Good Samaritan Donkey Sanctuary Inc (GSDSI) v C E & S P Berry [No 2]
[2007] NSWSC 397
•27 April 2007
CITATION: Good Samaritan Donkey Sanctuary Inc (GSDSI) v C E & S P Berry [No 2] [2007] NSWSC 397 HEARING DATE(S): 28 March 2007
JUDGMENT DATE :
27 April 2007JUDGMENT OF: Smart AJ at 1 DECISION: See paras 40-42 CATCHWORDS: Non-appearance of second defendant when earlier costs orders made explained - appropriate to review earlier costs order in view of lack of involvement of second defendant - not appropriate to make costs order against him in respect of principal proceedings - appropriate to make costs order of application to vary costs order against him LEGISLATION CITED: Nil CASES CITED: Nil PARTIES: Good Samaritan Donkey Sanctuary Inc (GSDSI) v C E & S P Berry; [No 2]; Cross-Claim C E Berry v GSDSI & Joanne Kokas FILE NUMBER(S): SC 1461/02 COUNSEL: (P) Mr M K Rollinson
(D) Mr R MarshallSOLICITORS: (P) Mr S J Friend
(D) Mr R A Murphy
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
SMART AJ
Friday, 27 April 2007
GOOD SAMARITAN DONKEY SANCTUARY INC (GSDSI) v. C E & S P BERRY
JUDGMENT
1 Stephen Philip Berry seeks to set aside the order made on 14 November 2006 in so far as it ordered him to pay the costs of the proceedings. He was not present or represented on that day which was the day fixed by the earlier and substantive judgment of 12 October 2006 to settle the short minutes of order and deal with the question of costs and any other outstanding matter.
2 The final hearing which was bitterly contested and involved considering a large volume of documents and over 5300 accounting entries extended over 9 days. Lengthy and detailed reasons for judgment were delivered on 12 October 2006. Matters of some complexity extending over many years had to be resolved.
3 It was not in dispute that Mr Berry was not in court on 12 October 2006. There was some dispute whether Mrs Berry was present in Court. Mr R Makin, the solicitor for the defendants, took the judgment on their behalf and was given at least one copy of it. I thought that Mrs Berry was in Court on 12 October 2006 and there was evidence to that effect from Mr G S Farrance who was present in Court when judgment was delivered. He was an honest witness. However, there was strong evidence to the contrary, that is, that she was not in Court on that day from Mr & Mrs Berry and Mr Makin. I propose to proceed on the basis that probably Mrs Berry was not in Court on 12 October 2006. There was evidence that later on 12 October 2006 Mr Makin telephoned the home of Mr & Mrs Berry and advised that the judgment did not look good for them and suggested that they come and discuss it. Mr Makin stated that the judgment was complicated and would need to be explained to them and that he would like both Mr Murphy (counsel) and himself to be there to minimise any chance of misunderstanding and ensure that they understood the meaning and effect of the judgment.
4 Mr Makin said that he did not recall having sent a copy of the judgment to Mr and Mrs Berry.
5 Mr Makin said that at the conference, which was held on 29 October 2006, his retainer and that of Mr Murphy were terminated and that he supplied to Mr and Mrs Berry everything that was in his voluminous file, a 56 litre plastic container. He denied that he told Mr and Mrs Berry that he was unwell and was not in a position to act for them any further. Mr Berry stated that Mr Makin had said words to that effect. I am unable to resolve this conflict and it is unnecessary to do so.
6 On 30 October 2006 Mr Makin took steps to notify the Court and the plaintiffs’ solicitor that he had ceased to act for Mr and Mrs Berry.
7 Mr Makin could not recall having received draft short minutes of the orders sought by the plaintiff prior to the conference but probably did so.
8 Mr Berry deposed to being handed a document headed Judgment/Order at the conference and Mr Makin saying that that was the judgment. Mr Berry did not recall Mr Makin saying that the document (the short minutes proposed by the plaintiff) had come from the plaintiff’s solicitor. Mr Berry did not understand that the document contained a draft of the orders which the plaintiff was s seeking. Neither Mr nor Mrs Berry had seen the Court’s judgment of 12 October 2006 prior to the conference on 29 October 2006. They had not discussed it and Mrs Berry had not explained its effect to her husband. It is probable that Mr Makin did not send a copy of the Court’s judgment of 12 October 2006 to Mr and Mrs Berry
9 Mr Berry believed that what was written in the document he was handed was final and conclusive and that nothing further could be done.
10 Mr Makin was adamant that at the conference held on 29 October 2006 they (he or Mr Murphy) informed Mr and Mrs Berry that it was necessary for them to attend Court on the adjourned hearing date (14 November 2006) and suggested that they have some representation.
