Supreme Court New South Wales Medium Neutral Citation: Beatrice McCleary v Metlik Investments Pty Limited; Beatrice McCleary v Benedict Chan;; Clement Chan v Benedict Chan (No 2) [2015] NSWSC 1361 Hearing dates: On the papers Date of orders: 16 September 2015 Decision date: 16 September 2015 Jurisdiction: Equity Before: Darke J Decision: Apart from certain costs incurred in relation to one of the Succession Act claims, the unsuccessful plaintiffs are ordered to pay the costs of the successful defendants. Catchwords: COSTS – departing from general rule that costs follow the event – application for family provision order – property transferred to claimant after commencement of proceedings – had transfer not occurred claimant would have succeeded in obtaining order for family provision – order that claimant pay costs of defendant incurred after the transfer Legislation Cited: Succession Act 2006 (NSW), s 99 Cases Cited: Harkness v Harkness (No 2) [2012] NSWSC 35 Oshlack v Richmond River Council (1998) 193 CLR 72; Singer v Berghouse (1993) 114 ALR 521 Category: Costs Parties: 2013/359456 Beatrice Sit King McCleary (plaintiff) Metlik Investments Pty Ltd (defendant) 2012/29419 Beatrice Sit King McCleary (first plaintiff) Agnes Yim King Kwan (second plaintiff) Benedict Aloysius Wai Nam Chan (defendant) 2013/187391 Clement Wai Shing Chan (plaintiff) Benedict Aloysius Wai Nam Chan (defendant) Representation: Counsel: M S Willmott SC and D Liebhold (plaintiffs) M Gorrick (defendants) Solicitors: Peter Tierney Lawyers (plaintiffs) Noel F Bracks & Company (defendants) File Number(s): 2013/3594562012/294192013/187391 Publication restriction: None Judgment 1. Judgment in these three proceedings was given on 30 July 2015 (see Beatrice McCleary v Metlik Investments Pty Limited [2015] NSWSC 1043). In each proceeding the plaintiff or plaintiffs were unsuccessful, and the proceeding was dismissed. I directed that if any party wished to contend for a costs order other than that the unsuccessful plaintiff pay the defendant's costs of the proceedings, a written submission to that effect be filed. 2. On 12 August 2015 written submissions to that effect were filed on behalf of each of the unsuccessful plaintiffs. On 23 August 2015 written submissions were filed on behalf of the defendants. The defendants submitted that in each proceeding the appropriate order is that the unsuccessful plaintiff or plaintiffs pay the defendant's costs. 3. The three proceedings may be described in summary form as follows. The first proceeding, the Trust proceeding, was brought by Beatrice McCleary against Metlik Investments Pty Limited, the trustee of the Kulau Lodge Settlement Trust. Her essential complaint throughout was that a power of appointment had been exercised in her favour (and in favour of her three sisters) in respect of certain units in Kulau Lodge in Dee Why. She argued in the alternative that there had been a defective attempt to so exercise the power. 4. The second proceeding was brought by Beatrice McCleary and her sister Agnes Kwan against their brother Benedict Chan, the executor of the estate of their late father August Chan. Claims were made for family provision orders under the Succession Act 2006 (NSW). 5. The third proceeding also involved a claim for a family provision order. The claim was brought by another sibling, Clement Chan, against Benedict Chan. 6. Mr M S Willmott SC and Mr D Liebhold, for the plaintiffs, submitted that the general principle that costs follow the event is not automatically applied in proceedings under Chapter 3 of the Succession Act. Reference was made to section 99 (1) of that Act which provides: 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. 1. Reference was also made to the well known observations made by Gaudron J in Singer v Berghouse (1993) 114 ALR 521 at 522. 2. It was submitted that it was appropriate to consider Beatrice McCleary and Agnes Kwan's family provision claim together with the Trust proceedings, as they were connected in so far as claims were made for units in Kulau Lodge. Reference was made to the statement in August Chan's will about the provision of the units, and an analogy was drawn with cases where the litigation can be seen to have been brought about by the conduct of the testator. 3. It was submitted that the institution of both proceedings should be seen as reasonable in circumstances where transfers of units were in fact made in July 2014, after the commencement of the Succession Act proceeding and the Trust proceeding. It was further submitted that had the transfers not occurred, Beatrice McCleary and Agnes Kwan would each have received orders for provision in their favour. Moreover, it was contended that in practical terms the core dispute (and hence "the event") was the entitlement to, and timing of, the transfers of the units. It was also submitted that it was unreasonable for the units not to be transferred until July 2014. 