Russell v Quinton [2000] NSWSC 369

New South Wales Supreme Court

CITATION : Russell v Quinton [2000] NSWSC 369 revised - 10/05/2000 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 2487/1999 HEARING DATE(S) : 1 May 2000 JUDGMENT DATE : 1 May 2000

PARTIES : Kaye Lorraine Russell (Plaintiff/Cross Defendant) Luke William Quinton (Defendant/Cross Claimant) JUDGMENT OF : Bergin J

COUNSEL : P Hallen SC (Plaintiff) J Rollason (Solicitor) (Defendant) SOLICITORS : Conway MacCallum (Plaintiff) Lane & Lane (Defendant) CATCHWORDS : Application for appointment of trustee pursuant to s15 Family Provision Act 1982 - Application for indemnity costs. Family Provision Act 1982 (NSW) LEGISLATION CITED : Supreme Court Act 1970 (NSW) De Facto Relationships Act 1984 (NSW) Bearns v Bearns-Hayes (unreported Young J 7 May 1997) Multicon Engineering P/L v Federal Airports Corp (1996) 138 ALR 425 Oshlack v Richmond River Council (1997) 152 ALR 83 CASES CITED : Baillieu Knight Frank (NSW) v Ted Manny Real Estate P/L (1992) 30 NSWLR 359, 362 Rosniak v GIO (1997) 41 NSWLR 608 Abbott v Random House Aust Pty Ltd (1999) FCA 1540 Re Wilcox; Ex Parte v Venture Industries P/L (1996) 141 ALR 727. DECISION : Trustee appointed. Party/party costs awarded.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BERGIN J

