Wood v Crawford

Wood v Crawford - [2010] NSWSC 252 - NSWSC 2010 case summary — Zoe

[17]

Yours faithfully, Cheryl Scholfield Associate to Justice Slattery 4 The copy of the email sent to Mr Wood said to him, "I am sorry I am unable to answer your questions. Here is a courtesy copy of the email I sent to both counsel and law firms earlier today." As a result of my associate's communications with the parties, the Court gave Mr Wood and Mr Crawford leave to file additional evidence. Both sides took advantage of this grant of leave. Mr Wood filed a supplementary submission on 17 March 2010 together with an affidavit of Keith Stanley Hurst sworn that day. The defendant filed supplementary submissions and an affidavit of Mr Michael Farry of 18 March 2010. Both these affidavits annexed correspondence, which is analysed in the course of this judgment. Mr Wood's Submissions as to Costs 5 Mr Wood says that he was successful on prayers for relief 1 and 2 of the amended summons, which prayers for relief sought a declaration that the Dolomite Road property was held on trust for Mr Wood and an order for its transfer to Mr Wood. Mr Wood says that he was successful and the ordinary rule that costs follow the event should apply and he should be awarded costs. He says that the issues at the hearing, as articulated in paragraph [10] of the principal judgment were the substantial issues raised in the amended summons and he was successful on these issues. 6 Next, Mr Wood says that Mr Crawford opposed the declaration of trust, and other relief sought until Mr Crawford made admissions in the witness box that were inconsistent with the continuation of that opposition. Mr Crawford's opposition was maintained through written and oral submissions opposing all Mr Wood's claims for relief. 7 Mr Wood submits that it was only upon the grant of leave to Mr Crawford to adduce oral evidence on the issue of his conversations with Mr Wood that evidence emerged of the parties' mutual intention that the Dolomite Road property was always to belong to Mr and Mrs Wood: Wood v Crawford [2009] NSWSC 1479 [14], [32]-[34], [39], [41]-[44], and [48]. The rejected paragraph [5] of Mr Crawford's principal affidavit contained no hint of the material evidence that emerged in his oral evidence supporting this mutual intention. Mr Wood submits that Mr Crawford's ultimate oral admission formed a critical part of Mr Wood obtaining relief and that Mr Crawford unreasonably withheld this evidence prior to the hearing. Indeed Mr Wood puts the case more strongly saying that paragraph [5] of Mr Crawford's affidavit is inconsistent with the admissions Mr Crawford ultimately made in the witness box. Mr Wood says that the true position revealed by the admission should never have been concealed in the way that it apparently was. Where a critical issue in the proceedings is denied from the outset and then without explanation is admitted it would, Mr Wood says, ordinarily ground a successful application for costs to be paid by the admitting party on an indemnity basis: see Uniform Civil Procedure Rules 2005 (UCPR) (NSW) r 42.5. 8 Mr Wood next argues that Mr Crawford's conduct prior to the proceedings in unilaterally taking steps to put the property on the market without notice to Mr Wood was unreasonable and made the initiation of the proceedings inevitable. Mr Wood's resistance to forced sale of the property was predictable. The position is made all the worse Mr Wood says because, as the evidence has now emerged, Mr Crawford attempted to sell the property knowing Mr Wood was the beneficial owner. 9 Mr Wood's case of unreasonable conduct on the part of Mr Crawford goes further. Mr Wood says that Mr Crawford's failure to make appropriate admissions and to conduct the case in a reasonable way is compounded because, even on Mr Crawford's case that Mr Wood was a mere tenant, Mr Crawford never admitted the need to reimburse Mr Wood for the amount by which mortgage payments exceeded the market rent or for the not insignificant improvements made to the property: Wood v Crawford [2009] NSWSC 1479, [46] and [58]. It is said that these admissions would have been proper and reasonable even on the case that Mr Crawford was advancing.

[21]

