Barrie West and Jocelyn West v Karlene Kennedy and Christopher West
[2013] ACTSC 170
BARRIE WEST and JOCELYN WEST v KARLENE KENNEDY & CHRISTOPHER WEST
[2013] ACTSC 170 (13 SEPTEMBER 2013)
ESTOPPEL – where representation that loan and interest in property waived – whether elements of estoppel established
Civil Law (Property) Act 2006 (ACT) s 201
Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
No. SC 162 of 2012
Judge: Master Mossop
Supreme Court of the ACT
Date: 13 September 2013
IN THE SUPREME COURT OF THE )
) No. SC 162 of 2012
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:BARRIE WEST
First Plaintiff
JOCELYN WEST
Second Plaintiff
AND:KARLENE KENNEDY
Defendant
AND:CHRISTOPHER WEST
Third Party
ORDER
Judge: Master Mossop
Date: 13 September 2013
Place: Canberra
THE COURT ORDERS THAT:
The plaintiffs’ claim is dismissed and there is judgment for the defendant against the plaintiffs.
The defendant’s counterclaim against the plaintiffs is dismissed.
The defendant’s counterclaim against the third party is dismissed.
The plaintiffs pay the defendant’s costs of the proceedings including reserved costs, except (a) in relation to the application to join Christopher West as a defendant in the proceedings which was heard on 5 November 2012 in relation to which there shall be no order as to costs; (b) the costs reserved by order 9 made on 19 July 2013.
Introduction
In this case the plaintiffs, Barrie and Jocelyn West, claim from the defendant, Karlene Kennedy, the sum of $89,700 which they say was lent to the defendant and her then husband, the plaintiffs’ son, Christopher West, the third party in these proceedings, in 2004. The plaintiffs also claim, in the alternative, that they had an equitable interest in the property that was purchased using the loan monies and seek to recover a share of the proceeds of the sale of that property which they assert is held on trust for them. Finally, in the further alternative, they assert they are entitled to restitution of the funds advanced to the defendant and her then husband, namely $75,000. I will refer to the plaintiffs and the third party by their names in order to clearly distinguish them. I will refer to the defendant as the defendant because at the time of the events in question she was known as Karlene West but at the time of the proceedings she was known as Karlene Kennedy.
In early 2004, Christopher West approached his parents, Barrie and Jocelyn West and asked to borrow some money to assist in purchasing a property. Originally, Christopher asked his parents for a loan of $50,000 but later asked for a further $25,000.
On 9 February 2004, the defendant and Christopher West purchased a property known as 22 Archdall Street, McGregor, ACT for the sum of $425,000. On 21 February 2004, Barrie and Jocelyn West entered into a written agreement with the defendant and Christopher West for a loan of $75,000. Of this amount, $25,000 was to be paid back in regular instalments over ten years and the remaining $50,000 was to be repaid upon sale of property, together with a pro rata share of any capital gain made on the sale. The written agreement is set out below:
AGREEMENT BETWEEN
CHRISTOPHER AND KARLENE WEST AS ONE PARTY
AND
BARRIE AND JOCELYN WEST AS THE OTHER PARTY
WHEREAS:
Christopher and Karlene West have decided to purchase the house and property on 22 Archdall Street, McGregor ACT, 2615 (Block 7 Section 13),
Barrie and Jocelyn West have decided to lend Christopher and Karlene West the sum of Seventy Five Thousand Dollars towards the cost of purchasing the house and property at 22 Archdall Street, McGregor, ACT;
IT IS AGREED,
that the loan will be repaid by Christopher and Karlene West to Barrie and Jocelyn West, or their estates, the following manner:
Fifty Thousand Dollars will be repaid if and when the property and house is sold to another purchaser together with a pro rata share of any capital gain made on the sale.
Twenty Five Thousand Dollars will be repaid over a period of ten years from the date of this agreement at the rate of Two Thousand Hundred dollars each year to be paid on the anniversary of the date of purchase. This sum and the period of repayment may be varied by Barrie and Jocelyn West if they believe the circumstances of Christopher and Karlene West warrant a lesser sum or longer period.