MONDAY 1 MAY 2000

2487/99 - KAY LORRAINE RUSSELL v LUKE WILLIAM QUINTON - ESTATE OF WILLIAM EDWARD QUINTON

JUDGMENT - EX TEMPORE

1 This matter was placed in the list today for the purpose of making some orders in respect of the judgment I delivered in this matter on 17 April 2000. The parties have had a two week period from 17 April to today to consider my findings for the purpose of reaching a possible agreement as to the implementation of any of the orders to facilitate the payment to the plaintiff of the additional $322,000 and the balance of the original legacy plus interest of $105,000 totalling $427,000. 2 Mr Hallen SC appeared for the plaintiff and Mr Rollason, solicitor, appeared for the defendant. Mr Hallen SC produced draft short minutes of order dealing with the matters necessary to reflect the findings that I had made and to facilitate the payment of the judgment amount. That includes the appointment of Hugh Charles Thomas, as trustee for the sale of property pursuant to section 15 of the Family Provision Act 1982 (NSW). The declarations and orders contained in those short minutes of order were not opposed, other than order 3 dealing with an order in terms of indemnity costs in the plaintiff's favour and order 6 which deals with the time before which the trustee for sale is not to take any steps to sell the property. 3 There are therefore two issues for my decision, the first being whether the trustee for sale should be appointed and only restricted from taking any steps until 1 June 2000 or at a later date; and the second issue being whether the costs order to be made is on an indemnity basis. Mr Rollason indicated at the outset that there was no opposition to an order being made that the defendant pays the plaintiff's costs of the proceedings on a party/party basis. 4 I will deal firstly with the matter of the appointment of the trustee. 5 The defendant relies upon Exhibit 1 which is a letter from Coogee First National addressed to the defendant dated 25 April 2000. That letter refers to an inquiry "regarding the proposed sale and marketing of Unit 2/2 Eastbourne Avenue, Clovelly". Mr Giltinan, of that firm, advised the defendant that he thought the most appropriate auction date would be 25 July 2000. That date was apparently chosen to accommodate the termination of the tenancy of the occupiers of the premises and to provide a period during which some improvements could be made to the property should the defendant desire so to do. That is the only evidence upon which the defendant relied. 6 The plaintiff opposes any amendment to the proposed orders and relied upon two features of the defendant's conduct to submit that the court would not be satisfied that the delay is appropriate. The first matter to which Mr Hallen SC referred is the matter of the defendant's failure to disclose the rental income from the two properties in his affidavits. I have dealt with that matter in my judgment and have referred to the defendant's explanation that he did not understand that he had to disclose that rental separately from the provision of bank statements to his solicitors for the purpose of this litigation. Although I made no particular findings in respect of whether that was a reasonable conclusion or not, the fact of the matter is that, properly advised, the defendant would or should have known that such amounts should have been disclosed. 7 The second matter upon which Mr Hallen SC relied was the failure of the defendant to pay the balance of the legacy of $200,000 which remained unpaid since the date of the grant of probate. $100,000 was paid to the plaintiff and although the defendant's former solicitors indicated nearly twelve months ago that the balance would be paid in the near future that money still remains outstanding today. 8 Nothing that has been presented to me today by the defendant changes the views that I have expressed in my judgment in paragraphs 144 and 145. Additionally I am of the view that the two matters are sufficient for me to be satisfied that the order sought in paragraph 6 of the short minutes of order is an appropriate order to make. 9 No attempts have apparently been made by the defendant to facilitate the payment of the $100,000 and that in itself would lead me to the conclusion that order 6 is reasonable. I will in due course make an order in terms of paragraph 6 and assume that the trustee will of course do all things reasonable to ensure that the best possible price is obtained at the sale of the property at 2/2 Eastbourne Avenue, Clovelly. 10 The second matter for decision is whether order 3 should be made in terms as proposed by Mr Hallen SC. This requires a recounting of some history in respect of the negotiations between the parties. 11 The deceased died on 18 July 1998. By letter dated 16 February 1999 the plaintiff's solicitors wrote to the defendant's then solicitors in terms of what could reasonably be described as a Calderbank letter making an offer to settle her proposed claim for $250,000 inclusive of costs, in addition to the legacy provided for the plaintiff under the will. The plaintiff's solicitors then advised the defendant's solicitors that they wished to be advised of the defendant's response to that offer within 21 days. 12 Although it was apparent there was some other communication between the solicitors, the next letter that I have been provided with on this application in Exhibit A is a letter from the defendant's then solicitors to the plaintiff's solicitors of 25 March 1999. In that letter the defendant's solicitors indicated that their client was of the view that the plaintiff did not have any need that could be demonstrated in any application to the court. 13 The defendant claimed that the defacto relationship between the plaintiff and the deceased had ended some years previously and that the plaintiff had not made any application under the Defacto Relationships Act 1984 (NSW). The defendant also advised the plaintiff that if she were to make an application which was unsuccessful the defendant would be seeking indemnity costs and would rely upon the letter in support of such an application. 14 On 13 April 1999 the plaintiff's solicitors communicated further with the defendant's solicitors rejecting the suggestion that the defacto relationship had terminated and indicated that the offer, that is the $250,000 inclusive of costs, remained open "in the hope that her claim may be settled without resorting to litigation". On 10 May the defendant's solicitors wrote rejecting the offer and indicated that they were instructed to accept service of any process. The summons was filed on 26 May 1999. 15 The court has a discretion under section 76 of the Supreme Court Act 1970 (NSW) to make an appropriate order for costs. It has been noted previously that there is a tension between section 76 of the Supreme Court Act 1970 (NSW) and section 33 of the Family Provision Act 1982 (NSW). Young J in Bearns v Bearns-Hayes, unreported decision of 7 May 1997, noted "although it is unclear it seems to me that the appropriate way of approaching the problem is that section 76 continues to apply save as it is modified by section 33. Indeed section 76 (1) of the Supreme Court Act actually says that it operates 'subject to any other Act'". I am satisfied that I do have a discretion to make an order for indemnity costs. The question is whether this is an appropriate case in which to make such an order. 