Solicitors:
Neagle Lawyers (Plaintiff)
Emil Ford Lawyers (Defendants)
File Number(s): SC 2012/382828
[2]
EX TEMPORE Judgment (Revised)
I gave judgment in these proceedings on 16 March 2015, dismissing the proceedings: Walton v Walton [2015] NSWSC 218.
Following delivery of judgment, I ordered that the plaintiff pay the defendants' costs of the proceedings. Thereafter, on the application of the plaintiff's solicitor, Mr Neagle, I revoked that order and made directions for the exchange of written submissions on costs. Initially, I indicated that I would deal with the question of costs on the papers. However, due to the nature of the material Mr Neagle adduced on behalf of the plaintiff in support of the costs application, I restored this matter to the list on Friday 27 March 2015 and indicated I would hear the argument about costs in open court.
On 25 March 2015, in support of the costs application, Mr Neagle served and delivered to my chambers a lever arch binder holding some 450 pages of documents including 19 pages of submissions, a 103 paragraph affidavit sworn by Mr Neagle, together with affidavits sworn by the plaintiff and her sisters Ms Robyn Walton and Ms Elizabeth Atkinson.
Walton v Walton [2015] NSWSC 405 | Case summary | Zoe
In my opinion, the affidavit material was almost entirely irrelevant to the question of costs, was inappropriate and, in some parts, little short of scandalous.
Ms Hill, who appeared for the defendants, objected to all of the material. I refused to admit certain, particularly egregious, passages but otherwise admitted the material subject to relevance.
The plaintiff has failed in the proceedings and, on the face of things, costs should follow the event.
Mr Neagle submitted that that should not occur because of what he described as the manner in which the defendants have conducted the proceedings. He pointed to what was said to be deficiencies in the manner in which the defendants gave discovery, to what he said was "lack of transparency" in their affidavits, and to the first defendant's alleged breach of the undertaking given to the plaintiff; and to other alleged misconduct of the defendants.
In my opinion, none of those matters is now relevant to the question of costs.
As to the question of discovery, there have been a number of interlocutory applications made in these proceedings concerning discovery. I am told costs orders, including against the defendants, have been made in those applications. Ms Hill, who appeared for the defendants, informed me that she did not seek to have these costs orders disturbed. Those costs orders therefore stand and such difficulties as the defendants have caused concerning discovery (about which I make no comment) have been addressed.
As to the asserted lack of transparency in the defendants' affidavits, both defendants gave evidence. Both were cross-examined. I do not see how I can take into account any perception Mr Neagle might now have as to the "lack of transparency" of their evidence on the question of costs.
As to the alleged breach of the undertaking, that has been dealt with by orders of the Court, including an order by Justice Hammerschlag on 17 February 2015.
Mr Neagle pointed out that the plaintiff brought the proceedings as a representative of her mother's estate. The plaintiff was so appointed pursuant to Uniform Civil Procedure Rules r 7.10 on the third day of the hearing.
In those circumstances, Mr Neagle submitted that the plaintiff should have her costs, and any costs she may be ordered to pay, out of the estate.
In that regard, Mr Neagle submitted that the plaintiff should be regarded as being in a position equivalent to an executor of her mother's estate and drew my attention to the observations of the Austin J in Drummond v Drummond [1999] NSWSC 923 at [43]:
"Thus it is normally the case that an executor who commences or defends an action in the capacity of executor is entitled to be indemnified out of the estate for the costs incurred in doing so, even if the litigation is unsuccessful, the executor's conduct is found to have been mistaken, and the other party in the litigation is held to be entitled to an order for costs."
I see a number of difficulties with that submission.
First, it is by no means clear to me that the appointment of the plaintiff as representative of the deceased's estate for the purposes of UCPR r 7.10 elevates the plaintiff to the position of executor or trustee.
Second, if it did, the plaintiff would face the problem of not having sought advice pursuant to s 63 of the Trustee Act 1925 (NSW): Re Beddoe; Downes v Cottam [1893] 1 Ch 547 and Macedonian Orthodox Community Church St Pekta Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66.
In any event, as the case of Adam v Mullen, (unreported), Holland J, 15 December 1976 (to which Mr Neagle referred to in his submissions) makes clear, such an order would not normally be made without the consent of the beneficiaries.
Although it might be open for me to infer that some of the beneficiaries (the plaintiff, Ms Robyn Walton, Ms Atkinson and, perhaps, Mr Phillip Walton) would consent to that course, it is clear enough that one of the beneficiaries, the first defendant, would not. And there is simply no evidence of the attitude of the remaining beneficiary, Mr Malcolm Walton.
It may be that, in due course, taking into account the views of the beneficiaries, the plaintiff might establish an entitlement to have her costs, or any costs she may be ordered to pay, from the estate. However, I am not prepared to make such declarations or orders in the absence of some of the beneficiaries.
Mr Neagle also sought an order that the plaintiff's costs be paid on an indemnity basis "from the monies that were previously held in Court pursuant to this matter." Mr Neagle was referring to the funds paid into Court by the defendants on 17 and 20 February 2015 and now to be paid out of the Court pursuant to orders I made on 18 March 2015.
I see no basis to make this order. First, I do not know whether those monies are any longer in Court. Second, those monies are not estate monies. They are proceeds of the sale by the defendants of their property at Anderson Avenue. They belong to the defendants. I raised these matters with Mr Neagle in argument and, ultimately, he did not press this aspect of the claim.
Alternatively, Mr Neagle submitted that as the plaintiff brought these proceedings for the benefit of the beneficiaries, they should contribute to her costs, including those costs that she may be ordered to pay.
