Supreme Court New South Wales Medium Neutral Citation: Grace Worldwide Group v Roberts [2012] NSWSC 1111 Hearing dates: 14 September 2012 Decision date: 17 September 2012 Before: McCallum J Decision: Plaintiffs granted leave to discontinue proceedings; plaintiffs ordered to pay defendant's costs of the proceedings on an indemnity basis; plaintiffs ordered to pay the defendant's costs of the two motions before the Court on an indemnity basis Catchwords: COSTS - indemnity basis - proceedings discontinued after being prematurely commenced Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Fountain Selected Meats (Sales Pty Limited v International Produce Merchants Pty Limited [988] FCA 201; (1988) 81 ALR 397 Joseph Lahoud v Victor Lahoud (2005) NSWSC 126 Nolan v Nolan (2004) VSCA 109 Category: Costs Parties: Grace Worldwide Group Head Office Pty Limited (first plaintiff) Grade Worldwide (Australia) Pty Limited (second plaintiff) Adrian Paul Roberts as Administrator of the Estate of Gail Margaret Lockhart (defendant) Representation: Solicitors: A Johnson, Marsdens Law Group (plaintiffs) P Biber, as Sydney agent for Henderson & Ball Lawyers (defendant) File Number(s): 2012/48033 Publication restriction: None Judgment - ex tempore 1HER HONOUR: Gail Lockhart was employed as an account manager in the Grace Removals group of companies. In early September last year, her employer confronted her with an allegation that she had embezzled company funds in the order of $460,000 over a period of about three years. Ms Lockhart admitted the embezzlement but not the amount. Her employment was terminated that day. A week later she took her own life. 2In February of this year two of the companies in the Grace Removals group commenced these proceedings against Ms Lockhart's de facto partner, Mr Adrian Roberts, purportedly in the capacity of "the legal personal representative of Ms Lockhart's estate." 3The plaintiffs now accept that their claim cannot be maintained against Mr Roberts but the parties are in dispute as to the terms on which the proceedings should be discontinued. A notice of discontinuance has in fact already been filed in the Registry. However, it is common ground that the notice was not filed in accordance with the rules, since the plaintiff had obtained neither the leave of the Court nor the defendant's consent to the discontinuance: cf r 12.1 of the Uniform Civil Procedure Rules 2005. 4Mr Roberts' consent, had it been sought, would have been predicated upon the resolution of his contention made in correspondence that he should have his costs of the proceedings paid on an indemnity basis. That is the principal issue now raised by the defendant in his amended notice of motion filed in court on 14 September 2012. 5For their part, the plaintiffs seek leave, belatedly, to discontinue the proceedings and orders that there be no order as to the costs of the proceedings and that the defendant pay their costs of their notice of motion dated 10 September 2012. 6The defendant's claim for indemnity costs is based on the contention that the claim against him as the alleged legal personal representative of the estate was premature when brought and was ultimately established to be untenable after he made a decision not to apply for letters of administration of the estate. In order to assess that contention it is necessary to recite some of the circumstances in which the proceedings were commenced. 7Gail Lockhart died on 8 September 2011. On 7 December 2011 Marsdens Law Group, acting for the plaintiffs, undertook various searches as a result of which they ascertained that, on 9 November 2011, the defendant had advertised his intention to apply to the Supreme Court of Victoria for a grant of administration of the estate upon intestacy. 8The search revealed no record of the foreshadowed application having in fact been made. Given that the search was undertaken more than 14 days after the publication of the advertisement it should have been clear that the intention stated in the advertisement had not in fact been carried out, at least as at that point. 9From that date, 7 December 2011, the plaintiffs appear to have proceeded on what is described in the correspondence as "the understanding" (more accurately described as an assumption on their part) that the defendant had "fulfilled his disclosed intention." 10Upon consideration of the evidence, however, there was no reasonable basis for reaching such an understanding. As already noted, the search conducted on 7 December ought to have revealed that an application had not been made in accordance with the disclosed intention. 11On 23 December 2011 the plaintiffs' solicitors sent a letter both to Mr Roberts and to the solicitors identified in the advertisement to which I have already referred. The letter referred to Mr Roberts' "impending, if not present, appointment as the legal representative of the estate" and in that circumstance enclosed an unsigned statement of claim on the assets of the estate. 