Supreme Court New South Wales Medium Neutral Citation: Dyce v David Landa Stewart Pty Ltd (No 2) [2021] NSWSC 701 Hearing dates: On the papers Decision date: 16 June 2021 Jurisdiction: Common Law Before: Adamson J Decision: Confirm order (5) made on 25 May 2021, namely that the defendant is to pay the first plaintiff's costs of the proceedings up to and including 25 September 2020. Catchwords: COSTS — Where solicitor activated an enduring power of attorney on behalf of former client who had since become incompetent — Whether solicitor ought be entitled to costs in respect of abandoned claim Cases Cited: Dyce v David Landa Stewart Pty Ltd [2021] NSWSC 590 Hawkins v Clayton (1988) 164 CLR 539; [1988] HCA 15 Spellson v George (1987) 11 NSWLR 300 Category: Costs Parties: Peter Dyce (First Plaintiff) PL Dyce Pty Ltd (ACN 000 261 807) (Second Plaintiff) Marion Lewis Pty Ltd (ACN 000 050 779) (Third Plaintiff) Loch Ness Real Estate Pty Ltd (ACN 004 247 125) (Fourth Plaintiff) Lidcombe Investments Pty Ltd (ACN 000 622 211) (Fifth Plaintiff) Richmond Export Pty Ltd (ACN 000 068 682) (Sixth Plaintiff) Ivan Dyce Pty Ltd (ACN 000 200 555) (Seventh Plaintiff) David Landa Stewart Pty Ltd (ABN 26 166 455 778) (Defendant) Representation: Counsel: C Harris SC / H Altan (Plaintiffs) J Armfield (Defendant) Solicitors: HWL Ebsworth Lawyers (Plaintiffs) Bartier Perry Lawyers (Defendant) File Number(s): 2020/12175 Judgment Introduction 1. On 25 May 2021, I published reasons for my decision to order the defendant to deliver up to the second to seventh plaintiffs their documents which had been in its possession: Dyce v David Landa Stewart Pty Ltd [2021] NSWSC 590 (the principal judgment). I made costs orders which would take effect if no party applied for different orders. 2. The defendant has applied to vary order (5), which was an order that the defendant pay the first plaintiff's costs up to and including 25 September 2020 (the proposed order). The defendant seeks the following orders instead of the proposed order. First, it seeks an order that the first plaintiff pay the defendant's costs of the proceedings referable to his claim against the defendant. In the alternative, the defendant seeks an order that the defendant pay the first plaintiff's costs up to an including 25 May 2020 and thereafter the first plaintiff pay that part of the defendant's costs of the proceedings that are referable to the first plaintiff's claim. 3. The defendant sought to tender correspondence between the parties and the court transcript of 25 September 2020 in support of its application for costs. I confirm that I have considered the correspondence. However, I note that in none of the communications was an offer made that would have resulted in the settlement of the proceedings. In these circumstances, it is not necessary to address these documents further. 4. This judgment ought be read together with the principal judgment since the findings made in the principal judgment are relevant to the costs order as between the first plaintiff and the defendant. Consideration 1. The factual background to the defendant's application appears from the principal judgment. It can be summarised briefly as follows. The first plaintiff is in a different position to the other plaintiffs. He is the only plaintiff who is a natural person; the other plaintiffs are corporations which he owned and, when he had the mental capacity to do so, controlled. In October 2019, he instructed HWL Ebsworth to obtain his documents from the defendant as he wanted to terminate his retainer of the defendant and its principal, Simon Singer, and retain HWL Ebsworth as his solicitor and the solicitor for his companies. 2. When the defendant refused to comply with the authority the first plaintiff had provided them, HWL Ebsworth commenced these proceedings on behalf of the first plaintiff and his companies to obtain their new clients' documents from their former solicitors. By that time, the first plaintiff no longer had the mental capacity to give instructions. On 25 May 2020, Mr Singer activated an enduring power of attorney which the first plaintiff had given him in 2017 (the 2017 Power of Attorney) and directed HWL Ebsworth to cease to act on behalf of the first plaintiff and to discontinue these proceedings on his behalf. On 25 September 2020, Mr Altan, who was instructed by HWL Ebsworth to represent the plaintiffs in these proceedings, informed the Court at a directions hearing that the claim by the first plaintiff would not be pressed. This course was taken in order to avoid controversy relating to Mr Singer's activation of the 2017 Power of Attorney. The defendant's primary application: that the first plaintiff pay its costs of defending itself from his claim 1. In support of the first variation of the proposed order sought, the defendant contended that, as the first plaintiff was incompetent at the time the proceedings were commenced, the proceedings on his behalf ought to have been commenced by a tutor. The defendant argued that, for this reason, the first plaintiff ought be ordered to pay the costs associated with the first plaintiff's claim against it. 2. The failure to sue through a tutor is regarded as an irregularity rather than a fundamental defect: Spellson v George (1987) 11 NSWLR 300 at 313E-F (Powell J). At no time did the defendant seek a stay of the proceedings until amended by the joinder of a tutor to act on behalf of the first plaintiff. Nor did the defendant apply to set the proceedings aside as a