New South Wales Supreme Court CITATION : HILLSTON v BAR-MORDECAI [2003] NSWSC 231 HEARING DATE(S) : 28/03/2003 JUDGMENT DATE : 4 April 2003 JURISDICTION: EQUITY JUDGMENT OF : Bryson J at 1 DECISION : Indemnity costs in some cases see [22-24] CATCHWORDS : COSTS - indemnity costs - ruling on claim for costs awarded to Hillston to be on indemnity basis - rulings for many Notices of Motion - indemnity costs awarded in some cases. LEGISLATION CITED : s.66G of the Conveyancing Act 1919 s.76 of the Supreme Court Act 1970 CASES CITED : Re Wilcox Ex Parte Venture Industries Pty Ltd (No.2) (1997) 72 FCR 151 Rosniak v. Government Insurance Office (1997) 41 NSWLR 608 PARTIES : Allan David James Hillston - Plaintiff in 3240/98 and Defendant in 1709/99 and 3039/02 Michael Jacob Bar-Mordecai - Defendant in 3240/98 and Plaintiff in 1709/99 and 3039/02 FILE NUMBER(S) : SC 3240/98; 1707/99 and 3039/02 COUNSEL : J. Whittle SC & B. Burke for A. Hillston M. Bar-Mordecai in person SOLICITORS : Shaw McDonald for A. Hillston M. Bar-Mordecai in person IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON J. 3240/98 - ALLAN DAVID JAMES HILLSTON V MICHAEL JACOB BAR-MORDECAI & ANOR 1707/99 - MICHAEL JACOB BAR-MORDECAI V ALLAN DAVID JAMES HILLSTON 3039/02 - MICHAEL JACOB BAR-MORDECAI V ALLAN DAVID JAMES HILLSTON FRIDAY 4 APRIL 2003 JUDGMENT (COSTS) 1 HIS HONOUR: At para.[273] of the reasons which I published on 28 February 2003 I deferred consideration of all questions of costs until the parties had an opportunity to consider my reasons and made any application for appropriate costs orders. Legal representatives of Mr Allan Hillston obtained an appointment to argue costs for 28 March 2003, which was four weeks after publication of my reasons, and counsel presented Mr Allan Hillston's application on that day. Mr Bar-Mordecai was notified of the appointment by letter of 20 March to which he replied on 25 March, seeking an adjournment, which Mr Hillston's solicitor did not agree to. Mr Bar-Mordecai asked me to adjourn argument on costs for two months, or for six weeks so that he could prepare submissions in reply. He proceeded to explain to me what he said were some complexities of questions of costs, but referred rather to a proposed appeal and to criticisms he would wish to make of the reasons which I published on 28 February. The effect of what he told me was that he wished to challenge many of my conclusions and to suggest that the case of Mr Allan Hillston which prevailed did so because of delinquency in the conduct of witnesses and in the way the case was presented. It was my view that, in disposing of questions of costs, I should accept and act on my own published reasons, including decisions on fact, on which I acted in making the principal orders. It was my view that a fair opportunity to prepare to argue costs had been given and I declined to adjourn the argument. 2 In each case Mr Hillston has achieved complete success and is entitled to a general order for costs. Mr Hillston's counsel asked me to depart from the usual order as to costs in several respects: (1) He asked that the general costs of the hearing of the three proceedings should be ordered to be assessed on the indemnity basis. (2) He asked that the costs of a number of interlocutory motions filed by Mr Bar-Mordecai be ordered to be paid on the indemnity basis. (3) He asked that all other costs of Mr Hillston of and incidental to proceedings 3240 of 1998 (undue influence) be paid on the party and party basis. (4) He asked that all of Mr Allan Hillston's costs of proceedings 1707 of 1999 (Family Provision Act) and 3039 of 2002 (removal of administrator) be paid on the indemnity basis. (5) He asked for an order dealing with access by Mr Hillston to the interest in the estate of the late Eveline Hillston which passed under her will to Mr Bar-Mordecai for enforcement of costs orders. 3 The Court has a discretionary power to order costs, referred to in s.76 of the Supreme Court Act 1970, and the Rules recognise that costs may be awarded on the indemnity basis: see Pt.52A r.4 and r.32 of the Supreme Court Rules. 4 The approach taken in the Federal Court of Australia to the exercise of this discretion was considered in Re Wilcox Ex Parte Venture Industries Pty Ltd (No.2) (1997) 72 FCR 151. In 152 Black CJ said: The circumstances under which indemnity costs will be ordered have been discussed in many cases in this Court and it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case cost will follow the event and the Court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless the Court has an absolute and unfettered jurisdiction in awarding costs, although that discretion must be exercised judicially. So indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court exercising its discretion in that way. Black CJ referred to a number of earlier decisions in the Federal Court of Australia, principally to John S. Hayes & Associates Pty Ltd v. Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 203 (Hill J) and Colgate-Palmolive Co. v. Cussons Pty Ltd (1993) 46 FCR 225 (Shepherd J). See too Cooper and Merkel JJ at 154 to 159. 