Finlay v Cox

[2023] NSWSC 400

Supreme Court

New South Wales

Medium Neutral Citation:

Finlay v Cox [2023] NSWSC 400

Hearing dates:

19 & 24 April 2023

Date of orders:

26 April 2023

Decision date:

26 April 2023

Jurisdiction:

Equity

Before:

Slattery J

Decision:

No order as to costs made to the intent that each of the plaintiff and the first defendant will bear his and her own costs of the proceedings between them.

Catchwords:

COSTS – exercise of costs discretion – plaintiff brings proceedings against multiple defendants but no longer wishes to proceed against the first defendant – the plaintiff and first defendant cannot agree upon what costs order should be made to conclude the proceedings – whether each of the plaintiff and the first defendant has acted reasonably in commencing and defending the proceedings respectively – whether one party was almost certain to have succeeded if the matter had been fully tried.

Legislation Cited:

Civil Procedure Act 2005, s 98(4)(c)

Conveyancing Act 1919, s 26(1)

Cases Cited:

Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194

Re Minister for Immigration and Ethnic Affairs v Lai Qin (1997) 186 CLR 622

Category:

Procedural rulings

Parties:

Plaintiff: Peter Leslie Finlay
First Defendant: Robina Victoria Cox
Second Defendant: Roger David Cox
Third Defendant: Heath Joseph Cox
Fourth Defendant: Hayley Elizabeth Cox

Representation:

Counsel:
Plaintiff: M. White SC

Solicitors:
Plaintiff: A.R. Martin, Martin Legal
First Defendant: R.J.B. Allsop, Allsop Glover Lawyers
Second, Third & Fourth Defendants: C. Leahy, Leahy Lawyers

File Number(s):

2022/275997

Publication restriction:

No

Judgment

1. This judgment resolves an issue that commonly arises in proceedings. The plaintiff, Peter Finlay, no longer seeks to press for any relief against the first defendant, Robina Cox. But Mr Finlay and Ms Cox cannot agree upon who shall pay the costs of the proceedings incurred between them to date. Mr Finlay continues the proceedings against three other defendants.

2. Mr Finlay says that he and Ms Cox should each bear his and her own costs of these proceedings. Ms Cox says that Mr Finlay should pay her costs and that the Court should quantify those costs by making an order under Civil Procedure Act 2005, s 98(4)(c) fixing a specified gross sum instead of assessed costs.

3. The principle that governs what costs order should be made in this situation are stated in Re Minister for Immigration and Ethnic Affairs v Lai Qin (1997) 186 CLR 622, at 625, per McHugh J. The applicable principle may be shortly stated as follows by reference to the judgment of McHugh J:

“[I]f it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.”

4. McHugh J also stated in Lai Qin (at 625) that “in some cases a judge may feel confident that, although both parties have acted reasonably one party was almost certain to have succeeded if the matter had been fully tried” and even though both parties have behaved reasonably in the conduct of litigation, cost orders have been made in favour of the party who would have been successful. But as McHugh J observed (at 625) “such cases are likely to be rare”.

5. The authorities are clear that the Court cannot try a hypothetical action between the parties on such an application: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194, at 201. Therefore, the Court’s account of the relevant facts below is as concise as it can be on such an application.

6. After the Registrar in Equity ascertained that the only issue remaining between Mr Finlay and Ms Cox was one of costs, the matter was referred to a judge for determination. The hearing took place on 19 April 2023. Mr M. S. White SC, instructed by Martin Legal, appeared for the plaintiff. Mr R.J.B. Allsop of Allsop Glover Lawyers appeared for the first defendant.

7. On 19 April 2023 the Court reserved its decision on the cost issues between Mr Finlay and Ms Cox and directed that the matter be adjourned to 24 April 2023 at 9.30am, with a view to the Court advancing the resolution of disputes between Mr Finlay and the three other defendants. Orders to that effect were made on 24 April 2023 as will be detailed below.

A Land Swap, Conveyancing Mistakes, and a Legal Action – 2020 to 2023

8. The parties’ present dispute arises out of a rural conveyancing transaction in 2020 in which both conveyancing lawyers made mistakes.

9. The Mistakes. Mr Finlay is 83 years old. He resides in an aged care facility after suffering a stroke in November 2020. He was hospitalised until May 2022. The stroke impaired his memory of prior events.

