Clarke v Clarke

[2023] NSWSC 802

Supreme Court

New South Wales

Medium Neutral Citation:

Clarke v Clarke [2023] NSWSC 802

Hearing dates:

On the papers

Date of orders:

10 July 2023

Decision date:

10 July 2023

Jurisdiction:

Equity

Before:

Robb J

Decision:

The Court’s order is:

(1) Order that there be no order as to costs of the defendants’ notice of motion filed on 23 December 2022 and the plaintiffs’ notice of motion filed on 31 January 2023, with the intent that all parties bear their own costs of those notices of motion.

Catchwords:

COSTS — costs orders in interlocutory proceedings — application of Lai Qin principles

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56

Cases Cited:

Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6

Category:

Costs

Parties:

Jeannette Dianne Clarke (First Plaintiff)
Alexander James Clarke (Second Plaintiff)
Bruce Alexander Clarke (First Defendant)
Margaret Ruth Pate (Second Defendant)
Stuart Raymond Clarke (Third Defendant)

Representation:

Counsel:
P Wiggins (Plaintiffs)
DC Price (Defendants)

Solicitors:
Walker & White (Plaintiffs)
Bartier Perry (Defendants)

File Number(s):

2021/00256589

Publication restriction:

Nil

JUDGMENT

1. These proceedings were commenced by a statement of claim filed on 8 September 2021. The plaintiffs are the executors of the estate of a deceased person who was, with each of the defendants, a co-executor of the estates of two deceased persons. It is only necessary to record that relief was sought concerning the administration of the two estates.

2. On 4 July 2022, Hallen J by consent of the parties made the following orders:

THE COURT IN CHAMBERS:

1.   Declares that the parties are bound by the Deed (“the Deed”) executed by them on 30 June 2022, a copy of which is placed with the papers.

2.   Orders that the parties comply with their obligations under the Deed in the manner prescribed by the Deed.

3.   Grants liberty to the parties to apply to the Court with respect to the implementation of, or consequential to the making of, these orders.

4.   Orders that the proceedings, including the notice of motion filed 6 June 2022, otherwise be dismissed…

3. Relevantly, the Deed referred to in order 1 provided for the assets of the two estates to be distributed in specie to various beneficiaries subject to a mechanism for the ‘evening up’ of the values of the shares received by the beneficiaries that depended upon the values of the assets in the estates. For that purpose, clause 5 of the Deed set out how the values of the assets should be determined that involved the appointment of a chosen valuer for each of the assets jointly on behalf of the parties.

4. On 23 December 2022, the defendants filed a notice of motion that in substance sought orders that would have the effect of requiring the plaintiffs to perform clause 5.1(c) of the Deed by signing the three letters of instruction drafts of which were annexures to an affidavit sworn by a solicitor instructed by the defendants.

5. On 31 January 2023, the plaintiffs filed what might be described as a cross notice of motion in which they sought a declaration that the parties will have performed clause 5.1(c) of the Deed by the signing of different drafts of the instructions to the valuers to the instructions that the defendants sought be given to the valuers. The plaintiffs sought a specific declaration that the additions to the drafts proposed by the defendants were not required for the performance of clause 5.1(c) of the Deed.

6. The parties each relied upon three affidavits as well as written submissions by counsel for the defendants dated 21 March 2023 and written submissions by counsel for the plaintiffs dated 28 March 2023.

7. The motions were set down for hearing before me on 31 March 2023. On that day the parties read their affidavits and counsel made submissions. Towards the end of the hearing, the Court made a number of observations of a practical nature concerning the appropriate way for the parties to resolve their differences concerning what information they might provide to the valuers for the purpose of guiding the valuation process: see T 38.38. Counsel for the parties then agreed that the Court should adjourn briefly so that discussions could take place with the aim of resolving the remaining differences between the parties. Upon resumption of the hearing, the Court was informed that discussions had progressed to the point where there was a prospect of them being successful, but counsel needed to obtain formal instructions. On that basis, the hearing was adjourned for the purpose of the Court either receiving draft short minutes of order to record the parties’ resolution of the dispute, or receiving any necessary additional submissions on any residual issues.

8. After a number of adjournments, on 5 June 2023, the Court was asked by the parties to make orders in the following terms:

The Court

1.   By consent makes orders in terms of the short minutes of order signed by Robb J and dated today’s date.

2.   Notes that the issue of costs is reserved and will be dealt with in accordance with orders 3 and 4.

Short minutes of order

1.   ORDERS that the notice of motion filed by the defendants on 23 December 2022 is dismissed.

2.   ORDERS that the notice of motion filed by the plaintiffs on 31 January 2023 is dismissed.

3.   ORDERS that the parties file and serve submissions as to costs by 5 PM on 7 June 2023.

4.   ORDERS that the parties file and serve submissions in response to the other parties submissions by 5 PM on 9 June 2022.