11 On the other hand Mr Berry said that nothing was said at the meeting on 29 October 2006 about the need for anyone to attend Court on 14 November 2006 or that the matter was going to be before the Court on such date. The document he was handed did not refer to that date.
12 At the hearing on 14 November 2006 I modified the proposed orders foreshadowed in my judgment of 12 October 2006 and sought by the plaintiff by deleting the requirement that Mr Berry account and limiting the requirement to account to Mrs Berry. As I remarked on 14 November 2006 the overwhelming impression I had from the evidence was that Mrs Berry was responsible for the management of the finances of the plaintiff (and its predecessor). Counsel for the plaintiff explained (T3 of 14/11/06) that the basis for including Mr Berry was that he was a defendant “and the evidence tended to indicate, although not strongly, there was some degree of co-operation between the two of them, the basis of which was not made very clear on the evidence relevant to these transactions.”
13 It appears from lines 55 and following of p 5 of the transcript[t (14/11/06) that there was no discussion about the order that the defendants pay the plaintiff’s costs of the proceedings save that I deleted the provision that such costs were to be assessed and payable immediately. Directions were given as to the service of the orders, as settled, upon Mrs Berry. The defendants were to be notified by letter that Mrs Berry should appear at the Court on 12 February 2007 at 9.30am. The further hearing was adjourned accordingly and the plaintiff’s solicitors complied with the directions. The Court also posted a copy of the orders of 14 November 2006 to Mr and Mrs Berry.
14 A copy of the Court’s orders made on 14 November 2006 was received by Mr & Mrs Berry because they consulted fresh solicitors (Patey & Murphy) and by that firm’s letter of about 19 December 2006 they noted the orders of 14 November 2006 and enclosed a copy of the affidavit of 18 December 2006 of Mrs C B Berry.
15 On 12 February 2007 counsel appeared for Mr Berry at the further directions hearing of the proceedings and Mr Berry was given leave to file a motion seeking to set aside the costs order made against him on 14 November 2006.
16 I am satisfied that Mr Berry became confused and did not appreciate that the short minutes of orders handed to him were a draft nor that he should attend Court on 14 November 0206 to argue that a costs order should not be made against him. Mr Berry impressed me as a person who did not have a grasp of legal matters and that he did not understand the effect of Mr Makin’s explanations.
17 Mr Berry has explained why he did not appear on 14 November 2006 and the delay which has occurred. Fairness requires that he should be allowed to argue whether a costs order should be made against him and the Court should reconsider the matter.
18 I turn now to the question whether a costs order should be made against him. Mr Berry attended every day of the extended court hearing. His affidavit of 18 June 2005 was withdrawn and not read as part of the evidence.
19 It was obvious during the hearing that Mrs Berry was the person who managed and controlled the affairs of the predecessor of the plaintiff and, for a limited time, those of the plaintiff.
20 Mrs Berry established, managed and controlled the various accounts through which money for the donkeys was channelled. Mr Berry’s role was primarily a physical one. He helped her to a limited extent with the care of the donkeys and their accommodation.
21 The plaintiff relied on the following:
a) Six of the twenty seven accounts reported on by the investigating accountant (Mr Rossetto) were in the joint names of Mr and Mrs Berry. This will require further analysis.
b) The case was 90 per cent about the bank accounts, what the records showed, or did not show, and what the Court should do about the situation revealed by the evidence.
c) As to transaction 3A (see Schedule D & E of Mr Rosetto’s report and paras 172-178 of the judgment of 12/10/06) the plaintiff relied on the sum of $130,135.90 being paid into the account known as Stephen and Christine Berry.
d) Mr & Mrs Berry conducted a business in partnership.Comment: This does not assist the plaintiff. It is established that this sum was part of the proceeds of sale of land owned by Mr & Mrs Berry which they purchased in 1980.
Comment: This related to the business of sub-contract builder and sub-contract carpenter. The work on site was primarily done by Mr Berry but as is so often the case this business was in the joint names of the husband and wife. This business did not extend to the management and affairs of the plaintiff’s predecessor. This point does not assist the plaintiff. The partnership business lasted for a limited time, that is, until 1999 when Mr Berry became ill and could no longer work.
e) The defendants were and are husband and wife. They lived together and co-operated. Mr Berry admitted that he helped his wife with the donkeys. He did not dissent from the proposition that his wife’s affidavit of 11 June 2004 had been prepared by them in co-operation, that they had refreshed each other’s recollection and assisted each other in putting forward her explanations. The plaintiff referred to para 1 of Mrs Berry’s affidavit of 11 June 2004 which states that she has examined the report of the investigating accountant and divided the receipts and expenditure into three categories:
i) those relating to her personal income and that of her husband from sources other than work with donkeys and their own private expenditure;
ii) receipts and expenditure relating to the publication known as Donkey Business, and
iii) receipts and expenditure relating to work she had done with the donkeys..
