Horswill v McClellan (No 2)

[2019] NSWSC 964

Supreme Court

New South Wales

Medium Neutral Citation:	Horswill v McClellan (No 2) [2019] NSWSC 964
Hearing dates:	On the papers
Date of orders:	30 July 2019
Decision date:	30 July 2019
Jurisdiction:	Equity
Before:	Darke J
Decision:	Order that the first defendant pay the plaintiffs’ costs of the proceedings on the ordinary basis.
Catchwords:	COSTS – departure from the usual rule – application by the plaintiffs’ for indemnity costs – whether the first defendant’s resistance to the plaintiffs’ claim for specific performance of an oral agreement for the sale of land had no real prospects of success – where the first defendant’s evidence was materially similar to the plaintiffs’ evidence – where the first defendant did not substantiate certain claims in his Amended Defence – first defendant’s resistance held not to be unreasonable – first defendant ordered to pay the plaintiffs’ costs on the ordinary basis
Legislation Cited:	Civil Procedure Act 2005 (NSW), s 98 Contracts Review Act 1980 (NSW) Conveyancing Act 1919 (NSW), s 54A Statute of Frauds 1677, 29 Car II c 3
Cases Cited:	Harrison v Schipp [2001] NSWCA 13 Horswill v McClellan [2019] NSWSC 557 Hurstville Municipal Council v Connor (1991) 24 NSWLR 724 James v Douglas [2016] NSWCA 178 Main-Road Property Group v Pelligra & Sons Pty Ltd (No 2) [2009] VSC 174 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Pipikos v Trayans [2018] HCA 39; (2018) 92 ALJR 880 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Category:	Costs
Parties:	Robert Leslie Horswill (First Plaintiff) Kim Maree Horswill (Second Plaintiff) Adam Leslie McClellan (First Defendant) Jennifer Anne McClellan (Second Defendant)
Representation:	Counsel: Mr D C Price (Plaintiffs)   Solicitors: Shaddock Lawyers (Plaintiffs)
File Number(s):	2017/290046
Publication restriction:	None

Judgment

1. On 16 May 2019 the Court delivered judgment in this matter (Horswill v McClellan [2019] NSWSC 557 – “the Principal Judgment”). This judgment assumes familiarity with and adopts the same terminology employed in the Principal Judgment.

2. In summary, the Court concluded that the plaintiffs were entitled to specific performance of an oral agreement to purchase part of the defendants’ adjoining property. In so doing, the Court was satisfied that the acts of part performance on which the plaintiffs relied were unequivocally referable to a contract of the same nature as that alleged by the plaintiffs.

3. The plaintiffs now seek an order (originally foreshadowed in their Statement of Claim filed on 25 September 2017) that the first defendant pay the plaintiffs’ costs of the proceedings on an indemnity basis. The plaintiffs provided submissions in support of their application. On 24 May 2019, the Court directed the first defendant to provide written submissions addressing this issue of costs by 14 June 2019. The first defendant (who became unrepresented a short time before the final hearing on 13 May 2019) did not do so. On 1 July 2019 further time was given for the first defendant to provide written submissions. No written submissions, however, were provided by the extended date of 22 July 2019.

4. The plaintiffs submitted, in effect, that the first defendant had acted unreasonably from the outset of the proceedings. Counsel submitted that the first defendant ought to have known that he had no real prospect of success in resisting the plaintiffs’ claim. The plaintiffs contended that the first defendant’s own affidavit showed:

1. that the first defendant knew the plaintiffs wished to purchase part of the defendants’ land;

2. that he was content for dealings with respect to the defendants’ land to be handled by the second defendant;

3. that the second defendant kept the first defendant appraised of her dealings with the plaintiffs in relation to the purchase;

4. that the first defendant signed the relevant documentation giving effect to the first stage of the boundary adjustment;

5. that the first defendant was aware of the proposal to effectuate the boundary adjustment in two stages; and

6. that the first defendant acknowledged that the boundary adjustment was to occur in two stages by placing a line of star posts on the defendants’ property which accorded with the second stage of the boundary adjustment.

