Supreme Court New South Wales Medium Neutral Citation: M Raiola and I Raiola In Andreatta v M Raiola [2014] NSWSC 1172 Hearing dates: 16 - 19 June 2014, 4 August 2014 (written submissions as to orders costs) Decision date: 25 August 2014 Jurisdiction: Equity Division Before: Black J Decision: Order made for dismissal of summons. Order made for first plaintiff to pay half of the defendant's costs of proceedings, as agreed or as assessed. No order made as to second plaintiff's costs of proceedings. Order made for defendant's cost of proceedings to otherwise be paid out of deceased's estate on indemnity basis. Above orders stayed for 14 days. Catchwords: PROCEDURE - costs - family provision claim - where plaintiffs have not succeeded in family provision claims - whether family provision claims warrant special principles as to costs - general rule that costs follow the event - whether reason shown to depart from general rule. Legislation Cited: - Civil Procedure Act 2005 (NSW) s 98 - Family Provision Act 1982 (NSW) - Uniform Civil Procedure Rules 2005 (NSW) r 42.1 Succession Act 2006 (NSW) ss 59, 99 Cases Cited: - Carey v Robson (No 2) [2009] NSWSC 1199 - Friend v Brien (No 2) [2014] NSWSC 614 - Harkness v Harkness (No 2) [2012] NSWSC 35 - Milne v Attorney-General (Tasmania) [1956] HCA 48; (1956) 95 CLR 460 - Moussa v Moussa [2006] NSWSC 509 - Oschlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 - Re Sherborne Estate (No 2); Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 - Ruddock v Vardalis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 - Singer v Berghouse [1993] HCA 35; (1993) 114 ALR 521 Category: Costs Parties: Massimo Raiola (First Plaintiff) Imma Raiola In Andreatta (Second Plaintiff) Maurizo Raiola (Defendant) Representation: Counsel: A Blank (Plaintiffs) J E Armfield (Defendant) Solicitors: KP Lawyers & Barristers (Plaintiffs) Whitfields (Defendant) File Number(s): 2012/379187 Judgment 1By proceedings commenced on 6 December 2012, Mr Massimo Raiola (to whom I will refer, without disrespect, as "Massimo") and Ms Imma Raiola (to whom I will refer, without disrespect, as "Imma") each sought a family provision order in relation to the estate of the late Giovanni Raiola, who had left his entire estate to his youngest son, Mr Maurizio Raiola (to whom I will refer, without disrespect, as "Maurizio"). That application was heard on 16-19 June 2014 and I delivered my judgment on 22 July 2014 ([2014] NSWSC 967) ("Judgment"). Each of the Plaintiffs was unsuccessful in their application for a family provision order, for somewhat different reasons. I indicated in the course of submissions that I would allow the parties an opportunity to address as to costs after delivery of my judgment and each of them has lodged written submissions in respect of the question of costs. Applicable principles 2Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides that: "Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court; and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) in turn provides that, where the Court makes an order as to costs, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. Costs are generally awarded to compensate the successful party for the expense of being put to the necessity of litigation; a wholly successful defendant should ordinarily receive its costs unless good reason is shown to the contrary; and the discretion to order costs must be exercised judicially and not against the successful party except for some reason connected with the proceedings: Milne v Attorney-General (Tasmania) [1956] HCA 48; (1956) 95 CLR 460 at 477; Oschlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 per McHugh J, at 119-123 per Kirby J; Ruddock v Vardalis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234. 3Section 99 of the Succession Act 2006 (NSW) in turn provides, relevantly, that: "The Court may order that the costs of proceedings under this Chapter in relation to the estate or notional estate of a deceased person (including costs in connection with mediation) be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit." That section confers a wide discretion in relation to costs, albeit a discretion that is to be exercised judicially, reflected in the use of the language "in such manner as the Court thinks fit". 4The authorities indicate that, in awarding costs in family provision proceedings, the Court is required to take into account considerations other than the event in the proceedings, including the overall justice of the case. In Singer v Berghouse [1993] HCA 35; (1993) 114 ALR 521 at 522, where Gaudron J had to consider whether security for costs ought to be ordered in respect of an application under the Family Provision Act 1982 (NSW), her Honour observed that: "In most cases, costs follow the event in the sense that, save in special or extraordinary circumstances, costs are awarded in favour of the successful party and against the unsuccessful one. ... Family provision cases stand apart from cases in which costs follow the event ... It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate." 5In Moussa v Moussa [2006] NSWSC 509, Barrett J referred to Singer v Berghouse above and to the