Stenlake v Whipps [2016] NSWSC 1520 | Case summary

(1) Interest up to Judgment

The plaintiff claims interest up to judgment under Civil Procedure Act 2005, s 100 for the period from 29 January 2013 (the date of the deceased's death) to 24 August 2016 (the date of the entry of a money judgment for the plaintiff in the sum of $100,000). The total interest claimed for this period, as calculated by the plaintiff is $16,979.53. The plaintiff says that this amount of interest should be added to the existing judgment in his favour for $100,000.
The Whipps parties oppose the payment of any interest on the sum of $100,000. They submit that it would be inequitable for the Court to exercise its discretion to award interest under Civil Procedure Act, s 100 on the $100,000 for the same period of time the plaintiff has also retained the Mercedes Benz motor vehicle, which had a market value of $90,000. The Whipps parties argue that the plaintiff's retention of an asset of virtually equivalent value to the $100,000 found due to the plaintiff neutralises the plaintiff's claim for interest. Moreover the Whipps parties submit that the set off is complete because the motor vehicle was retained for no less a period that the $100,000 was due.
The argument about interest is complicated by other issues. Ms Winfield submitted that the Mercedes Benz was included in the deceased's probate at an estimated value of $90,000. She submitted that she had not understood there was any issue that its market value was at least that amount, particularly as it had been purchased in 2010 for $170,000. Mr Ireland QC did not concede that this was an agreed figure.
But Ms Winfield submitted that an agreement was made during the hearing that the parties accepted a market value of $70,000 for the Mercedes Benz for the purposes of their contest. I accept Ms Winfield's submission as to the agreed valuation for the vehicle. The parties did agree on the second day of the hearing, as is recorded at page 158 of the transcript, that the vehicle was worth $70,000. They will be held to that agreement.
But a potential complicating factor in relation to the interest claim is in relation to the maintenance expenses of the vehicle and the benefit to the plaintiff of using the vehicle during the period since the deceased's death. Although the motion filed before 30 September 2016 has been resolved, part of the payment of $20,000 made on the resolution of this motion represents compensation to the Whipps parties for Mr Stenlake's use of the vehicle.
The purpose of the Court's discretion to award interest up to judgment under Civil Procedure Act, s 100 is properly to compensate a successful party for the practical loss the party has suffered: Screenco Pty Ltd v RL Dew Pty Ltd [2003] 58 NSWLR 720. Successful plaintiffs with a money judgment, will generally be entitled to an award of interest: Ruby v Marsh (1975) 132 CLR 642 at 644. Consistent with the principle that the award of interest is compensatory, the plaintiff here arguably should only be compensated for the net amount due to him after proper account is taken of the agreed market value of the Mercedes Benz that he withheld from the Whipps parties for a virtually identical period to that during which the $100,000 was owing to the plaintiff.
But for the settlement of the motion, which itself gives the estate some compensation for being deprived of the value of the Mercedes Benz, the course which would suggest itself is for the Court to set off the interest on the value of the vehicle which was wrongfully retained by the plaintiff against the interest of the value of the $100,000 owing to the plaintiff on account of his long-standing improvements to the Coraki property. Given the Court's findings on the claim and on the cross-claim, it would have been unjust to allow an award of interest on one of these amounts without allowing an interest set-off on the other amount. This would have suggested a result in which the Court allowed interest on the sum of $30,000 (being $100,000 minus $70,000) from 29 January 2013 to 24 August 2016.
But in my view an issue of double dipping arises here by reason of the settlement of the 30 September 2016 motion. The $20,000 which the estate has received on that settlement represents some compensation for the money which the estate could have received by turning possession of the Mercedes Benz to profitable account: it represents compensation for Mr Stenlake's use of the vehicle in the period that it was in his hands. In my view it would be overcompensation for the estate to receive the benefit (by way of set-off) of interest on the $70,000 capital value of the Mercedes Benz of which it was deprived as well as compensation for loss of use of the Mercedes Benz during that period. Both represent a measure of compensation for the estate's loss of use of the value of the capital value of the vehicle.
A number of uncertainties cloud the picture. The $20,000 paid in settlement of the motion also no doubt represents a compromise on issues such as legal costs and maintenance of the vehicle. But in my view it would not be unjust in this case to either party to award interest to the plaintiff Mr Stenlake only upon the net amount which is due to him of $80,000 after deduction of the $20,000 from the judgment entered on 24 August 2016. The $80,000 is the net amount to which he is entitled after the estate has been compensated for loss of use of the vehicle. That is the course which the Court will take.
The parties should agree upon the result of this interest calculation and provide it to the Court. The Court will then enter judgment in chambers for the additional interest.

