The plaintiffs, Ronda Elizabeth Rissanen and Suzanne Mary Broomhead, brought these proceedings in their capacity as the administrators of the estate of the late Brian Patrick Gill (Brian), who died on 13 May 1999. The defendants, Noela Therese Nunan and Rodney Michael Gill, are the surviving administrators of the estate of the late Henry William Joseph Gill (Henry), who died on 21 November 1965.
The plaintiffs' claims relate to the valuation and distribution of Henry's estate by the defendants. They seek, amongst other relief, orders for an account, the valuation of certain personal property of Henry, the payment of a one-eighth share of Henry's estate to Brian's estate and the removal of the second defendant as the trustee of Henry's estate.
It is not in dispute that Brian's estate is entitled to one-eighth of the residue of Henry's estate. At the time the proceedings were commenced, the majority of Henry's estate had already been distributed.
The hearing on 15 March 2019 related to an amended notice of motion filed by the first defendant seeking to strike out, in part, the third version of the statement of claim served by the plaintiffs. That part of the motion was not pressed at the hearing as the plaintiffs were granted leave, with the consent of the defendants, to file a further amended statement of claim in the form served on the defendants on 13 March 2019.
The issue to be determined is what costs orders should be made in those circumstances and in a context where the defendant had filed an earlier motion for similar relief in respect of the previous versions of the plaintiffs' pleadings.
The defendants seek orders that their costs of their notices of motion and any costs thrown away as a result of the various amendments to the pleadings be paid by the plaintiffs forthwith. The plaintiffs submit that no orders for costs should be made.
Written submissions on costs were served by the defendants on the evening before the hearing, which were supplemented by oral submissions by counsel at the hearing. The first plaintiff appeared for the plaintiffs by phone at the hearing. As the first plaintiff was not in a position to deal with the issue of costs at that time, I allowed the plaintiffs time to serve a written submission on the issue of costs and the defendants to file a short reply, noting that I would complete my consideration of the issues having regard to those submissions.
[3]
Procedural history
On 8 December 2017, the plaintiffs, who are self-represented, commenced these proceedings by way of summons. Following orders by the Court that the case proceed by way of pleadings, the plaintiffs filed their first version of a statement of claim headed "amended statement of claim" on 12 July 2018 (1st claim).
On 6 August 2018, the defendants filed a notice of motion seeking to have the proceedings dismissed under r 13.4(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for failing to disclose a reasonable cause of action. On 4 September 2018, the defendants filed written submissions setting out the deficiencies with the 1st claim and evidence in support of their motion.
On 2 October 2018, the hearing of the defendants' notice of motion was adjourned because the plaintiffs had foreshadowed they would make significant amendments to their pleading and provide documents in support of their claims. On 9 October 2018, the plaintiffs filed a second version of a statement of claim headed "statement of claim" (2nd claim), which included five new prayers for relief and seventeen new paragraphs.
Following receipt of the 2nd claim and pursuant to an order of the Court made on 16 October 2018, the defendants filed and served an amended notice of motion, which sought an alternative order that the plaintiffs' 2nd claim be dismissed pursuant to rule 14.28 of the UCPR with leave to be granted to the plaintiffs to file a statement of claim in a proper form. The defendants filed and served written submissions detailing the issues with the 2nd claim and evidence in support of the amended notice of motion.
On 6 February 2019, prior to the hearing of the amended notice of motion, the plaintiffs served a third version of a statement of claim headed "further amended statement of claim" (3rd claim).
On 26 February 2019, the first defendant's solicitor wrote to the plaintiffs outlining their concerns with the form of the 3rd claim and attached a copy of it marked up to highlight comments and suggested changes. On 12 March 2019, the defendants served further written submissions and evidence in support of the amended notice of motion (which was to be pressed in respect of the 3rd claim) on the plaintiffs.
On 13 March 2019, the plaintiffs served the fourth and current version of the statement of claim on the defendants (4th claim). It is the 4th claim that the defendants consented to being filed and, as a result, they now only press their amended notice of motion in so far as it seeks orders that their costs be paid by the plaintiffs.