5 In the Court of Appeal in Rosniak v. Government Insurance Office (1997) 41 NSWLR 608 indemnity costs were addressed by Mason P at 615 to 617; Clarke JA concurred see 627. After referring to the decision of the primary judge and the cases cited in that decision Mason P said at 616: Later cases have emphasised that the discretion to depart from the usual "party and party" basis for costs is not confined to the situation of what Gummow J described as the "ethically or morally delinquent party" ( Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415): see Baltic Shipping Co v Dillon, "Mikhail Lermontov" (1991) 22 NSWLR 1 at 34; Colgate – Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234. Nevertheless the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because the party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule maker: Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 248. 6 These authorities do not establish any delimitation of the grounds upon which indemnity costs may be ordered, but it is clear, both in principle and on authority, that the indemnity costs basis is not adopted in the ordinary case, and is not adopted unless there is some sound discretionary ground for departing from the ordinary rule; where such grounds have been found, they have usually been found in some unreasonable or otherwise delinquent or unsatisfactory aspect of the conduct of the party against whom the order is made. 7 The three proceedings were heard together. Mr Allan Hillston called relatively little of the evidence, and, by a very great preponderance most of the time at the hearing was taken up in dealing with affidavit and oral evidence tendered by Mr Bar-Mordecai, and with incidental arguments and contentions made by him. Cross-examination of Mr Bar-Mordecai was very lengthy, and its length was a product of the length and volume of material with which Mr Bar-Mordecai dealt in his affidavits, the many respects in which his evidence was open to challenge, and the difficulty in obtaining direct and relevant responses to questions. He contributed significantly to the length of the hearing by reading affidavits which contained irrelevant material, scandalous material, material which was bad in form, and repetitious material, and significant time was spent dealing with objections. A great deal of what he said in evidence was shown to be untrue or extremely improbable, to the degree of seeming fabulous. Mr Hillston's case on undue influence was relatively simple as most of the facts on which it was based were admitted in the pleadings. Mr Bar-Mordecai's principal answer was to adduce evidence exploring the nature of his relationship with the deceased; he contended that he was her de facto husband. It would not have been a defence to the Undue Influence claim to establish that he was her de facto husband, and nothing in the evidence he led, which was extremely lengthy, had any real force to rebut the presumption of undue influence or to show that Mrs Eveline Hillston acted independently; if anything, his case tended to confirm that she did not. He did not deal in substance with the centrally important matter, the facts relating to which were within his own knowledge and power of adduction of evidence and not within those of Mr Allan Hillston, of the facts and circumstances which led to the making of each of the gifts and Mrs Eveline Hillston's decisions to make the gifts. Notwithstanding the great length of the hearing, this centrally important matter was hardly approached at all. 8 Mr Bar-Mordecai's credit was completely destroyed by cross-examination and other evidence, to the point where I was of the view that he would say anything and that his evidence should not be relied on. The many witnesses that he called, for all their number and the length of time given to dealing with them, did nothing of substance to support a defence of the undue influence claim. He spent an immense amount of time and effort in advancing falsehoods and defending the plainly indefensible. In his Family Provision claim it was clear from documents that he had been given legal advice in July 1994 that he could make a claim; he would not acknowledge the obvious, but this was plainly true, and he had no substantial explanation for not having brought the proceedings at the right time. He raised a great many matters purportedly in explanation of time which had been used, and the facts showed that he had used time in ways which were extremely unmeritorious, by advancing a false claim based on assertion that the will had been revoked and he was Mrs Eveline Hillston's de facto husband. His grossly exploitative conduct towards her plainly disentitled him from receiving any further provision under an order of the Court, he was entitled under her will to receive what was, in the circumstances, generous provision, and he did not put forward any substantial or arguable basis on which the Court should order any further provision. The proceedings in which he sought to have Mr Allan Hillston removed as executor were expressed and presented in a chaotic fashion, but, when the difficulties of understanding what he put forward were penetrated, it was plain that the proceedings had no substance. 