Price v Price

Judgment

1. BASTEN JA: I agree with Macfarlan JA.
2. MACFARLAN JA: This is an application for leave to appeal from a costs order made by Pembroke J in the Equity Division on 6 February 2020. Whilst this Court would not ordinarily grant leave to appeal against such an order, particularly when the amount involved is substantially less than $100,000, the proper administration of justice requires a grant of leave, as occurred in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (see at [1] per Basten JA). As indicated below, the primary judge in the present case made errors of both principle and fact in exercising his costs discretion.
3. The evidence before the primary judge was very limited. The following description of what occurred is based upon the material put before this Court, by way of evidence or concession, upon the basis of which this Court is able to re-exercise the discretion which was not properly exercised at first instance. In large measure the description is derived from the part of the applicant's written submissions with which the respondents said that they did not cavil.

The proceedings at first instance

1. The applicant in this Court, Ms Mary Price, married Mr Andrew Price in 2010. They separated in 2019 and are parties to hard-fought and incomplete proceedings in the Family Court of Australia. The proceedings went into abeyance when, in January this year, Mr Price fell gravely ill, such that he became in need of a guardian.
2. On 25 May 2012 Mr Price had executed an Appointment of an Enduring Guardian and an Enduring Power of Attorney, in both cases in favour of Ms Price or, if she be unwilling or unable to act, then his sister Ms Elisabeth Theodore, the present third respondent. The first and second respondents are children of Mr Price as a result of a previous marriage.
3. At 3.14pm on Friday 31 January 2020 a letter from Ms Price's solicitor, Ms Rebekah Dorter, was sent by email to Mr Price's solicitor, Mr Farshad Amirbeaggi, enclosing copies of the appointments referred to in [5] above and enquiring whether Mr Price had recently executed documents revoking them when, on Ms Price's view, Mr Price lacked the capacity to do so. The letter did not foreshadow that Ms Price was intending to take any action as Mr Price's attorney or guardian.
4. At 5.45pm on that evening Mr Amirbeaggi stated by email to Ms Dorter that he had instructions to approach the Guardianship Division of the NSW Civil and Administrative Tribunal ("NCAT") on the following morning (being Saturday) seeking to have the powers conferred on Ms Price revoked. He invited her to volunteer her retirement.
5. At 5.51pm on the same evening Ms Dorter responded by email to the effect that a demand for a response before Saturday was unreasonable, that she would obtain instructions and that she would respond by the close of business on Monday 3 February 2020. She asked that no application be made to NCAT in the meantime.
6. At 6.10pm on the same evening Mr Amirbeaggi indicated by email that he would not wait before making an application, given Ms Price's "conduct, and very clear conflict". The relevant emails, including this one, were not in evidence before this Court, only a description of them being before it.
7. At 11.36pm on the same evening, the present respondents commenced proceedings in the Equity Division of the Supreme Court by filing a Summons.
8. The Summons sought the following relief: "1. Order that the Defendant be removed as named Attorney in the Enduring Power of Attorney, dated 25 May 2012. 2. Order that the First, Second and or Third Plaintiffs be named and appointed whether jointly or severally as substitute Attorney in the Enduring Power of Attorney, dated 25 May 2012. 3. In the alternative to Orders 1 and 2 that the Enduring Power of Attorney, dated 25 May 2012, be cancelled, revoked, or set aside. 4. Order that the Defendant be removed as named Enduring Guardian in the Enduring Guardian Deed, dated 25 May 2012. 5. Order that the First, Second and or Third Plaintiffs whether jointly or severally be named and appointed as substitute Enduring Guardian in the Enduring Guardian Deed dated 25 May 2012. 6. The Defendant [within] 48 hour[s] of Order produce to the Plaintiffs a list of all acts she has performed or undertaken in the exercise of her capacity as Attorney Under Power or Enduring Guardian. 7. The Defendant within 48 hours of Order return all property of Andrew John Price held in her possession, custody, or control. 8. The Defendant be restrained by injunction from holding herself out as acting in the capacity of Attorney Under Power or Enduring Guardian of Andrew John Price. 9. The Defendant be restrained by injunction from in any way dealing with the property of Andrew John Price. 10. Order that the Defendant pay the Plaintiffs' costs of these proceedings. 11. Any further or other Order that the Court deems fit. 12. These Orders be taken out forthwith."