The agreement was signed by Barrie West, Jocelyn West, Christopher West and the defendant.
Some time before April 2005, the plaintiffs varied the annual scheduled repayments of $2,500 on the condition that Christopher West and the defendant put the money that they were saving for those repayments into a bank account. From time to time, Christopher West would report to the plaintiffs the amount of money that was in the account. No repayments were ever made to the plaintiffs.
I will outline below the evidence of each of the witnesses before turning to consider the dispositive issue in the case, namely, whether or not the estoppel pleaded by the defendant is made out.
Barrie West
From the end of 2006 to mid-2008, Christopher West served in Iraq with the Australian Defence Force. In March 2007, during a period when he had returned to Canberra on leave, Barrie West said he had a conversation with Christopher West and the defendant in his kitchen where “I said to them, in the context of Christopher’s safe return from Iraq I would waive the loan.” He could not recall the specific words that he said although he said that whatever he said was not queried. The “general thrust” of the conversation was that “we wanted to give Christopher some present on his return from Iraq ... and we thought that the best way to do that was to say that whatever they had saved up they could spend as they wished to.” He was asked whether he said he would waive the whole of the amount or just the repayments. He said: “No I didn’t make anything specific. As I say the thing was that it was a present for his return home. So that was that.”
In 2008 the plaintiffs became aware that Christopher West and the defendant were planning to divorce.
On 27 February 2008, the defendant emailed the plaintiffs. The email said:
Good Morning Jo and Barrie
With things getting worse by the day, can you please clarify the loan situation. My understanding was that you kindly waivered [sic] the loans. Can you please clarify if this was the case. If it is not then please give me the amounts you will be claiming as it will need to be taken into settlement.
Barrie West responded to the email shortly after it was sent:
Good morning, Karlene
The loans of $50K and $25K were given to you both to purchase your home at 22 Archdall St because without this sum of money the house could not be bought.
I waived the loans and the interest from the $25K loan at Christopher’s mid term break from his deployment to Iraq for two reasons, first, to remove a worry from his mind during what turned out to be a very dangerous deployment and second, as an advance welcome home present when his deployment finished.
To my mind, in any settlement of your affairs, irrespective of the conditions, the pair of you would share equally in the equity that the loans would have in the current value of your home.
I hope this clarifies the situation.
In cross-examination, Barrie West said that he understood the words “taken into settlement” in the defendant’s email to mean a reference to things being taken into account in the defendant’s divorce settlement with Christopher West. He understood the request to relate to both loans. He was also asked what he meant by the term “waived” in his email. He said he used it as a “normal English expression”. He denied that it meant “forgiven”. It meant he had “waived the loans”. He said:
It meant that the money that we had advanced was still there and if they sold the house they would return it to us.
....
He was asked whether there was a synonym for the word “waived” that he used. He initially refused to identify any synonym and then when directed to answer the question could not identify any synonym. He said:
I used that expression and I didn’t think of anything else. We didn’t make a gift --- if you’re asking me did I forgive the amount of money we both paid for them to buy the house then the answer is no --- it didn’t mean that to me.
He had “no idea” why he hadn’t said that the loans had not been forgiven. His evidence was that he was angry when he got the email and this was because he thought he should have been approached jointly by his son and the defendant.
Barrie and Jocelyn West became aware through an advertisement in the newspaper that the property was for sale. The house was in fact sold on 9 September 2009. The plaintiffs looked the property up on the internet and discovered that the sale price was $550,000.
The plaintiffs did not take any steps to enforce the loan agreement until 10 March 2010 when the plaintiffs wrote to the defendant requesting payment of a pro rata share of the capital gain made on the sale of the property. They said:
I draw your attention to the attached signed and witnessed agreement between yourself, and Christopher West, Mrs J.A West and myself, and to the exchange of emails of February, 2008 also attached. At the time of the exchange of emails you did not disclose any intention to sell the property and house at 22 Archdall Street, McGregor, ACT.
