Supreme Court New South Wales Medium Neutral Citation: Kohari v NSW Trustee & Guardian (No 3) [2017] NSWSC 1431 Hearing dates: 19 October 2017 Date of orders: 03 November 2017 Decision date: 19 October 2017 Jurisdiction: Equity - Family Provision List Before: Parker J Decision: See paragraph 21 Catchwords: Costs – party/party – offer of compromise – judgment for plaintiff no more favourable than offer – effect of notice disputing a fact where fact subsequently admitted – Uniform Civil Procedure Rules 2005 (NSW), rr 42.8, 42.15 Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), rr 42.8, 42.15 Cases Cited: Kohari v NSW Trustee & Guardian [2016] NSWSC 1372 Kohari v NSW Trustee & Guardian (No 2) [2017] NSWSC 1080 Category: Costs Parties: Robert Kohari (Plaintiff) NSW Trustee & Guardian (Defendant) Representation: Counsel: F Austin (Plaintiff) D Stewart (Defendant) Solicitors: Gerard Malouf & Partners (Plaintiff) NSW Trustee & Guardian (Defendant) File Number(s): 2015/152834 Publication restriction: Nil Judgment – EX TEMPORE (revised and issued 6 november) 1. On 18 August 2017 I delivered judgment on the plaintiff's claim in these proceedings: Kohari v NSW Trustee & Guardian (No 2) [2017] NSWSC 1080. I must now make orders as to the costs of the proceedings. These reasons assume familiarity with my August judgment. 2. The proceedings were commenced in May 2015. They were fixed for hearing commencing on 9 March 2016. As mentioned in my August judgment, there was initially an issue raised by the defendant as to whether the plaintiff was the son of the deceased. At the hearing on 9 March the plaintiff sought to rely on an affidavit of the deceased's ex-wife and the mother of the plaintiff, Julie Anne Darhy. That affidavit, among other things, denied that she had been unfaithful to the deceased, and asserted that the deceased was the father of the plaintiff. The affidavit was served late, and the defendant complained that it had not had a reasonable opportunity to investigate the matters raised in the affidavit. McDougall J vacated the hearing and ordered that the plaintiff pay "the defendant's costs thrown away and wasted by reason of the vacation of the hearing date." 3. On 13 May 2016, the defendant filed a notice of motion seeking orders requiring the plaintiff, the plaintiff's mother, the plaintiff's brother and the plaintiff's aunt to submit to DNA testing for the purpose of determining whether the plaintiff was indeed the son of the deceased. The application came before Hallen J, who determined it on 21 September: Kohari v NSW Trustee & Guardian [2016] NSWSC 1372. 4. His Honour granted the application, but ordered the defendant to pay the costs of the procedure. He also made orders as to the costs of the defendant's notice of motion. Those orders were as follows: 2. Orders in the event that the DNA testing ordered is carried out and in the event that the Plaintiff is successful in establishing at the substantive hearing that he is the biological child of the deceased, the Plaintiff's costs of this Notice of Motion are to be paid out of the estate. 3. Orders in the event that he is not successful then the Plaintiff is to pay the Defendant's costs of the Notice of Motion. 4. Orders in relation to the Defendant's costs of the Notice of Motion, in so far as they are not recovered from the Plaintiff they are to be paid out of the estate of the deceased. 1. In my August judgment, I awarded the plaintiff a legacy of $100,000. Previously, on 21 March 2016, the defendant had served an offer of compromise. The amount of the offer of compromise was $100,000. This brought into play Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 42.15, which relevantly provides that unless the Court orders otherwise, in the event of an offer being made by the defendant, but not accepted by the plaintiff, and the plaintiff obtaining a judgment on the claim which was no more favourable to the plaintiff than the terms of the offer, then the plaintiff is entitled to an order for costs on the ordinary basis up to the date of the offer, and the defendant is entitled to an order for costs on an indemnity basis from the date after the day on which the offer was made. In each case, the entitlement is an entitlement to costs "in respect of the claim." 2. The parties agree that the general costs of the proceedings should be dealt with in accordance with this rule so that the plaintiff should receive an order for costs in his favour on the ordinary basis up to and including 21 March 2016, and the defendant should receive an order for costs in its favour, on an indemnity basis, from 22 March 2016 onwards. They also agree that this should be "subject to" the interlocutory orders made by McDougall J and Hallen J. There is a question as to how this exception should be formulated, to which I will return in discussion with counsel when formulating my orders. 3. The substantial issue between the parties is the effect on these orders of a notice to admit a fact, which was served by the plaintiff on 15 March 2016. The notice sought an admission that the plaintiff was the biological child of the deceased. On 16 March the defendant served a notice disputing that fact. 4. The plaintiff has, of course, succeeded on that issue. As noted in my August judgment, the DNA testing confirmed the deceased's paternity of the plaintiff. It was made clear prior to the trial (exactly when prior to the trial is in dispute) that the defendant did not contest the deceased's paternity. 5. This brings into play UCPR r 42.8 which deals with circumstances where a party, described in the rule as a "disputing party", serves a notice disputing a fact in response to a notice to admit issued by the other party, described in the rule as a "requesting party". UCPR r 42.8(2) provides: (2) Unless the Court orders otherwise, the disputing party must, after the conclusion of proceedings in which a fact in dispute is subsequently proved or is subsequently admitted by the disputing party, pay the requesting party's costs, assessed on an indemnity basis, being costs incurred by the requesting party: (a) in proving the fact, or (b) if the fact has not been proved – in preparation for the purpose of proving the fact. 1. It is common ground between the parties that sub-r (b) is the applicable one on the basis that the deceased's paternity was subsequently admitted by the disputing party (the defendant here). Although no formal admission was made, I am content to proceed on that basis. 