(2) Costs

The Whipps parties' principal submission on costs was that Mr Stenlake should pay the whole of their costs of his claim and the cross-claim. In the alternative, the Whipps parties seek orders that Mr Stenlake pay his own costs and pay their costs of the cross-claim, on which the Whipps parties were successful. Further in the alternative, the Whipps parties seek orders that each party pay his or her costs of the proceedings on the basis that: (1) each party had a measure of success, or alternatively (2) that this is one of that class of cases on which principle infers that each party should bear his or her own costs. The Whipps parties relied upon the affidavit of Glenda Anne Whipps of 10 August 2016 in support of their costs application.
Mr Stenlake opposes these proposed costs orders. He submits that the plaintiff has "overwhelmingly succeeded" in the proceedings and should have his costs, discounted only slightly for the Whipps parties' potential success on the cross-claim.
The parties developed their arguments in oral submissions. It is convenient to deal with the parties' written and oral submissions by reference to the principal issues that each raised and answered on the question of costs.
The Course of Proceedings. The Whipps parties submit that Mr Stenlake was not successful on his pleaded and particularised Statement of Claim. The Whipps parties submit the plaintiff was slow to crystalise the claim that he really made and when the claim was finally crystalised parts of it were said either to have been abandoned by Mr Stenlake or ultimately not contested by the Whipps parties.
The Whipps parties further submit that this case is analogous to one which the plaintiffs' success is attributable only to matters raised in a late amendment. They say that no admissible evidence was served upon them until the week before the hearing and that the Whipps parties were entitled to take the view that the plaintiffs' claim therefore could not succeed and that opportunities to resolve the proceedings early were therefore lost. As a result, they submit Mr Stenlake is not entitled now to recover his costs.
This argument is a criticism of the way that Mr Stenlake filed his evidence pre-hearing. The Whipps parties contend that Mr Stenlake's first affidavit in the proceedings of February 2014 contained no detail and indeed no admissible evidence as to the expenditure that was being relied upon to found the equitable charge claimed over the Coraki property. Moreover, the Whipps parties point out that having commenced proceedings in February 2014 and having the final March 2015 hearing set down in September 2014, Mr Stenlake filed his only admissible evidence in relation to his expenditure as late as 2 March 2015, a mere seven days before the commencement of the hearing. The Whipps parties contend that because of the lack of admissible evidence they were entitled to take the view that Mr Stenlake's claim would not succeed. But more importantly they say that they were in no position to consider a possible compromise of the proceedings.
It is true that Mr Stenlake's early affidavits contained little detail as to the quantum of his claim. But I doubt that the early service of evidence quantifying the plaintiff's expenditure would have made a great deal of difference to the question that was ultimately contested of whether the second defendant's conscience was bound as the executor of Lola's estate by knowledge of Mr Stenlake's improvements to the Coraki property. In my view that issue was always going to be contested between these respective parties.
But it is likely that some cost reduction would have occurred, if the plaintiff's admissible quantum evidence had been served in a timely way. As it was, the parties managed to agree with the assistance of their expert valuers, on the increase on the value of the real estate at the Coraki property at $100,000 by reason of Mr Stenlake's improvements. The figure ultimately reached was a sum equivalent to the enhanced capital value of the Coraki property in consequence of Mr Stenlake's expenditure. But in order even for that figure to be reached it was still necessary to take steps to quantify the expenditure undertaken and then consider whether the increase in capital value of the Coraki property was less than Mr Stenlake's expenditure on the property. The consensus which was ultimately reached really needed to go through the various steps of adducing detailed evidence as to the expenditure and then as to the valuation of the property. Such costs reductions as would have occurred due to earlier service of Mr Stenlake's quantum evidence would have been relatively minor.
Successful Return of the Mercedes Benz. The Whipps parties submit that they were wholly successful in respect of the Mercedes Benz motor vehicle and should therefore have an order for their costs of the cross-claim. In reply Mr Stenlake submits that the Whipps parties were unsuccessful on large parts of the cross-claim, and principally in relation to the return of the deceased's goods and chattels.