It was our understanding that the house at 22 Archdall Street was to be your very long term home in Canberra and that a sale in the short term was definitely not intended.
You will note that the repayment of the loan for $50,000 was to be made if and when the property and house at 22 Archdall Street was sold to another purchaser together with a pro rata share of any capital gain on the sale.
You will also note that the repayment of the loan for $50,000 and a further loan of $25,000, together with the accrued interest were waived and the attached reasons for waiving these loans and interest.
You will appreciate that our investment in the property at 22 Archdall Street was $75,000, that waiving the loans did not negate that investment and further, that if and when the property were sold, you, as the sole owner, after your separation from Christopher West, would be obliged to provide us with a pro-rata share of any capital gain on the sale, which would amount to our return on investment.
In 2009, you took it upon yourself, and without consultation between us, (as a major investor in the property), to sell the property and house at 22 Archdall Street.
You received a sale price of $550,000, which would have netted you a capital gain of $124,000 on the price we paid for the property, $426,000.
You retained the full sale price and have made no attempt to honour your agreement to provide us a pro-rata share of the capital gain.
We estimate a pro rata share of the capital gain would be 74/426th for $124,000, that is, $21,831.
We should be grateful if you were to forward a cheque for this sum by the end of this month.
In response to the letter dated 10 March 2010, the defendant telephoned the plaintiffs and spoke to Barrie West for a few minutes. Barrie West could not recall what was discussed but could recall that at the end of the call he got abused and the phone was slammed down in his ear.
It is notable that the letter proceeds on the basis that repayment of the $75,000 was in fact forgiven and that only an entitlement to a pro-rata share of the capital gain remained. The basis on which such an entitlement could have survived the waiver of the loan was not explained.
On 3 April 2012, Barrie West wrote again to the defendant. The relevant parts of the letter are:
You will recall the letter dated 10 March, 2010.
I understand you now intend to leave Canberra and in the course of the move have broken up the family.
Whereas the intention in purchasing the house at 22 Archdall St, McGregor, had been to establish a permanent residence in Canberra to provide a secure home for the family, your move to Brisbane indicates a change of mind and circumstance.
I wish to inform you that we have now placed the matter of the return of my investment of $75,000 in the hands of our solicitors.
This letter appears to articulate a different position from the 2010 letter, namely, that the whole of the $75,000 remained owing.
Proceedings were commenced by the plaintiffs on 25 May 2012.
Jocelyn West
The second plaintiff said that her husband handled the household financial arrangements including the loan with Christopher West and the defendant.
She could not recall being involved in any conversation with Christopher West about the waiver in 2007. She gave evidence that Barrie West discussed the waiver with her when Chistopher West was deployed in Iraq. She said that Barrie West said he wanted to remove a worry from Christopher West’s mind and could not recall any further details.
Christopher West
Christopher West served in Iraq from the end of 2006 until mid-2007.
His evidence as to what occurred when he was home on leave in the middle of that period was that there were discussions with his father during which both he and the defendant were present. His mother was also within earshot but did not participate in the conversation.
His evidence of the “general thrust” of the conversation was that his “father was waiving the repayment of the loan but his interest still existed in the house”. Later in his evidence he said: “My father had said to me that he was waiving the payment of the loan. But he still held his interest in the property.”
When he returned from Iraq in 2007, he decided that his marriage to the defendant was over and soon afterwards began to make arrangements to move out of the family home and organise a division of the marital assets. There were communications between him and the defendant containing various proposals, drafted by him, for the splitting of the couple’s assets and liabilities. He said that, in his view, the $75,000 was still in issue and referred to in proposals that he sent to the defendant in relation to settlement of their affairs.