4. It was variously submitted that the costs of Beatrice McCleary and Agnes Kwan should all be borne by the estate of their late father, or that the costs orders should be moulded to take into account that transfers of units were effected, such that there would be no order as to costs. 5. In relation to Clement Chan's claim, it was submitted that he should have his costs out of the estate, or alternatively that there be no order as to costs, because it was not unreasonable for him to bring his claim, which was a borderline case, and that if he had to pay costs he may then be in need of provision. 6. Mr Gorrick, for the defendants Metlik Investments Pty Limited and Benedict Chan, referred to the statements made by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]-[68] concerning the important principle that ordinarily a successful party is entitled to an award of costs in its favour. I was also referred to the judgment of Hallen J in Harkness v Harkness (No 2) [2012] NSWSC 35 at [18] where his Honour said: …… (c) The view of some practitioners advising a potential applicant contemplating a claim for a family provision order, that there is little risk, and probably much to be gained, in making claim, however tenuous, because even if the claim fails the applicant will, very likely, get his, or her costs out of the estate and that he, or she, will not be significantly out of pocket, and the legal practitioner will receive his, or her, costs and disbursements in any event, has been thoroughly discredited. ……. (e) Where, as here, the issue is whether the unsuccessful applicant should bear the costs of the successful defendant, s 98 of the Civil Procedure Act, and the rules quoted above, will apply, and, 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: Moussa v Moussa [2006] NSWSC 509 at [5]. …… (i) In exercising its discretion in relation to costs, the Court will have regard to "the overall justice of the case": Jvancich v Kennedy (No 2). The "overall justice of the case" is "not remote from costs following the event". However, 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: Moussa v Moussa; Carey v Robson (No 2); Bartkus v Bartkus [2010] NSWSC 889 at [24]. …… (k) 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"… 1. In relation to the Trust proceeding, Mr Gorrick said that even though Beatrice McCleary's argument was largely based upon a statement contained in August Chan's will, no analogy could be drawn with probate or will construction cases where costs are sometimes awarded to unsuccessful parties because "the testator was to blame". He submitted that Beatrice McCleary failed on all her arguments and should pay the costs of those proceedings, even if (which was not conceded) it could be said that she acted reasonably in bringing the claim. 2. As for the Succession Act proceeding brought by Beatrice McCleary and Agnes Kwan, Mr Gorrick emphasised that the claims were persisted with even after the transfer to each of them of three units in Kulau Lodge. Mr Gorrick noted that after the transfers the plaintiffs were even emboldened to recalibrate their claims by seeking provision to enable the units to be renovated. He pointed out that in those circumstances the transfers could hardly be regarded as "the event". It was put that Beatrice McCleary and Agnes Kwan were each unsuccessful, and should pay the costs of the proceedings, even if it could be said (which was not conceded) that it was reasonable for them to bring their claims. 3. Mr Gorrick rejected the suggestion that Metlik Investments Pty Limited acted unreasonably in not transferring the units until July 2014. He also rejected the suggestion that some of the hearing time was wasted due to a failure on the part of Benedict Chan to put on sufficient evidence about the size of the estate. Mr Gorrick submitted that the estate was on any view large enough to cater for the plaintiffs' claims if they were successful. 4. As for the Succession Act proceeding brought by Clement Chan, Mr Gorrick submitted that even though he succeeded in obtaining an extension of time to bring his claim, he was otherwise unsuccessful, and there was no reason why the usual costs order should not be made. 5. Having considered the submissions of the parties, I have concluded that, apart from portion of Beatrice McCleary's costs of her Succession Act claim, the appropriate order for costs is that the unsuccessful plaintiffs pay the successful defendant's costs of the proceedings. 