacate.
5. It was also contended that Dr Alexander's opinions did not establish that Mr Darren Barnes could not vacate within a further 28 days and that the sums he claimed he had access to in his bank account established that he had the means to do so. There could be, however, no certainty that he would use those funds to do so, or to meet any costs order, especially given his apparent obligations also to pay his former and current solicitors.
6. In all of the circumstances discussed in the earlier judgment and notwithstanding the difficulties Mr Darren Barnes claims he faces in vacating, I am not satisfied that there should be yet a further 90 days given for him to vacate this property. It cannot be overlooked that what is in issue is an estate property and that finalisation of its administration has been long delayed as the result of Mr Darren Barnes' repeated failures to settle an untenable resistance of giving possession of the property.
7. I am satisfied that the further time he will now have to vacate is just in all the relevant circumstances.

Should an indemnity costs order be made?

1. There was no issue about the Court's power to make the indemnity costs order sought: s 98 of the Civil Procedure Act 2005 (NSW) and r 42.5 of the Uniform Civil Procedure Rules 2005 (NSW).

The parties' cases

1. Mr Phillip Barnes relied on Mr Darren Barnes' failure to complete the purchase after the issue of the notice to complete, which led to the termination of the agreement to purchase the property, as providing a basis for the indemnity costs order. Total costs of some $85,852.25 were pursued, with a gross sum costs order of $106,910.67 sought, calculated as follows: 1. 70% of the costs incurred up to and including 12 September 2022, calculated to be $30,227.40 ($43,182.00 / 100 * 70); plus 2. 90% of the costs incurred thereafter, calculated to be $39,647.03 ($44,052.25 / 100 * 90); plus 3. 100% of the disbursements which include Counsel's costs totalling $37,036.24.
2. The failure to complete was argued to establish relevant delinquency as a litigant, because completion would have resolved the proceedings. But still Mr Darren Barnes did not settle or vacate, even when he did not have the means to acquire the property, despite the case he later advanced: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22] and [35]; Mead v Watson [2005] NSWCA 133 at [8].
3. In the alternative, a later Calderbank offer of settlement which Mr Darren Barnes did not accept, was argued also to properly result in an indemnity costs of $103,284.57. That also established relevant delinquency, the rejection of this offer having been unreasonable: Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951 at [17]. This figure was calculated by: "19.1 70% of the costs incurred up to and including 12 March 2023, calculated to be $38,565.45 ($55,093.50 / 100 * 70); plus 19.2 90% of the costs incurred thereafter, calculated to be $27,682.88 ($30,758.75 / 100 * 90); plus 19.3 100% of the disbursements which include Counsel's costs totalling $37,036.24."
4. Rule 42.5(a) of the Uniform Civil Procedure Rules was also relied on as providing that, in the case of costs payable out of property held, or controlled, by a person who is a party to the proceedings in the capacity of executor, all costs (other than those that have been incurred in breach of the person's duty in that capacity) are to be allowed.
5. An indemnity costs order was opposed, because there had not been relevant delinquency. Mr Darren Barnes' failure to comply with the notice to complete his purchase not being able to be treated as if he had rejected an offer of settlement, even by way of analogy. There was also no finding that his case as to the termination of the contract had been hopeless and no other relevant delinquency on his part.
6. Further, the basis on which costs had been charged had not been adequately disclosed; the fee agreement not being in evidence and there being no itemised details provided as to how the costs had been incurred.
7. Ms Taylor swore a further affidavit providing the costs agreement and invoices on which the claims had been advanced.

There can be no indemnity costs order flowing from Mr Darren Barnes' failure to complete

1. The applicable principles were not in issue. They include that while the discretion to award indemnity costs is absolute and unfettered, it must be exercised judicially, that requiring that there be some special or unusual feature in the case justifying such an award. For example, where a party persists in what should have been seen to be a hopeless case. Further, it is conduct in the litigation, not the subject matter of the litigation which is relevant, thus ethical or moral delinquency in what gave rise to the litigation does not provide a basis for such an order: Mead at [8]-[9].
2. It follows that an indemnity costs order from the date that Mr Darren Barnes failed to complete the sale after service of the notice to complete, cannot be made, that not having been relevant conduct within the litigation.