An early proposal dated 10 February 2008 and entitled “Initial Offer for the division of estate between Chris and Karlene West” did not refer to the $75,000 loan notwithstanding that it did explicitly examine the liabilities associated with the Archdall Street house. Subsequently a document dated 20 February 2008 made reference, when referring to the assessment of assets and liabilities of the parties to “Parental contributions to estate (75K)”. That reference did not treat the matter as being one involving any liability associated with the Archdall Street property but appears to have been sufficient to prompt the email inquiry from the defendant to the plaintiffs on 27 February 2008. There was no reference to the $75,000 in another lengthy email from Christopher West to the defendant on 26 February 2008. The application for consent orders also did not refer to the loan. Consent orders were ultimately filed in the Family Court on 11 April 2008 and made on 16 April 2008.
He said that his understanding during negotiations and at the time when the final court orders were drafted was that he and the defendant would need to pay back the money if and when his father decided to “call in the loan”. At the time of negotiating the settlement he said he had not seen the email correspondence between the defendant and his father on 27 February 2008. He said that the 10 February document was a comprehensive statement of the family’s assets and liabilities at that date as he understood them. He said the loan was not referred to in the document because the negotiation process was a difficult process and he had to bypass some issues, including the issue of the loan from his parents because that was a difficult issue. In cross-examination, he was asked why there was no reference to the loan in the “initial offer” and the final consent orders if his understanding was that the loan was still owed. He said that at the end of the family law process the defendant was left with an obligation to repay $75,000 notwithstanding that there was no mention of it in the court orders or the documents filed that gave rise to those orders.
Having regard to the comprehensive nature of his correspondence and the absence of any suggestion in that correspondence that there was a liability of any amount to the plaintiffs either attaching to the Archdall Street property or otherwise, the evidence of Christopher West that a liability of $75,000 continued to exist was surprising. I do not accept that this can simply be explained by the fact that it was a difficult issue. In my view if he considered an actual liability continued to exist he would have raised it in the correspondence rather than deliberately not disclosing it in circumstances where the defendant, as part of the settlement, was to take ownership of an asset that was subject to that undisclosed liability. Therefore I do not place any weight on his oral evidence that a liability continued to exist in assessing the evidence as to what occurred in relation to waiver in March 2007 or in assessing what Barrie West intended when he wrote the email on 27 February 2008.
Karlene Kennedy
The defendant consistently used the word “waivered” when she meant “waived”. She said she was not present when Barrie West said that the loan had been waived. She said that:
I wasn’t really involved in the financial stuff that much, but I do recall him having a conversation that, you know, that we – that the loans had been waivered [sic] and we ceased making payments to that account.
In relation to the email that the defendant sent to the plaintiffs on 27 February 2008, she said that she sent the email to “clarify the situation”. The defendant said that what she understood by her use of the word “waivered” in that email was that the plaintiffs had “gifted” her and Christopher West the money. She said that her understanding of Barrie West’s response was that “to me they had waivered the loans and interest by that time, and the equity that we had in the house was for us to share equally”.
She said that she would not have entered into the family law consent orders if she knew that the $75,000 was still repayable because “that would have been an unfair split of our assets and equity, so I would be left with a large debt that wasn’t solely mine”.
She recounted the receipt of the letter of 10 March 2010, her heated conversation with Barrie West, a second letter which was not in evidence and the third letter dated 3 April 2012.
In cross-examination it was suggested to her that the property settlement was so favourable to her that it would not have been an equitable division unless the $75,000 loan was assumed to still be outstanding. The defendant said that she told the solicitor who advised her about the property settlement that the $75,000 loan had been “gifted” by the plaintiffs. She said that as it was a gift it was not taken into account when entering into the consent orders. She said that the division of marital assets, which appeared to be very favourable to her, did not take into account Christopher West’s substantial superannuation fund and that when his superannuation was taken into account the division was far more even. That evidence was consistent with the application for consent orders which showed that when the value of Christopher West’s superannuation was taken into account the division of property between the parties was 53:47 in Christopher West’s favour.
