3540/06 LEANNE MICHELLE WHITE v DAVID JOSEPH PATTERSON - COSTS
JUDGMENT
1 I am dealing with the question of costs consequent upon my judgment of 24 November 2008: White v Patterson [2008] NSWSC 1226.
2 Submissions on costs have been received in accordance with directions made by me on the subject.
3 The plaintiff (Ms White) submits that she should have an order for costs against the first defendant (Dr Patterson) and also against the second defendant (Mia, Dr Patterson's daughter).
4 The first defendant's position is that "a fair proportion of the costs should be borne by the plaintiff".
5 The second defendant says that no order for costs should be made against her (noting that any costs awarded would be a liability of her tutor).
6 The principles that govern the award of costs in a case such as this where an adjustive order is made under s 20 of the Property (Relationships) Act 1984 have been referred to in a number of recent decisions of the Court of Appeal.
7 In Kardos v Sarbutt (No 2) [2006] NSWCA 206, the Court of Appeal suggested two approaches by way of analogy - one (at [27]) with matrimonial proceedings where "the starting point is that each party bear his and her own costs"; and the other (at [28]) with partnership disputes where "the prevailing rule nowadays is that the costs of both parties of an action for dissolution are paid out of the partnership assets, unless there is some good reason to the contrary". It was then said (at [35]) that "the starting point should be that each party should bear its own costs".
8 In Dunstan v Rickwood (No 2) [2007] NSWCA 266; (2007) 38 Fam LR 491, however, the Court of Appeal emphasised that the general rule that costs follow the event is as applicable to this kind of case as to any other. The court said (at [40]):
"In my view, this court should approach the question of the costs of the trial on the basis of the general discretion established by s 98 and reg 42.1 of the UCPR. Prima facie, costs should follow the event. On that basis, the respondent having been successful at trial is entitled to her costs. I cannot see any basis upon which she should be entitled only to a percentage of the costs. In the latter respect, I note that Mr Brzostowski did not identify any basis upon which the court could determine what percentage it might award the respondent, if it was minded to make such an order."
9 The approach in Dunstan v Rickwood (No 2) was confirmed by the Court of Appeal in Hayes v Marquis [2008] NSWCA 10.
10 The Court of Appeal returned to the matter in Baker v Towle [2008] NSWCA 73; (2008) 39 Fam LR 323 and confirmed that the starting point for the exercise of the discretion as to costs must be that costs follow the event - although the nature of the proceedings is such that the relevant concept of "event" may present difficulties:
11 Basten JA said (at [83]):
"An application under s 20 for adjustments to interests in assets should involve a specific claim and a defence which should indicate the degree (if any) to which the defendant is willing to concede the adjustment sought. The pleadings will then identify the scope of the dispute. The next question is whether any degree of success on the part of the plaintiff should be sufficient to justify an order for payment of her costs in full, or whether the costs order should in some sense be proportionate to the degree of success. In such a case, the 'event' may be identified with greater or less precision by reference to the extent of the adjustment ordered."
12 Beazley JA (with whom Mathews AJA agreed) said (at [23] - [25]):
"[23] The real question is what is the appropriate order for costs. An obvious starting point is the pleadings. However, the identification of the issues in the pleadings is likely to be only one of several considerations relevant to the costs order that ought to be made. The considerations may include whether any offers of settlement have been made and if so what those offers were. The discretionary considerations may also include the manner in which the proceedings are conducted. These are but two examples. There may be a whole range of relevant circumstances depending upon the particular case.
[24] I would therefore prefer to treat the identification of the issues that arise on the pleadings as part of the consideration of matters relevant to the court's discretion. In my opinion, that gives proper effect to r 42.1 and is consistent with the authorities and, in particular, the statement of McLelland J in Parker v McNair (1990) DFC 76, to which the court referred in Vollmer (see [8] of the judgment on the leave application).
[25] The difference between the approach that I prefer and the approach of Basten JA is probably more apparent than real. It will be apparent from what I have said that, where an order for adjustment is made, the costs order made will rarely, if ever, depend simply upon which party commenced proceedings. The question of costs needs to assessed in accordance with the facts and circumstances in each case and, as the analysis undertaken by the court in Vollmer indicates, no principles or general guidelines have emerged in cases under the Property (Relationships) Act ."
13 I turn therefore to the pleadings. In her statement of claim, the plaintiff claimed an order for the payment of $250,000 by the first defendant to her. The first defendant, by his cross-claim, claimed an order for the payment of $250,000 by the plaintiff to him. Each party resisted the claim of the other.
14 The plaintiff's position at the time of trial (as outlined in submissions dated 26 June 2008) was that the No 32 house property should be sold and that she should have 60% of the net proceeds. The property's value at the time of trial (inclusive of $79,000 improvements) was $854,000. Allowing for selling expenses of, say, $27,000, the 60% claim entailed about $500,000.
