Taryn Maree Hammond v Annette Hammond

Judgment 1This is the hearing of an amended Notice of Motion filed on 12 October 2012 in which the plaintiffs seek leave to extend time and review a decision of Registrar Musgrave of 23 July 2012 when the learned Registrar dismissed the plaintiffs' proceedings. An alternative claim is made pursuant to the Uniform Civil Procedure Rules 36.16 to set aside the orders made by the Registrar on 23 July 2012. 2The proceedings are an application by two children of the deceased under the Succession Act 2006 for provision out of his estate. 3Although I will return to the history a little later, the immediate facts leading to the dismissal of proceedings seem to be as follows. There was a directions hearing on 15 February 2012 when the matter was stood over to 2 July 2012. On 10 April 2012 the defendant's solicitors served a notice of intention to cease to act and then on 15 May 2012 actually served the notice of ceasing to act. On 2 July 2012 there was a directions hearing and there was no appearance by the plaintiffs. This was because, as the solicitors acting for the plaintiffs admit, the solicitor having carriage of the matter did not make a diary note of the adjourned date and did not attend. The Registrar on 2 July 2012 stood the matter over to 23 July 2012. A notice was issued by the Court on 2 July 2012 to the plaintiffs giving notice that the Court may dismiss the proceedings under UCPR 13.6. The notice was addressed to Armando John Gardiman, Solicitors St James Centre, Level 16, 111 Elizabeth Street, Sydney. The solicitors were Turner Freeman and Mr Gardiman was the solicitor on the record. There is sworn evidence that that notice was not received by Turner Freeman. This appears to be because the firm had moved address prior to service of the notice to Martin Place in Sydney. 4The evidence is that there was a permanent mail redirection in force to forward mail addressed to the old address to the new address. It seems reasonably plain that, as the letter was not addressed to Turner Freeman, the redirect may not have picked it up and forwarded it to their new address. 5The solicitors conceded that they had not filed a notice of change of address with the Court. The plaintiffs' claims 6The plaintiffs submit that they should obtain relief on two bases. One, that as they were not notified of the hearing, they were entitled to have the judgment set aside ex debito justitiae. Two, in any event, they should be entitled, as they were not heard, to an order pursuant to UCPR 36.16 setting aside the orders. 7I turn to the first matter. In support of their submission, the plaintiffs referred to the High Court decision of Cameron v Cole (1944) 68 CLR 571 at 589 where Rich J said: "It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside; and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside (Craig v Kanssen, [1943] 1 KB 256 at 262). In such a case there has been no valid trial at all. The setting aside of the invalid determination lays the ghost of the simulacrum of a trial, and leaves the field open for a real trial (Crane v Director of Public Prosecutions, [1921] 2 AC 299 at 332-3)." 8In Hoskins v Van Den-Braak (1998) 43 NSWLR 290 the Court of Appeal dealt with a situation where a District Court judge was dealing with a provision of the Local Courts Act 1982 which allowed the setting aside of orders. At p 298 the Court, after reviewing the cases including that referred to above said the following: "It follows that Cooper A-J saw too wide a field of potential operation of s 75A(1). The passages in Cameron v Cole and Taylor v Taylor to which reference has been made, and the other cases discussed above, establish that the power to relieve against the type of injustice suffered by Mr Hoskins resides in the Local Court as an incident of its function as a court of justice; that the duty to set aside and/or relieve against the consequences of a default order or judgment exists ex debito justitiae (that is, not as a matter of discretion, or subject to terms). Nothing in the language of s 75A(1) detracts from the common law right to relief ex debito justitiae against a denial of natural justice of the present type. I have already referred to cases establishing that relevantly indistinguishable rules do not have this draconian effect: see Craig v Kanssen (especially at 260); MacFoy v United Africa Co Ltd [1962] AC 152 especially at 159; Pritchard (especially at 519). The analysis of s 75A in Coles v Burke is consistent with this, for reasons already given." 9The defendants refer to the provisions of UCPR 36.16 which is in the following terms: (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order. 10In particular they refer to the fact that the motion was not filed until 29 August 2012, well after the 14 days referred to in the rule. There is no doubt on the evidence that shortly after 30 July 2012 Mr Goldberg, the person handling it at Turner Freeman, was notified of the orders made on 23 July 2012. There was also a telephone conversation with his office on 6 August 2012, the day the 14 days expired, inquiring about the matter and what was happening about a notice of motion. 