observation of Palmer J in Re Sherborne Estate (No 2); Vanvalen v Neaves (2005) 65 NSWLR 268; [2005] NSWSC 1003 that "[a] decision whether a Family Provision Act claim fails or succeeds produces a black and white result which often belies the fact that the case was borderline and could have gone either way." His Honour observed that it was by no means unreasonable for the plaintiff's legal advisers in that case to believe that the claim had reasonable prospects of success, a comment which might also be made in the present case, and observed that "the overall justice of the case", to use Gaudron J's expression, warranted the conclusion that no order for costs should be made against the Plaintiffs in that case and that costs should be left to lie where they fell. In Carey v Robson (No 2) [2009] NSWSC 1199 at [20], Palmer J in turn noted that the usual practice in New South Wales was to apply the usual cost rule in an unsuccessful family provision application and noted that that approach: "reflects the policy embodied in s 56 of the Civil Procedure Act that litigation must be conducted responsibly and should only be commenced by a plaintiff after careful evaluation of the costs consequences likely to attend to failure." 6In Friend v Brien (No 2) [2014] NSWSC 614, White J noted the observation of Gaudron J in Singer v Berghouse above and pointed to Moussa v Moussa above as an example where a similar position was taken as to costs. His Honour summarised the position (at [20]) as follows: "In other words, although there can be departure from the usual principle that costs follow the event and that an unsuccessful applicant for a family provision order might not be required to pay costs, or might even have his or her costs out of the estate, that is not the usual order. There is a public policy in the usual practice as well as the element of justice reflected in the rule that costs follow the event." 7In Harkness v Harkness (No 2) [2012] NSWSC 35 at [18], Hallen AsJ (as his Honour then was) cited Moussa v Moussa as authority (at [18]) that: "In the absence of some good reason to the contrary, there should be an order that the costs of the successful defendant be paid by the unsuccessful plaintiff." His Honour nonetheless also noted that: "The Court may be more willing to depart from the general principle in proceedings for a family provision order than in other types of case. ... As proceedings for a family provision order are essentially for maintenance, a court may properly decide to make no order for costs, even though it were otherwise justified, against an unsuccessful applicant, if it would adversely affect the financial position which had been taken into account in dismissing the application. ... There are also other circumstances that may lead the Court to order payment out of the estate of the costs of an unsuccessful Plaintiff. The Court may allow an unsuccessful plaintiff costs out of the estate, if in all the circumstances the case was meritorious, reasonable or "borderline"." Costs in respect of Massimo's claim 8I held, in the Judgment, that I was not satisfied that an order should be made in favour of Massimo, notwithstanding that I observed (in paragraph 70 of the Judgment) that the deceased's conduct in transferring his share of a Naples unit to Maurizio without his authority was open to criticism and that Massimo had at least a moral claim to reimbursement in respect of certain expenses that many members of the community would consider ought to have been acknowledged by the estate or by Maurizio. I observed that, notwithstanding those matters, where Massimo had been very successful in his own right and his financial position was plainly sufficient to maintain a comfortable lifestyle for himself and his family, and given the size of the estate and the competing demands on it, I was not satisfied that the deceased had failed to make adequate provision for Massimo. 9The Plaintiffs proposed an order that Massimo's costs be paid out of the deceased's estate or, alternatively, there should be no order as to his costs. The Plaintiffs submit that Massimo had some success in the proceedings, albeit that it was of a modest character, so far as he had relied upon his having expended money on the deceased's funeral in support of his claim for family provision under s 59 of the Succession Act and, in submissions on the last day of the hearing, Maurizio through his Counsel undertook to pay those expenses, in circumstances that payment had not previously been offered or tendered. Massimo also points to the observations in my judgment, which I noted above, as to the circumstances of the transfer of the Naples unit. Massimo submits, with some force, that it is unfortunate that Maurizio has not addressed the issues arising out of the circumstances of the transfer of the Naples unit, and that is a matter which may give rise to further litigation and wasted expense. 