Comment: The donkey welfare venture was that of Mrs Berry and while he did assist her with the physical work of caring for the donkeys and possibly helped with the establishment of physical structures, he was not involved in the management and control of the financial and property aspects of the plaintiff’s predecessor. It is not sufficient to make him liable for costs that he assisted his wife in preparing a response to the plaintiff’s allegations and that he did some of the physical work, nor that he did some construction work at the properties at which the donkeys were accommodated. Mrs Berry managed and controlled the financial affairs relating to the donkeys including the accounts held with various institutions.
f) Up to the service of the affidavit of 2 March 2007 Mr Berry never attempted to put to the Court a case out of his own mouth that he divorced himself entirely from all and any of the challenged transactions in that he knew nothing relevant about them and is incapable, as he now attempts to assert, of stating anything relevant about them. The defence was not conducted on the basis that irrespective of Mrs Berry’s position Mr Berry bore no responsibility.
Comment: Mr Berry did not give evidence at the hearing. An affidavit which he had sworn on 28 June 2005 was not relied upon. The focus at the hearing was on the activities of Mrs Berry and what she had done with certain moneys and her management of the financial affairs of the plaintiff’s predecessor and to a much lesser extent, the plaintiff. The same counsel and solicitor represented Mr and Mrs Berry. Little attention was directed to the separate position of Mr Berry. In retrospect their interests were not identical. At the hearing Mrs Berry did not undertake a detailed analysis of the transactions and payments but the Court on studying the papers was able to make a detailed analysis of some of the payments and transactions. At the hearing much of Mrs Berry’s case was put in broad and general terms – all moneys she received for the donkeys was used for the benefit and welfare of the donkeys. She did not deny that she had mixed her own moneys, those received for the donkeys and those given to her to be used as she thought fit. When matters came to a head in November 2001, Mr Berry was not involved in the confrontations involving Mrs Berry and various ladies (referred to in my judgment of 12 October 2006). It was Mrs Berry who sought advice and organised the land transfers and the substantial payments of cash.
22 At the hearing it was obvious that Mr and Mrs Berry were experiencing financial difficulties. Their representatives did not have a copy of the transcript and they probably could not afford to be separately represented.
23 I return to the six accounts in the name of Mr and Mrs Berry with the Greater Building Society.
24 On Schedule B to Mr Rossetto’s report (part of Exhibit A) the 22 accounts in the lower box appear under the heading “Accounts Held Solely by C Berry”.
25 On Schedule E, p 3 there is the heading “Money banked into accounts controlled by CVB”. Many of the accounts listed under this heading are in the names of Mr and Mrs Berry.
26 I do not attach weight to these headings. They may be the headings or determinations of Ms Kokas. It is not clear why the account in the sole name of Mr Berry should be described as controlled by Mrs Berry. This may be an assumption.
27 I turn now to Schedules B & C (part of Exhibit A to Mr Rossetto’s report. So far as I can tell the first account in the name of Mr and Mrs Berry listed on Schedule B was known as SB & CB, numbered 024 04 06104/6 and started on 24 October 1990. There is a discrepancy in Schedule B where the year given is 1992. Another account in their name was known as SB & CB, numbered 028-09 53583/9 and started on 31 December 1990. There are a lot of small credit and debit transactions on this account during 1990, 1991 and early 1992. However, some substantial amounts were deposited into this account in March 1992, namely $10,350 (transaction 315), $31,000 (transaction 322) and $10,100 (transaction 333) and also in May 1992, $25,526.50 (transaction 373).
28 On 6 February 1992 a further account number 028 09 53809/9 was opened in the name of Mr and Mrs Berry and known as SPB & CEB. This account was closed on 14 September 1992 with the withdrawal of $6752.60 (transaction 600).
29 On about 14 September 1992 a fresh account, numbered 018 09 06803/0 was opened (transaction 592) with a deposit of $6552.60 apparently coming from account numbered 028 09 58809/9 closed that day, less $200. Mr Berry in para 15 of his affidavit of 2 March 2007 states:
“From September 1992 to July 2000 my wife and I had a personal cheque account at the Greater Building Society (account No 018 09 06803/0). That account was used by my wife and I as our personal account and at no time to my knowledge ever contained money belonging to the plaintiff or its predecessor.”
Many of the amounts withdrawn from this account were relatively small, quite a number being in cash. The deposits, other than the initial deposit, were also relatively small and included amounts for unemployment and sickness benefits. This account could be described as a personal cheque account.
30 An examination of the over 5300 entries in Schedule C reveals that there were many transactions in accounts standing in the name of Mr and Mrs Berry over the years. Generally, the amounts of those transactions tended to be relatively small.