6. Dealing first with the Trust proceeding, I can see no good reason to depart from the usual position that costs follow the event. The event may be described as whether, by reason of an exercise of power, or a defective exercise of power, by Metlik Investments Pty Limited in 2006, Beatrice McCleary was entitled to have three units in Kulau Lodge transferred to her. Beatrice McCleary failed to establish any such exercise or attempted exercise of power. Metlik Investments Pty Limited in fact transferred three units to her in 2014, but this was not pursuant to an exercise of power as alleged. I do not accept that Metlik Investments Pty Limited acted unreasonably in not making the transfer before July 2014. In my opinion, the appropriate order is that Beatrice McCleary pay Metlik Investments Pty Limited's costs of the Trust proceeding. 7. I can also see no good reason to depart from the usual position in relation to Clement Chan's Succession Act proceeding. It may not have been unreasonable for Clement Chan to bring his claim, but that circumstance would not on its own justify a departure from the usual rule. It is said that this was a borderline case. I would not describe the case in those terms, although I do regard it as a claim which had some merit (see the earlier judgment at [171]). Again, however, that circumstance on its own does not warrant a departure from the usual position. Neither does the circumstance that an adverse costs order will cause Clement Chan's financial position to be detrimentally affected. Even when those factors are considered together, as they must be, I think that in all the circumstances, the appropriate order is that Clement Chan pay Benedict Chan's costs of those proceedings. 8. In relation to the Succession Act proceeding brought by Beatrice McCleary and Agnes Kwan, there is one matter which in my view justifies a departure from the usual position that costs follow the event. That matter is the transfer of the three units to Beatrice McCleary in July 2014, 18 months after the commencement of the proceedings. 9. I agree that the transfer of the units cannot be regarded as "the event". However, I do not think there is any doubt that, had such transfers not occurred, Beatrice McCleary would have succeeded in obtaining an order for provision in her favour. It therefore seems to me that she was justified in commencing the proceedings, and continuing with them, at least up to the date of transfers. Had she then discontinued the proceedings, she would likely have had a good argument that she should be relieved of having to pay Benedict Chan's costs (see Uniform Civil Procedure Rules r. 42.19(2)). 10. Aside from the transfer of units, I do not think that there are any other factors that would warrant a departure from the usual position. I should also note that I do not think that the evidence adduced by Benedict Chan concerning the size of the estate was in the circumstances deficient, or led to any waste of hearing time. It was always plain that the estate (whether distributed or not) was very large, and more than ample to meet the claims that were brought. 11. In my opinion the appropriate order to make as between Beatrice McCleary and Benedict Chan in the Succession Act proceeding is that Beatrice McCleary pay Benedict Chan's costs incurred in relation to her claim after 28 July 2014. 12. The same result does not follow in relation to the position as between Agnes Kwan and Benedict Chan. Given the state of the evidence adduced concerning Agnes Kwan's financial position (as to which see the earlier judgment at [81]-[87], [153] and [156]) I am unable to confidently conclude that, had the three units not been transferred to her, she would have succeeded in obtaining an order for provision in her favour. In those circumstances, and in the absence of other factors that would warrant a departure from the usual position, it is my opinion that the appropriate order to make as between Agnes Kwan and Benedict Chan is that Agnes Kwan pay Benedict Chan's costs incurred in relation to her claim. 13. The Court orders: 1. In proceeding 2013/359456, that Beatrice McCleary pay Metlik Investments Pty Limited's costs of the proceeding; 2. In proceeding 2012/29419, that Beatrice McCleary pay Benedict Chan's costs incurred in relation to her claim after 28 July 2014, and that Agnes Kwan pay Benedict Chan's costs incurred in relation to her claim; and 3. In proceeding 2013/187391, that Clement Chan pay Benedict Chan's costs of the proceeding. 4. In accordance with General Practice Note 18, that the exhibits and subpoenaed material be returned forthwith. ********** 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 September 2015