Mr Stenlake argues that the major factual and legal questions that arose in the proceedings and upon which he succeeded are the following: Glenda Whipps' knowledge of the renovations and the basis on which Mr Stenlake agreed to pay for them; Lola's intention to create equity in the Coraki property in favour of Mr Stenlake in exchange for the renovations; the estate's claim to an equity in Mr Stenlake's pharmacy business; the estate's claim to the return of chattels beyond those which Mr Stenlake voluntarily surrendered in the course of the hearing; the exercise of inspecting the evidence at the storage facility was essentially a waste of costs, including the unnecessary fourth hearing day on the 9th of June 2015 and did not result in additional relief in favour of the Whipps parties; and, Ms Glenda Whipps never had a tenable cross-claim of any kind against Mr Stenlake, the arguable cross-claims being those on behalf of the estate represented by the second defendant, Mr Ian Whipps, in relation to the Mercedes Benz motor vehicle.
Mr Stenlake submits that to the extent that the Whipps parties have been successful in relation to the Mercedes Benz motor vehicle that it is a sufficiently small part of the cross-claim that at best Mr Stenlake's costs should be discounted by no more than 10 per cent on account of this issue.
To the extent that Mr Stenlake's submissions separate out the position of each of the Whipps parties and seek to look at their individual prospects of success, whilst such separation is a useful tool of analysis, the making of separate costs orders in respect of Glenda Whipps and Ian Whipps is not appropriate. Both defendants had the same legal representation and it is to be expected that their costs are largely undivided.
In my view some credit must be given for the estate's success on the cross-claim. It does warrant a discount from the costs orders which in my view should otherwise be made in Mr Stenlake's favour. The issues concerning alleged gift of the Mercedes Benz motor vehicle were more substantial and time consuming than Mr Stenlake concedes in his submissions. He stoutly resisted the Whipps parties' contention that the Mercedes Benz was a gift to the deceased. For example consideration of the issue is recorded in the first judgment at paragraphs [63] to [75], a not unsubstantial part of the judgment.
But that being said, a greater amount of hearing time and resources was expended on the issues related to the claimed equitable charge, on which Mr Stenlake was successful. And some claims were abandoned by the Whipps parties before trial, such as the claim to an equity in Ms Stenlake's pharmacy business, which would have involved the expenditure of resources. Moreover, the Whipps parties' success with respect to the Mercedes Benz motor vehicle and in gaining the return of some chattels of the deceased retained by Mr Stenlake is to a degree attenuated by their failure on or abandonment of their claims to other chattels of the deceased.
Mr Stenlake's Pre-Trial Conduct. The Whipps parties submit that Mr Stenlake's pre-trial conduct in relation to the estate justifies the making of a costs order against him. The Whipps parties submit that much of the controversy that followed in the proceedings resulted from Mr Stenlake's wrongful interference in the property of the estate and its administration.
But Mr Stenlake's pre-trial conduct is not of particular relevance to issues of costs, unless it can be said that he was responsible for generating the disputes that occupied the Court's time in the proceedings. The Court certainly did make findings about the insensitivity and provocative nature of some of Mr Stenlake's conduct.
But that conduct in my view neither occasioned or particularly lengthened these proceedings. Quite apart from Mr Stenlake's poor behaviour in relation to the particular items of personal property and his gaining access to the Coraki property, the Whipps parties strongly contested his contention that he was entitled to any charge over the Coraki property for the work that he had performed to improve it. In my view, even if he had behaved with less insensitivity towards Lola's relatives, these proceedings were very likely to have taken place in much the same way that they did.
Judgment within Local Court Jurisdictional Limits. The Whipps parties submit that the amount awarded does not exceed the jurisdictional limit of the Local Court even before allowance is made for a set off for the Whipps parties' successful cross-claim.
The Whipps parties claim the benefit of Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.30(2) that where the amount awarded did not exceed the jurisdictional limit of the Local Court that "unless a Court otherwise orders" a successful plaintiff is not entitled to payment of his or her costs of the proceedings: see also Kardos v Sarbett (No. 2) [2006] NSWCA 206. The Whipps parties say that this is an appropriate case for the application of the principle.
But in my view there is a threshold problem with this part of the Whipps parties' costs submission. UCPR, r 42.30 only applies to proceedings under the Property (Relationships) Act 1984, a form of proceeding which could have been brought in either the District Court or the Supreme Court. This Court's jurisdiction under Property (Relationships) Act is virtually now defunct. All new proceedings brought under the Property (Relationships) Act have since March 2009 been required to be brought in the Family Court of Australia. The present proceedings are not proceedings brought under the Property (Relationships) Act. No relief under that Act was sought. Rather the parties invoked the Court's equitable and common law jurisdiction.