10. Prior to July 2020 Mr Finlay lived on a grazing property known as “Dellwood”, at Deepwater, a small town proximally 40 km north of Glen Innes on the Northern Tablelands of New South Wales. He had inherited Dellwood from his father. For many years prior to 2020 Mr Finlay had conducted farming and grazing operations upon Dellwood, as its sole registered proprietor.

11. In July 2020, Mr Finlay decided, partly because of his advancing years, that he wanted to move into residential property in Severn Street, Glen Innes (the Glen Innes property) which was owned by one of his relatives, a member of the Cox family.

12. So, he negotiated and contracted for the sale of a 50% share in Dellwood to Roger, Heath, and Hayley Cox, who have been joined respectively as the second to fourth defendants in the Summons commencing these proceedings (and from time to time are referred to in these reasons as “the counterparties”). In exchange for transferring a 50% share in Dellwood to the counterparties, Mr Finlay agreed to take title to the Glen Innes property from one of them and to pay additional money consideration to them. This was given effect by two contracts for sale: one for the sale by Mr Finlay of Dellwood to the counterparties and the other for the sale of the Glen Innes property by one of the counterparties to Mr Finlay.

13. The first defendant, Ms Cox, is a solicitor. She acted for the counterparties on this July 2020 conveyancing transaction. Ms Cox and the counterparties are all close family: Roger Cox is Robina Cox’s husband. Heath and Hayley Cox are their children.

14. Mr Finlay retained his own solicitor on the transaction, Ms Kerri Anne Swain, who Mr Finlay later sued for negligence and who became the fifth defendant in the proceedings. At the time of the July 2020 conveyancing transaction, Ms Cox held an enduring power of attorney to act on behalf of Mr Finlay. She had held this power since 2014. Ms Cox had acted for many years as Mr Finlay’s tax agent, solicitor, and accountant. Ms Cox did not use her enduring power of attorney for Mr Finlay when acting in the July 2020 conveyancing transaction.

15. The origins of the present dispute are not hard to find. They lie in the text of the contract for sale of Dellwood and the conveyance to the counterparties that followed it. This is the only contract for sale that needs to be discussed. The contract for sale provided for the sale by Mr Finlay of Dellwood to 4 persons, namely Mr Finlay and the counterparties. The contract for sale was in the standard form of the Law Society and Real Estate Institute of New South Wales 2019 edition. On the covering page it provided for the option of marking one or more of three boxes to reflect the relationship of the purchasing parties among themselves upon completion. The options were described as “joint tenants”, “tenants-in-common”, and “in unequal shares”. None of these boxes were ticked or marked in any way in the executed and exchanged form of contract. No other clause of the contract for sale indicated the way Dellwood would be held by Mr Finlay in the counterparties on completion.

16. It is not now in contest that the parties had at least agreed the following terms for Mr Finlay to convey Dellwood to the counterparties and himself: that Mr Finlay would convey 50% of Dellwood to the counterparties; that he would hold his remaining 50% of Dellwood as a tenant in common with the counterparties as a group comprising the other 50%; and that as among themselves the counterparties would hold their own 50% share in Dellwood, so acquired, as joint tenants. In the contract for sale in accordance with accepted conveyancing practice, Mr Finlay appeared as a purchaser of a share of Dellwood because that is how he would ultimately be recorded on the title when the transaction was completed. As will be seen, the counterparties contend there are more terms to the agreement than this.

17. A curiosity of this case is that Ms Cox does not always appear to have contended an agreement consistent with the terms set out immediately above. In response to a complaint that Mr Finlay lodged with the Legal Services Commissioner about her conduct the Legal Services Commissioner obtained a version of the conveyancing agreement from Ms Cox. The Legal Services Commissioner records in his correspondence to Mr Finlay, that:

“Ms Cox says that at the time she understood it was agreed that the Cox family would hold a 50% share as joint tenants with you [Mr Finlay] as set out in the Transfer and that the ‘agreement’ failed to recognise the nature of the tenancy.”