At the hearing, the parties were ordered to attend a court annexed mediation, which is to be completed by 3 May 2019.
[4]
Costs of the notices of motion and costs thrown away
The power to award costs is a matter within the discretion of the court: s 98 Civil Procedure Act 2005 (NSW).
That discretion is a broad one: Oshlack v Richmond River Council (1998) 193 CLR 72. It must be exercised judicially having regard to the circumstances of the case, the established principles and the overriding mandate provided for in respect of the conduct of litigation of this Court, being the need for parties to conduct their proceedings with a view to the just, quick and cheap resolution of the real issues in dispute: ss 56 - 60 of the Civil Procedure Act 2005 (NSW).
The general rule is that costs follow the event, unless it appears that some other order should be made: r 42.1 UCPR.
The event refers to the practical result of a particular claim: Windsurfing International Inc v Petit (1987) AIPC 90-441 per Waddell LJ, as cited in the commentary to Ritchie's Uniform Civil Procedure NSW, vol 1 at [42.1.10]. The event can be determined by asking "who, as a matter of substance and reality, has won?": Roache v News Group Newspapers Ltd [1998] EMLR 161 at 168 - 169.
The costs of an amendment are usually paid if they result in costs thrown away. A party that amends a pleading without leave must, after the conclusion of the proceedings, pay the costs of, and occasioned by, the amendment: r 42.6 UCPR.
There is a public interest in encouraging parties to seek to resolve matters, particularly interlocutory disputes, and not penalising a party who responds to an application by way of compromise: ASIC v Rich [2003] NSWSC 297 at [78] citing Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2002] FCA 581.
However, it is also recognised that there is a difference between a constructive compromise which represents negotiation between the parties for the efficient resolution of proceedings and a compromise which represents a substantial capitulation and some element of success for the other side. In the latter circumstances, a costs order may be justified: Australian Securities and Investments Commission v Rich [2009] NSWSC 1229.
The defendants submit that their costs of the motions and those thrown away as a result of the amendments should be paid by the plaintiffs. They say the amendments to the pleadings only came about as a result of their correspondence, motions, detailed written submissions and evidence served to date. The costs relating to those activities should be paid by the plaintiffs as they were all necessary and reasonably incurred and led to the 4th claim being prepared and served which, while not perfect, is now in a form that can be responded to.
The essence of the plaintiffs' submissions appear to be that no costs order should be made in circumstances where:
1. some amendments made to the 2nd claim were the result of mistakenly including a claim for relief pursuant to s 63 of the Trustee Act 1925 (NSW), which error had been identified to the defendants early on in the proceedings;
2. the claim does not raise complicated issues and the plaintiffs' concerns are well known to the defendants;
3. the defendants could have responded to the claim earlier and agreed to have the matter sent to mediation but instead chose to raise issues with the formal pleadings, which led to increased time and costs;
4. the plaintiffs had sought the advice of a barrister in Sydney to write up to the third statement of claim and it should have been accepted in that form; and
5. no costs had been thrown away because of anything the plaintiffs have done as they did not seek to adjourn the hearing of the defendants' initial notice of motion and did not themselves seek to have anything struck out by the court.
The relevant events in this case are the resolution of the defendants' notices of motion. Both motions were resolved, for the most part, by consent of the parties as a result of the plaintiffs having agreed to amend their claims on three occasions, and the defendants consenting to the filing of the 4th claim.
The hearing of the first motion did not proceed due to the plaintiffs advising they would be making significant amendments and then serving the 2nd claim. That led to the amended motion being filed by the defendants, which was resolved following service of the 4th claim two days before the hearing on 15 March 2019.
A review of the different versions of the claims identify that there have been significant and material changes made by the plaintiffs since the 1st claim was filed on 12 July 2018. Those changes include the abandonment of some claims and the addition of new claims for relief and new pleadings of material facts.
It also appears that all but one of the changes made by the plaintiffs to their pleadings came about as a result of the defendants' actions in filing notices of motion and providing written materials to the plaintiffs which outlined deficiencies with the pleadings.