15 The first defendant's position at the time of trial appeared to be in accordance with his defence and cross-claim.
16 A number of offers of settlement were made over the period April 2005 to May 2008. I need not go into them in detail. It is sufficient to say that the plaintiff did not reject an offer that was more favourable to her than the eventual outcome. The first defendant rejected several such offers. Every offer involved some payment by the first defendant to the plaintiff.
17 There is reference in submissions on both sides to the extent of pre-trial correspondence and processes. It does seem to have been significant - more significant than in many other cases. There is some force in the argument put on behalf of the plaintiff that this was, to some extent, a product of the first defendant's lack of legal representation (in the later states) and his having taken relevant records to the United States.
18 The plaintiff says that the first defendant did not give full and frank disclosure of his assets until about 14 days before the trial and that this was despite numerous requests and directions. There is some force in this, but it is to be remembered that the first defendant was for a long time operating without legal assistance (and indeed was self-represented at the trial).
19 The intervention of the second defendant prolonged the proceedings to some extent. But that intervention was something brought about by the first defendant for his benefit. Added burdens from that element should be attributed to the first defendant.
20 The salient points with respect to costs as between the plaintiff and the first defendant may, I think, be summarised as follows:
1. The plaintiff was successful in obtaining an order as sought in her statement of claim (which, however, was, in value terms, only about one-half of the result contended for in pre-trial submissions).
2. The first defendant was wholly unsuccessful in his cross-claim.
3. The result the plaintiff achieved was not less favourable to her than any settlement offer made by the first defendant and not accepted by her.
4. The plaintiff was put into a position where she had to prosecute the proceedings to a conclusion to obtain her entitlement.
5. The quantity of pre-trial work was increased by the first defendant's lack of legal representation and the removal of many of his records in the United States.
6. To the extent that the trial was prolonged by the participation of the second defendant, that was something brought about by the first defendant.
21 In these circumstances, I am of the opinion that the "event", for costs purposes, should be regarded as comprehensive success on the part of the plaintiff, coupled with factors militating against any adjustment or exception in favour of the first defendant.
22 On that basis, the first defendant should be ordered to pay the plaintiff's costs of the proceedings.
23 The plaintiff says that the order in her favour should be against both the first defendant and the second defendant. Given that no relief was sought or awarded against the second defendant, however, I am of the opinion that it is sufficient that there be an order against the first defendant only.
24 As to the question of indemnity costs (also sought by the plaintiff), I am not satisfied that any "relevant delinquency" (in the sense referred to in Oshlack v Richmond River Council [1998] HCA 1; (1998) 193 CLR 72) has been shown so as to warrant such an order.
25 Two particular matters not related to costs are mentioned in the first defendant's submissions on costs. First, he says that one share in Maple-Ferryman still held by the plaintiff should be transferred to him. Second, he says that the plaintiff should be required to remove a caveat lodged on the title to the No 32 property. I accept those submissions.
26 I also accept the submission of the plaintiff that the undertaking given by the first defendant to the court, pending determination of the proceedings, regarding retention of funds in Australia should be converted into an order having equivalent effect until all payments required by the orders have been made.
27 The orders the court now makes are as follows:
1. Order that the interests of the plaintiff and the first defendant with respect to property be adjusted in such manner that
(a) if and to the extent that the plaintiff continues to hold one share in the capital of Maple-Ferryman Pty Ltd ACN 094 539 143, she do transfer that share absolutely to the first defendant; and
(b) the first defendant do pay to the plaintiff the sum of $250,000.00; and
(c) each of the plaintiff and the first defendant do otherwise hold and enjoy her or his separate property free from interests and claims of the other of them.
2. Order that the transfer referred to in paragraph (a) of Order 1 and the payment referred to in paragraph (b) of Order 1 be made within sixty days.
3. Order that, if the sum to be paid under paragraph (b) of Order 1 is not paid within sixty days after the making of these orders, that sum or so much thereof as is from time to time unpaid, shall bear interest calculated from the expiration of the period of sixty days and otherwise as if s 101 of the Civil Procedure Act 2005 applied.
4. Order that if and to the extent that a caveat lodged by the plaintiff continues to be recorded on the title to the land in Folio Identifier 318/1030531, the plaintiff do within sixty days deliver to the first defendant a duly executed withdrawal of caveat.
5. Order that the first defendant pay the plaintiff's costs of the proceedings as agreed or assessed.
6. Order that pending payment of the sum referred to in paragraph (b) of Order 1, any interest to be paid under Order 3 and the costs to be paid under Order 5, the first defendant shall not transfer or cause or permit to be transferred out of Australia any moneys currently standing to his credit in the Uni Super Superannuation Fund or moneys that, as at 21 July 2007, had recently been deposited into his Commonwealth Bank account from that superannuation fund.
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