18. Joint tenants hold in equal shares. Mr Finlay could not hold a 50% interest as a joint tenant with each of the Cox family members. If this is what the Commissioner’s letter means, it is difficult to understand how Ms Cox could have thought this. But leaving this matter aside, the Legal Services Commissioner identifies elsewhere in his correspondence the source of the stream of mistakes, misunderstandings and confrontations that have flowed from the 2020 conveyancing transaction. He said that neither solicitor in the July 2020 conveyancing transaction had prepared for their client any form of written agreement to record their fundamental consensus. The discipline of preparing such a foundational document is especially important in intrafamily arrangements such as this. The Legal Services Commissioner did not appear to have such a written agreement, nor does the Court. The parties now each contend for different versions of a wider agreement, an outcome which would have been impossible if a properly documented comprehensive agreement had been settled and signed at the outset.

19. But the contract for sale of Dellwood to the counterparties failed to reflect the agreement that it is now conceded on all sides had been made: it gave no indication that after the conveyance Mr Finlay would hold his interest in Dellwood in unequal shares from the counterparties; it gave no indication of the agreement for a tenancy in common between Mr Finlay and the counterparties; nor did it indicate the arrangement for a joint tenancy within the counterparties. In the absence of these boxes being ticked the presumptive legal inference from the form of the contract for sale was that Mr Finlay and the counterparties were acquiring equal shares in Dellwood as tenants-in-common: Conveyancing Act 1919, s 26(1).

20. It can perhaps be accepted that a mistake was made in settling the form of the contract for sale. But why the mistake was not noticed remains a mystery. The contract for sale contains two obvious departures from what is now considered to be the agreement: the omission of the acquisition of Dellwood in unequal shares and no description of the acquisition by Mr Finlay as holding as a tenant in common with the counterparties. If Ms Swain and Ms Cox had scrutinised the contract for sale these departures must surely have been noticed.

21. The instrument of transfer compounded these omissions. The transfer records Mr Finlay as transferring Dellwood to himself, Roger Cox, Heath Cox, and Hayley Cox as joint tenants, thereby implying that they were acquiring in equal shares. This reflected neither the presumptions arising from the form of the contract for sale, nor the agreement now conceded to have been made between the parties. The contract implied that Mr Finlay and the counterparties would take as tenants-in-common. The conceded agreement between the parties gave Mr Finlay a 50% share, and the counterparties the other 50%.

22. Again, it can perhaps be accepted that a mistake was made in settling and executing the form of the transfer. But it is puzzling why elementary supervision and attention on the part of Ms Swain and Ms Cox did not pick up the inconsistency between (1) the contract for sale and conveyance, and (2) the parties’ agreement on the one hand and the contract and conveyance on the other hand.

23. To her very considerable credit, early on Ms Swain sought to make amends for her side of these mistakes. She rightly and honestly acknowledged that it needed to be rectified at her expense. As will be seen, Ms Cox’s position on this issue has been elusive.

24. Failing to take and execute clear and careful instructions from an elderly person risks foreseeable additional expense and inconvenience. That risk materialised here. Mr Finlay seems to have forgotten, since his stroke, that he engaged in the 2020 conveyancing transaction, which further contributed to the later confusion. A clearly documented and executed written agreement or exchange of foundational correspondence between lawyers should have left no doubt what the agreement was between these parties.

25. But what happened between the parties after the July 2020 conveyancing transaction further contributed to the cost, inconvenience and continuing aggravation of the present litigation.

26. Events after July 2020. Mr Finlay was hospitalised for the stroke he suffered in November 2020 and thereafter he was admitted to a nursing home. He had lost a considerable part of his memory because of his stroke and did not give instructions to any solicitor for about 12 months. But he eventually retained a local solicitor, Mr G Barrett, to act for him. Mr Finlay seems to have forgotten during this period that he had ever engaged Ms Swain and to have forgotten the terms on which he had agreed the July 2020 conveyancing transaction.

27. But in November 2021 Ms Swain was alerted to the error in the contract for sale and the conveyance. In the five months from November 2021, she wrote to Ms Cox seeking Ms Cox’s cooperation to rectify the error. But surprisingly, after giving an early hint that she would work collaboratively with Ms Swain, Ms Cox became obstructive. The correspondence between November 2021 and March 2022 clearly shows Ms Cox changed her position over Christmas 2021 and began to delay and frustrate Ms Swain’s efforts to fix their mutual mistake.

28. Ms Swain’s first email in this series of correspondence was dated 12 November 2021 and made a straightforward request. Ms Swain said to Ms Cox the following:

“Hi Robina,

it has come to my attention that the transfer registered for the sale of 50% of Dellwood to Roger, Heath and Hayley was incorrect. It has Peter holding a 25% share as joint tenants with Roger Heath and Hayley. It should be 50% in tenants-in-common. We will need to register any transfer to fix that and make submissions to the stamp office that it is just a correction, not a new contract. Please confirm you are happy to assist me with that.

