New South Wales Supreme Court CITATION : Graham v Hulme; Hulme v Graham [2009] NSWSC 1264 HEARING DATE(S) : 8 October 2009 JUDGMENT DATE : 8 October 2009 JURISDICTION : Equity JUDGMENT OF : Slattery J at 1 EX TEMPORE JUDGMENT DATE : 8 October 2009 ORDERS: 1. Judgment for the plaintiff against the defendants in the sum of $61,861.94. 2. Order that the defendants pay 50% of the plaintiff's costs of the proceedings. DECISION : 3. Order that if a sum of no less than $42,907.29 is paid by the defendants to the plaintiff on or before 29 October 2009 pursuant to order 1, then until further order of the court: (i) order 1 is stayed; (ii) the plaintiff shall not register as a judgment any assessment of costs made pursuant to order 2. 4. Liberty to the parties to apply in respect of order 3 upon 72 hours' notice. CATCHWORDS : PROCEDURE - costs - recovery of costs - successful plaintiff recovers only 50% of her costs due to the premature commencment of proceedings CATEGORY : Consequential orders 3887/09: Plaintiff/Cross-Defendant: Courtney Michelle Graham as Executor of the Estate of Jeffrey James Graham First Defendant/ First Cross-Claimant: Janet Ann Hulme PARTIES : Second Defendant/Second Cross-Claimant: Bronwyn Ann Hulme-Craig 4332/09: Plaintiff: Janet Ann Hulme Defendant: Courtney Michelle Graham as Executor of the Estate of Jeffrey James Graham FILE NUMBER(S) : SC 3887/09; 4332/09 3887/09: Plaintiff/Cross-Defendant: Mr A Rogers Defendants/Cross-Claimants: Mr J O'Connor COUNSEL : 4332/09: Plaintiff: Mr J O'Connor Defendant: Mr A Rogers 3887/09: Plaintiff/Cross-Defendant: Dribbus Kovacevic Lawyers Defendants/Cross-Claimants: Guardian Lawyers SOLICITORS : 4332/09: Plaintiff: Guardian Lawyers Defendant: Dribbus Kovacevic Lawyers IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION SLATTERY J THURSDAY 8 OCTOBER 2009 3887/09 COURTNEY MICHELLE GRAHAM AS EXECUTOR OF THE ESTATE OF JEFFREY JAMES GRAHAM v JANET ANN HULME AND BRONWYN ANN HULME-CRAIG 4332/09 JANET ANN HULME v COURTNEY MICHELLE GRAHAM AS EXECUTOR OF THE ESTATE OF JEFFREY JAMES GRAHAM JUDGMENT (Re Costs) 1 HIS HONOUR: I gave my principal judgment in this matter yesterday. There was an argument this morning about the costs of these proceedings. 2 The estate claims that it should have costs of the recovery proceedings. It has been successful in achieving a judgment in the sum of $59,510.37. Additional interest on this sum is still being calculated. There is a stay on approximately one third of that judgment. 3 Mr Rogers seeks the costs of these proceedings on behalf of the estate. Mr O'Connor resists that outcome on behalf of Janet Hulme. Mr Rogers points to the fact that the estate has been largely successful. He says that proceedings would not have had to have been brought if the accounting given to the estate on 27 August 2009 in respect of the funds transferred from the estate had been given much earlier, when it was requested. 4 He submits that the chronology of events between the death of Jeffrey Graham and July 2009 shows Janet Hulme's solicitor failed to deal with correspondence. That correspondence asked in increasingly insistent terms for the return of or an account of the monies that had been transferred from the estate. 5 These proceedings were commenced by an ex parte application before Nicholas J on 29 July 2009. His Honour granted a freezing order. The proceedings were returnable before Ward J on 4 August, when the first contest involving the currently briefed counsel took place. Mr Rogers points to the fact that right up until late August the correspondence from Janet Hulme's solicitors parried the requests for the information or for the return of funds to the estate. 6 Mr Rogers also submits, that the letter of 27 August 2009 from Guardian Lawyers, for Janet Hulme, which gives an account of what was done with $10,603.08 of the moneys transferred from the estate accounts by Janet Hulme, came some 3 weeks after these proceedings were commenced. He submits this shows continuing delay in the provision of timely information by Janet Hulme. He says that Janet Hulme's conduct meant that the proceedings had to be commenced and therefore the estate should receive an order for costs as it has been largely successful in those proceedings. 7 Against that Mr O'Connor puts a number of things. He reads paragraphs 16 to 20 of the affidavit of Brendan Noney of 30 August 2009. Mr Rogers has not taken issue with the contents of this affidavit, and properly so. It would be difficult to do so. It appears from that affidavit that in the month of July that Mr Noney, the solicitor with the carriage of this matter on behalf of Janet Hulme suffered a series of unfortunate personal and family medical issues which removed him from practice. They also undoubtedly distracted him from legal work and caused him to be focussed on the care of his own family. This matter consequently could not be attended to by him. Mr Noney's affidavit shows that what was asserted at the time in correspondence from Guardian Lawyers had a basis in fact. 8 Janet Hulme was apparently also suffering with her health in a way that made it difficult for her to give instructions to Guardian Lawyers. Her health issues may well have been compounded by a severe grief reaction as a result of the death of the deceased. This is how Mr O'Connor explains the delay in responding to the correspondence from the estate's solicitors. 