9 For all three matters Mr Bar-Mordecai contended against making an order for costs on grounds which in substance call for reconsideration of my earlier decision; however I should not embark on any such reconsideration on the costs application. He also made inappropriate criticisms of the evidence of Mr Allan Hillston and of witnesses called by him, saying that Mr Allan Hillston's behaviour was delinquent and that his witnesses were delinquent and gave evidence which was false and proved to be false; he contended that the hearing arose out of the misconduct of the successful party. He contended that refusal by Mr Allan Hillston to abandon some of his claims prolonged the hearing. The reference here was to a claim that Mr Bar-Mordecai had caused Mrs Hillston's death or otherwise given her inappropriate medical treatment during the crisis which preceded her death. Mr Allan Hillston's counsel indeed did put forward some material in support of that claim, but abandoned it early in the hearing after I had shown myself to be extremely unreceptive to it in view of the withdrawal and failure of a similar contention, and of reliance on forfeiture, in the probate proceedings before Einstein J, and also of there having been no inquest or prosecution after an investigation of the circumstances of Mrs Eveline Hillston's death by police as a result of a complaint made by Mr Allan Hillston; and after the Coroner had decided, on having the police report, that there should be no inquest. The forfeiture position was abandoned early in the hearing and contributed very little to the length of the hearing. In other respects the contentions made by Mr Bar-Mordecai amounted in substance to challenges to decisions which I made, and views which I took of witnesses and of the force of evidence in my judgment of 28 February. I do not accept that the length of cross-examination of Mr Bar-Mordecai, although very lengthy, was inappropriately so. 10 I have in view the terms of my decision of 28 February 2003 and the adverse comments directed to Mr Bar-Mordecai and his conduct which appear there at many places. In my view the issues which he fought and the positions which he took in all three lawsuits were groundless, in ways which in all reason he ought to have understood himself. The issues arose out of extremely improper and unmeritorious conduct of his own, on any objective view there was nothing reasonably worth contending for in any of the three cases and he acted altogether unreasonably in taking them to trial. In the circumstances he should pay the costs of the hearing on the indemnity basis. For the same reasons, the cost of all the stages of the two proceedings which he initiated himself should also be paid by him on the indemnity basis. See Order 1 and the orders at paras [23] and [24] 11 Mr Hillston contended that the costs of a number of interlocutory motions filed by Mr Bar-Mordecai in proceedings 3240 of 1998 (undue influence) should be allowed on the indemnity basis. The motions referred to were filed on 5 October 2001, 11 October 2001, 26 October 2001, 4 March 2002, 27 March 2002, 15 April 2002, 1 May 2002 and 24 May 2002. Although these applications differed in detail their main subjects were that Mr Bar-Mordecai recurringly called attention back to complaints about interlocutory arrangements for the protection of funds against which he had a claim, and about the constitution of the court by myself. Much of the subject matter of these motions had been addressed in one way or another at earlier directions hearings. 12 His Notice of Motion of 5 October 2001 was disposed of by me for reasons which I stated on 10 October 2001. The principal claim was a claim to have access to funds out of the proceeds of sale of the house at Eastbourne Avenue. There were other claims, including a challenge to my hearing the proceedings. On other claims in the Notice of Motion I made orders in the nature of directions. To some degree the matters raised in this Notice of Motion repeated matters that had been considered earlier. I have not earlier made an order for costs of the Notice of Motion. I should now order that Mr Bar-Mordecai as defendant pay the plaintiff's costs of the Notice of Motion. However it does not appear to me that I should order that those costs be assessed on the indemnity basis. See Order 2. 13 Mr Bar-Mordecai's Notice of Motion filed on 11 October 2001 came before Knight AJ on 23 October 2001 and his Honour dealt with the application in part, ordered that Mr Bar-Mordecai pay the plaintiff's costs of that day without a special order for indemnity costs and adjourned the Notice of Motion to 26 October 2001 before me. On 26 October 2001 there were a number of notices of motion before me. Among many other things I dismissed the remaining claims in the Notice of Motion of 11 October 2001, observing of several of them but I was not prepared to allow the claims to be reopened. I ordered that the defendant pay the plaintiff's costs of that Notice of Motion. (In the notes of my orders of 26 October the Notice of Motion is referred to as the Notice of Motion of 15 October 2001; it bears that date at one place but was in fact filed on 11 October 2001.) The order of 26 October 2001 has not been entered, and is open for reconsideration. Claims 4, 5, 6 and 8 pressed before me on 26 October 2001 were either claims to reopen matters which had already been adjudicated or claims which lacked substance. For this reason I will direct that the costs of the Notice of Motion filed by the defendant on 11 October 2001 (also referred to as the Notice of Motion of 15 October 2001,) ordered to be paid by the defendant be paid on the indemnity basis. See Order 3. 