I accept that the amendment to the 2nd claim to abandon the claim for relief under s 63 of the Trustee Act 1925 (NSW) was advised by the plaintiffs to the defendants at an early point in time as having been included by mistake. But other claims have been abandoned by the plaintiffs as a result of issues raised by the defendants. This includes the claim based on issues raised in previous litigation (to which the plaintiffs are not parties) about the administration of Henry's estate.
I also accept that the plaintiffs may consider that this matter does not raise complex issues and that they provided materials to the defendants prior to the proceedings outlining what steps the defendants should have taken, and what payments should have been made to Brian's estate. However, that submission is not, in my opinion, to the point.
It is not what the plaintiffs considered the case to be or the documents that were provided by them that is relevant, but what was evident from the form of the pleadings served. It is not expected or fair for the defendants to have to "flesh out general expressions or indirect allusions by piecing together information in other documents": Northam v Favell Favco Holdings Pty Ltd (Supreme Court (NSW), Bryson J, 7 March 1995, unrep).
Claims made in this Court must be properly pleaded in accordance with the rules. It is incumbent on parties, including those who are self-represented, to ensure that their pleadings disclose a reasonable cause of action, plead the material facts on which they rely and are sufficiently precise and unambiguous so as to put the opposing party on notice of the real substance of the claim. Rule 13.4 of the UCPR requires a pleading to be as brief as the nature of the case allows, but sufficiently clear regarding the causes of action and facts on which they are based.
The evidence and procedural history disclose that the defendants went to significant lengths to identify to the plaintiffs the issues they had with the three versions of the claims. They filed three sets of written submissions (totalling 23 pages) which identified in some detail what was wrong with the pleadings and what had to be done to rectify them. The solicitor for the first defendant even provided detailed comments, by way of a mark-up, on the proposed 3rd claim. This is not a situation where the defendants have sat back and argued that the plaintiffs' pleadings were embarrassing or defective without identifying their concerns. To the contrary, the defendants have sought to provide the plaintiffs with assistance in an appropriate way.
A review of the earlier pleadings highlight that there were significant deficiencies which needed to be rectified. Each new version of the statement of claim has, in effect and in my view, represented an acknowledgement by the plaintiffs that the previous version was defective.
In that way, the defendants have obtained a measure of success as a result of their motions. They have ultimately been successful in obtaining the alternative order sought in the amended notice of motion for a pleading that is adequate according to the rules.
The plaintiffs have been on notice that the defendants would be seeking the costs of the preparation of the written submissions and affidavits in relation to the motions since 28 September 2018, when the first defendant's solicitor wrote to the plaintiffs in relation to the 2nd claim and advised they would be seeking to amend the motion to the form that was before the Court at the hearing. That letter made it clear the defendants had already incurred legal costs and would be seeking to have them, and any further costs incurred in relation to the amended motion, paid by the plaintiffs.
There have been no costs orders made in these proceedings despite the various interlocutory hearings. The matter is in early stages and the defendants have already incurred not insignificant legal costs in seeking a proper pleading over the past eight months. It is this success that should be compensated.
For these reasons, I consider it appropriate to exercise my discretion and make an order that the plaintiffs pay the defendants' costs of, and incidental to, their notice of motion filed on 6 August 2018 and amended notice of motion filed 19 October 2018.
As to the order that the plaintiffs pay the defendants' costs thrown away by reason of the amendments and the grant of leave to file the 4th claim, the defendants accepted, rightly in my view, that making this order as well as an order for the costs of the motions would involve some "double accounting". I accept it may be possible to avoid this with an appropriately worded order. However, I am not satisfied that an order for costs thrown away is appropriate in this case, in circumstances where the defendants' costs thrown away, which may include the preparation of written submissions and affidavits relating to the notices of motion, are likely to be recoverable, at least in part, by the costs order in the terms I have proposed.
[5]
Should costs be payable forthwith?
Unless otherwise ordered by the Court, the costs of an interlocutory application follow the outcome of the case and do not become payable until the conclusion of the proceedings: r 42.7 UCPR.