12Purportedly in recognition of the fact that this was no doubt a "difficult time" for Mr Roberts, the letter asserted an intention to reach an amicable resolution of the claim and in that circumstance allowed until 14 January 2012 for Mr Roberts or his solicitors to contact the plaintiffs' solicitors. 13In all the circumstances, including the relatively recent death of Ms Lockhart and the time of year at which the letter was sent, it may be accepted, at the least, that at that point the plaintiffs were proceeding with unnecessary haste. 14The defendant's solicitors were later to inform the plaintiffs' solicitors that the letter of 23 December 2011 had not in fact been received by either the defendant or his solicitors. It was not until late January that they responded to the letter. The plaintiffs were evidently determined by that point to commence proceedings in any event. 15In the application before me, the plaintiffs complained that the defendant should have identified the flaw in the proceedings commenced. In my view, that misconceives the responsibilities of those advising the plaintiffs. The defendant's lawyer was not his opponent's keeper. 16The statement of claim was filed on 14 February 2012 and served on 17 February 2012. In the middle of March 2012, within the time allowed under the rules for the filing of a defence, Mr Biber, who is the Sydney agent for the defendant's Melbourne lawyers, identified the flaw in the commencement of the proceedings in the clearest terms and suggested the view that the claim was susceptible to a strike-out application. 17Thereafter, there was an extensive exchange of correspondence as to what should be the fate of the proceedings. The correspondence included an attempt to cure the problem by amending the claim to add further parties; discussion as to the appropriate way in which the proceedings should be brought to an end (once that inevitability was accepted by the plaintiffs) and other matters. In short, the correspondence did not achieve agreement and indeed ultimately saw the parties become more polarised in their respective positions. 18In my view, Mr Biber was correct in his assertion in the correspondence that the proceedings should never have been commenced when they were. The plaintiffs now contend, with a measure of hindsight analysis, that the defendant was reasonably viewed as, and is in fact, an executor de son tort. In particular it was contended before me and in correspondence to the defendant that he had made frequent statements to the effect that he was the executor of the estate. Reliance was also placed on the fact that he had sworn a statutory declaration as to the assets and liabilities of the estate which, it was said, indicated that he had made the kind of inquiry which one could only make by holding oneself out as executor. 19Upon analysis of the evidence relied upon I do not think there is any force in that submission. The only representation made by the defendant to the plaintiffs to the effect contended derives from an email exchange between the defendant and Mr Alex Pickering, evidently a person employed by one of the companies within the Grace Removals group and probably one of Ms Lockhart's employers. 20The email string unfolded as follows. Mr Roberts wrote to Mr Pickering asking Mr Pickering to do him a favour: "should any more personal mail come to Grace for Gail, have that forwarded to my home address." It should be noted that the evidence reveals that by that stage the plaintiffs had evidently retained Marsdens and Marsdens had commenced inquiries to ascertain the status of the estate. It should further be noted that by the time of this email exchange Marsdens had identified that no application had been made to the Court. 21Mr Pickering responded: "Of course any mail we receive here is opened and directed accordingly within the business and I believe any personal mail for Gail would have to be set aside for her executor." Mr Roberts responded: "As I am legally Gail's next of kin I am also the executor of her estate and managing the process with the solicitors that myself and Gail's parents have appointed to finalise it so please forward any personal mail of Gail's to myself so I can pass it on to the solicitors." 22Mr Pickering responded by seeking the contact details for the solicitors and said, contrary to Mr Roberts' request, that he would forward any mail directly to the solicitors. 23Plainly, to the extent that that was a representation that Mr Roberts was the executor of Ms Lockhart's estate, the conclusion stated did not follow from the premise. It should have been apparent to the plaintiffs' legal representatives that the mere fact of being Gail Lockhart's next of kin did not constitute appointment of Mr Roberts as the executor of her estate. Further, the representation was expressly contradicted by the advertisement later discovered by the plaintiffs' solicitors, which should have put them on notice that Ms Lockhart had died without a will and that Mr Roberts did not at that time have the status of administrator of her estate. 