Gray v Latter (No.2)
[2014] NSWSC 207
•11 March 2014
Supreme Court
New South Wales
Medium Neutral Citation: Gray v Latter (No.2) [2014] NSWSC 207 Hearing dates: On the papers Decision date: 11 March 2014 Jurisdiction: Common Law Before: Adamson J Decision: (1) Order that the price nominated in the contract for sale between the plaintiffs as vendors and the defendants as purchasers for the property known as129 Davis Road, Swan Bay be varied from $240,000 to $167,500 and that clause 39 be amended accordingly.
(2) Direct the parties to execute a variation of the mortgage in registrable form to vary the principal sum advanced from $235,000 to $162,500.
(3) Order the plaintiffs to deliver up a discharge of mortgage in registrable form to the defendants, if:
(a) the defendants pay to the plaintiffs the sum of $137,900, less any amounts paid after 28 February 2014 in reduction of that sum in accordance with (3)(b) below, within 12 weeks of 28 February 2014, being 23 May 2014; and
(b) the defendants continue to pay to the plaintiffs $300 per week, being $150 for interest and $150 in repayment of principal until the earlier of:
(i) payment of the outstanding principal sum in accordance with order (3)(a) above; and
(ii) 23 May 2014.
(4) If the conditions provided for in (3)(a) and (b) are not met, order:
(a) Judgment for possession of the property in favour of the plaintiffs.
(b) Grant leave to issue writ of possession of the property such writ to issue at any time on and from 24 May 2014.
(c) Judgment for the defendants against the plaintiffs in an amount of $24,600 plus the sum of any payments of $150 per week made by way of interest since 28 February 2014 until the date on which the defendants vacate the premises.
(5) Grant liberty to apply on three days' notice.
(6) Order the plaintiffs to pay the defendants' costs of the proceedings.
Catchwords: CONTRACTS REVIEW - Orders to vary principal sum in mortgage
COSTS - defendants substantially succeeded - entitled to costs although not successful on some argumentsLegislation Cited: Civil Procedure Act 2005 (NSW)
Competition and Consumer Act 2010 (Cth), Schedule 2 (Australian Consumer Law)
Contracts Review Act 1980 (NSW)
National Consumer Credit Protection Act 2009 (Cth), Schedule 1Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333
Gray v Latter [2014] NSWSC 122Category: Costs Parties: John Russell Gray (First Plaintiff)
Narelle Lynn Steinwede (Second Plaintiff)
Geoffrey Wayne Latter (First Defendant)
Sonia Lee Perkins (Second Defendant)Representation: Counsel:
M Young SC (Plaintiff)
M Klooster (Defendants)
Solicitors:
Bransgrove Lawyers (Plaintiffs)
Cordato Partners Lawyers (Defendants)
File Number(s): 2013/75672 Publication restriction: Nil
Judgment
Introduction
On 27 February 2014 I published my reasons for decision in the principal proceedings and set out the orders I proposed to make, subject to hearing from the parties as to the form of the orders and as to costs: Gray v Latter [2014] NSWSC 122. None of the parties sought to be heard on the form of the orders. The parties made submissions on costs in writing.
The parties' submissions
The plaintiffs contended that I ought make no order as to costs. They submitted that, although the defendants had been granted relief under the Contracts Review Act 1980 (NSW) which substantially varied the mortgage the subject of the proceedings, they had failed on the following matters raised by way of defence and cross-claim:
(1) Undue influence (withdrawn on the first morning of the trial);
(2) Misrepresentation under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law);
(3) Misrepresentation under the general law;
(4) Unconscionability under the Australian Consumer Law;
(5) Unconscionability under Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Code); and
(6) That the proceedings were vitiated under the National Credit Code through failure to serve a s 88 notice.
The plaintiffs contended that the issues on which the defendants had been unsuccessful had been time-consuming and had prolonged the hearing.
The defendants contended that the appropriate order would be for the plaintiffs to pay the defendants' costs of the proceedings. They referred in their submissions to the following offers as being germane to the exercise of my discretion.
On 27 March 2013 (approximately two weeks after the statement of claim was filed) the defendants made an offer on the following terms:
(a) No reduction in the principal sum of $235,000
(b) The plaintiffs allow the defendants to refinance with an immediate payment of $140,000.00 being made to the plaintiffs upon the refinance occurring
(c) The plaintiffs take a second mortgage as security for the balance principal sum of $78,500.00 to be repaid over 8 years at $250 per week ($50 interest and $200 principal)
The plaintiffs rejected this offer on 11 April 2013. The final orders made are more favourable to the defendants than the defendants' offer as the principal sum has been reduced from $235,000 to $162,500.
