On 7 May 2019, the plaintiff discontinued these proceedings.
The plaintiff was permitted to discontinue without prejudice to any right of the defendants to apply for such order as to the costs of the proceedings to which they may be entitled.
The proceedings had been set down on 18 September 2018 for a five-day hearing commencing on 13 May 2019.
A hearing on the issue of costs took place on 28 May 2019.
The defendants sought the following alternative orders as to costs:
(a) The Plaintiff pay the Defendants' costs of the proceedings on an indemnity basis.
(b) Alternatively, the Plaintiff pay the Defendants' costs of the proceedings on the ordinary basis up to and including 9 November 2017 and on the indemnity basis thereafter.
(c) In the further alternative, the Plaintiff pay the Defendants' costs of the proceedings on the ordinary basis.
As I understand the submissions made on behalf of the defendants at the hearing, they accepted that, instead of the date in order (b), the Court might order the plaintiff to pay their costs on the indemnity basis from 18 September 2018. 9 November 2017 was the date on which the plaintiff swore his affidavit in these proceedings, and 18 September 2018 was the date on which the proceedings were set down for hearing.
The defendants started by relying upon Uniform Civil Procedure Rules 2005 (NSW) rule 42.19(2), which provides: "Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued."
The defendants also relied upon Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 (Bitannia) at [54] and [70]. I accept the defendants' submission that this authority has the effect that, where a plaintiff has discontinued, the plaintiff has the onus of making an application in respect of costs if he or she does not propose to pay the costs of the other parties. Bitannia, at [54], makes clear that the plaintiff must demonstrate "some sound positive ground or good reason for departing from the ordinary course".
The plaintiff was self-represented on the costs argument, and did not formally make an application for an order that he be relieved of the obligation to pay the defendants' costs. However, the hearing was conducted as if that application had been made.
The plaintiff made written submissions as to why he should not be ordered to pay the defendants' costs at all. Those submissions have been placed in the Court's file. The submissions do not provide any material reason why the ordinary result should not follow. Consequently, the defendants are at least entitled to an order that the plaintiff pay their costs of the proceedings on the ordinary basis.
The real question is whether the plaintiff should be ordered to pay the defendants' costs on the indemnity basis, and if so for what period.
The principles that are relevant to the present case that govern when the Court should order that costs be paid on the indemnity basis were most recently and, with respect, helpfully outlined by Henry J at [12]-[15] and [20] in Somerville Legal Pty Ltd v Boensch [2019] NSWSC 267. Her Honour, citing Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, and Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324, stated as follows at [14]:
There are no fixed rules as to when the discretion to award indemnity costs may be exercised but the cases suggest that it requires a special or unusual feature, such as some relevant delinquency in relation to the conduct of the case…
In the circumstances of the present case, the question is whether the plaintiff's conduct in commencing the proceedings and pursuing them has been so unreasonable that he should be ordered to pay the defendants' costs on the indemnity basis, or alternatively whether his claim was so hopeless that costs should be ordered on that basis.
The plaintiff and the first defendant are brothers. The second defendant is the wife of the first defendant. The proceedings concern property at 5 Edgecliff Boulevard, Collaroy NSW.
By his statement of claim filed on 24 July 2017, the plaintiff claimed declarations and orders that would have the effect that he was a one half beneficial owner of the Edgecliff Boulevard property.
The defendant also sought declaratory relief concerning the operation of s 145 of the Conveyancing Act 1919 (NSW), concerning how various properties that were part of the deceased estate of the plaintiff's and the first defendant's mother should bear a mortgage over those properties.
The plaintiff did not contest the submission made on behalf of the defendants that, if the Edgecliff Boulevard property was solely the beneficial property of the first defendant, it would not have formed part of the deceased mother's estate and, accordingly, the s 145 claim would not arise.
The defendants relied upon the fact that the beneficial ownership of the Edgecliff Boulevard property was considered in a judgment delivered by me in earlier proceedings between the plaintiff and the first defendant: see Sotiropoulos as executor of estate of Sotiropoulos v Sotiropoulos [2015] NSWSC 855. At [25], [26] and [45], I made observations to the effect that the present plaintiff had accepted that the present first defendant was entitled to the beneficial ownership of the Edgecliff Boulevard property, the present first defendant had accepted that he was personally responsible for the repayment of the debt attributable to the property, and that he had paid that amount to the Bank, and that the present first defendant had claimed that the property was held on a constructive trust for him by the deceased.