She also gave evidence about the various improvements undertaken by Christopher West and herself to the Archdall Street property between 2004 and the sale of the house.
Equitable estoppel
In the final submissions, the case put by the defendant was fundamentally one of estoppel. In order to establish an estoppel the defendant needed to meet the requirements for an equitable promissory estoppel outlined by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429, namely, that:
1. the claimant assumed that a particular legal relationship then existed between the claimant and the other party or expected that a particular legal relationship would exist between them and, in the latter case, that the other party would not be free to withdraw from the expected legal relationship;
2. the other party has induced the claimant to adopt that assumption or expectation or acquiesced in the claimant’s adoption of that assumption;
3. the claimant acted or abstained from acting in reliance on the assumption or expectation;
4. the other party knew or intended the claimant to do so;
5. the claimant’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and
6. the other party has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
In the present case I am satisfied that each of these elements has been made out.
First element: The defendant has established that she assumed that a particular legal relationship existed between Mr and Mrs West on the one hand and her husband and herself on the other. That was that further entitlement to repayment of the loan of $75,000 had been waived. As she explained it in her evidence, she assumed that what had previously been a loan was to be treated as a gift.
Both Barrie and Christopher West’s evidence was that the defendant was present at the meeting at Barrie and Jocelyn West’s house when Barrie West said he would “waive the loan”. The defendant said that she was not present. It is also possible that she was present but not fully participating in any conversation because she and Jocelyn West left discussion of issues relating to the loan to their husbands. I do not think that it is necessary to make a finding as to whether or not she was, in fact, present. That is because I accept that either because she was present and heard the conversation or because it was reported to her by Christopher West she had, following the conversation, the understanding that the $75,000 loan had been waived in the sense of being forgiven. What was actually said by Barrie West was, on his evidence, that he would “waive the loan”. He did not make anything specific. On his evidence there was no specific mention of maintaining any interest in the property. Christopher West gave evidence of the “general thrust” of the conversation being the waiver of the loan but the maintenance of an interest in the property. However, as I have indicated above, I place no weight on this evidence. In my view, on this point, the evidence of Barrie West is more likely to reflect what occurred namely, a non-specific statement that he had waived the loan. Accepting Barrie West’s evidence, there was a reference to waiving the loan but it was not very specific. There was no discussion of the maintenance of an interest in the property.
The defendant’s understanding of the outcome of the conversation was that the loan had been waived. That is consistent with the terms of her February 2008 email which expresses that understanding but also recognises the possibility that some other position might have been reached between Barrie and Christopher West who were the persons principally responsible for any discussions in relation to the loan.
I do not accept that any of the negotiations relating to the settlement of family law matters either before or after the email would lead or did lead the defendant to depart from the assumption engendered by the email, namely that the $75,000 loan had been waived and hence did not need to be accounted for in the weighing up of assets and liabilities for the purposes of the property settlement. As at the time of entry into the consent orders there was nothing at all to put her on notice that she would be taking the Archdall Street property subject to a liability that had not been disclosed or assessed as part of the settlement process.
Second element: The plaintiffs induced the defendant to adopt that assumption. The email of 27 February 2008 was very clearly an act of Barrie West on his own behalf and on behalf of his wife that induced the defendant to believe that the obligation to repay the loan had been waived and that the funds made available to her and her husband would be treated as a gift.
Third element: The defendant acted on the basis of the information that she had been given by the plaintiffs and the assumption that it engendered. Clearly enough, at the time of her email, negotiations over the property settlement with her husband were in progress. Her evidence was that had she not understood that the loan had been forgiven then she would not have agreed to the terms of settlement which she ultimately agreed to. She gave a particular explanation as to why that was the case, namely, that had $75,000 been required to be paid out of any future sale of the McGregor property then the settlement, which preserved Christopher West’s superannuation entitlements, would not have been possible. I accept that evidence and do not accept the plaintiffs’ submission that the defendant did not act in reliance on the information because the settlement was so favourable to her in any event.
