Darragh v Gloria McDonough and Barry McDonough
[2017] VCC 665
•2 June 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-16-04443
| JANICE ELIZABETH DARRAGH | Plaintiff |
| v | |
| GLORIA DAWN MCDONOUGH BARRY JOHN MCDONOUGH | First Defendant |
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JUDGE: | LEWITAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 February 2017 | |
DATE OF RULING: | 2 June 2017 | |
CASE MAY BE CITED AS: | Darragh v Gloria McDonough and Barry McDonough | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 665 | |
REASONS FOR JUDGMENT
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Subject: Application to stay statement of claim; abuse of process.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Represented in person | |
| For the first Defendant For the second Defendant | Represented in person Represented in person |
HER HONOUR:
1 The plaintiff in this proceeding (the present proceeding), Janice Elizabeth Darragh (Janice) claims that the defendants Gloria Dawn McDonough (Gloria) and Barry John McDonough (Barry) are indebted to Janice in the sum of $1,200,000. Janice also seeks further relief including damages, relief pursuant to s 21(1)(a) and (b) and s 27(1)(a) and (b) of the Limitation of Actions Act 1958 and compensation for distress and humiliation. Janice filed a statement of claim dated 26 September 2016 (SOC).
2 On 23 October 2017 Gloria made an application by correspondence that the proceeding be “closed down”. On 15 December 2016 Judicial Registrar Burchell made an order adjourning the defendants’ application which was made pursuant to Order 23.01 of the County Court Civil Procedure Rules 2008 (the Rules) on the grounds of abuse of process, res judicata, Anshun estoppel, the operation of the Limitation of Actions Act, and in light of the Judgment dated 25 February 2009 by Judge Morrow in Darragh v McDonough (Morrow J’s judgment).
3 In the present proceeding Gloria filed a defence dated 14 November 2016 (Gloria’s defence). Janice made two affidavits dated 15 December 2016 (Janice’s first affidavit) and 22 December 2016 respectively. Gloria made an affidavit in reply dated 13 January 2017. Barry filed a defence dated 25 January 2017. Each of the parties was self-represented.
Background
4 The events which are the subject of Janice’s claim date back to about the mid-1980s.
5 Janice and Gloria are siblings. Violet Beatrice Darragh is their mother (the mother). The mother passed away on 16 December 1985. Gloria was the eldest daughter and Janice the second child. A third daughter, Marianne Joyce Darragh (Marianne), the youngest daughter, is now deceased.
6 Gloria and Barry were married. Barry left the family home at 16 Gladwin Avenue, East Bentleigh in 1983. They were divorced in 1986.
7 On 27 May 1977 the mother executed a will (the will). In the will, the mother appointed Gloria as executrix and trustee of her will and apart from a bequest of $3000 to Gloria’s then husband, Barry, the rest of the mother’s estate was to be divided equally between her three daughters.
Principles on application to strike out a pleading
8 Rule 23.01 of the Rules provides:
23.01(1) Where a proceeding generally or any claim in a proceeding –
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court –
The Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
9 As stated by Kyrou J (as he then was) in Putt v Perfect Builders Pty Ltd[1] it is appropriate to first consider abuse of process because:
it is wider in scope that res judicata and issue estoppel. This is because a proceeding which seeks to re-agitate matters dealt with in a prior judicial decision may constitute an abuse of process even if the principles of res judicata and issue estoppel do not apply.
[1] [2013] VSC 600, [12].
10 The relitigation of matters previously ruled upon impinges upon the public interest in the finality of litigation.[2] As such, it is open to judges to order a stay in proceedings where a party is attempting to relitigate a question already determined. The Court is empowered to do so by r 23.01(1)(b) of the Rules. In Walton v Gardiner[3] the High Court held that proceedings before a court should be stayed as an abuse of process if their continuance would be “unjustifiably vexatious and oppressive for the reason that it is sought to relitigate anew a case which has already been disposed of by earlier proceedings”.
[2]Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 538.
[3] (1933) 177 CLR 378, 393.