24In that context I note the remarks made by Ormiston JA in Nolan v Nolan (2004) VSCA 109 relied upon by Mr Biber on behalf of the defendant where his Honour said at [23] (emphasis added): The significance of this analysis in the present case is that there is no evidence of any acts taken by or on behalf of Sidney Nolan before the grant of probate on 12 January 1977 which could fairly be viewed as the basis from which an inference might be drawn that he was purporting to assert some right as executor (or trustee) over his deceased wife's estate. Possibly in modern times such an inference is harder to draw, inasmuch as the nature of grants of representation and the requirements for grants may now be better known and understood, so that acts performed in recent times may not always lead to the necessary inference. However, in the present case the most that can be said is that, in clearing out the premises in which they had lived together as man and wife, Nolan took into his custody the three paintings, albeit that the evidence as to what he did with at least two of them is problematic. For present purposes one may assume that he did obtain custody or possession of the three paintings, but in my opinion that is not enough. There must be evidence that the act in question involved an assertion of executorial power, whether it be over chattels or land, and clearly there was no such act of which there is evidence, at least to my knowledge. 25In my view the plaintiffs, properly advised, should have known that it was premature to commence any proceedings against Mr Roberts purportedly as the legal personal representative of Ms Lockhart's estate. I am satisfied on that basis, and having regard to the submissions put forward on behalf of the defendant by Mr Biber, that it is appropriate that the plaintiffs pay the defendant's costs of the proceedings on an indemnity basis. 26The costs were undoubtedly increased due to the approach taken by the plaintiffs in correspondence after Mr Biber drew the difficulty to their attention. First, somewhat surprisingly, the solicitors expected Mr Biber to prepare a notice of discontinuance for them. Subsequently the plaintiffs' solicitors filed a notice in the Registry ignoring Mr Biber's correspondence (which flagged a dispute as to the proper order as to costs) and, as I have already noted, ignoring the rules. 27The plaintiffs' solicitors then resiled from the position as articulated in the wrongly filed notice of discontinuance. That notice included an order that the plaintiffs should pay the defendant's costs. However, in a letter dated 29 August 2012 from the plaintiffs' solicitors to Mr Biber, they contended that the defendant should pay their costs. That letter is a stark illustration of hindsight analysis, effectively blaming the defendant for failing to correct a misapprehension which, with due attention, the plaintiffs would never have reached. 28As I have already indicated the plaintiffs, properly advised, should have known that the action when commenced was premature. As events transpired, it had no chance of success as against Mr Robert. For those reasons, in my view the case falls within the category of cases in which an indemnity costs order should be made: cf Fountain Selected Meats (Sales Pty Limited v International Produce Merchants Pty Limited [988] FCA 201 at [21]; (1988) 81 ALR 397. 29Separately the defendant sought an order for interest on the costs already paid. The only authority cited for the entitlement to such an order was the decision of Joseph Lahoud v Victor Lahoud (2005) NSWSC 126 at [82]-[83] per Campbell J. Lahoud was a very different case in which substantial costs had been incurred and there had been an extensive delay. 30Whilst I accept, as stated by his Honour, that there is no requirement before an order for payment of interest on costs is made for the Court to be satisfied that the circumstances of the case are out of the ordinary, I do not think this is a case in which an award of interest is appropriate. 31For those reasons, I make the following orders: (1)As to the plaintiffs' notice of motion filed 10 September 2012, I make order 1 in the notice of motion. The motion is otherwise dismissed. I order the plaintiffs to pay the defendant's costs of the motion on an indemnity basis. (2)As to the defendant's further amended notice of motion filed in Court on 14 September 2012, I make orders 3 and 4 in the motion. ********** Amendments 16 October 2012 - Correction to solicitor details Amended paragraphs: Judgment coversheet 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: 16 October 2012