Thanks,

Kerri”

29. This email received a brief, positive and apparently friendly response two days later. On 14 November 2021 Ms Cox wrote back:

“Hi Kerri,

Sure. I was not aware. It was (as per the contract 50%). Will discuss further Monday with you.

Kind regards,

Robina Cox.”

30. Nothing happened for another month. Ms Swain emailed wrote again on 13 December 2021, seeking Ms Cox’s cooperation and stressing her overall duty to Mr Finlay:

“Hi Robina,

I’ve been thinking about the transfer of Dellwood and I would prefer to fix this as soon as possible. If you’re acting as his power of attorney currently, then I think you should be able to sign the transfer. Especially given that it is in his best interests. I contacted revenue NSW and they said that we lodge a letter was [sic] supporting material through eduties. Are you able to do that or do you want me to do it? We need to supply the following. If I’m doing it, can you please send me a copy of the stamped front page of the contract and the stamping printout so I can use the same reference number. I’ve done the new transfer which would need to be signed before submitting.

Thanks,

Kerri.

31. The following day Ms Swain received an email back from Ms Cox, signalling her probable assistance:

“Hi Kerri,

Will do as soon as I get a spare minute. We’ll have to register the POA now but that doesn’t take long now with PEXA.

Kind regards,

Robina Cox.”

32. Nothing further was heard back from Ms Cox for almost 2 months. So, Ms Swain decided to write again on 9 February 2022 to press for a correction to the title of Dellwood to reflect the agreement she understood had been made:

“Hi Robina,

I’ve prepared the documents to enable the title to Dellwood to be corrected to Peter owning 50%. I’ve attached a transfer which you can sign as his attorney. Maybe printed copies and Roger Heath and Hayley consigned the second one instead of trying to squeeze on the one transfer (though up to you, I don’t mind if you want to put all on one). I’ve also done the client authorisations and purchaser declaration (for Peter). You should be able to amend the front page of the PD Roger Heath and Hayley. All set up a PEXA workspace and send you an invite.

Thanks,

Kerri.”

33. This email attached a draft transfer describing the transferees as:

“Peter Leslie Finlay as to 50% as tenants-in-common with Heath Joseph Cox, Roger David Cox and Hayley Elizabeth Cox as joint tenants as to 50%.”

34. If registered on title, this would have reflected what Ms Swain understood was the agreement. The counterparties have since accepted that the agreement comprised at least these terms. Ms Cox wrote back on 11 February 2022 to Ms Swain with an excuse for delay:

“Hi Kerri,

Roger, Heath, and Hayley are all away but will try to speak to them over the weekend.

Kind regards,

Robina Cox”

35. Ms Swain was satisfied with this. She responded, “Great, thanks.” But in the face of Ms Cox’s further silence and after the lapse of sufficient time for Ms Cox to get the documentation signed, Ms Swain politely enquired on 22 February 2022 of her:

“Hi Robina,

Were you able to get the transfer and client authorisations signed? I really like to get this one down and off my worries list. The CT as it stands does not reflect the contract so we need to fix it.

Regards,

Kerri”

36. There was no reply. Ms Swain wrote again on 9 March 2022 to Ms Cox diplomatically seeking cooperation from her fellow professional:

“Hi Robina,

How are you going with your submissions to stamp office and getting transfer signed? I’d like to get this fixed up ASAP.

Thanks,

Kerri.”

37. Ms Swain’s good-mannered approach was getting her nowhere. Over a week later she rang Ms Cox, who gave her quite a surprise: Ms Cox said she no longer thought that the transfer was a mistake.

38. This can be inferred from Ms Swain’s final email to Ms Cox on 21 March 2022, which was less diplomatic and far more assertive, as Ms Swain discerned Ms Cox and the other members of her family were maintaining a position which would greatly disadvantage Ms Swain’s client, Mr Finlay:

“Hello Robina,

I have not received a letter from Roger, Hayley, and Heath’s solicitor. Please advise who that is so I can contact them. I have a duty to Peter to sort [this out] as soon as possible. If Roger, Hayley and Heath are not going to agree to sign the new transfer so that their share is 50% as per the contract, then I will have to take steps to determine what legal proceedings can be taken to have them return property which they should not have, i.e. Peter’s 25% share of the farm.