There must, however, be an indemnity costs order

1. The refusal of the Calderbank offer of settlement was not addressed in Mr Darren Barnes' submissions. That offer was made on 20 February 2023, but not responded to. The letter explained why it was expected that Mr Darren Barnes' case would fail, given his failure to perform the contract he alleged; his ongoing inability to finance the purchase; and the date the contract had been terminated, even on his best case.
2. The offer proposed two options. The first, completion of the purchase. The second: "a. That your client vacates the property within 6 weeks from the date of orders; b. Failing compliance with (a), a warrant of possession be issued; c. Your client pay rent to the estate for the time of his occupation pursuant to the Orders of 7 April 2021, up to the date of these consent orders; d. If your client purchases the chattels located on the property, he can do so for the sum of $15,000.00; e. Any repairs to the property requested by the listing agent for the property be paid for by your client except those damages otherwise caused by flooding; f. Your client pays his own legal fees for the writ of possession proceedings; g. Your client's legal fees in relation to the administration of the estate and all of our client's legal fees (for both these proceedings and the administration) be paid by the estate. h. The parties agree to adopt Orders 7(j) to (p) of the Orders of 7 April 2021 for the purpose of selling the property. i. Your client agrees to retire from his position as executor and Attwood Marshall Lawyers will complete the administration of the estate."
3. What was so offered, conditional as it was, did not necessarily leave Mr Darren Barnes better off than the results of the April judgment. It did not, for example, deal with Darren Barnes' position as co-executor, resignation from which was a condition of the offer.
4. But still it must be accepted that what was offered was reasonable. Mr Darren Barnes was then legally represented and should have known that the case he advanced had no real prospect of success, particularly after what was explained in the February letter.
5. He had not only failed to complete his purchase when earlier served with the notice to complete, but he had no means, even at the time of the later hearing, to complete the purchase of the property.
6. There was thus no realistic prospect that Mr Darren Barnes could resist the order for possession which his co-executor had to pursue, in order that administration of the estate, which his ongoing failure to complete was holding up, could be finalised. The approach which he pursued in resisting giving possession of the property thus resulted in both unreasonable delay and expense, before the order for possession which he still resisted, but now accepts, was made.
7. In the result I am satisfied that the discretion to make an indemnity costs order from 20 February 2023 should be exercised, given Mr Darren Barnes' ongoing pursuit of his hopeless case.

Should there be a lump sum order and the costs paid out of the estate?

1. The appropriate order was argued by Mr Phillip Barnes to be that there be a lump sum costs order payable out of any distribution to Mr Darren Barnes from the estate. Otherwise, it was likely that the estate will not be paid at all: In the matter of Inavas Pty Ltd (Costs) [2017] NSWSC 1640 at [7]-[9].
2. Mr Darren Barnes contended that the evidence did not establish a proper basis for a lump sum order. Nor should the costs be paid out of the estate, given the evidence that he now has the means to pay them and that the claim had been pursued against him in his personal capacity.
3. Mr Darren Barnes annexed to his affidavit an unsigned letter of 16 June sent by the CommBank Team of the Commonwealth Bank, which showed the funds he then had in a bank account. The letter advised that might include uncleared cheques and that the Bank was not responsible for any reliance placed upon it.
4. Given the circumstances discussed in this and the May judgment, I am nevertheless satisfied that a lump sum order should be made, so that these parties are not put to the further time, trouble and expense of a costs assessment, which can only unjustly further deplete this estate and delay the finalisation of its administration.
5. Further, that those costs should be payable out of any distribution made to Mr Darren Barnes, there being no issue as to the Court's power to make such an order and the evidence also establishing that such an order is just in the circumstances I have discussed.
6. The legal assistance which Mr Phillip Barnes had to obtain, with the result the costs agreements he entered and the costs and disbursements incurred, were all the result of Mr Darren Barnes' unreasonable approach, including his ongoing failure to give up possession of the property, despite not being in a position to finalise its purchase. I have no confidence that such an approach would not continue, with the result ultimately further unnecessary cost incurred by the estate.
7. Sections 60 and 98 of the Civil Procedure Act also compel this conclusion, requiring as they do that the Court's discretions must be exercised with a view to achieving proportionality between the cost of the proceedings, their importance and complexity.
8. In the result I am satisfied that a lump sum, the payment of those costs out of Mr Darren Barnes' share of the estate, as well as the order in relation to the payment of Mr Phillip Barnes' costs, permitted by r 42.5(a) and about which there was no real issue, should all be made.

Orders

1. For these reasons I order: 1. Judgment for the plaintiff. 2. That a writ of possession be issued for the land comprised in Lot xxx in DPxxxxx being the land situated at and known as xxxxxx Road, Nimbin in the State of New South Wales. 3. That enforcement of the writ of possession be stayed for 28 days from the date of these orders, to permit the defendant/cross-claimant time to vacate the property. 4. That the defendant's cross-claim be dismissed. 5. That the defendant/cross-claimant pay the costs of the plaintiff/cross-defendant: 1. on the ordinary basis until 23 February 2023 and thereafter 2. on the indemnity basis. 1. That the costs in order 5 is specified as a gross sum of $103,284.57 pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) and that it shall be paid as a fixed sum from the proceeds of any distribution the defendant may receive as a beneficiary of the estate of the late Lawrence Phillip Barnes. 2. The balance of any costs of the plaintiff/cross-defendant be paid from the estate of the late Lawrence Phillip Barnes on the indemnity basis.

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