A Ltd v J (No 3)

[2017] NSWSC 931

Supreme Court

New South Wales

Medium Neutral Citation:	A Ltd v J (No 3) [2017] NSWSC 931
Hearing dates:	On the papers
Decision date:	12 July 2017
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1.   The costs of each of the first and second defendant be paid on the solicitor/client basis out of the Child’s estate.
Catchwords:	COSTS
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98(1) Succession Act 2006 (NSW), ss 18, 22(e) Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited:	A Ltd v J (No 2) [2017] NSWSC 896 A Limited v J [2017] NSWSC 736 Hill v Hill [2001] VSC 135 Hoffman v Waters [2007] SASC 273 In re an Incapable Person D [1983] 2 NSWLR 590 Snelgrove v Swindells [2007] NSWSC 868
Category:	Costs
Parties:	“A Ltd” (Plaintiff) “J” (First Defendant) “R” (Second Defendant)
Representation:	Counsel: R Williams (Plaintiff) S Chapple (First Defendant) P Wallis with P Boncardo (Second Defendant)   Solicitors: Unsworth Legal (Plaintiff) Keypoint Law (First Defendant) Benjamin & Robinson (Second Defendant)
File Number(s):	2017/00163312
Publication restriction:	Nil

Judgment

1. HER HONOUR: On 3 July 2017, I made orders granting leave to the plaintiff (A Ltd), in its capacity as manager of the estate of a child suffering serious medical conditions, to make an application for an order pursuant to s 18 of the Succession Act 2006 (NSW) authorising a statutory will to be made on behalf of the Child and then authorising the making of such a will. I published my reasons for so doing on 5 July 2017 (A Ltd v J (No 2) [2017] NSWSC 896).

2. At the time of making the orders on 3 July, the first defendant (the Mother) asked that the question of costs of the first and second defendants be reserved so that submissions could be made on that issue. (There was no objection to the order I made in relation to the costs of A Ltd.) I made directions for submissions to be filed and indicated that I would deal with that question on the papers. For the reasons that follow, I am of the view that the costs of both the Mother and the second defendant (the Father) be borne on a solicitor/client basis out of the Child’s estate.

3. It is not necessary to set out the background to the matter. Reference should be made to my principal judgment for that.

Submissions

4. As to the parties’ submissions on the question of costs, A Ltd took no position. It had already adduced evidence to the effect that the Child’s estate is of a sufficient size that any costs orders out of the estate would not adversely affect the Child’s position.

5. The Mother’s position is that both she and the Father should bear her or his own costs of the proceedings.

6. The Father on the other hand applies for his costs to be paid on the indemnity basis, or alternatively on the ordinary basis, from the Child’s estate.

7. In essence, the Mother submits that this is a case where parties who have sought to advance their own individual interests (even though clearly necessary and interested parties to the proceedings) should bear their own costs (noting the observations by Debelle J in Hoffman v Waters [2007] SASC 273 at [25] that “... there is a strong argument that, since parties are seeking to advance individual interests, each party should bear his own costs”).

8. The Father, on the other hand, argues that there is a public interest in making a statutory will to effect the orderly distribution of an incapacitated person’s assets on his or her death; that those with legitimate interests in such applications should not be dissuaded from assisting the Court properly to exercise its protective jurisdiction by fear that they may be obliged to do so at their own expense; and that a defendant, even if unsuccessful, should have his or her costs from the incapacitated person’s estate on an indemnity basis where it was reasonable to resist the claim for a statutory will.

9. The Father points out that he was not responsible for making the claim (having neither instigated nor prompted the proceedings). It is submitted that his evidence and submissions were necessary for the Court to revisit the exercise of its jurisdiction under s 18 (after the making by Robb J of the earlier statutory will in A Limited v J [2017] NSWSC 736) and to ensure that its discretion to authorise a will for the Child was properly exercised.

Determination

10. As is well known, s 98(1) of the Civil Procedure Act2005 (NSW) confers a discretion on the Court in respect of costs, such discretion to be exercised judicially and subject to the rules and any relevant legislation. Pursuant to r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), ordinarily costs follow the event. In protective matters, there is no general rule that the protected person’s estate should pay the costs of all parties; rather, the question is what order is proper to be made (In re an Incapable Person D [1983] 2 NSWLR 590 at 595; Snelgrove v Swindells [2007] NSWSC 868 at [25]).

11. In Hill v Hill [2001] VSC 135, in a matter involving an application for a statutory will, Byrne J said (at [10]) that:

It would be a matter of regret if [interested persons] were dissuaded from providing this assistance for fear that they might be obliged to do so at their own expense. On the other hand, in many cases it will be a desire to preserve its expectancy that provides such a beneficiary with the incentive to incur legal costs for that purpose, if it be advised to do so.

12. In the present case, both parents were obviously necessary and interested parties and both to an extent sought to advance his or her own interests.

13. The Mother (as did A Ltd) originally propounded a will excluding the Father from any share of the estate. She varied her position in that regard in the hearing before Robb J. The Father was only notified of the initial application for the making of a will on very short notice on 30 May 2017 and was not therefore in a position to adduce evidence on that application. The need to accord the Father procedural fairness was expressly noted by Robb J on that initial application.

14. On the hearing before me, both parents put in issue what share of the Child’s residuary estate should be bequeathed to the Father (the Father abandoning earlier written submissions to the effect that no will at all should be made). There was no dispute that the bulk of the estate should be left to the Mother. For the reasons set out in my principal judgment I accepted the Mother’s submissions as to the share that should be left to the Father and as to the making of provision in the will for the residuary shares for the siblings to be held on testamentary trusts (which the Father did not oppose). I accepted the Father’s submissions on the third issue then in debate (namely as to whether the trustees of the will should have a discretion to adjust the residuary beneficiaries’ distribution having regard to the manner in which the superannuation trustee might choose to distribute death benefits payable under the Child’s superannuation investment).

15. Assistance was thus obtained from both parents in formulating the appropriate will to be made on behalf of the Child.

16. The Child’s estate is substantial and there were a number of people, including the Father, with legitimate claims on the Child’s testamentary bounty. I accept that there was a public interest in the claim being brought by the plaintiff and for all interested parties to be heard in order to enable the making of a statutory will providing for the orderly distribution of the Child’s estate on death.

17. Neither parent, on the hearing before me, adopted an unreasonable position. Nor was the manner in which the proceedings (and cross-examination on behalf of the Father) conducted such as to warrant criticism of either party. This was clearly a matter in which there were strongly held views and emotions but neither parent’s stance was objectively unreasonable.

18. Having regard to the size of the Child’s estate, an order that the parents’ costs be paid out of the estate will not adversely impact the Child’s financial position or his care and wellbeing.

19. In those circumstances, I am of the view that it is appropriate that the costs of the first and second defendant be paid out of the Child’s estate. I think it appropriate that such an order be made on the solicitor/client basis, having regard to the element of self-interest in the submissions made on behalf of both parents at the hearing.

20. For the assistance of any subsequent costs assessment, I note that the presence of two Counsel for the Father at the hearing of the application on 30 June 2017 was due to the urgency of the application and the indication I had earlier given to the parties through my associate that, if not concluded that day, the hearing would be adjourned to a day the following week (when I understand the Father’s first barrister was not available).

Orders

21. Accordingly, I order as follows:

1. The costs of each of the first and second defendant be paid on the solicitor/client basis out of the Child’s estate.

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Decision last updated: 12 July 2017