But there is nevertheless a quantum related limitation on costs orders in the Supreme Court contained within UCPR, r 42.34, a rule on which the Whipps parties also rely and that Mr Stenlake addresses in his submissions. UCPR, r 42.34 provides as follows: "42.34 Costs order not to be made in proceedings in Supreme Court unless Court satisfied proceedings in appropriate court (1) This rule applies if: (a) in proceedings in the Supreme Court, other than defamation proceedings, a plaintiff has obtained a judgment against the defendant or, if more than one defendant, against all the defendants, in an amount of less than $500,000, and (b) the plaintiff would, apart from this rule, be entitled to an order for costs against the defendant or defendants. (2) An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted."
Mr Stenlake answers the Whipps parties' costs submission based on UCPR, r 42.34. He submits that although the net amount that he recovered is below $500,000, plus applicable interest, the limitation within UCPR, r 42.34 relating to the recovery of a sum less than $500,000 is not applicable. Mr Stenlake submits that this is not a case that the plaintiff could have brought in the District Court, which has no jurisdiction to grant relief by way of equitable charge, a form of relief which was the centrepiece of the plaintiff's case. The Whipps parties argue that such relief is available in the District Court through District Court Act 1973, s 134(1)(h), which provides: "134 Jurisdiction in equity proceedings (1) The Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in proceedings for: (a) the foreclosure or redemption of a mortgage or the enforcing of any charge or lien where the amount owing in respect of the mortgage, charge or lien does not exceed $20,000, as determined by the Court, (b) the specific performance, rectification, delivery up or cancellation of any agreement for: (i) the sale or purchase of any property at a price not exceeding $20,000, or (ii) the lease of any property the value of which does not exceed $20,000, as determined by the Court, (c) an order under section 3 of the Testator's Family Maintenance and Guardianship of Infants Act 1916 (as in force immediately before that Act was amended by the Succession Amendment (Intestacy) Act 2009 ) or a family provision order under Chapter 3 of the Succession Act 2006 , (d) relief against fraud or mistake where the damage sustained or the estate or fund in respect of which relief is sought does not exceed $20,000 in amount or value, as determined by the Court, (e) the execution of a trust or a declaration that a trust subsists, where the estate or fund subject or alleged to be subject to the trust does not exceed $20,000 in amount or value, as determined by the Court, or (f) the administration of the estate of a deceased person, where the estate does not exceed $20,000 in amount or value, as determined by the Court, or (g) any application under the Property (Relationships) Act 1984 , or (h) any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding the Court's jurisdictional limit."
Mr Stenlake's submissions are persuasive on this issue. Even if the District Court has jurisdiction to determine equitable claims for the recovery of money within its jurisdictional limit of $750,000, this is a case where commencement and continuation of these proceedings in the Supreme Court rather than the District Court "was warranted". The complexity of the equitable issues in this case and the wisdom of avoiding jurisdictional arguments in the District Court about whether a claim for a declaration of an equitable charge comes within s 134(1)(h), makes Mr Stenlake's decision to commence and continue proceedings in the Supreme Court entirely reasonable. UCPR, r 42.34 is not an obstacle for Mr Stenlake recovering an award of costs against the Whipps parties in this Court.
Overall Consideration. In my view it is not appropriate to make separate costs orders on the claim and the cross claim. Such an approach would contribute to a costly and protracted assessment of costs. This case calls for a global approach taking into account the respective parties' relative success and failures and the relative time and resources expended on those successes and failures.
Taking this approach in my view overall Mr Stenlake was more successful than the Whipps parties and should receive a costs order in his favour. But his costs should be discounted for the Whipps' parties success on their cross claim. In my view the proper result is that Mr Stenlake should recover two-thirds of his costs of these proceedings.

Stenlake v Whipps

At a glance

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Before

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Judgment (5 paragraphs)

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Legislation Cited (1)

Cases Cited (3)