Fourth element: Barrie West knew that the context in which the request for information about the state of the loan was the negotiation of a property settlement between his son and the defendant. Not only was that part of his general understanding of what was happening at the time, but also, the email by its terms made it clear that that was the purpose of the request.
Barrie West’s evidence as to what he understood to be the meaning of his email is inconsistent with the satisfaction of this fourth element for estoppel. That is because, if his evidence is accepted, he did not intend that email to mean what the defendant understood it to mean. Instead, his evidence was to the effect that he had not forgiven the loan and maintained the right to repayment if the property was sold. I do not accept that evidence. The reasons that I do not accept that evidence are as follow.
(a) The terms of his email are quite explicit and inconsistent with his explanation of what he intended them to mean. His email refers to waving the loans, plural, as well as the interest from the $25,000 loan. The reference to interest on the $25,000 is obscure given that, at least so far as the written agreement was concerned, there was no obligation to pay interest. Any reference to the loans in this context was unnecessary if all that had been waived was the interest component or if the loans remained payable. Further, the reference to sharing “equally in the equity that the loans would have in the current value of your home” was inconsistent with the loans remaining repayable. Had the requirement to repay those loans not been waived then the couple would not be able to share equally in the equity that was generated in their home. Rather, they would have been a shared liability.
(b) Barrie West did not appear to me to be unsophisticated in his use of language or in relation to financial matters. As between him and his wife, he was the one who dealt with financial matters generally and was responsible, in particular, for dealings in relation to the loan to Christopher West and the defendant. The circumstances in which he wrote the email were such that it would have been clear to him that a considered response was appropriate and I do not accept any contention that, due to some misunderstanding on his part, the letter did not mean what it said.
(c) Barrie West was given the opportunity to explain how the words that he used in the email were consistent with his assertion that the only obligation that had been waived was the requirement to make repayments on the $25,000 loan. I found his explanation to be quite unconvincing. He gave no explanation of how the words used could have been consistent with what he said they meant, even taking account of the possibility that he may have had a misunderstanding of the legal meaning of words that he used. In my view, he meant at the time what, in ordinary English, he said, namely that he had waived, in the sense of forgiven, the whole amount of $75,000. That is consistent with what he said in his 2010 letter (although he maintained in that letter an unexplained entitlement to a pro-rata share of the capital gain) but is inconsistent with the position adopted in 2012 and in these proceedings.
(d) It is not necessary to make any specific findings as to why his position might have changed since that email but there were indications in his evidence and the letters of 2010 and 2012 that his subsequent approach to the loan may have been influenced by unhappiness with the decision of the defendant to sell the Archdall Street property and then to move herself and her children away from Canberra. As will be apparent, neither the conversation in March 2007 nor the email of 27 February 2007 made any waiver conditional upon the house not being sold or the defendant or her children remaining in Canberra.
Therefore I find that Barrie West intended the defendant to adopt an assumption that he and his wife had waived the obligation upon Christopher West and the defendant to repay the loans totalling $75,000. He intended that the defendant act on the basis of that assumption in any settlement of her affairs with Christopher West.
Fifth element: The action of the plaintiffs will occasion detriment to the defendant if the assumption is not fulfilled. That is because the defendant has acted upon the basis of the assumption in reaching a property settlement with Christopher West in which she assumed ownership of the McGregor property. The plaintiffs assert, inter alia, that the defendant holds $89,700 of the proceeds of the sale on trust for the plaintiffs. The detriment that the defendant will suffer if the assumption is not fulfilled is, if the plaintiffs’ case is accepted, a liability in these proceedings to pay $89,700, which she had assumed would not be payable and hence took no account of in her settlement with Christopher West. I do not accept the plaintiffs’ submission that for the purposes of the estoppel asserted by the defendant, the defendant must establish that she would have been able to achieve a more favourable settlement with Christopher West. In my view it is sufficient that she lost the opportunity to have the liability now sought to be imposed upon her taken into account in the settlement with Christopher West. The evidence does not come close to supporting the submission made by the plaintiffs that the settlement was so favourable to her that she could never have achieved a more favourable settlement than she did.