5. The plaintiffs submitted that an inference of unreasonable conduct by the first defendant could be more safely drawn in circumstances where the first defendant did not proffer evidence to support the allegations he made in his Amended Defence as grounds to set aside the oral agreement under the Contracts Review Act 1980 (NSW) or under the equitable doctrine of unconscionable conduct.

6. It is well established that the Court has discretion under the Civil Procedure Act 2005 (NSW) s 98(1)(c) to order an unsuccessful party to pay the successful party’s costs on an indemnity basis. One basis for such an award, relevant to the present application, is where the unsuccessful party has been guilty of some “relevant delinquency” in the conduct of the proceedings which has exposed the successful party to unnecessary legal costs (see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [44]; James v Douglas [2016] NSWCA 178 at [63]; see also Harrison v Schipp [2001] NSWCA 13 at [133]-[134]). The relevant delinquency in the present case is said to be the first defendant’s resistance to the plaintiffs’ claim in circumstances where such resistance had no real prospects of success.

7. The primary basis on which the first defendant resisted the plaintiffs’ claim was that the alleged agreement was unenforceable by reason of s 54A of the Conveyancing Act 1919 (NSW) for want of a note or memorandum recording the agreement’s essential terms. The purpose of that section is to prevent fraudulent dealings in relation to land by requiring any dealings to be evidenced in writing (see Pipikos v Trayans [2018] HCA 39; (2018) 92 ALJR 880 at [88], citing the preamble to the Statute of Frauds 1677, 29 Car II c 3). If a plaintiff asserts the existence of an oral agreement creating or disposing of an interest in land, it would not usually be unreasonable for a defendant to plead s 54A as a complete defence even if the defendant chooses not to adduce any evidence of their own in support of their case. Similarly, it would not ordinarily be unreasonable for a defendant to simply require the plaintiff to prove the acts of part performance sufficient to give rise to the equity to have the agreement completed.

8. I accept the submission that the first defendant’s affidavit evidence was broadly consistent with the plaintiffs’ affidavit evidence so that the parties did not differ in a significant way as to the terms of the oral agreement or the relevant acts of part performance. But the critical question in the proceedings was whether those acts of part performance were sufficient as a matter of law to render the agreement enforceable. As determined in the Principal Judgment at [33], the Court held that those acts were sufficient. However, this was not a foregone conclusion at the outset of the proceedings. The plaintiffs always carried the not insignificant burden of showing that the relevant acts were unequivocally referable to the kind of agreement which they alleged existed between them and the defendants. As the authorities in this area show (see the Principal Judgment at [30]), a person relying on the doctrine of part performance faces a considerable task in establishing their entitlement to relief.

9. Even if the first defendant’s resistance to the plaintiffs’ claim might be described as lacking in strength, that is not in itself a sufficient basis for an award of indemnity costs (see, for example, Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 542; Hurstville Municipal Council v Connor (1991) 24 NSWLR 724 at 735; Main-Road Property Group v Pelligra & Sons Pty Ltd (No 2) [2009] VSC 174 at [37]).

10. I have considered the submission that the first defendant’s failure to provide evidence in support of the claims under the Contracts Review Act and for unconscionable conduct at general law further supported the conclusion that his resistance was without merit. The first defendant’s affidavit provided some evidentiary basis for these claims, but the first defendant failed to attend the hearing on 13 May 2019 and his affidavit was not read. Nevertheless, the absence of such evidence did not obviate the need for the plaintiffs to satisfy the Court that the oral agreement should be enforced, and such evidence as was served by the first defendant did not cause the plaintiffs to incur wasted legal costs to a significant degree.

11. For these reasons, the Court will order that the first defendant pay the plaintiffs’ costs of the proceedings on the ordinary basis.

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Decision last updated: 30 July 2019