There is a presumption against making an order for costs payable forthwith: Eastmark Holdings Pty Limited v Kabraji (No 2) [2012] NSWSC 1255 at [29].
Courts have identified a number of relevant considerations that may be taken into account to justify an order for costs payable forthwith. These include whether:
1. the interlocutory decision relates to, or is, a discrete, separately identifiable aspect of the proceeding;
2. there had been some unreasonable conduct on the part of the party against whom the costs have been ordered; and
3. there is likely to be a long delay in the final resolution of the proceedings.
See generally Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; Hamod v New South Wales [2007] NSWSC 707; Rafferty v Time 2000 West Pty Ltd (No 3) (2009) 257 ALR 503; Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No 2) [2010] FCA 1347.
In In the matter of Elsmore Resources Ltd [2014] NSWSC 1390, Black J, adopting the summary of Katzmann J in Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No 2) [2010] FCA 1347, identified the relevant principles as follows (at [5]):
"In summary, an order that costs be paid forthwith is an exception, which will only be made in a case that is out of the ordinary; such an order has the capacity to stultify proceedings, particularly brought by persons with limited resources, and also has the risk of operating unfairly where, over the course of proceedings, there may be orders which are made that one or other party should pay the costs of the other from time to time. Nonetheless, the Court may order that costs be paid forthwith, at least if there is an element of unreasonableness in the conduct of the unsuccessful party, and it is likely there will be a long delay between the interlocutory proceedings and the conclusion of the principal proceeding."
Some of these factors are present in this case.
As the defendants submit, the notices of motion and issues relating to the pleadings represent the determination of a separately identifiable matter, being the proper articulation of the claim that the plaintiffs seek to advance.
Further, given that the pleadings have not yet closed and it took eight months for the plaintiffs' claim to be finalised in a form acceptable to the defendants, it is very likely that the proceedings will be ongoing for some time.
However, there are other factors which to my mind tend against ordering that costs be payable forthwith.
The defendants relied on the proceedings having been brought as claims between the administrators of one estate, being the estate of Brian (the plaintiffs), against the trustees of another estate, being the estate of Henry (the defendants). Trustees are entitled, ordinarily, to have their costs paid from the estate on an indemnity basis. As there are few funds left to be distributed, it was said there is a risk that the defendant trustees may not be able to be indemnified.
While that may be a risk, the defendant accepted that there are ways that risk could be managed, such as by writing to beneficiaries and asking for contributions or seeking security for costs.
Further, the right of indemnification does not extend to situations where trustees have been found to have acted unreasonably. It appears the plaintiffs are, in some respects, claiming that the trustees have acted unreasonably and are seeking to have them personally account for some of the steps they have taken.
The defendants also submitted that the plaintiffs' overall conduct, in serving multiple statements of claim, was unreasonable. However, this must be considered in the context that the plaintiffs are self-represented and appear genuinely to have sought to address the concerns raised by the defendants' solicitors on each occasion. This has included seeking assistance from counsel when preparing the 3rd claim (which the defendants accepted was getting "closer") and attempting to obtain legal representation through LawAccess NSW to no avail.
While there is no documentary evidence before me of the plaintiffs' financial position, there is also a risk that making an order for costs to be payable forthwith in favour of the defendants could have a significant impact on the plaintiffs' ability to pursue the proceedings.
The defendants are going to be compensated for their costs as a result of my decision to award the defendants their costs in respect of their notices of motion. In that context, and in the circumstances set out above, I am not persuaded by the defendants' submissions that it is appropriate for me to also exercise my discretion and order that those costs be paid forthwith.
Given my findings above, it is unnecessary to determine the defendants' application for costs thrown away to be payable forthwith. Had I ordered them to be paid, I would not have ordered them to be paid forthwith as costs thrown away are generally only determinable after proceedings have been finally resolved. The defendants conceded this point at the hearing.
[6]
Orders
The Court makes the following order:
1. The plaintiffs to pay the defendants' costs of, and incidental to, the notice of motion filed on 6 August 2018 and amended notice of motion filed on 19 October 2018.
[7]
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: 12 April 2019