The difficulty with that proposition is that four of the six beneficiaries (Ms Robyn Walton, Ms Atkinson, and Messrs Phillip and Malcolm Walton) are not parties to the proceedings. The plaintiff may be able to bring proceedings against some or all of the beneficiaries for contribution in relation to the costs she has incurred. But not in these proceedings.
Otherwise, I can see no reason why costs should not follow the event.
I turn now to the affidavit material Mr Neagle served and sought to deploy on the costs application.
As I have said, I have ruled certain parts of that material to be inadmissible and allowed the balance subject to relevance. It was necessary for the defendants to consider and respond to that material. The question now arises as to whether I should make any further costs order concerning the costs application itself and whether I should take any further steps concerning Mr Neagle's position. Consideration of those matters requires examination of the affidavit material.
Amongst the matters agitated in Mr Neagle's affidavit were:
1. What Mr Neagle described as the plaintiff's "mental health problems" (at [7]);
2. Mr Neagle's personal observation that his client is "very truthful, honest and caring (at [8]) and "ethical and honourable" (at [9]);
3. The detailed circumstances of Mr Neagle's retainer by the plaintiff, including material that would otherwise be privileged (at [10] to [28]);
4. The retainer of, and advice given by counsel who appeared for the plaintiff in the proceedings before me (at [29] to [32]);
5. The plaintiff's "very distinct and genuine want to fulfil her mother's testamentary wishes...that she wrongly or rightly perceived were taken away from her mother by subterfuge" (at [39]);
6. The "history" pertaining to a previous matter between Mr Neagle and the defendants' solicitor, said to have arisen from a matter which allegedly settled "unfavourably" to that solicitor's then client. Mr Neagle asserted that the outcome of that matter "had not been forgotten" and had caused "my learned friend to present with belligerence around initiating and some of it respectfully considered unsavoury toward by client [sic]" and had caused "a Spanish armada of other events where I and various counsel have had cause for concern" (at [42] to [43]);
7. Mr Neagle's instructions that "various witnesses who provided evidence" (who I understand to be the witnesses referred to at [109] to [113] of my 16 March 2015 judgment and whose evidence concerning their visits to the defendants' home was not challenged before me) "had never even been to the deceased's home and that [the first defendant] had been canvassing them in the background to say what they did" (at [46]);
8. Mr Neagle's instructions to counsel who appeared before me at the hearing as to how to deal with the witnesses referred to in (g) above (at [48]);
9. The defendants' solicitor's alleged "general misunderstanding of the law of undue influence and also how discovery was appropriate in terms of general lines of forensic inquiry with that kind of prosecution [sic]" (at [50]);
10. The alleged shortcomings of discovery given by the defendants, to which I have referred (at [55] to [84]);
11. The alleged breach of the undertaking by the first defendant referred to above (at [85] to [90];
12. Various offers said to have been made, including at a mediation of this matter on 2 July 2014 (at [92] to [101]); and
13. Alleged shortcomings in the manner in which counsel conducted the case before me (at [102]).
In their affidavits, the plaintiff, Ms Robyn Walton, and Ms Atkinson sought to agitate the very matters the subject of my decision and contended, amongst other things, that some witnesses (those referred to by Mr Neagle) called by the defendants gave false evidence. It was entirely inappropriate that such evidence be adduced. As I have said, not one of those witnesses was cross-examined.
Ms Atkinson also, quite gratuitously, made a very serious allegation about the first defendant which I will not repeat. Mr Neagle repeated that allegation in his affidavit. How Mr Neagle thought it relevant or appropriate to file affidavits containing that allegation is beyond me.
Not one of those matters is relevant to the question of who should pay the costs of the proceedings. Mr Neagle should not have sworn, served or read affidavits in those terms. I find his conduct in that regard to be quite disgraceful.
The conclusion to which I have come is that, by seeking to deploy this material, Mr Neagle has, on the face of it, caused costs to be incurred by reason of his "serious incompetence or serious misconduct" or "improperly, or without reasonable cause" in circumstances for which he is responsible, for the purposes of s 99 of the Civil Procedure Act 2005 (NSW).
In those circumstances, I have concluded that I should direct Mr Neagle to show cause why, pursuant s 99(2) of that Act, I should not order that as between him and the plaintiff, his costs of this application be disallowed, and that he personally pay the costs that I have ordered the plaintiff pay in respect of the costs application.
For that reason I make these orders:
1. Grant leave to the plaintiff to file in Court the Affidavit of Lynda Joyce Walton made 31 March 2015.
2. Order that, subject to any costs orders already made, the plaintiff pay the defendants' costs of the proceedings, including the costs of the defendants' application to have the funds paid into court paid out to them, and the costs of the costs application.
3. Pursuant to s 99(2) of the Civil Procedure Act 2005 order that Shane Neagle show cause why I should not:
1. As between him and the plaintiff, disallow his costs of the costs application, including of the preparation of the "Plaintiff's Court Book - Costs Application" and the affidavits sworn by him, and by the plaintiff, Robyn Anne Walton and Elizabeth Mary Atkinson; and
2. Order him to pay to the plaintiff the costs that I have ordered the plaintiff to pay to the defendants, so far as those costs arise from the costs application.
1. Order that Mr Neagle show cause why I should not refer these reasons to the Law Society of NSW with a view to the Law Society considering whether Mr Neagle has engaged in professional misconduct or unsatisfactory professional conduct.
2. Order that Mr Neagle so show cause by submissions and, if he chooses, evidence, to be delivered to my Associate by 5pm on 10 April 2015.
3. Pursuant to s 99(4) of the Civil Procedure Act 2005 I direct that Mr Neagle inform the plaintiff of the making of this order by 5pm today.
4. Order that these orders be taken out forthwith.
[3]
Amendments
13 April 2015 - Typographical error in date at par 34(5) corrected
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Decision last updated: 13 April 2015