11 In State Bank of New South Wales Ltd v Stehnouse Ltd[4] Giles CJ stated that ‘the guiding considerations’ in determining whether relitigation of an issue in a subsequent proceeding constitutes an abuse of process are “oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice”.
[4] (1997) Aust Torts Reports paragraph 81-423, 64,089 (Stenhouse); cited with approval by Kyrou J in Putt v Perfect Builders Pty Ltd [2013] VSC 600, [13].
12 The non-exhaustive factors to which regard may be had when determining whether a matter constitutes an abuse of process include:
(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue;
(b) the opportunity available and taken to fully litigate the issue;
(c) the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings;
(f) the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.[5]
[5]Stenhouse (1997) Aust Tort Reports 81-423,
Procedural history
The earlier proceedings
13 On 12 June 2007 Janice issued proceedings in the Magistrates’ Court against Gloria as a natural person and in her capacity as executrix of the estate of the mother. The particulars of claim were amended on 7 September 2007 and on 7 December 2007. On 13 August 2008 the proceeding was transferred to the County Court pursuant to s 17 of the Courts (Case Transfer) Act 1991,Case No CI-08-03416 (the earlier proceeding).
14 In the earlier proceeding Janice alleged that Gloria, in her capacity as executrix of the estate, wrongly claimed that Janice was indebted to the estate in the sum of $90,000 in respect of a loan made by the estate.
15 In the earlier proceeding Janice alleged that she purchased the land known as Unit 1 56 Leopold Street South Yarra being the land described in Certificate of Title Volume 9365 Folio 693 (the South Yarra property) in or about mid-October 1985.[6]
[6] Paragraph 2 of the statement of claim in the earlier proceeding.
16 Janice alleged that Gloria wrongfully, and without Janice’s knowledge or consent, lodged a caveat over the South Yarra property on 2 September 1986.[7]
[7] Paragraph 5 of the statement of claim in the earlier proceeding.
17 Janice sold the South Yarra property in late 1986.[8] The sale was settled about mid-March 1987.[9]
[8] Paragraph 6 of the statement of claim in the earlier proceeding.
[9] Paragraph 7 of the statement of claim in the earlier proceeding.
18 Janice alleged that Gloria attended settlement of the sale of the South Yarra property and obtained $90,000 from the purchasers of the South Yarra property being money belonging to Janice “in purported discharge by [Janice] of the debt which [Gloria] wrongfully alleged [Janice] owed the estate of the deceased [the mother].”[10] Janice claimed that Gloria refunded the sum of $18,000 to Janice.[11]
[10] Paragraph 8 of the statement of claim in the earlier proceeding.
[11] Paragraph 9 of the statement of claim in the earlier proceeding.
19 Janice claimed that Gloria was indebted to her in the sum of $72,000, that the receipt by Gloria of the sum of $72,000 was unconscionable and that Gloria had been unjustly enriched and was not entitled to retain the sum for her benefit. Janice also claimed compensation for pain and suffering.[12]
[12] Paragraph 10 of the statement of claim in the earlier proceeding.
20 In a defence dated 5 September 2008 and filed in the earlier proceeding (the defence in the earlier proceeding), Gloria stated that she was the executrix of the will. Probate of the will was granted on 21 February 1986.[13] The distribution of the assets of the Mother’s estate concluded in approximately August 1986.[14]
[13] Paragraph 1.2 of the defence in the earlier proceeding.
[14] Paragraph 1.3 of the defence in the earlier proceeding.
21 The mother was the registered proprietor of the property known as 311 Barkly Street Elwood Victoria being the land comprised in Certificate of Title Volume 4535 Folio 804 (the Barkly Street Property). Gloria admitted that the Barkly Street property was sold for $185,000.[15] Gloria claimed that as executrix of the mother’s estate, she was obliged to distribute to the three residual beneficiaries to the mother’s estate the sum of approximately $56,425.57 each.[16] Details of Gloria’s administration of the mother’s estate were set out in paragraph 11.2 of the defence in the earlier proceeding. When giving evidence in the earlier proceeding, Gloria insisted that the distribution of the estate took place in August of 1986.[17] In paragraph 11.3 of the defence in the earlier proceeding, Gloria says that at the time of distribution, Janice made no complaint about Gloria’s administration of the mother’s estate.