14 On 26 October 2001 the defendant filed in Court Notice of Motion with which I dealt that day, and a note of my reasons is in the file. Most of the claims asked me to reopen matters which had been considered earlier, or to deal immediately with matters which could only be dealt with at the hearing. They were lacking in substance. There was no good ground for seeking repeated consideration of matters which had been dealt with earlier. The order has not been entered. Claim 1 was a claim for leave to amend the Defence. This was dealt with in that I allowed the defendant to file in Court by leave an Amended Defence on 9 November 2001. Otherwise the claims in the Notice of Motion of 26 October 2001 were brought before the Court without any reasonable basis. I will make orders (4) and (5). 15 The defendant filed a Notice of Motion on 4 March 2002 claiming that I dismiss myself from the proceedings and claiming that moneys which he had paid, after Mrs Eveline Hillston's death, to discharge a mortgage for which he and the deceased were both liable, should be paid out to him by the administrator. I dealt with this Notice of Motion on 15 March 2002 for reasons which I then stated and dismissed it with costs. This Notice of Motion was largely a renewed agitation of contentions which had failed earlier, although with some new alleged supporting circumstances. There was no reasonable basis for making this application. The order has not been entered. The application was one of a repetitious pattern of attempts to reopen matters which had been ruled on. I should order indemnity costs. See Order 6. . 16 By Notice of Motion of 27 March 2002 the defendant sought leave to prosecute a number of witnesses for perjury and sought an order for payment of money to him out of the estate of the deceased. This Notice of Motion came before Barrett J on 8 April 2002; for reasons then stated Barrett J dismissed claim 3 and made observations on the repetitious nature of the application. Barrett J reserved the costs of 8 April 2002. In further reasons on the same day Barrett J dismissed the applications for leave to prosecute Mr Hillston for perjury, although he contemplated that there might be some other application for leave to prosecute other witnesses for perjury. The costs were reserved. With the benefit of the hearing and the findings in my judgment it can be seen that the applications relating to perjury, and to the application for money to be paid out of the estate were entirely groundless and without merit. In the circumstances I should order payment of indemnity costs. See Order 7. 17 The defendant filed a Notice of Motion on 15 April 2002 seeking leave to file a cross-claim, seeking that the Court remove me from hearing the proceedings and other procedural directions. This Notice of Motion was heard by Windeyer J on 30 April 2002 and dismissed for reasons then stated. Largely the decision turned on his Honour's view that the claims to be put forward were not appropriate to be raised by a cross-claim, or had already been determined. Windeyer J was not prepared to reopen the question whether I should be disqualified and dismissed the Notice of Motion with costs. With the advantage of the decision of 28 February 2003 it can be seen that this Notice of Motion was lacking in substance. The order of 15 April 2002 has not been entered. The costs should be on the indemnity basis. See Order 8. 18 On the following day 1 May 2002 the defendant filed another Notice of Motion seeking much the same orders. Then on 14 May 2000 he filed another Notice of Motion seeking various orders – that the proceedings be struck out, that the administrator be removed and that the funds the administrator had paid out to legal advisers in the Probate proceedings be returned. Both these Notices of Motion were dismissed with costs on 24 May 2002. Neither order has been entered. As it can now be seen that these Notices of Motion were part of a practice of frequently filing insubstantial notices of motion, and that the matters sought to be raised were altogether lacking in substance, I am of the view that I should direct that the costs be paid on the indemnity basis. See Orders 9 and 10. 19 On 8 May 2002 the plaintiff filed a Notice of Motion for an order restraining the defendant from filing any notice of motion without first obtaining leave; and for related orders. I heard this application on 24 May and for reasons published on 31 May made orders as asked and ordered that the defendant pay the plaintiff's costs of the plaintiff's Notice of Motion dated 8 May 2002. My orders have not been entered. In my reasons of 31 May 2002 I said: In the circumstances I am satisfied that there has been abuse of the process of the court in making these repeated applications, that the defendant's course of conduct shows that unless restrained these abuses may well continue, and that this is an appropriate case for the exercise by the court of its inherent power to control interlocutory applications. I regard the order made in Kinnard v. Field as an appropriate model, bearing in mind that the defendant ought not to be prevented from making a proper application and that I have been given indications which lead me to