Mr Crawford's Submissions 15 Mr Crawford's first submission is that the present dispute arose from Mr Wood's failure to meet his obligations for the portion of the joint mortgage relating to the Dolomite Road property for which he was responsible. Mr Wood defaulted on his proportion of the mortgage payments in December 2008. This default continued up until the trial on 20 November 2009. Mr Crawford claims that the default continues. Mr Crawford relies upon Mr Wood's continuing defaults on their arrangements as being the fundamental cause of this litigation. 16 Second, Mr Crawford argues that Mr Wood's conduct in failing properly to attend to his financial affairs contributed to this litigation. Mr Crawford says that Mr Wood delayed obtaining a grant of probate from the Queensland Supreme Court for the estate of his late father who died in 2007. Mr Wood is the substantial beneficiary of his father's estate. Probate in the estate was not granted until January 2009. Even at trial in November 2009 Mr Wood had done nothing to raise funds to acquire the Dolomite Road property from Mr Crawford. Mr Crawford submits that it would have been easy for Mr Wood to use this property to repay the loan but he made no attempt to sell it for this purpose. 17 Third, Mr Crawford says that the burden of making the additional mortgage repayments caused Mr Crawford significant financial and emotional stress for a man of some eighty years of age already suffering health problems. Mr Wood's failure to deal with his mortgage obligations led to an understandable reaction on the part of Mr Crawford to bring matters to a head by attempting to sell the property. 18 Fourth, Mr Crawford says Mr Wood himself, broke off attempts to negotiate a settlement of the matter in 2008. Mr Crawford says this was for understandable reasons because Mr Wood was continuing to reside in the Dolomite Road premises in 2009 rent free knowing he was not making any contribution to the mortgage and putting Mr Crawford in a position where he had no option but to pay Mr Wood's portion of the mortgage in order to save his own property from being repossessed. 19 Mr Crawford rejects Mr Wood's reliance upon the Calderbank letters as they do not attempt to resolve all issues facing the parties and cannot for that reason be considered an offer of settlement to which Calderbank principles apply. Mr Crawford submits that the Calderbank letters state that Mr Crawford should transfer the title of the Dolomite Road property to Mr Wood but that he should meet the continuing mortgage obligations himself. 20 In summary Mr Crawford says the issues in this case are wholly occasioned by the conduct of Mr Wood and that the appropriate solution is for the Court to decline to award costs in the proceedings. Applicable legal principles 21 The legal principles applicable to the exercise of my discretion in this case are not controversial. Subject to the Rules of Court costs are in the discretion of the court and the ordinary principle is that costs generally follow the event: Civil Procedure Act 2005 s 98, UCPR r 42.1 Latoudis v Casey (1990) 170 CLR 534, at 566-7 and Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. A successful party should not be deprived of costs unless there is material to justify a contrary order being made: Milne v Attorney General for Tasmania (1956) 95 CLR 460 at 477. There is a discretion to refuse costs to a successful party, where the Court is satisfied that "some other order should be made": UCPR r 42.1. Where for example the successful party had encouraged the unsuccessful party to contest the proceedings or otherwise engaged in misconduct in relation to the transaction the subject of the proceedings or in the proceedings, an order refusing costs to a successful party may be justified: Ritter v Godfrey [1920] 2 KB 47; and Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371 at 377 and Jamal v Secretary Department of Health (1988) 14 NSWLR 252 at 271-1 per Mahoney JA. Decision

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26 Mr Wood's conduct was a substantial cause of these proceedings being commenced and maintained. Prior to the filing and service of the amended summons in August of 2009 Mr Wood had been in default under the mortgage since December 2008. This default caused significant financial and personal stress to Mr Crawford who was placed at risk of losing his personal residence at Racecourse Road. 27 Mr Wood also first advanced the unreasonable position through his pleadings that he was entitled to the Dolomite Road property without having to bear any of its outgoings until after the date of the court order. Mr Wood finally articulated through the form of his amended summons filed on 10 July 2009, that he was prepared to meet the liabilities and outgoings on the Dolomite Road property as the price of a declaration that he had a beneficial interest in the Dolomite Road property. Before mid-July 2009, when the summons was amended, Mr Crawford was quite entitled to resist the overstated relief Mr Wood was seeking in the proceedings. 28 But even after mid-July 2009 as the proceedings were progressing towards hearing, Mr Wood's conduct outside the courtroom seemed quite inconsistent with any genuine commitment to do equity as the price of gaining the relief to which he claimed to be entitled. Mr Wood was enjoying the benefit of occupation of the Dolomite Road property. He was not paying outgoings. Mr Crawford was being forced to pay outgoings at the peril of losing his Racecourse Road property. Mr Crawford was quite entitled to be sceptical of Mr Wood's promise to do equity as the price of gaining the equitable relief he sought. Whatever his summons might say, he did not demonstrate any practical willingness to contribute to Mr Crawford's ongoing financial commitments for the Dolomite Road property. Despite the findings in my principal judgment, even now as the next section of this judgment explains, Mr Wood has still not given a clear indication how Mr Crawford's liabilities over Racecourse Road will be paid out.

[39]

Events Since Judgment on 24 December 2009 43 Mr Michael Farry's affidavit of 18 March 2010 annexes correspondence passing between the parties from 5 March 2010 to 15 March 2010. This March 2010 correspondence shows a picture of continuing disagreement between the solicitors for the parties about the working through of consequential relief in these proceedings. With a justified sense of urgency Mr Crawford's supplementary submissions complain of Mr Wood's continuing default in respect of his share of the mortgage payments since the principal judgment on 24 December 2008. Despite my judgment that the Dolomite Road property should be transferred to Mr Wood before 1 May 2010, Mr Wood has made no information available as to either the proposed sale of the Queensland property or of the Dolomite Road property. Mr Crawford should not be required after the principal judgment to bear the burden of meeting Mr Wood's mortgage obligations. After a hearing in mid November 2009 I gave judgment before Christmas 2009 so that the parties would know who was responsible for the mortgage payments before they fell due in early January 2010 and thereafter. It is regrettable that Mr Wood is not discharging his responsibility for these obligations. 44 The March 2010 correspondence bears out Mr Crawford's contentions. In the March 2010 correspondence Mr Wood admits that he has not made the February mortgage payment for Dolomite Road but proposes eventually to make it on completion of the sale of the Queensland property. The correspondence shows disagreement about whether Mr Wood has made the January mortgage payment. Mr Crawford seeks a commitment as to the anticipated date for transfer of the Dolomite Road property to Mr Wood. The correspondence does not contain any clear answer on behalf of Mr Wood as to the anticipated transfer date other than by proffering the statement "when settlement has been scheduled we will contact you so that you may arrange the discharge and advise us how you want the remaining cheque drawn". Nothing in this correspondence indicates to Mr Crawford how or when Mr Wood proposes to effect settlement of the Dolomite Road transfer. Mr Crawford's concerns about the developing situation and the mortgagee's threats to take possession of his Racecourse Road property are understandable. Mr Wood's final position on these matters is expressed in the last paragraph of his solicitor's letter of 11 March 2010: "As our client is not in a financial position to make payments until the Queensland property is sold may we suggest either of the following options:

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