11It was the defendant's submission that as no notice of motion had been filed within 14 days as allowed by the rule, it was not possible to have the judgment set aside ex debito justitiae. The purpose of 36.16(3A) is to allow a variation of what flows from 36.16(1). Nowadays, invariably judgments are entered by being entered on the court system immediately after the order and hence the provision of another 14 days in the latter sub-rule gives some leeway to allow an application to be made under the rule. 12Sub-rule 36.16(4) provides that nothing in the rule affects any other power of the court to aside or vary a judgment or order. 13One should also note 36.15 which is in these terms: (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent. 14There are a number of bases which are commonly used to set aside judgments under this rule. They include judgments irregularly obtained and judgments obtained by fraud. 15It seems to me that the matter is determined in essence by the Court of Appeal decision in Hoskins v Van Den-Braak. 16In my view, the common law right to have the judgment set aside ex debito justitiae is a right which is outside the additional provisions contained in the Rules. The question in this case is whether I should exercise my discretion to allow it where the problem may have been caused by the solicitor's failure to file a notice showing a change of address for service. Turner Freeman, through Mr Gardiman, originally filed a notice of change of solicitor specifying their old address at 111 Elizabeth Street, Sydney. That was filed on 25 October 2010. Under Part 4.6 of the Rules a person may change their address for service by filing a notice of change showing the new address and serving the notice on all other parties. This did not occur. The manner of service is provided for in UCPR 10.5. The relevant part of the rule is UCPR 10.5(1) which is a follows: (1) Subject to these rules, a document may be served on a person: (a) by means of personal service, or (b) by posting a copy of the document, addressed to the person: (i) to the person's address for service, or (ii) if the person is not an active party, to the person's business or residential address, or (c) by leaving a copy of the document, addressed to the person: (i) at the person's address for service, or (ii) if the person is not an active party, at the person's business or residential address, with a person who is apparently of or above the age of 16 years and apparently employed or residing at that address, or (d) in the case of service on a corporation, by serving the document on the corporation in any manner in which service of such a document may, by law, be served on the corporation. 17It will be noticed that service can be by post to the person's address for service. That address was specified in the notice of change of solicitor filed on 25 October 2010. The address shown was: "Armando John Gardiman Turner Freeman Level 16 St James Centre 111 Elizabeth St Sydney NSW 2000" 18I have in par 3 above, set out how the notice was addressed by the Court. Notably, the words "Turner Freeman" were omitted from the address. In these circumstances, the notice was not posted to the correct address. Thus there was no proper notice of the hearing. No doubt if the words "Turner Freeman" had been included, the redirection would have been effective and the notice would have made its way to the correct person. 19In these circumstances, it seems that I should set aside the order. 20In case I am incorrect I must turn to the second ground of the defence, namely whether the plaintiffs can have the judgment set aside pursuant to UCPR 36.16. As the motion was not filed within the time limit under the Rules the order can only be set aside under 36.15 under any of the matters for setting aside a judgment after entry. In this case the failure to serve would be an irregularity which would satisfy the requirements for setting aside the judgment after entry. Accordingly, I will set aside the order. 21In these circumstances, I am minded to order that the plaintiffs' solicitors pay the defendant's costs of proceedings from the time that the plaintiffs' solicitors failed to appear at the directions hearing on 2 July 2012 until now. However, I will hear the plaintiffs' solicitors if there is anything they wish to put to me. 22As this matter has now been set aside, the current situation in respect of the matter is as follows. The proceedings were commenced on 10 April 2010 and the matter came before Hallen AsJ on 24 June 2011 for approval of a settlement. His Honour stated that he would not approve the proposed settlement until he had received an affidavit from the defendant setting out the matters required by Practice Note SC Eq 7 (clause 6), as well as an affidavit as to costs from the plaintiffs' and defendant's solicitors. The defendant and her solicitor filed the required affidavits by 28 November 2011 in compliance with his Honour's direction. The plaintiffs' solicitor did not file an affidavit as to costs until 13 January 2012 and, by letter on 9 February 2012 to the defendant's solicitor, rejected the previous agreed settlement and sought to recover additional monies to protect their costs estimate. 