9. At 11.51pm on the same evening, the Summons was served on Ms Price. It was returnable at 9am on Saturday 1 February 2020 before the Duty Judge, Henry J.
10. The supporting affidavit was prepared sometime after 6.06am on the Saturday morning. It summarised certain allegations made in the Family Court proceedings and attributed to Ms Price a concession about her transfer of approximately $1,000,000 from joint funds.
11. At the hearing before Henry J, Ms Dorter said inter alia: "DORTER: In relation to the enduring power of attorney and enduring guardianship, my instructions are my client has taken no steps to act on that power of attorney or enduring guardianship, and my instructions are to give an undertaking to the Court that she will not act upon that power of attorney or enduring guardianship. I have not at any stage been requested [to give] an undertaking by my friend. HER HONOUR: Your client will give that undertaking not to do so? DORTER: [She] will, your Honour. … DORTER: I don't hold instructions in relation to who would be the appropriate person [to act on the guardianship], other than my client's instructions that she would like to put on evidence so that she could be heard by the Court or the tribunal as to who was the appropriate person to act."
12. After a short adjournment, Ms Dorter said: "DORTER: I have received instructions from my client that she does provide the undertaking to the Court as previously mentioned. In relation to the interim period before this matter can be brought back before the Court, she's agreeable to the alternate Enduring Guardian and Power of Attorney which is Eli[s]abeth Christine Theodore..."
13. In the course of argument her Honour asked Mr Amirbeaggi whether he was pressing for orders 6, 7, 8 and 9 sought in the Summons. He confirmed that he was but, after argument, her Honour said: "HER HONOUR: Well, I should say that in circumstances where the Court has received an undertaking that the defendant has not exercised any powers under the attorney or enduring guardian, I am not prepared to make those orders now but it may be that you can seek those orders when you are before the Court on Thursday."
14. Her Honour made the following orders at the conclusion of argument on 1 February: "1 The Court notes the undertaking given to the Court by the defendant that, until 5pm, Thursday 6 February 2020, she will not act, and is unwilling to act, under both the Appointment of Enduring Guardian dated 25 May 2012 and the Enduring Power of Attorney dated 25 May 2012. 2 The Court notes the consent of the third plaintiff dated 1 February 2020 to her appointments as Enduring Attorney and Enduring Guardian for Andrew John Price. 3 The Court confirms the appointments of the third plaintiff as the alternate Enduring Attorney and Enduring Guardian for Andrew John Price, pursuant to the terms of the Appointment of Enduring Guardian dated 25 May 2012 and the Enduring Power of Attorney dated 25 May 2012. 4 The Court confirms the appointment of the third plaintiff to act as Enduring Attorney and Enduring Guardian is to take effect immediately and operate until 5pm, 6 February 2020. For avoidance of doubt, the third plaintiff is to act as the sole Enduring Attorney and Enduring Guardian for Andrew John Price pursuant to her appointments, as confirmed by the Court, until 5pm, 6 February 2020 or further order of the Court. 5 The defendant to file and serve any affidavit evidence on which she relies by 4 February 2020. 6 The plaintiffs to file and serve any affidavit evidence on which they rely by 5 February 2020. 7 The Summons for relief is stood over for further hearing before the Equity Duty Judge at 10am, Thursday 6 February 2020. 8 The Court notes the undertaking given to the Court by the defendant that, since 17 January 2020, she has not performed or undertaken any acts in the exercise of her capacity as Attorney or Guardian under the Appointments of Enduring Guardian dated 25 May 2012 and Enduring Power of Attorney dated 25 May 2012."