I note that originally you agreed that the transfer, as prepared by your office, was wrong and that a mistake had been made. In our recent telephone conversation, you stated that the transfer was supposed to [be] that way. That implies that you deliberately prepare the transfer differently to the contract, and that you prepared the transfer to have Roger, Hayley, Heath, and Peter owning as joint tenants with Peter’s share then being only 25% rather than him retaining 50% as agreed in the written contract signed by all parties. If that is the case, then you have possibly committed fraud and also possibly in breach of your fiduciary duty to Peter.

Please confirm that the transfer was mistakenly prepared so as to have Roger, Hayley, Heath and Peter owning as joint tenants and that you are arranging for Roger, Hayley and Heath to sign the new transfer which will rectify the mistake.

Regards

Kerri Swain”

39. Ms Cox then went dark. Remarkably before a solicitor acting for counterparties to conveyancing transaction she simply chose not to reply to this letter. This must have been deliberate after such entreating correspondence from Ms Swain. There was no further correspondence between Ms Swain and Ms Cox before these proceedings were commenced.

40. But by then Mr Finlay engaged new solicitors, Martin Legal, his present solicitors. On 22 July 2022 Martin Legal wrote to Ms Cox:

“Dear Ms Cox,

We act for Peter Leslie Finlay.

We are instructed that you hold a power of attorney regarding our client’s affairs. We are instructed to hereby give you notice of the revocation of that power of attorney in your favour. Please confirm receipt of this letter. Please acknowledge that your power of attorney has been revoked. Please send the original Power of Attorney to us by email to

[address of Martin Legal]

We await your reply.

Yours faithfully,

Martin Legal”

41. Once again remarkably, Ms Cox did not reply, exhibiting a continuing pattern of calculated discourtesy to her fellow professionals. None of the evidence before the Court suggests that Ms Cox did not receive all the emails and correspondence that Ms Swain and Mr Martin sent to her.

42. The lack of correspondence from Ms Cox is an important issue in the contest between the parties about the reasonableness of the commencement and conduct of this litigation. Mr Allsop says on behalf of Ms Cox that further attempts at contact should have been made before Mr Finlay commenced this litigation against Ms Cox, seeking the return of files and information about matters in which she had acted for Mr Finlay. Mr Allsop points to his own rapid response to the provision of the power of attorney and the other information requested in the Summons as proof of what was likely to have happened if Mr Martin had initiated further correspondence before action on behalf of Mr Finlay.

43. Mr Allsop is partly correct. His own response to this litigation was admirably prompt on behalf of Ms Cox. But to judge whether it was reasonable for Mr Finlay to initiate this litigation without further warning correspondence, it is necessary to look at matters from the point of view of Mr Finlay and those who advised him such as Mr Martin.

44. Such analysis presents a different picture. Mr Finlay was faced with a professional person who he had trusted and appointed in the recent past as his enduring attorney, who was now deliberately not responding to his reasonable enquiries about a transaction which was of great financial significance to him. For a family member, a holder of a power of attorney, and a trusted advisor such as Ms Cox, to withhold communications after March 2022 was bound to arouse a degree of suspicion in a reasonable person in Mr Finlay’s position about her motives.

45. Mr Allsop argues that Ms Swain or Mr Martin could have written another email before litigating. And he argues that the ultimate litigation reflected in the Summons had a different subject matter from the November 2021 – March 2022 email correspondence between Ms Swain and Ms Cox.

46. But there are several answers to this. First, if Mr Finlay’s frequent November 2021 – March 2022 correspondence had not elicited any response, Mr Finlay and Mr Martin were reasonably entitled to assume that if they resumed sending correspondence to Ms Cox, they would continue to be treated the same way.

47. Secondly, by September 2022, after a further six months of silence, and after Ms Cox had appeared to backtrack on initial offers of co-operating with Ms Swain, Mr Finlay could be reasonably concerned that Ms Cox’s silence might be a mask for further Cox family dealings with Dellwood. It was reasonable in such circumstances for Mr Finlay to seek ex parte relief without further warning.

48. Thirdly, Ms Cox did not reply to Martin Legal’s letter of 22 July 2022, which apparently reconfirmed Ms Cox’s continuing attitude of deliberate non-cooperation of a previously trusted advisor thereby heightening reasonable suspicions.