23A total amount of $40,332.66 is the entirety of the deceased's estate which is the subject of the claim for provision. An amount of $25,332.66 remains in the trust account of the plaintiffs' solicitors. An amount of $15,000 remains in the trust account of the defendant's solicitors. The plaintiffs' costs had been estimated at $44,943.27 on a solicitor/client basis and $37,035.32 on a party and party basis. The defendant's estimate of costs was $18,000 on a party and party basis. Given that the total value of the estate is $40,332.66, the total claimed party and party costs exceed the value of the estate by $14,702.66 leaving nothing for any claimant. 24I note that Practice Note SC Eq 7, clause 24, allows the Court to cap the costs that may be recovered by a party in circumstances including, but not limited to, cases such as this one, in which the value of the estate is less than $500,000. 25Rule 42.4 of the Uniform Civil Procedure Rules provides as follows: "Power to order maximum costs (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. (2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with any of these rules, or (b) has sought leave to amend its pleadings or particulars, or (c) has sought an extension of time for complying with an order or with any of these rules, or (d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap: (i) progress of the proceedings to trial or hearing, or (ii) trial or hearing of the proceedings. (3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap: (a) progress of the proceedings to trial or hearing, or (b) trial or hearing of the proceedings. (4) If, in the court's opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1)." 26This rule took the place of the former Supreme Court Rule Pt 52A r 35. The matter has been dealt with by Palmer J in Sherborne Estate (No 2); Vanvalen v Neaves [2005] NSWSC 1003; (2005) 65 NSWLR 268. I agree with his Honour's analysis of the rule that the rule 'is intended as a means whereby the court may, if the need arises, curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs by making it clear, at an early stage of the proceedings, that beyond a certain limit the parties will have to bear their own costs - win or lose'." 27After discussing a common matter which tends to increase the cost in these type of matters, namely personal animosity, Palmer J in Sherborne Estate (No. 2), Re; Vanvalen v Neaves went on to say at para [29] to [31]: "[29] It seems to me that UCPR 42.4 and its precursor, SCR Pt 52A r.35A, were designed to put into the Court's hands a brake on intemperate and disproportionately expensive conduct of proceedings. The power conferred by the Rule is not brought into play only if one of the parties invokes it: the Court itself may exercise the power on its own motion whenever it sees the need. This is because the policy of the law, enshrined in CPA s.56(1), is to facilitate the just, quick and cheap resolution of the real issues in proceedings. By s.56(2), the Court not only may, but must, give effect to that policy whenever it exercises any power conferred upon it by the Act or the Rules - indeed, even when the parties themselves do not wish to conduct the proceedings quickly or cheaply. [30] Proportionality of costs to the value of the result is central to the just and efficient conduct of civil proceedings: see e.g. Lownds v Home Office (Practice Note) [2002] EWCA Civ 365; [2002] 1 WLR 2450 per Lord Wolfe CJ. It is a pity that the precursor of UCPR 42.4 seems never to have been used to this end. In Jvancich v Kennedy (No 2) [2004] NSWCA 397 at para [6], the Court of Appeal pointed out that it has not been the practice in Australia for the Court to fix the amount of costs. However, the Court in that case was concerned with a costs order made at the conclusion of proceedings and was not giving consideration to the making of a capping order in the course of case management under SCR Pt 52A r.35A (UCPR 42.4). I do not read Jvancich as inhibiting the use to which I have suggested UCPR 42.4 may be put. In my opinion the Court should not be reluctant to use UCPR 42.4 to prevent extravagant expenditure of legal costs in FPA cases, such as has occurred here. The time for its use is early in case management, whenever it appears that the parties' litigious fervour may be leading them to excessive expenditure of costs. [31] However, the remedy provided by UCPR 42.4 is prophylactic: it cannot be used as a cure for excessive expenditure at the time of making a final costs order at the conclusion of proceedings: other powers of the Court must be engaged." 28Practice Note SC Eq 7 makes it clear that in cases where the estate is under $500,000, the Court may cap the costs of a successful claim. Thus, although in this particular case there were no pre-trial directions in which the costs were limited early on, there is a clear warning in the Practice Note, and also in a number of other decisions, that the Court will consider the capping of costs in the circumstance where the estate is under $500,000. 29The Court also has a general discretion under s 98 of the Civil Procedure Act 2005, which provides as follows: "Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and ..... 4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, (d) such proportion of the assessed costs as does not exceed a specified amount." 