15. On Tuesday 4 February 2020 Ms Price offered, on a without admissions basis, to resign as enduring guardian and vacate the office of attorney, with Ms Theodore taking her place. She also offered to consent to an order that each party bear his or her own costs. The substance of the respondents' reply late that day was that they were prepared to accept the first limb of the offer but not the second concerning costs. By letter sent the next day, Wednesday 5 February 2020, Ms Price reiterated that she would resign immediately as enduring guardian and vacate her office as attorney.
16. On 4 February 2020, prior to receiving the respondents' response of that day, Ms Price swore an affidavit that responded to allegations that the respondents had made concerning her conduct. By affidavits sworn on 5 February, the second and third respondents, and their solicitor, disputed various of Ms Price's contentions.
17. The proceedings came before the then Duty Judge, Pembroke J, on Thursday 6 February 2020. In this Court the parties accepted that the only material before Pembroke J comprised two documents handed up to his Honour in the course of the hearing, one being minutes of proposed consent orders and the other being a copy of s 6L of the Guardianship Act 1987 (NSW). No other documents were tendered. Whether his Honour nevertheless had reference to and relied on the contents of the court file is not known.
18. Mr Amirbeaggi told his Honour that he believed that the parties had settled the proceedings by the "renunciation or removal" of Ms Price as Mr Price's attorney and guardian, and her replacement with Ms Theodore. There was then discussion between his Honour and counsel about the appropriateness of the Court making orders (other than as to costs) in the terms agreed by the parties. His Honour was satisfied that they should be made.
19. The argument then turned to discussion as follows about the appropriate costs order, the respondents having sought and Ms Price having resisted an order that Ms Price pay the respondents' costs of the proceedings: "HIS HONOUR:… What's the argument about costs? I would not have thought it followed in these circumstances that the plaintiff pay the defendant's costs. You seem to have got what you set out to achieve. AMIRBEAGGI: Yes, your Honour. Depending on your Honour's attitude in adopting my being heard in relation to it, I would like to take your Honour to the conduct and the reasonableness of this defendant both before the proceedings, after the filing of the proceedings, and after orders were made on Saturday, 1 February in relation to the issues. HIS HONOUR: Proceedings commenced on Saturday. AMIRBEAGGI: The listing was obtained on Friday night. It proceeded before her Honour on Saturday morning. A hearing pursued for four or five hours. HIS HONOUR: Mr [Stewart] [the appellant's representative], we've a general policy rule that it is in the interests of the administration of justice that costs should follow the event. It reflects the view that if the plaintiff succeeds, the plaintiff should get their costs ordinarily because the defendant could have avoided the need for proceedings by agreeing to what the plaintiff seeks before the proceedings were commended. We try not to split hairs… or make too many fine distinctions when dealing with costs. It's just a good rule of thumb. [STEWART]: There was simply no opportunity given to the defendant to consent. HIS HONOUR: You could have consented on Saturday. [STEWART]: There was a consent where the interim regime that was instituted-- HIS HONOUR: You had four or five hours in Court on Saturday when you could have simply said yes, this is sensible in the circumstances. I will renounce my appointment of the Attorney General and guardian. You could have avoided the need to come to Court today. [STEWART]: It was conveyed on Tuesday and that would have meant to come today. We said each party bears their own costs. HIS HONOUR: The plaintiff, as the prime [sic] plaintiff, is entitled to their costs. [STEWART]: The reason why it should be ordered otherwise is the defendant, on Saturday, put forward the regime. On Tuesday it was made very clear. In fact we raised clearly s 6L which hadn't been considered by the parties on the Saturday. In that sense, we were also the ones who found the way to s 6L through correspondence yesterday. HIS HONOUR: Provisions of the guardianship are not the issue. The question is whether the defendant recognised the appropriate reasons in the circumstances of her renouncing her appointment. She took too long to recognise that or to be advised that she should recognise it. There is no real room or justification for departing from the order, really." (Emphasis added.)
20. His Honour then made the orders as sought in the short minutes, as well as an order that Ms Price pay the respondents' costs of the proceedings.