suppose, although by no means clearly, that there may be something for him to put forward in a cross- claim, if he should formulate it clearly. A further matter which has inclined me towards imposing control on the defendant is that his affidavits, notices of motion and oral submissions have many times departed from dealing with facts relevant to the business in hand to make scandalous assertions about lawyers, witnesses and other persons, attributing to them perjury, contempt of court and other forms of wrong conduct. Applications and documents containing scandalous matter should not be placed on the court's file unless the scandalous matter truly is required by the business in hand. The point has been reached where control on the defendant's conduct of this kind should be imposed. The application was of an extraordinary kind, made necessary by the improper practice adopted by the defendant for filing repeated and groundless notices of motion. In the circumstances the costs should be on the indemnity basis. See Order 11. 20 On 16 April 1999 Master McLaughlin, by an interlocutory order in proceedings 3240 of 1998 (Undue Influence) ordered under s.66G of the Conveyancing Act 1919 that the Eastbourne Avenue property be sold and ordered that the costs of each party of the Notice of Motion and of the sale be paid out of the proceeds of sale. The plaintiff asked me to vary this order so as to provide for payment of the plaintiff's costs by the defendant, and to take away the defendant's entitlement to payment of costs out of the proceeds of sale. I am not prepared to do this as the order was a considered order made by Master McLaughlin and in the circumstances of the time was made on reasonable grounds; it has been entered and should not now be vacated. However I will make an order that the plaintiff's costs and expenses be included in the costs recoverable against the defendant. See Order 12. 21 The plaintiff asked that I make the following order in each case: 5. In addition to all other rights to recover costs he may now or hereafter have, Allan David James Hillston be entitled to recover any costs as ordered herein from any part of the estate of the late Eveline Hillston which is the subject of a devise or bequest to Michael Jacob Bar-Mordecai under the will of the late Eveline Hillston. This application was later withdrawn. 22 Orders in proceedings 3430/98 (1) Order that the defendant pay the plaintiff's costs of the proceedings and further order that the plaintiff's costs of the trial of the proceedings be assessed on the indemnity basis. (2) Order that defendant pay the plaintiff's costs of the defendant's Notice of Motion of 5 October 2001. (3) Order that the plaintiff's costs of the defendant's Notice of Motion of 11 October 2001 (also referred to as 15 October 2001) ordered to be paid by the defendant by order of 26 October 2001 be assessed on the indemnity basis (4) Order that the defendant pay the plaintiff's costs of the defendant's Notice of Motion of 26 October 2001: and further order that the costs of the hearing of the defendant's Notice of Motion of 26 October 2001 be assessed on the indemnity basis. (5) Order that the defendant pay the plaintiff's costs of and occasioned by amendment of the Defence by the Defence filed in Court on 7 November 2001. (6) Order that the costs of the defendant's Notice of Motion of 4 March 2002 which the defendant was ordered to pay by order of 15 March 2002 be assessed on the indemnity basis. (7) Order that the defendant is to pay the plaintiff's costs of the defendant's Notice of Motion of 27 March 2002, such costs to be assessed on the indemnity basis. (8) Order that the costs payable by the defendant of the Notice of Motion of 15 April 2002 under the Court's order of 30 April 2002 be assessed on the indemnity basis. (9) Order that costs of the defendant's Notice of Motion of 1 May 2002 which the defendant was ordered to pay to the plaintiff by order of 24 May 2002 be assessed on the indemnity basis. (10) Order that the costs of the defendant's Notice of Motion of 14 May 2002 which the defendant was ordered to pay to the plaintiff by order on 24 May 2002 be assessed on the indemnity basis. (11) Order that the costs of the plaintiff's Notice of Motion of 8 May 2002 which the defendant was ordered to pay to the plaintiff by order of 31 May 2002 be assessed on the indemnity basis. (12) Direct that the costs and expenses of the plaintiff of and incidental to the application for an order under s.66G of the Conveyancing Act 1919, the order of 16 April 1999 and the sale under that order be allowed to the plaintiff as part of the costs of the proceedings recoverable by the plaintiff against the defendant. 23 Orders in Proceedings 1707/99 Order that the plaintiff pay the defendant's costs of the proceedings including costs of interlocutory applications and reserved costs: and further order that those costs be assessed on the indemnity basis. 24 Orders in Proceedings 3039/02 Order that the plaintiff pay the defendant's costs of the proceedings including costs of interlocutory applications and reserved costs: and further order that those costs be assessed on the indemnity basis. ********** Last Modified: 04/16/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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