16 The plaintiff relies upon two matters helpfully outlined by Mr Hallen SC in his written submissions on costs handed up this morning. The first matter is the making of the without prejudice offer save as to costs and its rejection. The second matter is the conduct of the defendant in maintaining as an issue in the proceedings, until the afternoon of the first day of the hearing, the existence of the defacto relationship between the plaintiff and the deceased. Mr Hallen SC has also helpfully outlined the authorities and in particular referred me to Multicon Engineering Pty Limited v Federal Airports Corporation (1996) 138 ALR 425. That was a decision of Rolfe J in which his Honour gathered together many of the relevant authorities and has provided me with guidance in coming to my decisions in this case. 17 The other authorities to which Mr Hallen SC referred include Oshlack v Richmond River Council (1997) 152 ALR 83, Baillieu Knight Frank (NSW) Pty Limited v Ted Manny Real Estate Pty Limited (1992) 30 NSWLR 359 and Rosniak v GIO (1997) 41 NSWLR 608. These decisions highlight circumstances that the Courts have found appropriate for a finding that indemnity costs should be awarded. 18 These include a reference to "abuse of process" and wastage of time and money on "totally frivolous and thoroughly unjustified defences": Baillieu Knight Frank (NSW) Pty Limited v Ted Manny Real Estate Pty Limited at 362, and "some evidence of unreasonable conduct": Rosniak v GIO at 616. Mr Hallen SC also referred me to Abbott v Random House Australia Pty Limited (1999) FCA 1540 in which the Full Court of the Federal Court referred to Higgins' J judgment as correctly referring to the principles in Re Wilcox; Ex Parte v Venture Industries Pty Limited (1996) 141 ALR 727. That included reference to the Court not departing from the rule that costs be ordered on a party/party basis unless the circumstances of the case warranted it. As to what circumstances may be a basis for warranting such departure the Court found that it was the "justice of the case" requiring it or where there was "some special or unusual feature in the case to justify it". 19 In Multicon Engineering Pty Limited v Federal Airports Corporation Rolfe J said at page 446 "in my opinion the evidence of the Calderbank letter, the rejection of the offer contained therein and the failure to obtain a result better than the offer, places the offeror in the position that a court should approach the application by that party for indemnity costs with a predisposition to holding that he is entitled to indemnity costs". There is no doubt that the plaintiff in this case obtained a result better than the offer, it being $322,000 in addition to the legacy, exclusive of costs, compared to the offer made of $250,000 in addition to the legacy, inclusive of costs. 20 Mr Rollason submitted that the defendant was entitled to have the matter tested. He submitted that nothing was certain in these cases and much will depend upon the particular findings made by the trial judge. In respect of an apparently similar submission in Multicon Engineering v Federal Airports Corporation Rolfe J said at p 448: "It is not whether it was reasonable for the parties rejecting the offer to fight on notwithstanding that the offer had been made but whether it was reasonable for the purpose of rejecting the offer to do so and in that regard I would suggest that the onus must be on the party rejecting the offer to establishing in some way the reasonableness of the course that it took. In my opinion that cannot be done by saying that litigation is uncertain and it was entitled rather than to accept the offer to have the uncertainty, whether legal or factual, resolved by judicial decision". 21 I shall return to this aspect of the matter shortly but I shall deal with the second matter raised by Mr Hallen SC which is the defendant's conduct in keeping alive the issue of the defacto relationship until the afternoon of the first day of the hearing. It was submitted by Mr Hallen SC that maintaining that issue was unreasonable in all the circumstances and that the plaintiff was put to the expense of having to obtain corroborative evidence from other witnesses, the affidavits of whom were read in the proceedings, and to be ready for trial to prove the existence of the defacto relationship. 22 There was some evidence given by Mr Milne, solicitor, who was called in respect of the cross claim to which I will refer shortly, that he had been told by the deceased in 1994 that there had been a "big bust up" between the deceased and the plaintiff. There is no doubt that the defendant's solicitors were instructed by the defendant that the relationship between the deceased and the plaintiff had ceased prior to the deceased's death. 23 There is evidence to which I referred in the judgment delivered on 17 April that the deceased and the plaintiff lived apart for the last two years of the defendant's life. That is a matter that is specifically referred to in the correspondence which forms part of Exhibit A on this application. The plaintiff has admitted that the plaintiff and the deceased lived apart but their relationship both sexual and otherwise continued until the deceased's death. 24 Mr Rollason submitted that the defendant, as the executor of the deceased's will, acted reasonably in testing issues consistently with the upholding of his late father's will. Mr Hallen SC submitted that the defendant was the only person who could benefit from this litigation as all other legacies had been paid out and the defendant was the sole beneficiary. It did appear at the commencement of the trial that the defendant believed that his father and the plaintiff had ceased their relationship. That, of course, was not an issue after the concession was made on the first day of the trial. 25 There is an important matter that is in the defendant's favour on this application. From the outset, that is prior to 16 February 1999 when the Calderbank letter was forwarded to the defendant's solicitors, there must have been some communication about the Cohabitation Deed 26 That appears by inference from the first paragraph of the letter of 16 February 1999 in Exhibit A. In that paragraph the plaintiff's solicitors advised the defendant's solicitors that they had obtained advice from Mr Hallen SC who was "strongly of the view" that the plaintiff had a claim "notwithstanding the Cohabitation Agreement". From this correspondence I infer that the defendant relied upon the existence of that agreement to resist the plaintiff's claim. A cross claim was filed on 24 February 2000 in which pursuant to s 31 of the Family Provision Act 1982 (NSW) the defendant sought the Court's approval of the release provided by the plaintiff in the Cohabitation Deed to which I have referred in the judgment delivered on 17 April. 27 The question that I am addressing is the one to which Rolfe J was referring and that is whether the rejection of the offer was reasonable. The question of whether the release in the Cohabitation Deed should be approved was not free of complexity as can be seen from the judgment of 17 April 2000. 28 I am of the view that the defendant was entitled to bring that cross claim and to have it decided by the Court. I am also of the view that it was therefore not unreasonable for the defendant to reject the plaintiff's offer. I am satisfied that I should not depart from the usual order in all the circumstances. I will therefore make an order that the defendant pay the plaintiff's costs of the proceedings on a party/ party basis and I will amend that order number 3 accordingly. 29 I make the orders in short minutes of order initialled by me, dated and placed with the papers. Order 3, reads as follows: "Order that the defendant pay the plaintiff's costs of the proceedings on a party/party basis". In relation to order 11, after the word "balance" the words "after the payment of the plaintiff's costs as assessed or agreed" should be inserted. ***********