The parties' arguments in this Court

1. Ms Price challenged Pembroke J's order that she pay the respondents' costs of the proceedings on two bases.
2. First, she contended that his Honour did not apply the "correct test" in exercising his costs discretion because he failed to have regard to the proceedings' character as protective rather than inter partes. She relied on Lindsay J's statement in CAC v Secretary, Department of Family and Community Services (No 2) [2015] NSWSC 344 at [11] that the "'the ordinary rule' in protective proceedings… [is] that the Court may exercise its discretion as to costs, not by reference to a rule that 'costs follow the event', but having regard to 'what, in all the circumstances, seems proper'" and his Honour's identification at [16] of factors relevant in this regard, including: "(a) The protective jurisdiction of the Court is generally governed by the 'welfare principle' (that the welfare and interests of each person in need of protection, here the plaintiff's children, are the paramount consideration) and an associated concern to ensure that whatever is done, or not done, is done in the interests, and for the benefit, of the particular person in need of protection. (b) The Court needs to be alive to the possibility that private individuals who would otherwise be concerned to act to protect a person in need of protection might be deterred from acting if bound to submit to a costs order on an unsuccessful application made by them to the Court, even though reasonably made: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640F. Cf, Wilson v Department of Human Services; Re Anna (No 2) [2011] NSWSC 545 at [95]-[108]. … (d) Proceedings relating to the welfare of children, or any other person in need of protection, are not adversarial in the sense encountered in ordinary civil litigation but, rather, are attended by a strong, special public interest element."
3. Ms Price's senior counsel acknowledged however that no submission that this was the "correct test" was made to his Honour (see Macedonian Church v Eminence Petar (2008) 237 CLR 66; [2008] HCA 42 at [120]). Counsel nevertheless submitted that the point was still open to him to take on appeal because the principle involved was obvious.
4. Secondly, Ms Price contended that the primary judge erred in acting on the basis that an "event" had occurred for the purposes of r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), which prescribes that, unless the court considers some other order is appropriate, "costs follow the event". She submitted that there was no relevant "event" as the proceedings were settled. As well, she contended that the primary judge erred in concluding that Ms Price acted unreasonably in not consenting to orders on the first return date of the respondents' Summons, that is, on Saturday 1 February.
5. In response to Ms Price's first contention, the respondents submitted that Ms Price stated the effect of Lindsay J's observations in CAC v Secretary too broadly and stressed that Lindsay J expressly noted that "the general rule [in the Supreme Court] remains that costs follow the event, unless the Court otherwise orders" (at [14]).
6. In response to Ms Price's second contention, the respondents submitted that the primary judge had correctly concluded that a relevant "event" had occurred (being the making of orders in favour of the third respondent, albeit by consent). They further submitted that there were a number of matters indicating that Ms Price did not act reasonably in relation to the litigation, including the following: "a. given the adversarial and caustic relationship between the parties to the Family Court proceedings, one would have thought the Applicant's initial position in maintaining her position as enduring guardian was untenable - regardless of Mr Price's capacity (see section 4 of the [Guardianship Act 1987 (NSW)]). The Applicant knew or ought to have known that she could not continue to act in Mr Price's best interests, possibly as far back as when the Applicant and Mr Price separated on a final basis; b. given the provisions of section 6HB(1)(b) of the [Guardianship Act], it was not possible for the Applicant to resign (at the relevant time) without the approval of the Tribunal; c. in the absence of an order from a 'review tribunal', there was no capacity to substitute in a replacement attorney; and d. for the purposes of a review application under section 6L of the [Guardianship Act] and section 36 of the Powers of Attorney Act 2003 (NSW): i. the Supreme Court has almost unfettered discretion in considering which matters are relevant; ii. it is a matter for the Supreme Court to determine who is an appropriate person (or persons) to replace an existing guardian based on admissible evidence; iii. it goes without saying that the Supreme Court would likely take into consideration the fact an existing guardian no longer wishes to maintain that position and any person (subject to the tender of admissible evidence) nominated by that guardian. This is not a mandatory consideration. e. on 1 February 2020, the Applicant consented (albeit on an interim basis) for the Third Respondent to be an alternate appropriate Enduring Guardian and Power of Attorney." (Footnotes omitted.)
7. The respondents summarised their position as follows: "The Respondents had no choice but to commence proceedings in circumstances where Mr Price lacked capacity and in the absence of an order from the Tribunal or the Supreme Court, it was impossible for the Applicant to simply renounce her role as enduring guardian and to 'appoint' an alternate guardian and attorney."