nullity. In these circumstances, I am not persuaded that the defendant has any entitlement to have its costs of defending the first plaintiff's claim paid from the commencement of the proceedings. The defendant's alternative application: that it pay the first plaintiff's costs up to and including 25 May 2020 and that the first plaintiff pay its costs thereafter 1. In the alternative, the defendant argued that because it had exercised the 2017 Power of Attorney on 25 May 2020, HWL Ebsworth was obliged to discontinue the plaintiff's claim on that date and cease to act for him. The defendant submitted that because the first plaintiff's claim was not discontinued when his solicitors received the direction on 25 May 2020, the first plaintiff was obliged to pay any costs incurred by the defendant after 25 May 2020 which were referable to its defence of the first plaintiff's claim. 2. I do not accept the defendant's submissions. Although the 2017 Power of Attorney had been given to Mr Singer by the first plaintiff, it did not entitle Mr Singer to act on the first plaintiff's behalf in all circumstances or irrespective of his expressed wishes. Although it was common ground that the first plaintiff had lost capacity by the time the proceedings were commenced, the first plaintiff had, in October 2019, expressed his intention to change solicitor in unmistakably clear terms. Any doubts about his then capacity to give a direction to the defendant to deliver up his documents to HWL Ebsworth were removed by Dr Chalkley's report. From discussions they had had the previous year (which are referred to in the principal judgment) Mr Singer was, in any event, aware of the first plaintiff's plans to change his arrangements. In these circumstances, Mr Singer was not entitled to disregard the first plaintiff's instructions and wait until the first plaintiff became incapacitated before activating the 2017 Power of Attorney. Further, HWL Ebsworth could be confident that the first plaintiff had, at a time when he was still competent, wanted to retain the firm as his solicitor. Thus, HWL Ebsworth, by commencing proceedings in the name of the first plaintiff, can be taken to have been acting in accordance with the instructions they had earlier received from him when he was still competent. 3. When HWL Ebsworth was notified that the 2017 Power of Attorney had been activated, it is understandable that the firm would not have acted in accordance with it immediately. The evident purpose and effect of the activation of the 2017 Power of Attorney was to prevent the first plaintiff from having anyone other than the defendant act on his behalf. Mr Singer knew, and had known since he had received the authority from the first plaintiff in October 2019, that the first plaintiff no longer wanted Mr Singer (or the defendant to act on his behalf). Thus, whatever other explanation Mr Singer gave in evidence as to his motive, I am persuaded that his motive was self-centred and not in accordance with what he knew to be the first plaintiff's wishes. In these circumstances, I am not satisfied that it would be appropriate to order the first plaintiff to pay any part of the defendant's costs of defending the claim against it. 4. Because of the evident inappropriateness of Mr Singer's activation of the 2017 Power of Attorney, it was reasonable for HWL Ebsworth to take a little time to consider what to do about it. As appears from my reasons at [92] of the principal judgment, I am satisfied that, on 25 September 2020, Mr Altan made it clear to the Court and to the defendant that the first plaintiff's claim was no longer maintained. As I recorded at [92] of the principal judgment, this step was taken to "avoid controversy arising from Mr Singer's exercise of power under the 2017 Power of Attorney." Usually, when a claim is abandoned, the person abandoning the claim is liable to pay the costs of the opposing party. However, it was Mr Singer (and therefore the defendant) who was the effective cause of the abandonment of the first plaintiff's claim, which would otherwise have been successful (on a similar basis, as the other plaintiffs' claims succeeded). Mr Singer ought not be permitted to profit (by way of a costs order in his favour) from his own breach: see, in a different context: Hawkins v Clayton (1988) 164 CLR 539 at 590 (Deane J); [1988] HCA 15. 5. In these circumstances, I consider the appropriate order to be the one which I proposed. In so far as the first plaintiff incurred costs associated with the first plaintiff's claim between 25 May 2020 and 25 September 2020, I am satisfied that the defendant ought bear those costs. This is because Mr Singer's conduct in activating the 2017 Power of Attorney was adverse to what he knew of the first plaintiff's intentions at a time when the first plaintiff had been competent to express them. In these circumstances, it was reasonable for HWL Ebsworth to take time to address how best to resolve the position, and in circumstances which included that the first plaintiff no longer had the mental capacity to give instructions although he had been mentally capable when he first instructed them to take the course of obtaining his documents from the defendant. Order 1. For the reasons given above, I make the following order: 1. Confirm order (5) made on 25 May 2021, namely that the defendant is to pay the first plaintiff's costs of the proceedings up to and including 25 September 2020. ********** 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: 16 June 2021