31 There was, however, a transaction of some magnitude. On 5 July 2001 $350,000 was paid into the account known as the “$350,000 account” which stood in the name of Mrs C E Berry. This represented the balance of the proceeds of sale of portion of the land purchased in 1980 at Duns Creek by Mr and Mrs Berry. On 5 August 2002 this account was closed, the sum of $350,000 was transferred into the account known as SB, standing in the name of Mr S P Berry along with a further $20,619.12.
32 The proceeds of sale of two portions of land at Duns Creek, including both those for $145,000 and $375,000 belong to Mr and Mrs Berry and reflected the major increase in land values over 20 years. These moneys do not and did not belong to the plaintiff.
33 By transfer dated 16 August 2002 Mr S P Berry completed the purchase of Lot 100, Deposited Plan 731327 at Bishops Bridge, for $157,500. No mortgage is shown on the title. Transactions 5212 and 5213 relate to this. Mr Berry cannot fairly be called on to account as to the application of $145,000 and $375,000. His share of the proceeds would have covered the purchase price of the land at Bishops Bridge. See Exhibits 4, 5, 6 and 7 for the various transfers and the moneys realised or paid in respect of the land at Duns Creek and Bishops Bridge. The purchase in 1980 of the land at Duns Creek by Mr and Mrs Berry was long before the plaintiff’s predecessor came into existence.
34 There are two further withdrawals from Mr Berry’s account, namely $10,137.60 on 20 August 2002 (transaction 5216) and $5,751.30 on 23 August 2002. On 14 March 2003 $100,000 was withdrawn from Mr Berry’s account (transaction 5281). The purpose of this withdrawal and its application is not clear. It may have been to facilitate the payment of the Newstart Allowances. From 17 March 2003 to 9 June 2003 Mr S P Berry is shown as having received Centrelink Newstart Allowances.
35 In para 15 of his affidavit of 2 March 2007 Mr Berry stated:
“… from time to time other accounts [than 018 09 06803/0] were held in the joint names of myself and my wife. So far as I am aware I was never a signatory to those accounts which were solely controlled by my wife. I never took nor received money from such accounts.”
36 With the benefit of the evidence and argument on behalf of Mr S P Berry and upon further consideration of the evidence adduced at the hearing I am persuaded that a costs order should not be made against Mr S P Berry other than in respect of this application. He was not a party to the mixing of the money or the failure to fully account for the moneys received on behalf of the plaintiff and its predecessor.
37 Accordingly I vary the costs order made on 14 November 2006 by deleting Order 9, namely that the defendants are to pay the plaintiff’s costs of the proceedings relating to the claims against the defendants to and including the date of these orders, including reserved costs and substituting:
Christine Elizabeth Berry is to pay the plaintiff’s costs of the proceedings relating to the claims against the defendants to and including 14 November 2006, including reserved costs.
38 Mr S P Berry by his motion sought that as between the plaintiff and him each party pay its own costs of the proceedings. This is appropriate. Accordingly, I will make no order for costs against Mr S P Berry.
39 Mr Berry sought his costs of his motion of 2 March 2007. In my opinion Mr Berry must pay the plaintiff’s costs of the motion. On 12 October 2006 I delivered a written judgment as to the further hearing on 14 November 2006 and the matters which would then be considered. I also announced those matters and that date from the Bench. The plaintiff complied with the directions given. It was the responsibility of Mr S P Berry to appear on 14 November 2006 and put his submissions to the Court. The plaintiff was entitled to test the facts advanced on behalf of Mr Berry. Mr Makin thought he had made it clear to Mr and Mrs Berry that it was necessary for them to appear at Court on 14 November 2006. I have taken into account on the issue of costs the letter of 9 March 2007 from Mr Berry’s solicitors and the reply of 21 March 2007 from the plaintiff’s solicitors.
40 I make the following orders:
1. Vary the costs order made on 14 November 2006 by deleting Order 9 and substituting:
(b) Make no order as to the costs of the proceedings as between the plaintiff and Stephen Philip Berry up to and including 14 November 2006.9(a) Order that Christine Elizabeth Berry pay the plaintiff’s costs of the proceedings relating to the claims against the defendants to and including 14 November 2006 including reserved costs.
2 . Order that Stephen Philip Berry pay the costs of the plaintiff of the application to vary the costs order made on 14 November 2006 against him including the hearing on 12 February 2007 and 28 March 2007.
41 I decline to make an order that the costs payable by Mrs Berry and those payable by Mr Berry be assessed and payable forthwith. It is better that all costs be assessed and payable on the final conclusion of the proceedings.
42 It is now appropriate for the parties to consider the future course of the proceedings. The matter should be listed for further directions before a Registrar on a convenient date in late May early June 2007, namely, on 5 June 2007 or such other day as the Registrar may appoint.
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