9 Mr O'Connor also says that the proceedings were commenced prematurely by the estate. He says that a letter from Guardian Lawyers of 28 July 2009 to the Estate's lawyers (Annexure M to the affidavit of Austin Pitman of 29 July 2009) fully explained when Mr Noney would be able to overcome his immediate medical challenges and be able to respond to the estate's correspondence. The letter said the following: "We are obtaining instructions in relation to your recent correspondence and apologise for the delay in replying. The writer has had an extended absence of leave ... influenza A/swine flu as well as his wife contracting pneumonia resulting in hospitalisation. We are seeking to reply to your correspondence by close of business tomorrow." 10 That letter followed an earlier email of the 16 July (annexure L to the same affidavit of Mr Pitman) in which Mr McKellar of Guardian Lawyers communicated with Mr Austin Pitman for the estate, seeking an extension of time for the purposes of replying to correspondence and to accommodate Mr Noney's delayed return. The letter of 16 July said: "We would appreciate that if you are instructed to commence any urgent proceedings that the writer and Mr Noney are both notified immediately." 11 Mr O'Connor points out that no warning was given that the proceedings were about to be commenced and that the proceedings were commenced before the expiry of Guardian Lawyers' final request for an extended time to respond. 12 Substantial costs in this case were undoubtedly occasioned in the preparation of the Court documents and the activation of this Court's processes to achieve the ex parte relief obtained on 29 August. 13 The negotiating positions taken by the parties in this pre-hearing correspondence can be summarised in this way: the estate sought in the correspondence more than it achieved in the result in the proceedings; and, Janet Hulme asked for greater accommodation than she has received in the proceedings. That correspondence does not have either party offering to settle for a better position than that party reached in the proceedings. It cannot be said from this correspondence that either side should have its costs on the basis that it has done better than a without prejudice offer before hearing. 14 In this situation I am asked to exercise my discretion as to costs. Two factors need to be balanced here. On the one hand the estate was faced with a dilemma. It had not received a clear indication from Guardian Lawyers about the disposal of the funds taken from the estate, even by the time it commenced proceedings. The estate had waited a considerable period since it became aware of facts that put it on inquiry that funds had been removed from the estate by Janet Hulme. It was entitled to have some suspicion about what was happening. There had been a failure by Janet Hulme for a period of time to account for these missing sums totalling approximately $60,000. 15 On the other hand, the estate was receiving reasonable correspondence from responsible lawyers, saying that one of the members of the firm had been suffering illness and was unable to attend to the matter. This is not seriously contested today. There is no basis for it to be contested. That would have been the fact at the time. 16 The proceedings were commenced within a period during which an indulgence was being sought to accommodate the identified problems caused by Mr Noney's illness. It is difficult to know whether these proceedings and their costs would have been avoided, if Mr Noney had had a chance to respond to that last correspondence within the time requested. At least it can be said that the opportunity of avoiding the costs of these proceedings was lost by the fact that the proceedings were commenced before the afternoon of 29 July. Given the explanations it was being given for a failure to respond on behalf of Janet Hulme, the estate should have waited a little longer. I propose to award costs of the recovery proceedings to the estate as the failure to account had dragged on for about four months and caused the commencement of the proceedings. I will however only allow the estate 50 percent of its costs, to reflect the circumstances of its premature commencement of proceedings. 17 Now that the interest calculations have been done I make the following orders to give effect to this judgment and to the judgment that I gave yesterday, Wednesday 7 October 2009, Graham v Hulme; Hulme v Graham [2009] NSWSC 1167. 1) Judgment for the plaintiff against the defendants in the sum of $61,861.94. 2) Order that the defendants pay 50% of the plaintiff's costs of the proceedings. 3) Order that if a sum of no less than $42,907.29 is paid by the defendants to the plaintiff on or before 29 October 2009 pursuant to order 1, then until further order of the court: (i) order 1 is stayed; (ii) the plaintiff shall not register as a judgment any assessment of costs made pursuant to order 2. 4) Liberty to the parties to apply in respect of order 3 upon 72 hours' notice. ********** 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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