Kelly v Clarke [2001] NSWSC 1177

New South Wales Supreme Court

CITATION : Kelly v Clarke [2001] NSWSC 1177 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1237/00 HEARING DATE(S) : 7 December 2001 JUDGMENT DATE : 7 December 2001

PARTIES : Kevin Paul Kelly (P) Ron-El Jean Clarke (D) JUDGMENT OF : Hamilton J

COUNSEL : P M Friedlander (P) No appearance (D) SOLICITORS : Bowen & Gerathy (P) Hardman & Company (D) CATCHWORDS : PROCEDURE [576] - Costs - Departing from the general rule - Conduct of parties - Demand, offer and consent - Refusal of offer of settlement by defendant - Court to apply sanction where party declines reasonable offer - Offer before proceedings commenced. LEGISLATION CITED : Property (Relationships) Act 1984 CASES CITED : Kelly v Clarke [2001] NSWSC 1010 DECISION : Successful plaintiff awarded indemnity costs of whole proceedings.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 7 DECEMBER 2001

1237/00 KEVIN PAUL KELLY v RON-EL JEAN CLARKE JUDGMENT 1 HIS HONOUR: In this matter I delivered judgment on 9 November 2001 Kelly v Clarke [2001] NSWSC 1010 ("my judgment"). I directed at [33] that short minutes should be brought in to encompass my decision and that costs should be dealt with at that time. Short minutes have been brought in before me this morning by the plaintiff, who has also laid before me material to found an application that the defendant not only pay the costs but that they be paid on the indemnity basis. 2 There is, however, no appearance by or on behalf of the defendant although she has been called outside the Court. Although no notice of ceasing to act has reached the Court file, among the bundle of documents tendered today is a notice of ceasing to act, signed by the defendant's solicitors and served upon the plaintiff's solicitor, dated 4 December 2001. Furthermore, the plaintiff's solicitor has deposed that she has this morning had a telephone conversation with the defendant's former solicitor. He has assured her that he has communicated with the defendant on a number of occasions and that in one or more of those communications he has emphasised to her that the matter is before the Court this morning and that it is important that she be present when it is heard. 3 The plaintiff has asked me to include in the orders I make not only a declaration that the contract of sale between the parties ought be specifically performed and an order for its specific performance by the plaintiff, but a specific order that she execute a transfer of the property at or by a particular time and that, in default of her complying with that order, the Registrar be appointed to execute the transfer on her behalf. Furthermore, there was included in the minutes propounded an order that the plaintiff be solely responsible for and indemnify the plaintiff in relation to all outgoings on the property and encumbrances secured on it. However, I am not prepared to make an order that would place in the plaintiff's hands an executed transfer which, at least conceivably, he might get the existing mortgagee to consent to and create a situation whereby he becomes the sole registered proprietor and, therefore, legal owner of the property whilst leaving in existence a mortgage given by both parties. This, whilst it would no longer bind the property when the defendant no longer has an interest in it, would still contain a covenant to pay, upon which the mortgagee might conceivably rely. Before I am prepared to make an actual order for a transfer to effectuate the order for specific performance, I require before me hard evidence of the procurement by the plaintiff of a replacement mortgage in his name alone so that upon registration of the transfer there may be a full discharge of the existing mortgage which would terminate all obligations of any sort of the defendant under that mortgage. Liberty to apply will be reserved in the orders I propose to make so that the plaintiff may bring forward his proposal for further orders when those arrangements have been made, hopefully as soon as the early days of the next term. 4 The plaintiff not only asks for an order that the defendant pay the costs of the proceedings but that she pay them on the indemnity basis. In support of that he tenders a letter written by his solicitors on 26 March 1999 "without prejudice save as to costs" offering in a last attempt to avoid litigation the payment by the plaintiff to the defendant of "$10,000 in full and final settlement". Furthermore, during the course of the proceedings a formal offer of compromise was on 21 March 2001 forwarded by the plaintiff's solicitors to the defendant's solicitors offering the payment of $20,000 in settlement together with the defendant's costs in the sum of $5,000. 5 It must be borne in mind that despite a denial in evidence by the defendant I found that there was indeed an oral contract between the plaintiff and the defendant shortly after the cessation of cohabitation whereby she promised to transfer to him her interest in the property for the sum of $10,000. Although it was not necessary, I indicated that, were it necessary to determine his claim under the Property (Relationships) Act 1984 ("the PRA"), I would in satisfaction of his claim make a similar order, namely, that her share of the property be transferred to him on the basis that in all the circumstances either she should not be treated as having contributed to the property at all or that her contribution had been refunded to her at an early date. 6 Whilst I fully appreciate that a discretion always remains in the Court after a Calderbank letter or a formal offer of compromise as to whether indemnity costs should be awarded, even if the offer be better than the result ultimately achieved, by reference to an assessment of whether or not the refusal of the offer was reasonable, it seems to me that in this case the result that should flow is that there be indemnity costs. The truth of the situation as found by the Court was that there was a contract to transfer the property in consideration of $10,000, which was then promptly paid, and that it was the plaintiff's claim under the PRA rather than the defendant's claim under the PRA which should succeed. That flows, as I say, from a factual situation which always existed. On that basis it seems to me that it was not reasonable for relevant purposes for the defendant to reject the plaintiff's offer of 26 March 1999, much less his offer of 21 March 2001. 7 The order as to costs will, therefore, be that the defendant pay the plaintiff's costs of the proceedings on the indemnity basis.