49. Fourthly, the Martin Lawyers July 2022 correspondence to Ms Cox was close in character to a prelitigation warning letter. It concerned substantially the same subject matter as the claim for relief in the Summons against Ms Cox, which seeks the return of files in which Ms Cox may have acted as Mr Finlay’s attorney.

50. Finally, it must have been clear to Ms Cox, when she received Martin Legal’s letter of 22 July 2022 giving notice of revocation of the power of attorney, that Mr Finlay believed that it might have been misused. A person in Ms Cox’s position could reasonably have expected someone such as Mr Finlay to harbour continued suspicions about the recent misuse of the power of attorney, making it more imperative that she respond to the correspondence being sent to her.

51. All of this could have been easily cleared up by Ms Cox sending a simple reply to Ms Swain’s and Martin Legal’s correspondence. If anyone was behaving unreasonably here before litigation, it was Ms Cox. In the Court’s view, Mr Finlay was acting reasonably in commencing this litigation.

52. Another option was for Mr Finlay to commence litigation against the counterparties but not Ms Cox, who could simply have been issued with a subpoena for the power of attorney and files.

53. But this is to judge the issue of the reasonable conduct of the parties with the benefit of hindsight and does not take proper account of circumstances in which Mr Finlay and Martin Legal found themselves in September 2022. They did not know what the status of the power of attorney was, whether Ms Cox acknowledged its revocation, and what use had been made of it. Mr Finlay was entitled to seek what was, in substance, final relief against Ms Cox in relation to the power of attorney. That is what the Summons did against Ms Cox, and the course taken was reasonable.

54. The Litigation. Mr Martin commenced these proceedings by Summons in September 2022 in the Equity duty list. The Summons sought substantive interim relief restraining the counterparties from dealing with the interest they acquired in Dellwood, and as against Ms Cox and the purchasers, orders for delivery up to Mr Martin of all files relating to the financial, tax or legal affairs of Mr Finlay and a list of every file that Ms Cox and the defendants have ever worked on regarding Mr Finlay’s affairs.

55. These prayers for relief were described as “substantive interim relief” in the Summons but were final relief against Ms Cox. The prayers for relief restraining dealings with Dellwood were to protect Mr Finlay from the consequences of the 2020 conveyancing transaction which, at that stage, Mr Finlay and his advisers not unreasonably thought had been executed on Mr Finlay’s behalf through Ms Cox’s use of the power of attorney. Mr Finlay did not remember the transaction, so it was inferred that the attorney must have undertaken it.

56. The prayers for relief against Ms Cox sought a range of Mr Finlay’s files from Ms Cox which were designed to ring fence any harm that might have been caused by potential misuse of the power of attorney. Fundamental to these claims for relief was a loss of trust by Mr Finlay in Ms Cox in her role as his attorney and as a provider of a range of professional services to him. Her conduct in not responding to correspondence and in taking inconsistent positions in accounting for her role as Mr Finlay’s attorney had accelerated that loss of trust.

57. Served with the Summons was a draft Statement of Claim annexed to Mr Martin’s affidavit. The draft Statement of Claim pleaded that the contract for sale and conveyance had been effected by means of the power of attorney. This turned out to be wrong. Mr Finlay had signed the contract and probably the transfer himself, although the original of the transfer is not included in the evidence.

58. Kunc J made orders in the Equity duty list on 15 September 2022 restraining the counterparties from dealing with Dellwood until further order, and for production, either the original or a copy, of any power of attorney Mr Finlay had executed in favour of Ms Cox and any contract for sale executed by Ms Cox as attorney for Mr Finlay. Again, the assumption behind these orders was that Ms Cox had probably used the power of attorney to execute the contract.

59. Immediately after the Summons was served Mr Allsop corresponded with Martin Legal confirming the power of attorney had not been used for the July 2020 conveyancing transaction. Mr Allsop explained in the same correspondence that Mr Finlay’s previous solicitor, a Mr Bassett of Tenterfield, had complained to the Legal Services Commissioner whose determination in June 2022 had explained the true position in relation to the power of attorney. But it seems clear that due to some diversion of mail, or perhaps because he was in an aged care facility, Mr Finlay had not received this correspondence which was addressed to the Glen Innes property. So, the existence of the correspondence with the Legal Services Commissioner does not diminish Mr Finlay’s claim to have been acting reasonably before commencing proceedings.