2. I raised with the parties the question of whether the costs referred to in sub-r (2) are limited to costs which are incurred after the service of the notice disputing the fact. Counsel for the plaintiff submitted that the rule was not so limited. I accept that in terms the rule does not say that the costs are limited to costs incurred after the notice disputing the fact has been served. However, it may be implicit in the phrase "costs incurred by the requesting party" that the costs have been incurred by a party who, at the time the costs were incurred, had already been served with a notice disputing the fact. In my view, that would be consistent with the evident purpose of the rule, which is to give the disputing party an opportunity, before disputing the fact, to admit the fact and avoid the costs which may thereafter be incurred in proving it. If the party who receives a notice to admit a fact admits that fact, then the rule can have no application, and it seems somewhat strange that a subsequent dispute about the fact would give the party serving the notice to admit the fact a right to recover costs already incurred in relation to that fact, which it would not otherwise have. 3. I do not need to determine this question finally, because in my view, even if the effect of the rule is to cover costs incurred prior to the service of the notice disputing the fact, it is within the Court's power to order otherwise with respect to costs incurred before the service of such a notice. 4. Counsel for the plaintiff criticised the defendant's conduct in putting paternity in issue. He pointed out that, the plaintiff having been born in the period of time during which the deceased was married to Ms Darhy, there was a presumption that the deceased was the plaintiff's father. Apparently the defendant had taken no steps prior to the March hearing to lead evidence on paternity, even though it bore the onus of disputing that fact. 5. I do not accept this criticism. In effect, counsel's submission invites me to ignore the conclusion of McDougall J that it was the plaintiff that was at fault in relation to the adjournment. There is no reason for me to do so. If the presumption had truly been decisive, as is now suggested, the plaintiff could have done without Ms Darhy's affidavit. In fact, her evidence was relevant to a number of issues, and it was relied upon at the hearing before me, and she was cross-examined on it, even though by that time paternity had been conceded. 6. More broadly, I do not accept the defendant's conduct in putting paternity in issue was unreasonable. The deceased, as I pointed out in my August judgment, vehemently denied paternity while he was alive. The very fact that Ms Darhy and the plaintiff refused to agree to a DNA test, requiring an application and a formal order by the Court, was enough to raise reasonable doubts. 7. Where a notice to admit a fact is served on a party, often that party will have personal knowledge as to the truth or otherwise of the fact asserted, or the means readily of finding out. In this case, the defendant, as executor of the deceased's estate, had no such knowledge of where the truth lay. In itself that is a good reason, in my opinion, for departing from the usual consequence prescribed by UCPR r 42.8. 8. Furthermore, the costs of the DNA testing and of the defendant's application have already been dealt with by the Court. The order made by Hallen J on 21 September provided for the defendant, in the events which have now occurred, to pay the plaintiff's costs of the application out of the estate on the ordinary basis. 9. At the time that order was made, the plaintiff's representatives must have known of the notice to admit, but they did not apparently rely on it before his Honour. I do not now think I should give the plaintiff a second opportunity to seek a more favourable order. 10. For these reasons, I will order that UCPR r 42.8 not apply, leaving the UCPR r 42.15 order to apply to all interlocutory costs of the proceedings, except where that would alter the incidence of costs fixed by the existing interlocutory orders of McDougall J and Hallen J. 11. However, I think that the effect of UCPR r 42.15 should be treated as spent on the delivery of judgment. The defendant has been substantially successful on the argument before me concerning costs, but I will order the plaintiff to pay the costs of that argument on the ordinary basis only. (Further consideration was given to the form of orders) 1. On 3 November 2017 the Court made the following orders: 1. Order that the defendant pay the plaintiff's costs of the proceedings up to and including 21 March 2016, except for the costs thrown away and wasted by the vacation of the hearing date on 9 March 2016, to be assessed on the ordinary basis. 2. Order that the plaintiff pay the defendant's costs of the proceedings from 22 March 2016 to the delivery of the judgment on 18 August 2017, except for the defendant's costs of the parentage testing procedure and its notice of motion filed on 13 May 2016, to be assessed on an indemnity basis. 3. Order that UCPR Rule 42.8(2) not apply to the plaintiff's costs incurred in preparation for the purpose of proving the fact that the plaintiff is the biological child of the deceased, the late Paul Kohari, to the intent that such costs (if any) incurred after 15 March 2016 and up to 22 March 2016 shall be included in the costs of the proceedings payable by the defendant on the ordinary basis under Order 1 above. 4. Order that the plaintiff pay the defendant's costs of the proceedings, to be assessed on the ordinary basis, following the delivery of the judgment on 18 August 2017. 5. Order that: (a) the costs payable by the plaintiff under the order of McDougall J of 9 March 2016 and under Orders 2 and 4 above be set-off against: (i) the costs payable by the defendant under the order of Hallen J of 21 September 2016 and under Order 1 above; and (ii) the provision made for the plaintiff out of the estate of the deceased on 18 August 2017; (b) the defendant shall be at liberty to withhold from that provision a sum estimated by the defendant to cover the set-off against the plaintiff's liability for costs ("the withheld sum"); and (c) in the event that the withheld sum exceeds the amount of the set-off against the plaintiff's liability for costs as ultimately determined, interest is to be paid to the plaintiff from the estate of the deceased on that part of the withheld sum which exceeds the amount of the set-off at the rate applicable to unpaid legacies in accordance with section 84A of the Probate and Administration Act 1898 (NSW), from 19 October 2017, calculated daily. ********** 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: 06 November 2017