10Maurizio responds that the position in respect of funeral costs is irrelevant, because the Court accepted that a family provision claim under the Succession Act could not be used as a basis for recovery of other debts or claims for compensation if the statutory requirements for an order for provision were not satisfied (Judgment [69]) and the Court's observations in respect of the Naples unit were irrelevant, so far as the question was whether the deceased had made proper provision for Massimo was to be determined by the size of the estate and the competing needs of Imma and Maurizio, not by reference to the deceased's conduct in respect of that unit (Judgment [70]). 11The matters to which I referred in my judgment suggest that Massimo has been treated unfairly, in some respects, by his father and by Maurizio. However, the jurisdiction for costs cannot be used as a means to address unfairness of that kind, which did not otherwise support an application for a family provision order. It seems to me that Massimo's claim always faced substantial difficulty, namely, the strength of his own financial position and his capacity to support his family without the need for further provision. In these circumstances, notwithstanding the concession that he should be reimbursed the costs of the deceased's funeral from the estate, it seems to me that the application of the usual rule as to costs, which as I noted above is applicable in New South Wales in family provision cases, requires that he be ordered to pay the costs referable to his claim. Costs in respect of Imma's claim 12I noted in paragraph 51 of the Judgment that I was not satisfied that Imma had established a claim to provision from the estate, given, inter alia, the deceased's expressed intentions, the length of the estrangement between her and the deceased and the deficiencies in her evidence as to the present state of property owned by her in Italy and as to her and her former husband's present financial position, in circumstances that she continued to reside in the same property as her former husband. 13The Plaintiffs proposed that there should be no order as to Imma's costs. The Plaintiffs point out that, as I noted above, in awarding costs in family provision proceedings, the Court is required to take into account considerations other than the event in the proceedings, including the overall justice of the case. The Plaintiffs point to the findings that I reached concerning Imma's financial position, where I had recognised, inter alia, that she resides in a separate apartment in a house owned by her former husband from whom she is separated but not divorced and that she is presently unemployed and will have difficulty finding employment given her age and the economic environment in Italy. Imma contends, and I accept that, notwithstanding the uncertainties as to her financial position noted in my judgment, it is at least clear that she depends on her former husband for her accommodation and on her former husband, son and others for income, although I also observed that she owned the adjacent Mira property. Maurizio relies on Harrison v Skinner (No 2) above as an example where the Court made a costs order against an unsuccessful plaintiff, although each of the plaintiffs' financial resources was modest and a costs order might have an adverse impact upon them. 14On any view, it seems to me that Imma's case was reasonably brought and "borderline" in its prospects, although ultimately weakened by the gaps in the evidence as to her and her former husband's financial position and therefore not successful. It also seems to me that an order for costs would have a real adverse impact on Imma's financial position that, notwithstanding the uncertainties noted in my judgment, plainly has its difficulties. In these circumstances, I am satisfied that there should be no order for costs made against Imma. Orders 15Maurizio submits that an order for costs should be made jointly and severally against Massimo and Imma, since it may be difficult to enforce a costs order against Imma in Italy. That question does not arise, in circumstances that I have not held that an order for costs should be made against Imma. Had it been necessary to address that question, I would not have made joint and several costs orders, where that would have required Massimo to bear the costs of a claim which he had not bought, merely because the two separate claims were brought in a single proceeding rather than, as they might well have been, in two separate proceedings heard together. 16It seems to me that, as a matter of impression, half of the costs of the proceedings can be attributed to Massimo's claim, and is likely to assist the parties in achieving an assessment of their costs in a cost-effective manner if I make an order that reflects that position. I will, however, stay that order for 14 days in case either party seeks to make further submissions that a variation of that order is appropriate. Accordingly, I make the following orders: 1. The Summons be dismissed. 2. The First Plaintiff pay 50% of the Defendant's costs of the proceedings as agreed or as assessed. 3. There be no order as to the Second Plaintiff's costs of the proceedings. 4. The Defendant's costs of the proceedings otherwise be paid out of the deceased's estate on the indemnity basis. 5 Stay these orders for 14 days. ********** 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: 09 September 2014