9. The result of these orders being made was that the parties’ notices of motion were dismissed without the Court having determined their respective merits, notwithstanding that the Court had received the parties’ evidence and submissions in respect of the relief sought in the notices of motion.

10. On the issue of costs, the plaintiffs served undated submissions of their counsel. The plaintiffs’ position was that the Court should make no order as to costs. That position was based in part on evidence given by a solicitor retained by the plaintiffs that established that, on 2 June 2023, the parties exchanged a Deed of Amendment whereby they amended the Deed. Clause 2 of the Deed of Amendment replaced clause 5.1(c)-(j) of the Deed to stipulate a new valuation process. Otherwise the terms of the Deed were confirmed. The plaintiffs otherwise relied upon the principles that are generally applied in cases that have been resolved by compromise without the Court having decided the dispute on the merits, as laid down by McHugh J in Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 (the Lai Qin principles), as well as other authorities that have accepted these principles. The plaintiffs submitted that it had not been shown that any parties had acted so unreasonably that the Court should depart from the general approach of making no order as to costs in cases where the Court had not been required to decide the case on the merits in the ordinary way.

11. By their counsel’s written submissions dated 7 June 2023, the defendants sought an order that the plaintiffs pay their costs of both of the notices of motion.

12. The defendants made submissions concerning the merits of the plaintiffs’ conduct by reference to identified parts of the court book that was provided by the parties to the Court for the purposes of the hearing on 31 March 2023. The thrust of the submissions was that, given that the subject matter of the dispute was a disagreement as to the appropriate wording of the instructions to be given to the valuers, the plaintiffs had provided no more information to the defendants than that the amendments sought by the defendants “are not necessary”. The plaintiffs did not, according to the defendants, provide positive responses to subsequent correspondence and, as submitted at [18]: “It was not until counsel for the plaintiffs made oral submissions during the hearing before Justice Robb on 31 March 2023 that the plaintiffs’ objections to the draft letters of instruction were articulated with specificity.” The defendants submitted that the plaintiffs’ conduct was therefore contrary to the requirements of s 56 of the Civil Procedure Act 2005 (NSW) and that the plaintiffs had in effect refused to negotiate in good faith with the defendants.

13. All parties provided reply submissions on 9 June 2023. The plaintiffs contradicted the claim that they had not responded to the defendants’ correspondence, and said in any event that they had articulated their position in their written submissions served before the hearing. The principal substantive submission made by the plaintiffs was that the reason why the parties had not been able to agree to the terms of the instructions to be given to the valuers was that the defendants changed their position, and sought to include additional, untested assumptions that were intended to influence the valuation process adopted by the valuers.

14. The defendants’ response sought to reinforce their original submissions to the effect that the plaintiffs had failed to avoid the need for the notices of motion by not putting their “cards on the table”. The defendants then provided outline submissions examining the responses provided by the plaintiffs, with a view to demonstrating that the plaintiffs had not sufficiently informed the defendants before the hearing of their real opposition to the course desired by the defendants.

15. I am satisfied in these circumstances that the proper costs order is that the Court should make no order for the costs of the notices of motion, with the intent that all parties should bear their own costs.

16. This is an appropriate case for the application of the Lai Qin principles. Not only has the Court not decided the merits of the dispute between the parties, it is not warranted or appropriate that the Court decide the claim by the defendants that the plaintiffs acted unreasonably in their negotiations with the defendants in relation to the terms of the letters of instructions to the valuers, by reference to the defendants’ reliance on certain of the correspondence between the parties. There was a real and obvious difficulty with the information that the defendants wanted to provide to the valuers, in that it was to a considerable extent subjective and only invited disputation between the parties. With respect, it should have been obvious to the defendants that the amendments to the letters of instructions that they sought to make were contentious. Furthermore, the position that obtained at the time of the hearing has changed by reason of the subsequent agreement by the parties to enter into the Deed of Variation, which had the desirable effect of resolving the dispute, but has changed the legal position as between the parties. The Court is not in a position to judge the reasonableness of any of the parties in changing their positions in the way necessary to enter into the Deed of Variation.

17. The Court’s order is:

1. Order that there be no order as to costs of the defendants’ notice of motion filed on 23 December 2022 and the plaintiffs’ notice of motion filed on 31 January 2023, with the intent that all parties bear their own costs of those notices of motion.

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Decision last updated: 10 July 2023