[15] Paragraph 8.1 of the defence in the earlier proceeding.
[16] Paragraph 11.2 of the defence in the earlier proceeding.
[17] Morrow J’s judgment, paragraph 33.
22 Gloria said that Janice accused her of mismanaging the mother’s estate for the first time on 2 January 2006 at a restaurant at Southbank.[18] Gloria said that Janice assaulted her at that meeting.[19]
[18] Paragraph 14.12 of the defence in the earlier proceeding.
[19] Paragraph 14.13 of the defence in the earlier proceeding.
23 In the earlier proceeding Gloria denied obtaining any sum of money from the proceeds of sale of the South Yarra Property.[20]
[20] Paragraph 14.14 of the defence in the earlier proceeding.
24 In Gloria’s defence in the earlier proceeding, Gloria claims that “to the extent the plaintiff pleads any cause of action for breach of trust, any action in tort or contract, or any action for breach of statutory duty, that cause of action is barred by reason of sections 5(1) and 21(2) of the Limitation of Actions Act 1958 (Vic) [21].
[21] Paragraph 17 of the defence in the earlier proceeding.
Trial reasons of Morrow J
25 In paragraphs 46 and 47 of his Judgment Morrow J held that the plaintiff asked him to infer:
that the defendant lodged a Caveat on the South Yarra property on the 2nd September 1986 and that the plaintiff was completely unaware of this lodgement. She asks me to infer that the defendant turned up at the settlement of the South Yarra property and that she produced the Caveat and was able to persuade (presumably the purchaser’s solicitors) to give her a cheque for $100,000 in return for the withdrawal of the Caveat.
This seems to me to be an incredible scenario….It is simply unbelievable that the plaintiff did not find out about the caveat until after the settlement.
26 Judge Morrow held that Janice had “demonstrably failed to prove her case”.[22]
[22]Darragh v McDonough [2009] VCC, [61].
27 Judge Morrow did not accept that any of the matters relied upon by Janice would provide Janice with grounds for arguing that the statute of limitations would not apply to her claim assuming that s27 of the Limitation of Actions Act applied.
That section provides that any action “based upon the fraud of the defendant” is one where the period of limitation “shall not begin to run until the plaintiff has discovered the fraud”. The fact is, however, on the plaintiff’s own evidence, that she did discover the fraud, i.e. the misappropriation of her money, immediately after the event. In the circumstances then, the statute is applicable and, in the circumstances, I find that the plaintiff’s case is statute barred, under this Section.
S.21 of the Limitation of Actions Act 1958 provides that the statute does not run in an action by a beneficiary under a trust in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy or to recover from the trustee, trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use: (see subsections (1)(a) and (b) of s.21). It seems to me that this section has no application to this case because the defendant was not a trustee in relation to the plaintiff’s South Yarra property. Assuming for the moment that the defendant did turn up at the settlement of that property and steal or misappropriate $100,000, it was from the plaintiff, as owner of that property, and not the plaintiff as a beneficiary in the mother’s estate.[23]
[23]Darragh v McDonough [2009] VCC, [59]-[60].
Application to the High Court for special Leave
28 On 10 March 2010 the High Court (Justices Hayne and Crennan) delivered the following judgment.
1 The applicant seeks special leave to appeal against orders of the Court of Appeal of the Supreme Court of Victoria (Buchanan JA and Kyrou AJA) dismissing the applicant’s application to extend the time within which to serve and file a notice of appeal from the order of a single judge of the County Court of Victoria (Judge Morrow).
2. The applicant and respondent are sisters. The respondent was appointed executrix and trustee of their mother’s will. The dispute arose in the context of the distribution of the estate.