For the purposes of the costs argument, the defendants accepted that the plaintiff had not put the first defendant's claim that he was the sole beneficial owner of the Edgecliff Boulevard property in issue in the earlier proceedings, and the defendants did not attempt to show that the plaintiff had obtained any positive benefit from taking that stance.
The defendants also relied upon the fact that, in the taking of accounts in respect of the deceased mother's estate, the present plaintiff had made a number of objections to the allowance of expenses claimed by the first defendant, as executor of the deceased's estate, on the basis that the expenses related to the Edgecliff Boulevard property, and should not be allowed because that property was beneficially owned solely by the first defendant.
When I asked whether the evidence showed that the plaintiff had obtained some benefit based upon those claims, the defendants' counsel responded by saying that there was no evidence to that effect, as the accounting process had not yet been completed.
Ultimately, the defendants did not submit that the plaintiff's conduct in commencing the present proceedings claiming a half beneficial interest in the Edgecliff Boulevard property was an abuse of process because the plaintiff had changed his position, after obtaining a benefit as a result of his accepting or asserting that the first defendant was the sole beneficial owner of the Edgecliff Boulevard property.
The defendants also did not submit that I had, in the 2015 judgment, made a finding of fact or law that the first defendant was solely beneficially entitled to the Edgecliff Boulevard property.
Rather, the defendants relied upon the argument that it was entirely unreasonable for the plaintiff to have commenced the present proceedings, in which he had no prospects of success, because, on the earlier occasions, he had accepted that the first defendant was the sole beneficial owner of the Edgecliff Boulevard property, and an analysis of the plaintiff's statement of claim, and the contents of his 9 November 2017 affidavit, showed that he was unable to allege, or prove, any facts that could have established that he was entitled to half of the beneficial ownership of the Edgecliff Boulevard property.
I take the view that, while the statement of claim is not well-drafted, it does allege facts reasonably capable of establishing that the plaintiff had a half beneficial ownership in the Edgecliff Boulevard property. Paragraphs 16 to 31 of the plaintiff's affidavit contain evidence which provided an arguable basis to support the plaintiff's claim. That is true, although I accept the submission made on behalf of the defendants that some parts of the affidavit are clearly in an inadmissible form.
I do not accept that, in all of the circumstances, particularly as they must be considered in the context of a costs application, the evidence sufficiently clearly establishes that it was unreasonable for the plaintiff to commence and pursue these proceedings, so as to justify an order for indemnity costs from the time of their commencement. I also do not accept the submission that the plaintiff's claim was hopeless, although plainly the fact of his earlier acceptance that the first defendant was the sole owner of the relevant property would have caused the plaintiff very serious forensic difficulties, had the proceedings continued to judgment.
However, in his submissions the plaintiff clearly acknowledged that he had formed the view that he wished to discontinue the proceedings in September 2018. The plaintiff provided an explanation in his submissions that he tried to negotiate with the defendants to achieve a discontinuance on the basis of what he thought was a reasonable order as to the costs that he should pay.
I am satisfied that it was unreasonable for the plaintiff not to have discontinued as soon as he formed the view that he would not prosecute the proceedings to hearing.
Shortly before the hearing was fixed to begin, the plaintiff made an application to adjourn the hearing. The adjournment application was refused. The plaintiff then made it clear that he had no intention at all of appearing to prosecute his case. Consequently, he sought and was given leave to discontinue the proceedings.
I am satisfied, from the plaintiff's own statements, that he had no intention to prosecute his claim to final hearing at any time after September 2018.
The plaintiff, in those circumstances, ought to have saved the defendants from wastefully incurring the costs of preparing to conduct a five-day hearing.
As it is necessary to fix a precise date for the change in the basis upon which the plaintiff should be ordered to pay the defendants' costs, it is appropriate to choose the date on which the proceedings were set down for hearing, being 18 September 2018.
I therefore make the following orders:
1. Order the plaintiff to pay the defendants' costs of the proceedings on the ordinary basis up to 18 September 2018.
2. Order the plaintiff to pay the defendants' costs of the proceedings on the indemnity basis after 18 September 2018.
[3]
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Decision last updated: 19 June 2019