On 26 November 2013 the plaintiffs made an offer on the following terms:
(a) No reduction in the principal sum of $235,000;
(b) The plaintiffs' legal costs (calculated on an indemnity basis) in the vicinity of $60,000 is added to the principal secured by the mortgage;
(c) The term of the mortgage extended to 30 November 2018;
(d) Weekly repayments to increase to $350 per week ($150 interest and $200 principal).
The defendants submitted that none of the terms of the plaintiff's only offer amounted to a genuine attempt at compromise.
On 3 December 2013 the defendants made a further offer to the plaintiffs that broadly approximates the orders I made in the proceedings. However, the defendants do not seek costs on other than the ordinary basis (cf. Calderbank v Calderbank [1975] 3 All ER 333) and relied on the offer merely to show that they had not been guilty of disentitling conduct and that they ought have their costs of the proceedings.
Reasons
The Court's power to award costs is discretionary: s 98 of the Civil Procedure Act 2005 (NSW).
The difficulty with the plaintiffs' submission is that the hearing of the matter took only two days. Both counsel conducted it efficiently. Although there were matters, such as whether the plaintiffs were engaged in a business, on which they defendants were unsuccessful, the evidence pertaining to these matters was otherwise relevant to the relief under the Contracts Review Act (having regard to the breadth of matters relevant to the determination of whether a contract is unjust) and, accordingly, was otherwise pertinent to the claim for relief that succeeded. In my view, the issues on which the defendants were unsuccessful did not in any material way prolong the hearing or complicate the matter.
The defendants have had substantial success in the proceedings. In the only offer made by the plaintiffs, they sought to add their costs of the proceedings on an indemnity basis to the amount secured by the mortgage over the property which was already encumbered for far more than its value. The element of compromise in the extension of the term of the loan was, effectively, dwarfed by the enlargement of the secured amount. The defendants' offers, by contrast, were reasonable and, in the case of the first, substantially better for the plaintiffs than the result, and, in the case of the second, broadly equivalent to the orders I have made.
The Uniform Civil Procedure Rules, and to a lesser extent Calderbank offers, are largely designed for judgments in money sums, rather than, as in the present case, orders the terms of which are fashioned by reference to relief that alters the effect of contracts already entered into. Although the defendants did not seek other than that their costs of the proceedings be paid on the ordinary basis, their offers are nonetheless relevant since they demonstrated that there is no reason why the costs order ought not follow the result of the proceedings, in which the defendants have been substantially successful.
In my view the appropriate order is that the plaintiffs pay the defendants' costs of the proceedings.
Orders
I make the following orders:
(1) Order that the price nominated in the contract for sale between the plaintiffs as vendors and the defendants as purchasers for the property known as129 Davis Road, Swan Bay be varied from $240,000 to $167,500 and that clause 39 be amended accordingly.
(2) Direct the parties to execute a variation of the mortgage in registrable form to vary the principal sum advanced from $235,000 to $162,500.
(3) Order the plaintiffs to deliver up a discharge of mortgage in registrable form to the defendants, if:
(a) the defendants pay to the plaintiffs the sum of $137,900, less any amounts paid after 28 February 2014 in reduction of that sum in accordance with (3)(b) below, within 12 weeks of 28 February 2014, being 23 May 2014; and
(b) the defendants continue to pay to the plaintiffs $300 per week, being $150 for interest and $150 in repayment of principal until the earlier of:
(i) payment of the outstanding principal sum in accordance with order (3)(a) above; and
(ii) 23 May 2014.
(4) If the conditions provided for in (3)(a) and (b) are not met, order:
(a) Judgment for possession of the property in favour of the plaintiffs.
(b) Grant leave to issue writ of possession of the property such writ to issue at any time on and from 24 May 2014.
(c) Judgment for the defendants against the plaintiffs in an amount of $24,600 plus the sum of any payments of $150 per week made by way of interest since 28 February 2014 until the date on which the defendants vacate the premises.
(5) Grant liberty to apply on three days' notice.
(6) Order the plaintiffs to pay the defendants' costs of the proceedings.
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Decision last updated: 11 March 2014
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