3. The County Court rejected the applicant’s submission that the respondent misappropriated $73,721.00 from the applicant when the settlement of the sale of the applicant’s property in South Yarra took place in 1987. In any case, the judge found that the claim, which was brought 22 years after any cause of action arose, was statute barred. The judge held that ss 21 and 27 of the Limitation of Actions Act 1958 (Vic)(‘the Act”) did not apply on the evidence before him and thus did not assist the applicant in this case.
4. The applicant served the notice of appeal regarding the County Court decision five days late. However the Court of Appeal did not reject the application for an extension of time on the basis of the delay. The Court rejected the application due to the fact that the appeal was so hopeless as to render futile a grant of an extension of time in which to serve the notice of appeal.
5. Because the applicant is unrepresented, the application falls to be dealt with under r 41.10 of the High Court Rules 2004.
6. The applicant’s written submissions again raise the contention that the claim was not statute barred pursuant to s 21(1) of the Act, which provides that no limitation period applies to an action by a beneficiary under a trust in respect of any fraud by the trustee. There is no reason to doubt the correctness of the findings of Judge Morrow that there was no evidence of fraud and that the respondent was not a trustee in relation to the South Yarra property. Accordingly, an argument under s 21(1) of the Act has no prospects of success.
7. …We see no reason to doubt the correctness of the conclusions reached by the Court of Appeal. (emphasis mine) [24]
[24]Darragh v McDonough [2010]HCASL 2.
The plaintiff’s statement of claim dated 26 September 2016 (SOC)
29 Janice claims that Gloria and Barry are indebted to the plaintiff in the sum of $1,200,000 and that the receipt by Gloria of the sum of $91,409 was unconscionable and that Gloria has been unjustly enriched by reason of the following matters:
(1) Claims arising from the wrongful distribution of the mother’s estate
(paragraphs 1 – 24 of SOC). These allegations and the factual circumstances giving rise to the complaints by Janice about the distribution of the mother’s estate were considered and dealt with by Judge Morrow in the earlier proceeding on 25 February 2009, by the Court of Appeal on 17 April 2009 and the High Court on 10 March 2010 on an application by Janice for special leave to appeal. It would be an abuse of process to relitigate those issues in the present proceeding.
(2)Claims arising from the sale of the South Yarra property (paragraphs 26 – 40 of SOC). Janice alleges that Gloria wrongfully attended settlement and obtained and retained an amount of $124,00 being money belonging to Janice. These allegations and the factual circumstances giving rise to the complaints by Janice about the sale and settlement of the South Yarra property were dealt with by Judge Morrow in the earlier proceeding on 25 February 2009, by the Court of Appeal on 17 April 2009 and the High Court on 10 March 2010 on an application by Janice for special leave to appeal. It would be an abuse of process to relitigate those issues in the present proceeding.
(3)Janice seeks relief pursuant to s 21(1)(a) and (b) of the Limitation of Actions Act 1958 and s27(1)(a) and (b) of the Limitation of Actions Act. These allegations and the factual circumstances giving rise to the claim for relief by Janice pursuant to the Limitation of Actions Act were considered and dealt with by Judge Morrow in the earlier proceeding on 25 February 2009, by the Court of Appeal on 17 April 2009 and the High Court on 10 March 2010 on an application by Janice for special leave to appeal. It would be an abuse of process to relitigate those issues in the present proceeding.
(4) Janice alleges that Gloria wrongfully retained Janice’s balance of proceeds of sale of the South Yarra Property in an amount of $124,000 being moneys belonging to Janice for Gloria and Barry’s financial benefit. Janice alleged that the financial benefit obtained by Gloria and/or Barry can be “traced” to:
(a) the purchase by Gloria of a property at 7 Lytton Street Elwood being the land described in Certificate of Title Volume 4712 Folio 241 (the Lytton Street Property) (paragraphs 41 -49 of SOC).
(b) the purchase by Gloria and Barry of a property at 16 Gladwyn Avenue, East Bentleigh being the land more particularly described in Certificate of Title Volume 8420 Folio 812 (the Bentleigh property) (paragraphs 50 -59 and 65-66 of SOC).