Determination of the leave application

1. It is convenient to refer first to Ms Price's second ground of challenge to the primary judge's costs order, namely, that his Honour misapplied r 42.1's directive that costs are to follow the event unless it appears that some other order is appropriate.
2. As to this contention, it must first be concluded that there was no "event" for this purpose. Whether in particular cases the event is taken as a reference to the outcome of proceedings as a whole or the result of determination of particular issues, for there to be an "event" there must have been a contest in which the applicant for costs has succeeded. As McHugh J pointed out in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6, if there is no hearing on the merits, the rule that costs follow the event is inapplicable. To similar effect, Basten JA said in Nichols at [2] that "where there has been no trial there is no 'event'" (see also at [30] per Payne JA, Meagher JA agreeing). There was no contest or hearing as to the merits here because the orders (other than as to costs) were made by consent. That is not to say that a litigant who obtains consent orders will not ever be entitled to costs. He or she may well be, depending upon an assessment of the conduct of each party (see Minister v Lai Qin referred to at [43] below). Where there is consent, that litigant will not however have the benefit of the presumption created by r 42.1.
3. If, as the parties in this case agreed should be so, one treats the primary judge's comments made in the course of argument as his reasons for his decision, it is clear that his Honour impermissibly applied the rule embodied in r 42.1. He seems to have referred to it four times (see the emphasised passages in [22] above). The last reference is in the final three sentences of what his Honour said. These appear to constitute his reasons, albeit succinct, for making the costs order. What his Honour said in that last passage was that Ms Price "took too long to recognise" that she should be "renouncing her appointment" and that in those circumstances there was no justification "for departing from the order", which appears to have been a reference to the principle his Honour quoted earlier to the effect that costs ordinarily follow the event. As, for the reasons I have given, there was no relevant "event" for the purposes of this principle, his Honour was in error in applying it.
4. The primary judge also erred in concluding that Ms Price acted unreasonably. His Honour did not have before him evidence of the factual circumstances which would have enabled him to form a view about that topic.
5. Taking into account, for the purposes of re-exercising the costs discretion, the further material that is before this Court, I consider that it should be concluded that Ms Price did not act unreasonably and that there should be no order as to the costs of the proceedings. I note in this respect that Ms Price did not contend in this Court that her costs at first instance should be paid by the respondents. She was content that there be no order as to costs.
6. The following matters are of particular relevance to the reasonableness of Ms Price's conduct and to the unreasonableness of that of the respondents.
7. First, both the Appointment of an Enduring Guardian and the Enduring Power of Attorney provided for the third respondent to act as guardian and attorney in the event that Ms Price was unwilling or unable to act. There was therefore no need for the respondents to approach the Court (or NCAT) if Ms Price agreed to renounce her position.
8. Secondly, the respondents had no evidence that Ms Price intended or threatened to exercise any of her powers as guardian or attorney precipitously, or at all. No such threat was contained in her solicitor's letter sent at 3.14pm on Friday 31 January (see [6] above). Moreover, at the hearing before Henry J the next morning Ms Dorter readily proffered on Ms Price's behalf the undertaking referred to in the next paragraph below that she would not so act. Ms Dorter also made the point that her client had not been requested to provide such an undertaking (see [14] above).
9. Thirdly, at the same hearing Ms Dorter gave on Ms Price's behalf an undertaking that until the further hearing fixed for 6 February 2020 "she will not act, and is unwilling to act" under both appointments. That triggered the third respondent's entitlement under the instruments to act in the interim period. Ms Dorter also expressly indicated to the Court that her client had no objection to the third respondent so acting.
10. Fourthly, the respondents' commencement of proceeding was precipitous, not affording Ms Price any reasonable opportunity to respond substantively to the respondents' solicitor's letter sent at 5.45pm on Friday 31 January. In light of Ms Price's cooperative conduct before Henry J at the hearing the next morning, it can readily be inferred that at least an interim undertaking not to act (and therefore to permit the third respondent to act as guardian and attorney for the period of the undertaking) would have been forthcoming if that opportunity had been given.
11. Fifthly, when Ms Price offered on Tuesday 4 February to consent to the relief that the respondents sought concerning the appointments, the respondents failed to accept her entirely reasonable offer to agree that there be no order as to the costs of the proceedings.
12. Sixthly, the respondents did not obtain under the consent orders made by Pembroke J a good deal of the relief that they had sought in their Summons in the proceedings. In particular, they did not obtain the appointment of the first or second respondents as guardians or attorneys to act with the third respondent, as had been sought in Orders 2 and 5 of the Summons, and they did not obtain Orders 6 to 9 (see [11] above) being injunctions, orders for return of property and identification of acts done under the appointments.
13. To these circumstances, the principles summarised by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 need to be applied: "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action." (Citations omitted.)
14. Their application leads to the conclusion that Ms Price should not be ordered to pay the respondents' costs of the first instance proceedings. Ms Price did not act, to use McHugh J's words just quoted, "so unreasonably" that she should pay those costs. In fact, she did not act unreasonably at all.
15. It is unnecessary in these circumstances to consider whether Ms Price would have been assisted in having this conclusion arrived at by recourse to the observations of Lindsay J in CAC v Secretary, Department of Family and Community Services (No 2), to which I have referred above (see [25]), but which were not brought to the primary judge's attention. It is sufficient to say that those observations do not assist the respondents in the present case because, from their point of view, the proceedings were misconceived. Contrary to their contention that they "had no choice but to commence proceedings" (see [30] above), the issues concerning Mr Price's guardian and power of attorney about which the respondents were concerned could have been resolved without an application to the court (or NCAT) if they had afforded Ms Price the usual pre-action opportunity to consider and indicate her position (see Nichols v NFS at [6]).
16. As the successful party on appeal, Ms Price sought, and should obtain, an order for the respondents to pay her costs of the proceedings in this Court. I note that her counsel foreshadowed the possibility of an application for an order that these costs be paid on the indemnity basis. If that possibility is to be pursued, that should occur in the normal fashion by a notice of motion being filed within the time prescribed by the UCPR. Ms Price would of course be at risk of paying the costs of that motion if she were unsuccessful.
17. For these reasons, I propose the following orders: 1. Grant leave to appeal. 2. Set aside the costs order, being Order 6, made by Pembroke J on 6 February 2020. 3. Note that no order is made as to the costs of the proceedings at first instance. 4. Order the respondents to pay the applicant's costs of the proceedings in this Court.
18. MEAGHER JA: I agree with Macfarlan JA.

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