Sixth element: It is clear that the defendant has failed to act to avoid the detriment, in that the plaintiffs have now asserted through proceedings an entitlement to payment which is the very detriment that the defendant was induced by the plaintiffs to assume would not arise.
As a consequence, in my view the plaintiffs are estopped from now asserting that the loan made in the agreement dated 21 February 2004 is repayable, in whole or in part, by the defendant or that any of the proceeds of the sale of the Archdall Street property are held on trust for them. This means that the plaintiffs’ claim, whether it is based in contract, trust or restitution, must fail.
I note that the plaintiffs submitted that s 201 of the Civil Law (Property) Act 2006 precluded the defendant from establishing any equitable promissory estoppel because to do so on the basis of the email of 27 February 2008 would permit, in effect, the disposition of an interest in property without the requirements of the section being met. Notwithstanding that the loan agreement does not say so in terms, the defendant has admitted in her defence that the plaintiff held “an interest” in the Archdall Street property. Assuming that admission to be correct, I am satisfied that s 201 does not preclude the establishment of an equitable estoppel in circumstances where the formal requirements of s 201 have not been complied with. That is because the estoppel does not involve any disposition of an interest in property. Rather it is an equity that precludes certain conduct, namely reliance upon the loan agreement, when it would be unconscionable to do so. The existence of such a personal equity which precludes assertion of an interest in property is not sufficient to trigger s 201: see Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 433.
Given that the plaintiffs’ claim must fail by reason of the estoppel, it is unnecessary to deal with the other aspects of the defence. Further, the defendant’s counterclaim seeking rectification is unnecessary as is the claim for contribution made by the defendant against Christopher West.
Costs
In relation to costs, as between the plaintiffs and the defendant costs should follow the event including, with two exceptions, any reserved costs. The exception in relation to reserved costs is the costs of the application made by the defendant to join Christopher West as a third party to the proceedings. That course was unsuccessfully opposed by the plaintiffs because, at that stage, there was no claim made against Christopher West. While there was no appeal against the decision of the Registrar to join Christopher West, in my view the procedure adopted was not the appropriate one and that was a matter that ultimately needed to be resolved by the filing of an amended defence and counterclaim. In my view, in relation to the application before the Registrar on 5 November 2012, the appropriate order is that there be no order as to costs of that application.
The other exception is those costs reserved by order 9 made on 19 July 2013. Those costs were previously the subject of an undertaking by counsel for the defendant. Having regard to the undertaking given, I do not need to make any order in relation to those costs.
In relation to Christopher West, although he was joined as a party to the proceedings, he did not enter a notice of intention to respond and participated in the proceedings only as a witness. In the circumstances there should be no separate costs order in relation to him but my intention is that the order requiring the plaintiffs to pay the defendant’s costs of the proceedings includes, subject to what I have said above, the costs of the whole of the proceedings including the counterclaim against Christopher West.
Orders
Therefore, the orders of the Court will be that:
1. The plaintiffs’ claim is dismissed and there is judgment for the defendant against the plaintiffs.
2. The defendant’s counterclaim against the plaintiffs is dismissed.
3. The defendant’s counterclaim against the third party is dismissed.
4. The plaintiffs pay the defendant’s costs of the proceedings including reserved costs, except (a) in relation to the application to join Christopher West as a defendant in the proceedings which was heard on 5 November 2012 in relation to which there shall be no order as to costs; (b) the costs reserved by order 9 made on 19 July 2013.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Mossop.
Associate:
Date: 13 September 2013
Counsel for the plaintiff: Mr T Crispin
Solicitors for the plaintiff: S&T Lawyers
Counsel for the defendant: Mr J Pappas
Solicitors for the defendant: Kamy Saeedi Lawyers
Date of hearing: 16 August 2013
Date of judgment: 13 September 2013
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