(c) the purchase by Gloria of the property at 27 Daintree Crct North Lakes being the land described in title Reference 50793153 Lot 633 on SP 228895 (the Queensland Property). Janice seeks a declaration of constructive trust over Gloria’s Queensland Property and an order enabling her to take possession of the Title in part payment (paragraphs 67 and 68 and paragraphs H in the prayer for relief).
30 The allegation that Gloria and/or Barry obtained a financial benefit by wrongfully retaining money belonging to Janice from the proceeds of the sale of the South Yarra property (and referred to in the above paragraph 29(4)) arise out of the issues determined by Judge Morrow in the earlier proceeding. The claim by Janice that Gloria retained the balance of proceeds of sale of the South Yarra property were dealt with by Judge Morrow in the earlier proceeding on 25 February 2009, by the Court of Appeal on 17 April 2009 and the High Court on 10 March 2010 on an application by Janice for special leave to appeal. It would be an abuse of process to relitigate those issues in the present proceeding.
31 Further, in a defence dated 25 October 2016, Barry says that he left the family home in Bentleigh in 1983. He and his wife were divorced in 1986. Gloria received sole ownership of the Bentleigh property as part of the settlement. Barry stated that since that time he and Gloria have had absolutely no financial or commercial business dealings. Barry states that he moved to Queensland to live in 1999. He rents a bedroom, bathroom and a garage to house his 14 year old car. He has a small cash saving with no other assets and lives off the government pension.
32 Although Barry was not a party to the earlier proceeding, the claim against him would depend upon a finding in the present proceeding that Janice was entitled to damages against Gloria in respect of the sale of the South Yarra property and the administration of the mother’s estate. In my view the present proceeding against Barry should be stayed because it would involve the relitigation of the issues which were determined by Judge Morrow in the earlier proceeding. In Rippon v Chilcotin Pty Ltd[25] the plaintiff brought proceedings against accountants who were not parties to an action in the Supreme Court and could not claim the benefit of any cause of action estoppel or issue estoppel. The Court of Appeal referred to the decision of the House of Lords in Reichel v Magrath[26] which held that a defence which was not barred by res judicata estoppel may nevertheless be struck out as an abuse of process.[27] Lord Halsbury LC said (at 688) that it would be:
“…a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceeding to set up the same case again…it surely must be in the jurisdiction of the Court of Justice to prevent the defeated litigant raising the very same question which the Court has decided in a separate action.”
[25] [2001] NSWCA 142.
[26] (1889 14 App Cas 665.
[27] [2001] NSWCA 142, [15].
33 As evidence of the money that Janice says Gloria owes to her as a result of the wrongful distribution and misappropriation of the proceeds of the sale of the South Yarra property, Janice claims that she attended Gloria’s residence in June 2012 and Gloria signed a Transfer of Land and an Agreement to Pay moneys belonging to Janice.
34 In paragraph 57 of Janice’s first affidavit Janice states that she attended Gloria’s residence and -
gave her the option to let me move into the matrimonial property and stop paying rent or she sign two documents being an agreement to pay and a Transfer of Land transferring a percentage of the matrimonial property to me in resolution of the stolen funds. She signed the two documents. Now produced and shown to me and marked ‘57’ are true copies of the Agreement to Pay ‘57A’ and Transfer of Land ‘57B’.
35 Janice exhibited an “Agreement to Pay” purportedly signed by Gloria on 30 July 2012.[28]
[28] Exhibit 57A to Gloria’s first affidavit.
36 In paragraphs 63 and 66 of Gloria’s defence dated 14 November 2016 Gloria states that no monies were owed to Janice and that the transfer was signed under duress and was taken by police when they interviewed Janice regarding the assault in 2012.
37 In an affidavit made 13 January 2017 Gloria stated that the agreement:
… is a fraudulent document.
I did not sign this document.