30Under s 98(4)(c), there is power to limit the costs by fixing the amount instead of allowing them to be assessed. In Sherborne, his Honour Mr Justice Palmer referred to this power. His Honour discussed the section in the following terms: "39. The purpose for which Mr Lindsay seeks to use CPA s.98(4)(c) is not the purpose for which it has been used so far, according to the authorities. In the usual case in which the power is exercised it is the successful party which seeks to avail itself of the power in order to avoid the expense and delay of a costs assessment. Here, Mr Lindsay, on behalf of an unsuccessful party, seeks to use the power against the successful party - not to avoid the delay and expense of a contest before the assessor but in order to cap the costs of the trial itself. 40 There is no justification in the words of the CPA for restricting the use of s.98(4) to circumstances in which it has been used in the past: indeed, such an interpretation would be contrary to the mandate in CPA s.56(1) and (2) which obliges the Court, in interpreting any provision of the CPA or the UCPR, to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute. 41 However, large though the power given by s.98(4) is, it must be exercised judicially: i.e., the exercise of the power must have a proper factual foundation and must be explicable according to legal principle. 42 It is conceivable that the Court could exercise the power under s.98(4)(c) on the application of an unsuccessful party in making a final costs order so as to cap a successful party's recoverable costs where the Court considers that the successful party's costs are grossly excessive. In Jvancich (supra) the Court of Appeal did not rule out the making of a capping order in any circumstance: see per Giles JA at para [6]. But such a capping order would be very rare: the Court's decision would have to be an informed one, i.e. founded on a consideration of the costs actually incurred, the circumstances at the time at which they were incurred, whether they were reasonable in those circumstances, and what would have been a reasonable amount to have incurred. 43 There is a high risk that readily allowing an unsuccessful party to make a costs capping application under s.98(4)(c) will prolong the battle between the litigants at greater expense and with longer delay than if the successful party's reasonable costs were estimated by an assessor in accordance with the Legal Profession Act". 31It should be appreciated that the type of capping order which I am discussing is one which does not affect the costs as between solicitor and client. There is of course a power in the Court, in the exercise of its supervisory jurisdiction, to limit the costs which might be payable by a client. See Woolf v Snipe [1933] HCA 5; (1933) 48 CLR 677 at 678 and Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 1363; (1999) 94 FCR 167. In the present case, there has been no request by the plaintiffs to restrict their costs and there is no information before me about the retainer which they may have entered into with their solicitor. 32In the absence of any restriction on the amount that the solicitors may charge the client, plainly if there is a capping order to limit the amount which the plaintiffs can recover from the estate, any amount of any award which they receive will be depleted by the amount which they have to pay over and above the costs they have recovered from the estate. 33In Parker v Parker [2006] NSWSC 473, Brereton J said at par [35] the following: "[35] I raised with counsel the question of costs which in an estate as small as this with as many claims on it as here, always presents a difficulty. In Moore v Moore [2004] NSWSC 587, Young CJ in Eq said that ordinarily some special justification would be needed to warrant an order for more than $35,000 for costs of a successful claimant in a family provisions application. In the context of proceedings under the Property (Relationships) Act 1984 (NSW), in Deves v Porter [2003] NSWSC 878 Campbell J suggested that a useful rule of thumb in such proceedings was that the costs awarded ought not exceed the amount recovered. But in Van Zonneveld v Seaton (No 2) [2005] NSWSC 175 Campbell J recognised that, while Deves v Porter provided a useful rule of thumb, it was one which had to be applied with caution and having regard to the circumstances of the individual case." 34In the present case we are concerned with what is admittedly on any view a small estate and one where, on current estimates, costs will exceed the total value of the estate. It must have been plainly obvious to the plaintiff from early in the proceedings. The matters referred to by Palmer J in par [30] of his judgment in Sherborne are very applicable to the present case. 35I raise these matters not to make any decision at present but to draw the matters to the attention of the parties and their solicitors so they can consider the ongoing administration of the proceedings. 36I make the following orders: 1)Set aside the order of Registrar Musgrave on 23 July 2012. 2)I direct the solicitors to serve a copy of this judgment on their clients. 3)I will hear the parties on costs. 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: 31 October 2012