Browne v Browne [2011] NSWSC 752

Supreme Court New South Wales

Medium Neutral Citation: Browne v Browne [2011] NSWSC 752 Hearing dates: 18 July 2011 Decision date: 18 July 2011 Jurisdiction: Equity Division Before: Gzell J Decision: Defendant ordered to pay costs on party and party basis Catchwords: PROCEDURE - Costs - lay executor in selling assets to fund legacy ordered by court distributed the estate without paying balance of legacy - whether indemnity costs should be ordered Legislation Cited: Civil Procedure Act 2005 Cases Cited: Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 Colgate-Palmolive Pty Ltd v Cussons [1993] FCA 536; (1993) 46 FCR 225 Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 Category: Procedural and other rulings Parties: Carol Ann Browne (Plaintiff) Michael Browne (Defendant) Representation: Counsel R Lovas (Plaintiff) K Morrissey (Defendant) Solicitors Pigott Stinson Lawyers (Plaintiff) Lindsay Brien (Defendant) File Number(s): 2011/0056898

EX TEMPORE Judgment 1In proceedings before Rein J involving the parties to the litigation with which I am concerned, his Honour granted the Plaintiff, in addition to the provisions made by the will and codicil of the deceased, a legacy in the amount of $475,000. His Honour ordered that interest on such amount should be payable at the rates provided for interest on a judgment pursuant to s 101 of the Civil Procedure Act 2005, such interest to be calculated from 1 June 2010 in respect of the balance unpaid from time to time. His Honour ordered that the Plaintiff's benefits provided by the will and codicil should lapse 60 days after the payment of $300,000 of the legacy. His Honour then went on to make an order with respect to the contents of a residence at Falls Creek to which I will return. 2On 12 July 2011, $175,000 was paid to the Plaintiff. Interest had not been paid on the $175,000 while it remained unpaid, but this morning counsel for the Defendant said he had instructions not to oppose an order that the Defendant pay the Plaintiff $27,072.26 and an order, for the avoidance of doubt, that notwithstanding s 101(6), the Defendant pay the Plaintiff interest on the said $27,072.26 pursuant to s 101 of the Civil Procedure Act . 3I am asked to depart from the usual order as to costs and make an order that as from 17 May 2011 the Defendant pay the Plaintiff's costs on the indemnity basis from that date. The Plaintiff seeks an order that she be paid costs on the ordinary basis prior to that date. 4Reference was made to Rouse v Shepherd (No 2) (1994) 35 NSWLR 277 particularly at 279 where Badgery-Parker J cited with approval what had been said by Sheppard J in Colgate-Palmolive Pty Ltd v Cussons [1993] FCA 536; (1993) 46 FCR 225 at [24]; 233-234, said: "... it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152); evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo ); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata ) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (1993) 46 IR 301); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata ) ; an imprudent refusal of an offer to compromise; eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor ( eg Megarry V-C in EMI Records [1983] Ch 59)." 5Then at 281, Badgery-Parker J cited what the Court of Appeal had said of the objects of the rules of court as to indemnity costs in Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 724-725: Encourage savings of private costs and avoidance of the inherent risks, delays and uncertainties of litigation. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary To indemnify the plaintiff where notionally the real cause and occasion of the litigation is the attitude adopted by the defendant." 6His Honour went on to say: "With the above precedents and policy in mind, the circumstances of this case must then be scrutinised in order to decide whether it is one in which it would be appropriate to award indemnity costs." 7The significance of the date 17 May 2011 lies in the fact that on that day the solicitors for the Plaintiff referred to their suspicion that the Defendant had distributed the whole of the estate including the residual estate to himself and his brother. Reference was made to the fact that the remaining part of the court order of $175,000 plus interest was a legacy for the Plaintiff out of the estate of the deceased and the Plaintiff's entitlement to costs was a contingent debt until assessed. The solicitors submitted that the Defendant had in his affidavit confessed to a serious and apparently deliberate breach of trust, no doubt based upon the failure to retain the residue of the estate, or so much of it as was needed to pay the balance of the legacy together with interest. 8There were two responses to that letter both dated 6 June 2011. The first stated that the estate had been distributed in an effort to sell the assets so as to raise sufficient funds to pay the Plaintiff. The second asked that a notice to produce for inspection served on the 17 May 2011 be narrowed. 9I said I would return to a further order made by Rein J. His Honour ordered that the Plaintiff should have all the contents of the residence at Falls Creek save and except for a specified number of chattels. 10In a letter of 12 July 2011 the solicitors for the Defendant stated by reference to par 8 of his affidavit that the Defendant had not received the chattels to which he was entitled. But a comparison of the items in par 8 and the excepted items in his Honour's order shows that they clearly did not match. 11On 10 August 2010 the solicitors for the Defendant wrote to the solicitors for the Plaintiff alleging that the Plaintiff had not complied fully with the orders and that being so the Defendant did not see why he should have to pay any interest. But the handing over of the chattels specified in the order of Rein J was not a condition precedent to the payment of interest. 12On 12 January 2011 the solicitors for the Plaintiff demanded payment of the $175,000 plus interest. 13A defence was filed on 28 April 2011 and, if I have not already referred to it, in a letter of 12 July 2011 the Defendant demanded further chattels that he had not received identified in par 8 of his affidavit. As I have said, however, that misunderstood the chattels that his Honour excepted from the Plaintiff's entitlement in his orders. 14The submission was made that the Defendant failed to admit liability when he ought, that his payment of the bare minimum $300,000 under the orders and his failure to explain why that and no more was paid made it inconceivable that the Defendant was not using the litigation deliberately to delay his requirement to pay moneys to the Plaintiff. 15It was submitted that the Defendant as executor of the estate was not treating beneficiaries on an equal footing. 16As I understand it, the Defendant is not a lawyer. The requirement that residuary estate be retained to meet legacies may not have been apparent to him. Clearly there was a concerted effort on his part to realise assets of the estate to pay the moneys ordered to be paid to the Plaintiff by Rein J. 17In Colgate-Palmolive Sheppard J said at [24]; 233: "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis, whether here or in England." 18In my view the conduct of the Defendant was not so contrived as was submitted by counsel for the Plaintiff. One ought not visit an order for indemnity costs upon a layperson not versed in administration of trust estates. I do not regard the conduct of the Defendant as being so heinous as to justify the court departing from the ordinary order of costs. 19I make the orders in the short minutes of order as amended, initialled and dated by me. 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: 19 July 2011