I believe that the Plaintiff signed the document using a copy of the Transfer Document which I signed under duress using a different signature and the police seized this document when they interviewed her regarding her assault on me in 2012.[29]
[29] Point 57(b) of the affidavit made by Gloria dated 13 January 2017.
38 In paragraph 58 of her first affidavit Janice states that she was arrested and charged with ‘aggravated burglary’. She exhibited a copy of the Charge and Summons. [30] The charge was “obtain property by deception”. She states:
The Magistrate gave me 100 hours of community service. The OPP requested a twelve months’ intervention order and a year later requested a further twelve months’ intervention order thereby giving the first named defendant 24 months to re-arrange her affairs and sell the matrimonial property. I have a criminal record by demanding my moneys.
[30] Exhibit 58 to Gloria’s first affidavit.
39 Janice claims that in March 2013 Gloria was granted an intervention order and a second intervention order 12 months later in 2014.
40 In a letter dated 23 October 2016 Gloria wrote to the Registrar of the County Court. She stated that in January 2011 Janice referred her issue of alleged fraud against Gloria to the Victorian Police Commissioner. The matter was referred to Caulfield CIB and subsequently Gloria was advised that no action would be taken. She again referred the matter to the Victorian Police Commissioner. The matter was again investigated by Caulfield CIB. The police found no merit to her claim and the file was closed.
41 Gloria claims that Janice forced her way into her Bentleigh property on 30 July 2012 and assaulted Gloria by slapping her face with an open hand and continuously striking her with a metal bar. Gloria said that she was forced to sign a Transfer of Land over the Bentleigh property.[31]
[31] Letter dated 23 October 2016 by Gloria to the Registrar of the County Court, [7].
42 The consideration stated in the Transfer of Land is “Love and affection from one sister to another sister.” It is apparent that at that stage there was no love lost between the two sisters.
43 Gloria states that she rang the police when Janice left. Gloria states that they took possession of the Transfer of Land when they interviewed Janice. Gloria says that she has moved to Queensland “to get away from such nonsense” and it could prove difficult for her to make an appearance. Gloria said that she will be 77 years old on 26 October 2016.
44 The determination of the issues raised by the “Agreement to Pay”[32] and the purported transfer of the Bentleigh property”[33] would reopen the issues which were raised in the earlier proceeding in relation to the administration of the mother’s estate and the sale and settlement of the South Yarra property. These issues were dealt with by Judge Morrow in the earlier proceeding on 25 February 2009, by the Court of Appeal on 17 April 2009 and the High Court on 10 March 2010 on an application by Janice for special leave to appeal. It would be an abuse of process to relitigate those issues in the present proceeding.
[32] Exhibit 57A to Janice’s first affidavit.
[33] Exhibit 57B to Janice’s first affidavit.
45 I have considered the factors referred to by Giles CJ in Stenhouse.[34] The issues raised by Janice in the present proceedings were of fundamental importance to the issues raised in the earlier proceeding. Janice had the opportunity to fully litigate those issues in the earlier proceeding. For the reasons I have stated the determination of the claims Janice makes in respect of the Agreement to Pay and Transfer of Land depend on the resolution of the issues which were considered and dealt with by Judge Morrow in the earlier proceeding.
[34] (1997) Aust Torts Reports paragraph 81-423 (Stenhouse); cited with approval by Kyrou J in Putt v Perfect Builders Pty Ltd [2013] VSC 600, [13].
46 There is a public interest in the finality of litigation. Parties ought not be permitted to relitigate issues which were the subject of the earlier proceedings which gave rise to the judgment. The relitigation of those issues in the present proceeding would be unfair and oppressive to the defendants and would constitute an abuse of process. I propose to order that the proceeding be permanently stayed.
Res Judicta and issue estoppel
47 The principles of res judicata and issue estoppel would not apply to the proceedings issued against Barry. However in view of the decision to stay the proceedings against Gloria and Barry, it is not necessary for me to decide whether the principles of res judicata and issue estoppel apply against Gloria.
Orders
48 I will make an order to stay the proceeding.
49 I will hear the parties on the question of costs.
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