60. On 20 September 2022 Kunc J made all the orders sought against Ms Cox on a final basis. This involved the production of files by Ms Cox to Mr Finlay and the production of lists of files of Ms Cox concerning the conduct of Mr Finlay’s affairs. In the Court’s view, Mr Finlay’s conduct to this point was reasonable. Moreover, Mr Finlay was successful in getting the relief that he sought in the Summons against Ms Cox. There is no basis for an order for costs against Mr Finlay up to this point.

61. Mr Allsop submitted that Mr Finlay thereafter carried on these proceedings unreasonably. The principal reason for this was said to be that on 6 December 2022 Mr Finlay took the unwarranted step of filing a Statement of Claim which alleged that Ms Cox was acting as Mr Finlay’s power of attorney in the 2020 conveyancing transaction and owed Mr Finlay fiduciary duty as his attorney.

62. Mr Allsop submits that his informative correspondence back to Mr Martin showed to Mr Martin that Mr Finlay had signed the July 2020 contract for sale himself, and that it had not been signed by Ms Cox as attorney. Mr Allsop submits that therefore the 6 December 2022 Statement of Claim should never have been filed or persisted in.

63. But once again this needs to be looked at from the perspective of Mr Finlay and his advisers at the time and not in hindsight. Ms Swain had been joined by December 2022, as the fifth defendant to these proceedings and was by then very much at arm’s length from Mr Finlay. Full information was therefore unlikely to be readily available to Mr Finlay about what had passed between Ms Swain and Ms Cox in relation to the July 2020 conveyancing transaction. The safe course for someone in Mr Finlay’s position was to persist in his allegations of breach of fiduciary duty and misuse of the power of attorney for a little longer. Mr Finlay was not obliged, acting reasonably, to merely accept what Mr Allsop was saying at face value and drop the claim straight away. He was entitled to make enquiries and check the facts and he faced a few information obstacles in reaching that objective at that point.

64. And Mr Finlay had moderated his claims based on what he had been told by Mr Allsop. He had dropped an allegation of common law fraud against Ms Cox, which had been included in an unfiled draft Statement of Claim (in paragraph 34) served with the Summons as an attachment to Mr Martin’s affidavit commencing proceedings. Whether or not there was sufficient material to justify that allegation of fraud when made does not have to be decided to assess the reasonableness of Mr Finlay’s conduct of these proceedings, as that Mr Finlay did not persist in that allegation.

65. From February this year onwards, the continuing issues between Mr Finlay and Ms Cox have been about who will pay the costs of the proceedings, which have become the subject of evidence in anticipation of the present argument in these reasons. On 17 March this year Mr Finlay filed an Amended Statement of Claim that withdrew all further claims against Ms Cox.

Proceedings Against the Fifth Defendant

66. Ms Swain settled after a mediation. The counterparties have filed a Defence and Cross Claim, which accept that the agreement was at least that Mr Finlay would have at law a 50 per cent interest in Dellwood as tenant-in-common with the counterparties.

67. The counterparties allege that they agreed other additional terms with Mr Finlay. But on 24 April orders were made between Mr Finlay and the counterparties to rectify the title to Dellwood to reflect the 50:50 tenancy in common between Mr Finlay and the counterparties. The balance of the issues on the Defence and Cross Claim will go to trial.

68. In the result, upon the Court’s analysis both in commencing and in pursuing the present litigation Mr Finlay has conducted himself reasonably. The appropriate course therefore in the application of conventional principle is for each of Mr Finlay and Ms Cox to bear his and her own costs of these proceedings. It is unnecessary therefore to consider the quantification of Mr Allsop’s claim for costs against Mr Finlay.

Conclusions and Orders

69. The Legal Services Commissioner has already dealt with aspects of this matter, apparently dismissing the complaint against Ms Cox, so the Court will not refer it for further investigation for unsatisfactory professional conduct or make additional comment about the low standard of conveyancing exhibited by the factual narrative in this matter.

70. For these reasons the Court makes the following orders:

1. Order that these proceedings are dismissed as between the plaintiff and the first defendant; and

2. Make no order as to costs as between the plaintiff and the first defendant to the intent that the plaintiff and the first defendant will each bear their own costs of these proceedings.

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Decision last updated: 26 April 2023